G.R. No.

L-50008 August 31, 1987

PRUDENTIAL BANK, petitioner,

vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of First Instance
of Zambales and Olongapo City; FERNANDO MAGCALE & TEODULA BALUYUT-
MAGCALE, respondents.

PARAS, J.:

This is a petition for review on certiorari of the November 13, 1978 Decision * of the then Court
of First Instance of Zambales and Olongapo City in Civil Case No. 2443-0 entitled "Spouses
Fernando A. Magcale and Teodula Baluyut-Magcale vs. Hon. Ramon Y. Pardo and Prudential
Bank" declaring that the deeds of real estate mortgage executed by respondent spouses in
favor of petitioner bank are null and void.

The undisputed facts of this case by stipulation of the parties are as follows:

... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and Teodula

Baluyut Magcale secured a loan in the sum of P70,000.00 from the defendant
Prudential Bank. To secure payment of this loan, plaintiffs executed in favor of
defendant on the aforesaid date a deed of Real Estate Mortgage over the
following described properties:

l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse spaces

containing a total floor area of 263 sq. meters, more or less, generally
constructed of mixed hard wood and concrete materials, under a roofing of cor.
g. i. sheets; declared and assessed in the name of FERNANDO MAGCALE
under Tax Declaration No. 21109, issued by the Assessor of Olongapo City with
an assessed value of P35,290.00. This building is the only improvement of the
lot.

2. THE PROPERTY hereby conveyed by way of MORTGAGE includes the right

of occupancy on the lot where the above property is erected, and more
particularly described and bounded, as follows:

A first class residential land Identffied as Lot No. 720, (Ts-308,

Olongapo Townsite Subdivision) Ardoin Street, East Bajac-Bajac,
Olongapo City, containing an area of 465 sq. m. more or less,
declared and assessed in the name of FERNANDO MAGCALE
under Tax Duration No. 19595 issued by the Assessor of
Olongapo City with an assessed value of P1,860.00; bounded on
the

NORTH: By No. 6, Ardoin Street

SOUTH: By No. 2, Ardoin Street

EAST: By 37 Canda Street, and

WEST: By Ardoin Street.

All corners of the lot marked by conc. cylindrical

monuments of the Bureau of Lands as visible limits.
( Exhibit "A, " also Exhibit "1" for defendant).

Apart from the stipulations in the printed portion of the aforestated

deed of mortgage, there appears a rider typed at the bottom of the
 reverse side of the document under the lists of the properties
mortgaged which reads, as follows:

AND IT IS FURTHER AGREED that in the event

the Sales Patent on the lot applied for by the
Mortgagors as herein stated is released or issued
by the Bureau of Lands, the Mortgagors hereby
authorize the Register of Deeds to hold the
Registration of same until this Mortgage is
cancelled, or to annotate this encumbrance on the
Title upon authority from the Secretary of
Agriculture and Natural Resources, which title with
annotation, shall be released in favor of the herein
Mortgage.

From the aforequoted stipulation, it is obvious that the mortgagee

(defendant Prudential Bank) was at the outset aware of the fact
that the mortgagors (plaintiffs) have already filed a Miscellaneous
Sales Application over the lot, possessory rights over which, were
mortgaged to it.

Exhibit "A" (Real Estate Mortgage) was registered under the

Provisions of Act 3344 with the Registry of Deeds of Zambales on
November 23, 1971.

On May 2, 1973, plaintiffs secured an additional loan from

defendant Prudential Bank in the sum of P20,000.00. To secure
payment of this additional loan, plaintiffs executed in favor of the
said defendant another deed of Real Estate Mortgage over the
same properties previously mortgaged in Exhibit "A." (Exhibit "B;"
also Exhibit "2" for defendant). This second deed of Real Estate
Mortgage was likewise registered with the Registry of Deeds, this
time in Olongapo City, on May 2,1973.

On April 24, 1973, the Secretary of Agriculture issued Miscellaneous Sales

Patent No. 4776 over the parcel of land, possessory rights over which were
mortgaged to defendant Prudential Bank, in favor of plaintiffs. On the basis of the
aforesaid Patent, and upon its transcription in the Registration Book of the
Province of Zambales, Original Certificate of Title No. P-2554 was issued in the
name of Plaintiff Fernando Magcale, by the Ex-Oficio Register of Deeds of
Zambales, on May 15, 1972.

For failure of plaintiffs to pay their obligation to defendant Bank after it became
due, and upon application of said defendant, the deeds of Real Estate Mortgage
(Exhibits "A" and "B") were extrajudicially foreclosed. Consequent to the
foreclosure was the sale of the properties therein mortgaged to defendant as the
highest bidder in a public auction sale conducted by the defendant City Sheriff on
April 12, 1978 (Exhibit "E"). The auction sale aforesaid was held despite written
request from plaintiffs through counsel dated March 29, 1978, for the defendant
City Sheriff to desist from going with the scheduled public auction sale (Exhibit
"D")." (Decision, Civil Case No. 2443-0, Rollo, pp. 29-31).

Respondent Court, in a Decision dated November 3, 1978 declared the deeds of Real Estate
Mortgage as null and void (Ibid., p. 35).

On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp. 41-53), opposed
by private respondents on January 5, 1979 (Ibid., pp. 54-62), and in an Order dated January 10,
1979 (Ibid., p. 63), the Motion for Reconsideration was denied for lack of merit. Hence, the
instant petition (Ibid., pp. 5-28).
The first Division of this Court, in a Resolution dated March 9, 1979, resolved to require the
respondents to comment (Ibid., p. 65), which order was complied with the Resolution dated May
18,1979, (Ibid., p. 100), petitioner filed its Reply on June 2,1979 (Ibid., pp. 101-112).

Thereafter, in the Resolution dated June 13, 1979, the petition was given due course and the
parties were required to submit simultaneously their respective memoranda. (Ibid., p. 114).

On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while private
respondents filed their Memorandum on August 1, 1979 (Ibid., pp. 146-155).

In a Resolution dated August 10, 1979, this case was considered submitted for decision (Ibid.,
P. 158).

In its Memorandum, petitioner raised the following issues:

1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID; AND

2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE

RESPONDENTS OF MISCELLANEOUS SALES PATENT NO. 4776 ON APRIL 24, 1972
UNDER ACT NO. 730 AND THE COVERING ORIGINAL CERTIFICATE OF TITLE NO. P-2554
ON MAY 15,1972 HAVE THE EFFECT OF INVALIDATING THE DEEDS OF REAL ESTATE
MORTGAGE. (Memorandum for Petitioner, Rollo, p. 122).

This petition is impressed with merit.

The pivotal issue in this case is whether or not a valid real estate mortgage can be constituted
on the building erected on the land belonging to another.

The answer is in the affirmative.

In the enumeration of properties under Article 415 of the Civil Code of the Philippines, this Court
ruled that, "it is obvious that the inclusion of "building" separate and distinct from the land, in
said provision of law can only mean that a building is by itself an immovable property." (Lopez
vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958; Associated Inc. and Surety Co., Inc. vs. Iya, et
al., L-10837-38, May 30,1958).

Thus, while it is true that a mortgage of land necessarily includes, in the absence of stipulation
of the improvements thereon, buildings, still a building by itself may be mortgaged apart from
the land on which it has been built. Such a mortgage would be still a real estate mortgage for
the building would still be considered immovable property even if dealt with separately and apart
from the land (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). In the same manner, this
Court has also established that possessory rights over said properties before title is vested on
the grantee, may be validly transferred or conveyed as in a deed of mortgage (Vda. de Bautista
vs. Marcos, 3 SCRA 438 [1961]).

Coming back to the case at bar, the records show, as aforestated that the original mortgage
deed on the 2-storey semi-concrete residential building with warehouse and on the right of
occupancy on the lot where the building was erected, was executed on November 19, 1971 and
registered under the provisions of Act 3344 with the Register of Deeds of Zambales on
November 23, 1971. Miscellaneous Sales Patent No. 4776 on the land was issued on April 24,
1972, on the basis of which OCT No. 2554 was issued in the name of private respondent
Fernando Magcale on May 15, 1972. It is therefore without question that the original mortgage
was executed before the issuance of the final patent and before the government was divested of
its title to the land, an event which takes effect only on the issuance of the sales patent and its
subsequent registration in the Office of the Register of Deeds (Visayan Realty Inc. vs. Meer, 96
Phil. 515; Director of Lands vs. De Leon, 110 Phil. 28; Director of Lands vs. Jurado, L-14702,
May 23, 1961; Pena "Law on Natural Resources", p. 49). Under the foregoing considerations, it
is evident that the mortgage executed by private respondent on his own building which was
erected on the land belonging to the government is to all intents and purposes a valid mortgage.
As to restrictions expressly mentioned on the face of respondents' OCT No. P-2554, it will be
noted that Sections 121, 122 and 124 of the Public Land Act, refer to land already acquired
under the Public Land Act, or any improvement thereon and therefore have no application to the
assailed mortgage in the case at bar which was executed before such eventuality. Likewise,
Section 2 of Republic Act No. 730, also a restriction appearing on the face of private
respondent's title has likewise no application in the instant case, despite its reference to
encumbrance or alienation before the patent is issued because it refers specifically to
encumbrance or alienation on the land itself and does not mention anything regarding the
improvements existing thereon.

But it is a different matter, as regards the second mortgage executed over the same properties
on May 2, 1973 for an additional loan of P20,000.00 which was registered with the Registry of
Deeds of Olongapo City on the same date. Relative thereto, it is evident that such mortgage
executed after the issuance of the sales patent and of the Original Certificate of Title, falls
squarely under the prohibitions stated in Sections 121, 122 and 124 of the Public Land Act and
Section 2 of Republic Act 730, and is therefore null and void.

Petitioner points out that private respondents, after physically possessing the title for five years,
voluntarily surrendered the same to the bank in 1977 in order that the mortgaged may be
annotated, without requiring the bank to get the prior approval of the Ministry of Natural
Resources beforehand, thereby implicitly authorizing Prudential Bank to cause the annotation of
said mortgage on their title.

However, the Court, in recently ruling on violations of Section 124 which refers to Sections 118,
120, 122 and 123 of Commonwealth Act 141, has held:

... Nonetheless, we apply our earlier rulings because we believe that as in pari
delicto may not be invoked to defeat the policy of the State neither may the
doctrine of estoppel give a validating effect to a void contract. Indeed, it is
generally considered that as between parties to a contract, validity cannot be
given to it by estoppel if it is prohibited by law or is against public policy (19 Am.
Jur. 802). It is not within the competence of any citizen to barter away what public
policy by law was to preserve (Gonzalo Puyat & Sons, Inc. vs. De los Amas and
Alino supra). ... (Arsenal vs. IAC, 143 SCRA 54 [1986]).

This pronouncement covers only the previous transaction already alluded to and does not pass
upon any new contract between the parties (Ibid), as in the case at bar. It should not preclude
new contracts that may be entered into between petitioner bank and private respondents that
are in accordance with the requirements of the law. After all, private respondents themselves
declare that they are not denying the legitimacy of their debts and appear to be open to new
negotiations under the law (Comment; Rollo, pp. 95-96). Any new transaction, however, would
be subject to whatever steps the Government may take for the reversion of the land in its favor.

PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales & Olongapo
City is hereby MODIFIED, declaring that the Deed of Real Estate Mortgage for P70,000.00 is
valid but ruling that the Deed of Real Estate Mortgage for an additional loan of P20,000.00 is
null and void, without prejudice to any appropriate action the Government may take against
private respondents.
LEUNG YEE, plaintiff-appellant,
vs.
FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-
appellees.

Booram and Mahoney for appellant.

Williams, Ferrier and SyCip for appellees.

CARSON, J.:

The "Compañia Agricola Filipina" bought a considerable quantity of rice-cleaning machinery

company from the defendant machinery company, and executed a chattel mortgage thereon to
secure payment of the purchase price. It included in the mortgage deed the building of strong
materials in which the machinery was installed, without any reference to the land on which it
stood. The indebtedness secured by this instrument not having been paid when it fell due, the
mortgaged property was sold by the sheriff, in pursuance of the terms of the mortgage
instrument, and was bought in by the machinery company. The mortgage was registered in the
chattel mortgage registry, and the sale of the property to the machinery company in satisfaction
of the mortgage was annotated in the same registry on December 29, 1913.

A few weeks thereafter, on or about the 14th of January, 1914, the "Compañia Agricola Filipina"
executed a deed of sale of the land upon which the building stood to the machinery company,
but this deed of sale, although executed in a public document, was not registered. This deed
makes no reference to the building erected on the land and would appear to have been
executed for the purpose of curing any defects which might be found to exist in the machinery
company's title to the building under the sheriff's certificate of sale. The machinery company
went into possession of the building at or about the time when this sale took place, that is to
say, the month of December, 1913, and it has continued in possession ever since.

At or about the time when the chattel mortgage was executed in favor of the machinery
company, the mortgagor, the "Compañia Agricola Filipina" executed another mortgage to the
plaintiff upon the building, separate and apart from the land on which it stood, to secure
payment of the balance of its indebtedness to the plaintiff under a contract for the construction
of the building. Upon the failure of the mortgagor to pay the amount of the indebtedness
secured by the mortgage, the plaintiff secured judgment for that amount, levied execution upon
the building, bought it in at the sheriff's sale on or about the 18th of December, 1914, and had
the sheriff's certificate of the sale duly registered in the land registry of the Province of Cavite.

At the time when the execution was levied upon the building, the defendant machinery
company, which was in possession, filed with the sheriff a sworn statement setting up its claim
of title and demanding the release of the property from the levy. Thereafter, upon demand of the
sheriff, the plaintiff executed an indemnity bond in favor of the sheriff in the sum of P12,000, in
reliance upon which the sheriff sold the property at public auction to the plaintiff, who was the
highest bidder at the sheriff's sale.

This action was instituted by the plaintiff to recover possession of the building from the
machinery company.

The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor
of the machinery company, on the ground that the company had its title to the building
registered prior to the date of registry of the plaintiff's certificate.

Article 1473 of the Civil Code is as follows:

If the same thing should have been sold to different vendees, the ownership shall be
transfer to the person who may have the first taken possession thereof in good faith, if it
should be personal property.

Should it be real property, it shall belong to the person acquiring it who first recorded it in
the registry.
 Should there be no entry, the property shall belong to the person who first took
possession of it in good faith, and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith.

The registry her referred to is of course the registry of real property, and it must be apparent that
the annotation or inscription of a deed of sale of real property in a chattel mortgage registry
cannot be given the legal effect of an inscription in the registry of real property. By its express
terms, the Chattel Mortgage Law contemplates and makes provision for mortgages of personal
property; and the sole purpose and object of the chattel mortgage registry is to provide for the
registry of "Chattel mortgages," that is to say, mortgages of personal property executed in the
manner and form prescribed in the statute. The building of strong materials in which the rice-
cleaning machinery was installed by the "Compañia Agricola Filipina" was real property, and the
mere fact that the parties seem to have dealt with it separate and apart from the land on which it
stood in no wise changed its character as real property. It follows that neither the original
registry in the chattel mortgage of the building and the machinery installed therein, not the
annotation in that registry of the sale of the mortgaged property, had any effect whatever so far
as the building was concerned.

We conclude that the ruling in favor of the machinery company cannot be sustained on the
ground assigned by the trial judge. We are of opinion, however, that the judgment must be
sustained on the ground that the agreed statement of facts in the court below discloses that
neither the purchase of the building by the plaintiff nor his inscription of the sheriff's certificate of
sale in his favor was made in good faith, and that the machinery company must be held to be
the owner of the property under the third paragraph of the above cited article of the code, it
appearing that the company first took possession of the property; and further, that the building
and the land were sold to the machinery company long prior to the date of the sheriff's sale to
the plaintiff.

It has been suggested that since the provisions of article 1473 of the Civil Code require "good
faith," in express terms, in relation to "possession" and "title," but contain no express
requirement as to "good faith" in relation to the "inscription" of the property on the registry, it
must be presumed that good faith is not an essential requisite of registration in order that it may
have the effect contemplated in this article. We cannot agree with this contention. It could not
have been the intention of the legislator to base the preferential right secured under this article
of the code upon an inscription of title in bad faith. Such an interpretation placed upon the
language of this section would open wide the door to fraud and collusion. The public records
cannot be converted into instruments of fraud and oppression by one who secures an inscription
therein in bad faith. The force and effect given by law to an inscription in a public record
presupposes the good faith of him who enters such inscription; and rights created by statute,
which are predicated upon an inscription in a public registry, do not and cannot accrue under an
inscription "in bad faith," to the benefit of the person who thus makes the inscription.

Construing the second paragraph of this article of the code, the supreme court of Spain held in
its sentencia of the 13th of May, 1908, that:

This rule is always to be understood on the basis of the good faith mentioned in the first
paragraph; therefore, it having been found that the second purchasers who record their
purchase had knowledge of the previous sale, the question is to be decided in
accordance with the following paragraph. (Note 2, art. 1473, Civ. Code, Medina and
Maranon [1911] edition.)

Although article 1473, in its second paragraph, provides that the title of conveyance of
ownership of the real property that is first recorded in the registry shall have preference,
this provision must always be understood on the basis of the good faith mentioned in the
first paragraph; the legislator could not have wished to strike it out and to sanction bad
faith, just to comply with a mere formality which, in given cases, does not obtain even in
real disputes between third persons. (Note 2, art. 1473, Civ. Code, issued by the
publishers of the La Revista de los Tribunales, 13th edition.)

The agreed statement of facts clearly discloses that the plaintiff, when he bought the building at
the sheriff's sale and inscribed his title in the land registry, was duly notified that the machinery
company had bought the building from plaintiff's judgment debtor; that it had gone into
possession long prior to the sheriff's sale; and that it was in possession at the time when the
sheriff executed his levy. The execution of an indemnity bond by the plaintiff in favor of the
sheriff, after the machinery company had filed its sworn claim of ownership, leaves no room for
doubt in this regard. Having bought in the building at the sheriff's sale with full knowledge that at
the time of the levy and sale the building had already been sold to the machinery company by
the judgment debtor, the plaintiff cannot be said to have been a purchaser in good faith; and of
course, the subsequent inscription of the sheriff's certificate of title must be held to have been
tainted with the same defect.

Perhaps we should make it clear that in holding that the inscription of the sheriff's certificate of
sale to the plaintiff was not made in good faith, we should not be understood as questioning, in
any way, the good faith and genuineness of the plaintiff's claim against the "Compañia Agricola
Filipina." The truth is that both the plaintiff and the defendant company appear to have had just
and righteous claims against their common debtor. No criticism can properly be made of the
exercise of the utmost diligence by the plaintiff in asserting and exercising his right to recover
the amount of his claim from the estate of the common debtor. We are strongly inclined to
believe that in procuring the levy of execution upon the factory building and in buying it at the
sheriff's sale, he considered that he was doing no more than he had a right to do under all the
circumstances, and it is highly possible and even probable that he thought at that time that he
would be able to maintain his position in a contest with the machinery company. There was no
collusion on his part with the common debtor, and no thought of the perpetration of a fraud upon
the rights of another, in the ordinary sense of the word. He may have hoped, and doubtless he
did hope, that the title of the machinery company would not stand the test of an action in a court
of law; and if later developments had confirmed his unfounded hopes, no one could question the
legality of the propriety of the course he adopted.

But it appearing that he had full knowledge of the machinery company's claim of ownership
when he executed the indemnity bond and bought in the property at the sheriff's sale, and it
appearing further that the machinery company's claim of ownership was well founded, he
cannot be said to have been an innocent purchaser for value. He took the risk and must stand
by the consequences; and it is in this sense that we find that he was not a purchaser in good
faith.

One who purchases 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 have put him upon such inquiry and investigation as might be necessary to acquaint him
with the defects in the title of his vendor. A purchaser cannot close his eyes to facts which
should put a reasonable man upon his guard, and then claim that he acted in good faith under
the belief that there was no defect in the title of the vendor. His mere refusal to believe that such
defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his
vendor's title, will not make him an innocent purchaser for value, if afterwards develops that the
title was in fact defective, and it appears that he had such notice of the defects as would have
led to its discovery had he acted with that measure of precaution which may reasonably be
acquired of a prudent man in a like situation. Good faith, or lack of it, is in its analysis a question
of intention; but in ascertaining the intention by which one is actuated on a given occasion, we
are necessarily controlled by the evidence as to the conduct and outward acts by which alone
the inward motive may, with safety, be determined. So it is that "the honesty of intention," "the
honest lawful intent," which constitutes good faith implies a "freedom from knowledge and
circumstances which ought to put a person on inquiry," and so it is that proof of such knowledge
overcomes the presumption of good faith in which the courts always indulge in the absence of
proof to the contrary. "Good faith, or the want of it, is not a visible, tangible fact that can be seen
or touched, but rather a state or condition of mind which can only be judged of by actual or
fancied tokens or signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas Lumber
Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)

We conclude that upon the grounds herein set forth the disposing part of the decision and
judgment entered in the court below should be affirmed with costs of this instance against the
appellant. So ordered.
JULIAN S. YAP, petitioner,
vs.
HON. SANTIAGO O. TAÑADA, etc., and GOULDS PUMPS INTERNATIONAL (PHIL.),
INC., respondents.

Paterno P. Natinga for private respondent.

NARVASA, J.:

The petition for review on certiorari at bar involves two (2) Orders of respondent Judge
Tañada 1 in Civil Case No. 10984. The first, dated September 16, 1970, denied petitioner Yap's
motion to set aside execution sale and to quash alias writ of execution. The second, dated
November 21, 1970, denied Yap's motion for reconsideration. The issues concerned the
propriety of execution of a judgment claimed to be "incomplete, vague and non-final," and the
denial of petitioner's application to prove and recover damages resulting from alleged
irregularities in the process of execution.

The antecedents will take some time in the telling. The case began in the City Court of Cebu
with the filing by Goulds Pumps International (Phil.), Inc. of a complaint 2 against Yap and his
wife 3 seeking recovery of P1,459.30 representing the balance of the price and installation cost
of a water pump in the latter's premises. 4 The case resulted in a judgment by the City Court on
November 25, 1968, reading as follows:

When this case was called for trial today, Atty. Paterno Natinga appeared for the
plaintiff Goulds and informed the court that he is ready for trial. However, none of
the defendants appeared despite notices having been served upon them.

Upon petition Atty. Natinga, the plaintiff is hereby allowed to present its evidence
ex-parte.

After considering the evidence of the plaintiff, the court hereby renders judgment
in favor of the plaintiff and against the defendant (Yap), ordering the latter to pay
to the former the sum of Pl,459.30 with interest at the rate of 12% per annum
until fully paid, computed from August 12, 1968, date of the filing of the
complaint; to pay the sum of P364.80 as reasonable attorney's fees, which is
equivalent " to 25% of the unpaid principal obligation; and to pay the costs, if any.

Yap appealed to the Court of First Instance. The appeal was assigned to the sala of respondent
Judge Tañada. For failure to appear for pre-trial on August 28, 1968, this setting being
intransferable since the pre-trial had already been once postponed at his instance, 5 Yap was
declared in default by Order of Judge Tañada dated August 28, 1969, 6 reading as follows:

When this case was called for pre-trial this morning, the plaintiff and counsel
appeared, but neither the defendants nor his counsel appeared despite the fact
that they were duly notified of the pre-trial set this morning. Instead he filed an
Ex-Parte Motion for Postponement which this Court received only this morning,
and on petition of counsel for the plaintiff that the Ex-Parte Motion for
Postponement was not filed in accordance with the Rules of Court he asked that
the same be denied and the defendants be declared in default; .. the motion for
the plaintiff being well- grounded, the defendants are hereby declared in default
and the Branch Clerk of Court ..is hereby authorized to receive evidence for the
plaintiff and .. submit his report within ten (10) days after reception of evidence.

Goulds presented evidence ex parte and judgment by default was rendered the following day by
Judge Tañada requiring Yap to pay to Goulds (1) Pl,459.30 representing the unpaid balance of
the pump purchased by him; (2) interest of 12% per annum thereon until fully paid; and (3) a
sum equivalent to 25% of the amount due as attorney's fees and costs and other expenses in
prosecuting the action. Notice of the judgment was served on Yap on September 1, 1969. 7
On September 16, 1969 Yap filed a motion for reconsideration. 8 In it he insisted that his motion
for postponement should have been granted since it expressed his desire to explore the
possibility of an amicable settlement; that the court should give the parties time to arrive at an
amicable settlement failing which, he should be allowed to present evidence in support of his
defenses (discrepancy as to the price and breach of warranty). The motion was not verified or
accompanied by any separate affidavit. Goulds opposed the motion. Its opposition 9 drew
attention to the eleventh-hour motion for postponement of Yap which had resulted in the
cancellation of the prior hearing of June 30, 1969 despite Goulds' vehement objection, and the
re-setting thereof on August 28, 1969 with intransferable character; it averred that Yap had
again sought postponement of this last hearing by another eleventh-hour motion on the plea
that an amicable settlement would be explored, yet he had never up to that time ever broached
the matter, 10 and that this pattern of seeking to obtain last-minute postponements was
discernible also in the proceedings before the City Court. In its opposition, Goulds also adverted
to the examination made by it of the pump, on instructions of the City Court, with a view to
remedying the defects claimed to exist by Yap; but the examination had disclosed the pump's
perfect condition. Yap's motion for reconsideration was denied by Order dated October 10,
1969, notice of which was received by Yap on October 4, 1969. 11

On October 15, 1969 Judge Tañada issued an Order granting Goulds' Motion for Issuance of
Writ of Execution dated October 14, 1969, declaring the reasons therein alleged to be
meritorious. 12 Yap forthwith filed an "Urgent Motion for Reconsideration of Order" dated
October 17, 1969, 13 contending that the judgment had not yet become final, since contrary to
Goulds' view, his motion for reconsideration was not pro forma for lack of an affidavit of merit,
this not being required under Section 1 (a) of Rule 37 of the Rules of Court upon which his
motion was grounded. Goulds presented an opposition dated October 22, 1969. 14 It pointed out
that in his motion for reconsideration Yap had claimed to have a valid defense to the action, i.e.,
".. discrepancy as to price and breach of seller's warranty," in effect, that there was fraud on
Goulds' paint; Yap's motion for reconsideration should therefore have been supported by an
affidavit of merit respecting said defenses; the absence thereof rendered the motion for
reconsideration fatally defective with the result that its filing did not interrupt the running of the
period of appeal. The opposition also drew attention to the failure of the motion for
reconsideration to specify the findings or conclusions in the judgment claimed to be contrary to
law or not supported by the evidence, making it a pro forma motion also incapable of stopping
the running of the appeal period. On October 23, 1969, Judge Tañada denied Yap's motion for
reconsideration and authorized execution of the judgment.15 Yap sought reconsideration of this
order, by another motion dated October 29, 1969. 16 This motion was denied by Order dated
January 26, 1970. 17 Again Yap moved for reconsideration, and again was rebuffed, by Order
dated April 28, 1970. 18

In the meantime the Sheriff levied on the water pump in question, 19 and by notice dated
November 4, 1969, scheduled the execution sale thereof on November 14, 1969. 20 But in view
of the pendency of Yap's motion for reconsideration of October 29, 1969, suspension of the sale
was directed by Judge Tañada in an order dated November 6, 1969.21

Counsel for the plaintiff is hereby given 10 days time to answer the Motion, dated
October 29, 1969, from receipt of this Order and in the meantime, the Order of
October 23, 1969, insofar as it orders the sheriff to enforce the writ of execution
is hereby suspended.

It appears however that a copy of this Order was not transmitted to the Sheriff "through
oversight, inadvertence and pressure of work" of the Branch Clerk of Court. 22 So the Deputy
Provincial Sheriff went ahead with the scheduled auction sale and sold the property levied on to
Goulds as the highest bidder. 23 He later submitted the requisite report to the Court dated
November 17, 1969, 24 as well as the "Sheriffs Return of Service" dated February 13, 1970, 25 in
both of which it was stated that execution had been "partially satisfied." It should be observed
that up to this time, February, 1970, Yap had not bestirred himself to take an appeal from the
judgment of August 29, 1969.

On May 9, 1970 Judge Tañada ordered the issuance of an alias writ of execution on Gould's ex
parte motion therefor. 26 Yap received notice of the Order on June 11. Twelve (1 2) days later,
he filed a "Motion to Set Aside Execution Sale and to Quash Alias Writ of Execution." 27 As
regards the original, partial execution of the judgment, he argued that —
1) "the issuance of the writ of execution on October 16, 1969 was contrary to law, the judgment
sought to be executed not being final and executory;" and

2) "the sale was made without the notice required by Sec. 18, Rule 39, of the New Rules of
Court," i.e., notice by publication in case of execution sale of real property, the pump and its
accessories being immovable because attached to the ground with character of permanency
(Art. 415, Civil Code).

And with respect to the alias writ, he argued that it should not have issued because —

1) "the judgment sought to be executed is null and void" as "it deprived the defendant of his day
in court" and "of due process;"

2) "said judgment is incomplete and vague" because there is no starting point for computation of
the interest imposed, or a specification of the "other expenses incurred in prosecuting this case"
which Yap had also been ordered to pay;

3) "said judgment is defective because it contains no statement of facts but a mere recital of the
evidence; and

4) "there has been a change in the situation of the parties which makes execution unjust and
inequitable" because Yap suffered damages by reason of the illegal execution.

Goulds filed an opposition on July 6, 1970. Yap's motion was thereafter denied by Order dated
September 16, 1970. Judge Tañada pointed out that the motion had "become moot and
academic" since the decision of August 29, 1969, "received by the defendant on September 1,
1969 had long become final when the Order for the Issuance of a Writ of Execution was
promulgated on October 15, 1969." His Honor also stressed that —

The defendant's Motion for Reconsideration of the Courts decision was in reality
one for new trial. Regarded as motion for new trial it should allege the grounds
for new trial, provided for in the Rules of Court, to be supported by affidavit of
merits; and this the defendant failed to do. If the defendant sincerely desired for
an opportunity to submit to an amicable settlement, which he failed to do extra
judicially despite the ample time before him, he should have appeared in the pre-
trial to achieve the same purpose.

Judge Tañada thereafter promulgated another Order dated September 21, 1970 granting a
motion of Goulds for completion of execution of the judgment of August 29, 1969 to be
undertaken by the City Sheriff of Cebu. Once more, Yap sought reconsideration. He submitted a
"Motion for Reconsideration of Two Orders" dated October 13, 1970, 28 seeking the setting
aside not only of this Order of September 21, 1970 but also that dated September 16, 1970,
denying his motion to set aside execution dated June 23, 1970. He contended that the Order of
September 21, 1970 (authorizing execution by the City Sheriff) was premature, since the 30-day
period to appeal from the earlier order of September 16, 1970 (denying his motion to set aside)
had not yet expired. He also reiterated his view that his motion for reconsideration dated
September 15, 1969 did not require that it be accompanied by an affidavit of merits. This last
motion was also denied for "lack of merits," by Order dated November 21, 1970. 29

On December 3, 1970, Yap filed a "Notice of Appeal" manifesting his intention to appeal to the
Supreme Court on certiorari only on questions of law, "from the Order ... of September 16, 1970
... and from the Order ... of November 21, 1970, ... pursuant to sections 2 and 3 of Republic Act
No. 5440." He filed his petition for review with this Court on January 5, 1971, after obtaining an
extension therefor. 30

The errors of law he attributes to the Court a quo are the following: 31

1) refusing to invalidate the execution pursuant to its Order of October 16, 1969 although the
judgment had not then become final and executory and despite its being incomplete and vague;
2) ignoring the fact that the execution sale was carried out although it (the Court) had itself
ordered suspension of execution on November 6, 1969;

3) declining to annul the execution sale of the pump and accessories subject of the action
although made without the requisite notice prescribed for the sale of immovables; and

4) refusing to allow the petitioner to prove irregularities in the process of execution which had
resulted in damages to him.

Notice of the Trial Court's judgment was served on Yap on September 1, 1969. His motion for
reconsideration thereof was filed 15 days thereafter, on September 16, 1969. Notice of the
Order denying the motion was received by him on October 14, 1969. The question is whether or
not the motion for reconsideration — which was not verified, or accompanied by an affidavit of
merits (setting forth facts constituting his meritorious defenses to the suit) or other sworn
statement (stating facts excusing his failure to appear at the pre-trial was pro forma and
consequently had not interrupted the running of the period of appeal. It is Yap's contention that
his motion was notpro forma for lack of an affidavit of merits, such a document not being
required by Section 1 (a) of Rule 37 of the Rules of Court upon which his motion was based.
This is incorrect.

Section 2, Rule 37 precisely requires that when the motion for new trial is founded on Section 1
(a), it should be accompanied by an affidavit of merit.

xxx xxx xxx

When the motion is made for the causes mentioned in subdivisions (a) and (b) of
the preceding section, it shall be proved in the manner provided for proof of
motions. Affidavit or affidavits of merits shall also be attached to a motion for the
cause mentioned in subdivision (a) which may be rebutted by counter-affidavits.

xxx xxx xxx 32

Since Yap himself asserts that his motion for reconsideration is grounded on Section 1 (a) of
Rule 37, 33 i.e., fraud, accident, mistake or excusable negligence which ordinary prudence could
not have guarded against and by reason of which ... (the) aggrieved party has probably been
impaired in his rights" — this being in any event clear from a perusal of the motion which
theorizes that he had "been impaired in his rights" because he was denied the right to present
evidence of his defenses (discrepancy as to price and breach of warranty) — it was a fatal
omission to fail to attach to his motion an affidavit of merits, i.e., an affidavit "showing the facts
(not conclusions) constituting the valid x x defense which the movant may prove in case a new
trial is granted." 34 The requirement of such an affidavit is essential because obviously "a new
trial would be a waste of the court's time if the complaint turns out to be groundless or the
defense ineffective." 35

In his motion for reconsideration, Yap also contended that since he had expressed a desire to
explore the possibility of an amicable settlement, the Court should have given him time to do so,
instead of declaring him in default and thereafter rendering judgment by default on Gould's ex
parte evidence.

The bona fides of this desire to compromise is however put in doubt by the attendant
circumstances. It was manifested in an eleventh-hour motion for postponement of the pre-trial
which had been scheduled with intransferable character since it had already been earlier
postponed at Yap's instance; it had never been mentioned at any prior time since
commencement of the litigation; such a possible compromise (at least in general or preliminary
terms) was certainly most appropriate for consideration at the pre-trial; in fact Yap was aware
that the matter was indeed a proper subject of a pre-trial agenda, yet he sought to avoid
appearance at said pre-trial which he knew to be intransferable in character. These
considerations and the dilatory tactics thus far attributable to him-seeking postponements of
hearings, or failing to appear therefor despite notice, not only in the Court of First Instance but
also in the City Court — proscribe belief in the sincerity of his avowed desire to negotiate a
compromise. Moreover, the disregard by Yap of the general requirement that "(n)otice of a
motion shall be served by the applicant to all parties concerned at least three (3) days before
the hearing thereof, together with a copy of the motion, and of any affidavits and other papers
accompanying it," 36 for which no justification whatever has been offered, also militates against
the bona fides of Yap's expressed wish for an amicable settlement. The relevant circumstances
do not therefore justify condemnation, as a grave abuse of discretion, or a serious mistake, of
the refusal of the Trial Judge to grant postponement upon this proferred ground.

The motion for reconsideration did not therefore interrupt the running of the period of appeal.
The time during which it was pending before the court — from September 16, 1969 when it was
filed with the respondent Court until October 14, 1969 when notice of the order denying the
motion was received by the movant — could not be deducted from the 30-day period of
appeal. 37 This is the inescapable conclusion from a consideration of Section 3 of Rule 41 which
in part declares that, "The "time during which a motion to set aside the judgment or order or for
a new trial has been pending shall be deducted, unless such motion fails to satisfy the
requirements of Rule 37. 38

Notice of the judgment having been received by Yap on September 1, 1969, and the period of
appeal therefrom not having been interrupted by his motion for reconsideration filed on
September 16, 1969, the reglementary period of appeal expired thirty (30) days after September
1, 1969, or on October 1, 1969, without an appeal being taken by Yap. The judgment then
became final and executory; Yap could no longer take an appeal therefrom or from any other
subsequent orders; and execution of judgment correctly issued on October 15, 1969, "as a
matter of right." 39

The next point discussed by Yap, that the judgment is incomplete and vague, is not well taken.
It is true that the decision does not fix the starting time of the computation of interest on the
judgment debt, but this is inconsequential since that time is easily determinable from the
opinion, i.e., from the day the buyer (Yap) defaulted in the payment of his obligation, 40 on May
31, 1968. 41 The absence of any disposition regarding his counterclaim is also immaterial and
does not render the judgment incomplete. Yap's failure to appear at the pre-trial without
justification and despite notice, which caused the declaration of his default, was a waiver of his
right to controvert the plaintiff s proofs and of his right to prove the averments of his answer,
inclusive of the counterclaim therein pleaded. Moreover, the conclusion in the judgment of the
merit of the plaintiff s cause of action was necessarily and at the same time a determination of
the absence of merit of the defendant's claim of untenability of the complaint and of malicious
prosecution.

Yap's next argument that the water pump had become immovable property by its being installed
in his residence is also untenable. The Civil Code considers as immovable property, among
others, anything "attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object." 42 The pump
does not fit this description. It could be, and was in fact separated from Yap's premises without
being broken or suffering deterioration. Obviously the separation or removal of the pump
involved nothing more complicated than the loosening of bolts or dismantling of other fasteners.

Yap's last claim is that in the process of the removal of the pump from his house, Goulds' men
had trampled on the plants growing there, destroyed the shed over the pump, plugged the
exterior casings with rags and cut the electrical and conduit pipes; that he had thereby suffered
actual-damages in an amount of not less than P 2,000.00, as well as moral damages in the sum
of P 10,000.00 resulting from his deprivation of the use of his water supply; but the Court had
refused to allow him to prove these acts and recover the damages rightfully due him. Now, as to
the loss of his water supply, since this arose from acts legitimately done, the seizure on
execution of the water pump in enforcement of a final and executory judgment, Yap most
certainly is not entitled to claim moral or any other form of damages therefor.

WHEREFORE, the petition is DENIED and the appeal DISMISSED, and the Orders of
September 16, 1970 and November 21, 1970 subject thereof, AFFIRMED in toto. Costs against
petitioner.
CONRADO P. NAVARRO, plaintiff-appellee,
vs.
RUFINO G. PINEDA, RAMONA REYES, ET AL., defendants-appellants.

Deogracias Tañedo, Jr. for plaintiff-appellee.

Renato A. Santos for defendants-appellants.

PAREDES, J.:

On December 14, 1959, defendants Rufino G. Pineda and his mother Juana Gonzales (married
to Gregorio Pineda), borrowed from plaintiff Conrado P. Navarro, the sum of P2,500.00, payable
6 months after said date or on June 14, 1959. To secure the indebtedness, Rufino executed a
document captioned "DEED OF REAL ESTATE and CHATTEL MORTGAGES", whereby Juana
Gonzales, by way of Real Estate Mortgage hypothecated a parcel of land, belonging to her,
registered with the Register of Deeds of Tarlac, under Transfer Certificate of Title No. 25776,
and Rufino G. Pineda, by way of Chattel Mortgage, mortgaged his two-story residential house,
having a floor area of 912 square meters, erected on a lot belonging to Atty. Vicente Castro,
located at Bo. San Roque, Tarlac, Tarlac; and one motor truck, registered in his name, under
Motor Vehicle Registration Certificate No. A-171806. Both mortgages were contained in one
instrument, which was registered in both the Office of the Register of Deeds and the Motor
Vehicles Office of Tarlac.

When the mortgage debt became due and payable, the defendants, after demands made on
them, failed to pay. They, however, asked and were granted extension up to June 30, 1960,
within which to pay. Came June 30, defendants again failed to pay and, for the second time,
asked for another extension, which was given, up to July 30, 1960. In the second extension,
defendant Pineda in a document entitled "Promise", categorically stated that in the remote event
he should fail to make good the obligation on such date (July 30, 1960), the defendant would no
longer ask for further extension and there would be no need for any formal demand, and plaintiff
could proceed to take whatever action he might desire to enforce his rights, under the said
mortgage contract. In spite of said promise, defendants, failed and refused to pay the obligation.

On August 10, 1960, plaintiff filed a complaint for foreclosure of the mortgage and for damages,
which consisted of liquidated damages in the sum of P500.00 and 12% per annum interest on
the principal, effective on the date of maturity, until fully paid.

Defendants, answering the complaint, among others, stated —

Defendants admit that the loan is overdue but deny that portion of paragraph 4 of the
First Cause of Action which states that the defendants unreasonably failed and refuse to
pay their obligation to the plaintiff the truth being the defendants are hard up these days
and pleaded to the plaintiff to grant them more time within which to pay their obligation
and the plaintiff refused;

WHEREFORE, in view of the foregoing it is most respectfully prayed that this Honorable
Court render judgment granting the defendants until January 31, 1961, within which to
pay their obligation to the plaintiff.

On September 30, 1960, plaintiff presented a Motion for summary Judgment, claiming that the
Answer failed to tender any genuine and material issue. The motion was set for hearing, but the
record is not clear what ruling the lower court made on the said motion. On November 11, 1960,
however, the parties submitted a Stipulation of Facts, wherein the defendants admitted the
indebtedness, the authenticity and due execution of the Real Estate and Chattel Mortgages; that
the indebtedness has been due and unpaid since June 14, 1960; that a liability of 12% per
annum as interest was agreed, upon failure to pay the principal when due and P500.00 as
liquidated damages; that the instrument had been registered in the Registry of Property and
Motor Vehicles Office, both of the province of Tarlac; that the only issue in the case is whether
or not the residential house, subject of the mortgage therein, can be considered a Chattel and
the propriety of the attorney's fees.

On February 24, 1961, the lower court held —

 ... WHEREFORE, this Court renders decision in this Case:

(a) Dismissing the complaint with regard to defendant Gregorio Pineda;

(b) Ordering defendants Juana Gonzales and the spouses Rufino Pineda and Ramon
Reyes, to pay jointly and severally and within ninety (90) days from the receipt of the
copy of this decision to the plaintiff Conrado P. Navarro the principal sum of P2,550.00
with 12% compounded interest per annum from June 14, 1960, until said principal sum
and interests are fully paid, plus P500.00 as liquidated damages and the costs of this
suit, with the warning that in default of said payment of the properties mentioned in the
deed of real estate mortgage and chattel mortgage (Annex "A" to the complaint) be sold
to realize said mortgage debt, interests, liquidated damages and costs, in accordance
with the pertinent provisions of Act 3135, as amended by Act 4118, and Art. 14 of the
Chattel Mortgage Law, Act 1508; and

(c) Ordering the defendants Rufino Pineda and Ramona Reyes, to deliver immediately to
the Provincial Sheriff of Tarlac the personal properties mentioned in said Annex "A",
immediately after the lapse of the ninety (90) days above-mentioned, in default of such
payment.

The above judgment was directly appealed to this Court, the defendants therein assigning only
a single error, allegedly committed by the lower court, to wit —

In holding that the deed of real estate and chattel mortgages appended to the complaint
is valid, notwithstanding the fact that the house of the defendant Rufino G. Pineda was
made the subject of the chattel mortgage, for the reason that it is erected on a land that
belongs to a third person.

Appellants contend that article 415 of the New Civil Code, in classifying a house as immovable
property, makes no distinction whether the owner of the land is or not the owner of the building;
the fact that the land belongs to another is immaterial, it is enough that the house adheres to the
land; that in case of immovables by incorporation, such as houses, trees, plants, etc; the Code
does not require that the attachment or incorporation be made by the owner of the land, the only
criterion being the union or incorporation with the soil. In other words, it is claimed that "a
building is an immovable property, irrespective of whether or not said structure and the land on
which it is adhered to, belong to the same owner" (Lopez v. Orosa, G.R. Nos. L-10817-8, Feb.
28, 1958). (See also the case of Leung Yee v. Strong Machinery Co., 37 Phil. 644). Appellants
argue that since only movables can be the subject of a chattel mortgage (sec. 1, Act No. 3952)
then the mortgage in question which is the basis of the present action, cannot give rise to an
action for foreclosure, because it is nullity. (Citing Associated Ins. Co., et al. v. Isabel Iya v.
Adriano Valino, et al., L-10838, May 30, 1958.)

The trial court did not predicate its decision declaring the deed of chattel mortgage valid solely
on the ground that the house mortgaged was erected on the land which belonged to a third
person, but also and principally on the doctrine of estoppel, in that "the parties have
so expressly agreed" in the mortgage to consider the house as chattel "for its smallness and
mixed materials of sawali and wood". In construing arts. 334 and 335 of the Spanish Civil Code
(corresponding to arts. 415 and 416, N.C.C.), for purposes of the application of the Chattel
Mortgage Law, it was held that under certain conditions, "a property may have a character
different from that imputed to it in said articles. It is undeniable that the parties to a contract
may by agreement, treat as personal property that which by nature would be real property"
(Standard Oil Co. of N.Y. v. Jaranillo, 44 Phil. 632-633)."There can not be any question that a
building of mixed materials may be the subject of a chattel mortgage, in which case, it is
considered as between the parties as personal property. ... The matter depends on the
circumstances and the intention of the parties". "Personal property may retain its character as
such where it is so agreed by the parties interested even though annexed to the realty ...". (42
Am. Jur. 209-210, cited in Manarang, et al. v. Ofilada, et al., G.R. No. L-8133, May 18, 1956; 52
O.G. No. 8, p. 3954.) The view that parties to a deed of chattel mortgagee may agree to
consider a house as personal property for the purposes of said contract, "is good only insofar as
the contracting parties are concerned. It is based partly, upon the principles of estoppel ..."
(Evangelista v. Alto Surety, No. L-11139, Apr. 23, 1958). In a case, a mortgage house built on
a rented land, was held to be a personal property, not only because the deed of mortgage
considered it as such, but also because it did not form part of the land (Evangelista v. Abad
[CA];36 O.G. 2913), for it is now well settled that an object placed on land by one who has only
a temporary right to the same, such as a lessee or usufructuary, does not become immobilized
by attachment (Valdez v. Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co., Inc. v.
Castillo, et al., 61 Phil. 709). Hence, if a house belonging to a person stands on a rented land
belonging to another person, it may be mortgaged as a personal property is so stipulated in the
document of mortgage. (Evangelista v. Abad, supra.) It should be noted, however, that the
principle is predicated on statements by the owner declaring his house to be a chattel, a
conduct that may conceivably estop him from subsequently claiming otherwise (Ladera, et al.. v.
C. N. Hodges, et al., [CA]; 48 O.G. 5374). The doctrine, therefore, gathered from these cases is
that although in some instances, a house of mixed materials has been considered as a chattel
between them, has been recognized, it has been a constant criterion nevertheless that, with
respect to third persons, who are not parties to the contract, and specially in execution
proceedings, the house is considered as an immovable property (Art. 1431, New Civil Code).

In the case at bar, the house in question was treated as personal or movable property, by the
parties to the contract themselves. In the deed of chattel mortgage, appellant Rufino G. Pineda
conveyed by way of "Chattel Mortgage" "my personal properties", a residential house and a
truck. The mortgagor himself grouped the house with the truck, which is, inherently a movable
property. The house which was not even declared for taxation purposes was small and made of
light construction materials: G.I. sheets roofing, sawali and wooden walls and wooden posts;
built on land belonging to another.

The cases cited by appellants are not applicable to the present case. The Iya cases (L-10837-
38, supra), refer to a building or a house of strong materials, permanently adhered to the land,
belonging to the owner of the house himself. In the case of Lopez v. Orosa, (L-10817-18), the
subject building was a theatre, built of materials worth more than P62,000, attached
permanently to the soil. In these cases and in the Leung Yee case, supra, third persons
assailed the validity of the deed of chattel mortgages; in the present case, it was one of the
parties to the contract of mortgages who assailed its validity.

CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from, should be, as it is
hereby affirmed, with costs against appellants.
JOSE A. LUNA, petitioner,
vs.
DEMETRIO B. ENCARNACION, Judge of First Instance of Rizal, TRINIDAD REYES and
THE PROVINCIAL SHERIFF OF RIZAL, respondents.

Jose S. Fineza for petitioner.

BAUTISTA ANGELO, J.:

On September 25, 1948, a deed designated as chattel mortgage was executed by Jose A. Luna
in favor of Trinidad Reyes whereby the former conveyed by way of first mortgage to the latter a
certain house of mixed materials stated in barrio San Nicolas, municipality of Pasig, Province of
Rizal, to secure the payment of a promissory note in the amount of P1,500, with interest at 12
per cent per annum. The document was registered in the office of the register of deeds for the
Province of Rizal. The mortgagor having filed to pay the promissory note when it fell due, the
mortgage requested the sheriff of said province to sell the house at public auction so that with
its proceeds the amount indebted may be paid notifying the mortgagor in writing of the time and
place of the sale as required by law. The sheriff acceded to the request and sold the property to
the mortgagee for the amount covering the whole indebtedness with interest and costs. The
certificate of sale was issued by the sheriff on May 28, 1949. After the period for the redemption
of the property had expired without the mortgagor having exercised his right to repurchase, the
mortgagee demanded from the mortgagor the surrender of the possession of the property, but
the later refused and so on October 13, 1950, she filed a petition in the Court of First Instance of
Rizal praying that the provincial sheriff be authorized to place her in possession of the property
invoking in her favor the provisions of Act No. 3135, as amended by Act No. 4118.

When the petition came up for hearing before the court on October 25, 1950, Jose A. Luna, the
mortgagor, opposed the petition on the following grounds: (1) that Act No. 3135 as amended by
Act No. 4118 is applicable only to a real estate mortgage; (2) that the mortgage involved herein
is a chattel mortgage; and (3) that even if the mortgage executed by the parties herein be
considered as real estate mortgage, the extra-judicial sale made by the sheriff of the property in
question was valid because the mortgage does not contain an express stipulation authorizing
the extra-judicial sale of the property. After hearing, at which both parties have expressed their
views in support of their respective contentions, respondent judge, then presiding the court,
overruled the opposition and granted the petition ordering the provincial sheriff of Rizal, or any
of this disputives, to immediately place petitioner in possession of the property in question while
at the same time directing the mortgagor Jose A. Luna to vacate it and relinquish it in favor of
petitioner. It is from this order that Jose A. Luna desires now to obtain relief by filing this petition
for certioraricontending that the respondent judge has acted in excess of his jurisdiction.

The first question which petitioner poses in his petition for certiorari is that which relates to the
validity of the extra-judicial sale made by the provincial sheriff of Rizal of the property in
question in line with the request of the mortgagee Trinidad Reyes. It is contended that said
extra-judicial sale having been conducted under the provisions of Act No. 3135, as amended by
Act No. 4118, is invalid because the mortgage in question is not a real estate mortgage and,
besides, it does not contain an express stipulation authorizing the mortgagee to foreclose the
mortgage extra-judicially.

There is merit in this claim. As may be gleaned from a perusal of the deed signed by the parties
(Annex "C"), the understanding executed by them is a chattel mortgage, as the parties have so
expressly designated, and not a real estate mortgage, specially when it is considered that the
property given as security is a house of mixed materials which by its very nature is considered
as personal property. Such being the case, it is indeed a mistake for the mortgagee to consider
this transaction in the light of Act No. 3135, as amended by Act No. 4118, as was so considered
by her when she requested to provincial sheriff to sell it extra-judicially in order to secure full
satisfaction of the indebtedness still owed her by the mortgagor. It is clear that Act No. 3135, as
amended, only covers real estate mortgages and is intended merely to regulate the extra-
judicial sale of the property mortgaged if and when the mortgagee is given a special power or
express authority to do so in the deed itself, or in a document annexed thereto. These
conditions do not here obtain. The mortgage before us is not a real estate mortgage nor does it
contain an express authority or power to sell the property extra-judicially.
But regardless of what we have heretofore stated, we find that the validity of the sale in question
may be maintained, it appearing that the mortgage in question is a chattel mortgage and as
such it is covered and regulated by the Chattel Mortgage Law, Act No. 1508. Section 14 of this
Act allows the mortgagee through a public officer in almost the same manner as that allowed by
Act No. 3135, as amended by Act No. 4118, provided that the requirements of the law relative to
notice and registration are complied with. We are not prepared to state if these requirements of
the law had been complied with in the case for the record before us is not complete and there is
no showing to that effect. At any rate, this issue is not how important because the same can be
treshed out when the opportunity comes for its determination, nor is it necessary for us to
consider it in reaching a decision in the present case. Suffice it to state that for the present we
are not expressing any opinion on this matter which concerns the validity of the sale in question
for the reason that this opinion will only be limited to a matter of procedure relative to the step
taken by the mortgagee in securing the possession of the property involved.

In the supposition that the sale of the property made by the sheriff has been made in
accordance with law, and the question he is confronted is how to deliver the possession of the
property to the purchaser in case of refusal to surrender its possession on the part of the debtor
or mortgagor, the remedy of the purchaser according to the authorities, is to bring an ordinary
action for recovery of possession (Continental Gin Co. vs. Pannell, 160 P., 598; 61 Okl., 102; 14
C.J.S., pp. 1027, 1028). The purchaser cannot take possession of the property by force either
directly or through the sheriff. And the reason for this is "that the creditor's right of possession is
conditioned upon the fact of default, and the existence of this fact may naturally be the subject
of controversy" (Bachrah Motor Co. vs. Summers, 42 Phil., 3, 6). The creditor cannot merely file
a petition for a writ of possession as was done by Trinidad Reyes in this case. Her remedy is to
file an ordinary action for recovery of possession in ordered that the debtor may be given an
opportunity to be heard not only in regarding possession but also regarding the obligation
covered by the mortgage. The petition she has filed in the lower court, which was not even
docketed, is therefore improper and should be regarded.

Wherefore, the order subject of the present petition for certiorari is hereby set aside, with costs
against respondent Trinidad Reyes.
G.R. No. L-47943 May 31, 1982

MANILA ELECTRIC COMPANY, petitioner,

vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
BATANGAS and PROVINCIAL ASSESSOR OF BATANGAS, respondents.

AQUINO, J.:

This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by
Manila Electric Company on a lot in San Pascual, Batangas which it leased in 1968 from Caltex
(Phil.), Inc. The tanks are within the Caltex refinery compound. They have a total capacity of
566,000 barrels. They are used for storing fuel oil for Meralco's power plants.

According to Meralco, the storage tanks are made of steel plates welded and assembled on the
spot. Their bottoms rest on a foundation consisting of compacted earth as the outermost layer, a
sand pad as the intermediate layer and a two-inch thick bituminous asphalt stratum as the top
layer. The bottom of each tank is in contact with the asphalt layer,

The steel sides of the tank are directly supported underneath by a circular wall made of
concrete, eighteen inches thick, to prevent the tank from sliding. Hence, according to Meralco,
the tank is not attached to its foundation. It is not anchored or welded to the concrete circular
wall. Its bottom plate is not attached to any part of the foundation by bolts, screws or similar
devices. The tank merely sits on its foundation. Each empty tank can be floated by flooding its
dike-inclosed location with water four feet deep. (pp. 29-30, Rollo.)

On the other hand, according to the hearing commissioners of the Central Board of Assessment
Appeals, the area where the two tanks are located is enclosed with earthen dikes with electric
steel poles on top thereof and is divided into two parts as the site of each tank. The foundation
of the tanks is elevated from the remaining area. On both sides of the earthen dikes are two
separate concrete steps leading to the foundation of each tank.

Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch thick.
Pipelines were installed on the sides of each tank and are connected to the pipelines of the
Manila Enterprises Industrial Corporation whose buildings and pumping station are near Tank
No. 2.

The Board concludes that while the tanks rest or sit on their foundation, the foundation itself and
the walls, dikes and steps, which are integral parts of the tanks, are affixed to the land while the
pipelines are attached to the tanks. (pp. 60-61, Rollo.) In 1970, the municipal treasurer of
Bauan, Batangas, on the basis of an assessment made by the provincial assessor, required
Meralco to pay realty taxes on the two tanks. For the five-year period from 1970 to 1974, the tax
and penalties amounted to P431,703.96 (p. 27, Rollo). The Board required Meralco to pay the
tax and penalties as a condition for entertaining its appeal from the adverse decision of the
Batangas board of assessment appeals.

The Central Board of Assessment Appeals (composed of Acting Secretary of Finance Pedro M.
Almanzor as chairman and Secretary of Justice Vicente Abad Santos and Secretary of Local
Government and Community Development Jose Roño as members) in its decision dated
November 5, 1976 ruled that the tanks together with the foundation, walls, dikes, steps,
pipelines and other appurtenances constitute taxable improvements.

Meralco received a copy of that decision on February 28, 1977. On the fifteenth day, it filed a
motion for reconsideration which the Board denied in its resolution of November 25, 1977, a
copy of which was received by Meralco on February 28, 1978.

On March 15, 1978, Meralco filed this special civil action of certiorari to annul the Board's
decision and resolution. It contends that the Board acted without jurisdiction and committed a
grave error of law in holding that its storage tanks are taxable real property.
Meralco contends that the said oil storage tanks do not fall within any of the kinds of real
property enumerated in article 415 of the Civil Code and, therefore, they cannot be categorized
as realty by nature, by incorporation, by destination nor by analogy. Stress is laid on the fact
that the tanks are not attached to the land and that they were placed on leased land, not on the
land owned by Meralco.

This is one of those highly controversial, borderline or penumbral cases on the classification of
property where strong divergent opinions are inevitable. The issue raised by Meralco has to be
resolved in the light of the provisions of the Assessment Law, Commonwealth Act No. 470, and
the Real Property Tax Code, Presidential Decree No. 464 which took effect on June 1, 1974.

Section 2 of the Assessment Law provides that the realty tax is due "on real property, including
land, buildings, machinery, and other improvements" not specifically exempted in section 3
thereof. This provision is reproduced with some modification in the Real Property Tax Code
which provides:

Sec. 38. Incidence of Real Property Tax. — They shall be levied, assessed and
collected in all provinces, cities and municipalities an annual ad valorem tax on
real property, such as land, buildings, machinery and other improvements affixed
or attached to real property not hereinafter specifically exempted.

The Code contains the following definition in its section 3:

k) Improvements — is a valuable addition made to property or an amelioration in

its condition, amounting to more than mere repairs or replacement of waste,
costing labor or capital and intended to enhance its value, beauty or utility or to
adapt it for new or further purposes.

We hold that while the two storage tanks are not embedded in the land, they may, nevertheless,
be considered as improvements on the land, enhancing its utility and rendering it useful to the
oil industry. It is undeniable that the two tanks have been installed with some degree of
permanence as receptacles for the considerable quantities of oil needed by Meralco for its
operations.

Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs. Atlantic
City, 15 Atl. 2nd 271.

For purposes of taxation, the term "real property" may include things which should generally be
regarded as personal property(84 C.J.S. 171, Note 8). It is a familiar phenomenon to see things
classed as real property for purposes of taxation which on general principle might be considered
personal property (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).

The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil. 328, wherein
Meralco's steel towers were held not to be subject to realty tax, is not in point because in that
case the steel towers were regarded as poles and under its franchise Meralco's poles are
exempt from taxation. Moreover, the steel towers were not attached to any land or building.
They were removable from their metal frames.

Nor is there any parallelism between this case and Mindanao Bus Co. vs. City Assessor, 116
Phil. 501, where the tools and equipment in the repair, carpentry and blacksmith shops of a
transportation company were held not subject to realty tax because they were personal
property.

WHEREFORE, the petition is dismissed. The Board's questioned decision and resolution are
affirmed. No costs.

SO ORDERED.
G.R. No. L-40411 August 7, 1935

DAVAO SAW MILL CO., INC., plaintiff-appellant,

vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees.

Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.

MALCOLM, J.:

The issue in this case, as announced in the opening sentence of the decision in the trial court
and as set forth by counsel for the parties on appeal, involves the determination of the nature of
the properties described in the complaint. The trial judge found that those properties were
personal in nature, and as a consequence absolved the defendants from the complaint, with
costs against the plaintiff.

The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the
Philippine Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of
Davao, Province of Davao. However, the land upon which the business was conducted
belonged to another person. On the land the sawmill company erected a building which housed
the machinery used by it. Some of the implements thus used were clearly personal property, the
conflict concerning machines which were placed and mounted on foundations of cement. In the
contract of lease between the sawmill company and the owner of the land there appeared the
following provision:

That on the expiration of the period agreed upon, all the improvements and buildings
introduced and erected by the party of the second part shall pass to the exclusive
ownership of the party of the first part without any obligation on its part to pay any
amount for said improvements and buildings; also, in the event the party of the second
part should leave or abandon the land leased before the time herein stipulated, the
improvements and buildings shall likewise pass to the ownership of the party of the first
part as though the time agreed upon had expired: Provided, however, That the
machineries and accessories are not included in the improvements which will pass to the
party of the first part on the expiration or abandonment of the land leased.

In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao,
Saw, Mill Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that
action against the defendant in that action; a writ of execution issued thereon, and the
properties now in question were levied upon as personalty by the sheriff. No third party claim
was filed for such properties at the time of the sales thereof as is borne out by the record made
by the plaintiff herein. Indeed the bidder, which was the plaintiff in that action, and the defendant
herein having consummated the sale, proceeded to take possession of the machinery and other
properties described in the corresponding certificates of sale executed in its favor by the sheriff
of Davao.

As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc.,
has on a number of occasions treated the machinery as personal property by executing chattel
mortgages in favor of third persons. One of such persons is the appellee by assignment from
the original mortgages.

Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real
property consists of —

1. Land, buildings, roads and constructions of all kinds adhering to the soil;

xxx xxx xxx

5. Machinery, liquid containers, instruments or implements intended by the owner of any

building or land for use in connection with any industry or trade being carried on therein
and which are expressly adapted to meet the requirements of such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We
entertain no doubt that the trial judge and appellees are right in their appreciation of the legal
doctrines flowing from the facts.

In the first place, it must again be pointed out that the appellant should have registered its
protest before or at the time of the sale of this property. It must further be pointed out that while
not conclusive, the characterization of the property as chattels by the appellant is indicative of
intention and impresses upon the property the character determined by the parties. In this
connection the decision of this court in the case of Standard Oil Co. of New York vs. Jaramillo (
[1923], 44 Phil., 630), whether obiter dicta or not, furnishes the key to such a situation.

It is, however not necessary to spend overly must time in the resolution of this appeal on side
issues. It is machinery which is involved; moreover, machinery not intended by the owner of any
building or land for use in connection therewith, but intended by a lessee for use in a building
erected on the land by the latter to be returned to the lessee on the expiration or abandonment
of the lease.

A similar question arose in Puerto Rico, and on appeal being taken to the United States
Supreme Court, it was held that machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or plant, but not when so
placed by a tenant, a usufructuary, or any person having only a temporary right, unless such
person acted as the agent of the owner. In the opinion written by Chief Justice White, whose
knowledge of the Civil Law is well known, it was in part said:

To determine this question involves fixing the nature and character of the property from
the point of view of the rights of Valdes and its nature and character from the point of
view of Nevers & Callaghan as a judgment creditor of the Altagracia Company and the
rights derived by them from the execution levied on the machinery placed by the
corporation in the plant. Following the Code Napoleon, the Porto Rican Code treats as
immovable (real) property, not only land and buildings, but also attributes immovability in
some cases to property of a movable nature, that is, personal property, because of the
destination to which it is applied. "Things," says section 334 of the Porto Rican Code,
"may be immovable either by their own nature or by their destination or the object to
which they are applicable." Numerous illustrations are given in the fifth subdivision of
section 335, which is as follows: "Machinery, vessels, instruments or implements
intended by the owner of the tenements for the industrial or works that they may carry on
in any building or upon any land and which tend directly to meet the needs of the said
industry or works." (See also Code Nap., articles 516, 518 et seq. to and inclusive of
article 534, recapitulating the things which, though in themselves movable, may be
immobilized.) So far as the subject-matter with which we are dealing — machinery
placed in the plant — it is plain, both under the provisions of the Porto Rican Law and of
the Code Napoleon, that machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or plant. Such result
would not be accomplished, therefore, by the placing of machinery in a plant by a tenant
or a usufructuary or any person having only a temporary right. (Demolombe, Tit. 9, No.
203; Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions
quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction
rests, as pointed out by Demolombe, upon the fact that one only having a temporary
right to the possession or enjoyment of property is not presumed by the law to have
applied movable property belonging to him so as to deprive him of it by causing it by an
act of immobilization to become the property of another. It follows that abstractly
speaking the machinery put by the Altagracia Company in the plant belonging to
Sanchez did not lose its character of movable property and become immovable by
destination. But in the concrete immobilization took place because of the express
provisions of the lease under which the Altagracia held, since the lease in substance
required the putting in of improved machinery, deprived the tenant of any right to charge
against the lessor the cost such machinery, and it was expressly stipulated that the
machinery so put in should become a part of the plant belonging to the owner without
compensation to the lessee. Under such conditions the tenant in putting in the
machinery was acting but as the agent of the owner in compliance with the obligations
resting upon him, and the immobilization of the machinery which resulted arose in legal
 effect from the act of the owner in giving by contract a permanent destination to the
machinery.

xxx xxx xxx

The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the
plant by the Altagracia Company, being, as regards Nevers & Callaghan, movable
property, it follows that they had the right to levy on it under the execution upon the
judgment in their favor, and the exercise of that right did not in a legal sense conflict with
the claim of Valdes, since as to him the property was a part of the realty which, as the
result of his obligations under the lease, he could not, for the purpose of collecting his
debt, proceed separately against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)

Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs
of this instance to be paid by the appellant.
G.R. No. L-17898 October 31, 1962

PASTOR D. AGO, petitioner,

vs.
THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the Court of First
Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK
ENGINEERING, INC., respondents.

Jose M. Luison for petitioner.

Norberto J. Quisumbing for respondent Grace Park Engineering, Inc.
The Provincial Fiscal of Surigao for respondent Sheriff of Surigao.

LABRABOR, J.:

Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No.
26723-R entitled "Pastor D. Ago vs. The Provincial Sheriff of Surigao, et al." which in part reads:

In this case for certiorari and prohibition with preliminary injunction, it appears from the
records that the respondent Judge of the Court of First Instance of Agusan rendered
judgment (Annex "A") in open court on January 28, 1959, basing said judgment on a
compromise agreement between the parties.

On August 15, 1959, upon petition, the Court of First Instance issued a writ of execution.

Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his
counsel, did not receive a formal and valid notice of said decision, which motion for
reconsideration was denied by the court below in the order of November 14, 1959.

Petitioner now contends that the respondent Judge exceeded in his jurisdiction in
rendering the execution without valid and formal notice of the decision.

A compromise agreement is binding between the parties and becomes the law between
them. (Gonzales vs. Gonzales G.R. No. L-1254, May 21, 1948, 81 Phil. 38; Martin vs.
Martin, G.R. No. L-12439, May 22, 1959) .

It is a general rule in this jurisdiction that a judgment based on a compromise agreement

is not appealable and is immediately executory, unless a motion is filed on the ground
fraud, mistake or duress. (De los Reyes vs. Ugarte, 75 Phil. 505; Lapena vs. Morfe, G.R.
No. L-10089, July 31, 1957)

Petitioner's claim that he was not notified or served notice of the decision is untenable.
The judgment on the compromise agreement rendered by the court below dated January
28, 1959, was given in open court. This alone is a substantial compliance as to notice.
(De los Reyes vs. Ugarte, supra)

IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its
jurisdiction in ordering the execution of the judgment. The petition for certiorari is hereby
dismissed and the writ of preliminary injunction heretofore dissolved, with costs against
the petitioner.

IT IS SO ORDERED.

The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought
sawmill machineries and equipments from respondent Grace Park Engineer domineering, Inc.,
executing a chattel mortgage over said machineries and equipments to secure the payment of
balance of the price remaining unpaid of P32,000.00, which petitioner agreed to pay on
installment basis.

Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering,
Inc. instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin said foreclosure,
petitioner herein instituted Special Civil Case No. 53 in the Court of First Instance of Agusan.
The parties to the case arrived at a compromise agreement and submitted the same in court in
writing, signed by Pastor D. Ago and the Grace Park Engineering, Inc. The Hon. Montano A.
Ortiz, Judge of the Court of First Instance of Agusan, then presiding, dictated a decision in open
court on January 28, 1959.

Petitioner continued to default in his payments as provided in the judgment by compromise, so

Grace Park Engineering, Inc. filed with the lower court a motion for execution, which was
granted by the court on August 15, 1959. A writ of execution, dated September 23, 1959, later
followed.

The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by
the lower court, levied upon and ordered the sale of the sawmill machineries and equipments in
question. These machineries and equipments had been taken to and installed in a sawmill
building located in Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to
whom, petitioner alleges, he had sold them on February 16, 1959 (a date after the decision of
the lower court but before levy by the Sheriff).

Having been advised by the sheriff that the public auction sale was set for December 4, 1959,
petitioner, on December 1, 1959, filed the petition for certiorari and prohibition with preliminary
injunction with respondent Court of Appeals, alleging that a copy of the aforementioned
judgment given in open court on January 28, 1959 was served upon counsel for petitioner only
on September 25, 1959 (writ of execution is dated September 23, 1959); that the order and writ
of execution having been issued by the lower court before counsel for petitioner received a copy
of the judgment, its resultant last order that the "sheriff may now proceed with the sale of the
properties levied constituted a grave abuse of discretion and was in excess of its jurisdiction;
and that the respondent Provincial Sheriff of Surigao was acting illegally upon the allegedly void
writ of execution by levying the same upon the sawmill machineries and equipments which have
become real properties of the Golden Pacific sawmill, Inc., and is about to proceed in selling the
same without prior publication of the notice of sale thereof in some newspaper of general
circulation as required by the Rules of Court.

The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction against the
sheriff but it turned out that the latter had already sold at public auction the machineries in
question, on December 4, 1959, as scheduled. The respondent Grace Park Engineering, Inc.
was the only bidder for P15,000.00, although the certificate sale was not yet executed. The
Court of Appeals constructed the sheriff to suspend the issuance of a certificate of sale of the
said sawmill machineries and equipment sold by him on December 4, 1959 until the final
decision of the case. On November 9, 1960 the Court of Appeals rendered the aforequoted
decision.

Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the
rendition of judgment on compromise in open court on January 1959 was a sufficient notice; and
(2) in not resolving the other issues raised before it, namely, (a) the legality of the public auction
sale made by the sheriff, and (b) the nature of the machineries in question, whether they are
movables or immovables.

The Court of Appeals held that as a judgment was entered by the court below in open court
upon the submission of the compromise agreement, the parties may be considered as having
been notified of said judgment and this fact constitutes due notice of said judgment. This raises
the following legal question: Is the order dictated in open court of the judgment of the court, and
is the fact the petitioner herein was present in open court was the judgment was dictated,
sufficient notice thereof? The provisions of the Rules of Court decree otherwise. Section 1 of
Rule 35 describes the manner in which judgment shall be rendered, thus:

SECTION 1. How judgment rendered. — All judgments determining the merits of cases
shall be in writing personally and directly prepared by the judge, and signed by him,
stating clearly and distinctly the facts and the law on which it is based, filed with the clerk
of the court.

The court of first instance being a court of record, in order that a judgment may be considered
as rendered, must not only be in writing, signed by the judge, but it must also be filed with the
clerk of court. The mere pronouncement of the judgment in open court with the stenographer
taking note thereof does not, therefore, constitute a rendition of the judgment. It is the filing of
the signed decision with the clerk of court that constitutes rendition. While it is to be presumed
that the judgment that was dictated in open court will be the judgment of the court, the court
may still modify said order as the same is being put into writing. And even if the order or
judgment has already been put into writing and signed, while it has not yet been delivered to the
clerk for filing it is still subject to amendment or change by the judge. It is only when the
judgment signed by the judge is actually filed with the clerk of court that it becomes a valid and
binding judgment. Prior thereto, it could still be subject to amendment and change and may not,
therefore, constitute the real judgment of the court.

Regarding the notice of judgment, the mere fact that a party heard the judge dictating the
judgment in open court, is not a valid notice of said judgment. If rendition thereof is constituted
by the filing with the clerk of court of a signed copy (of the judgment), it is evident that the fact
that a party or an attorney heard the order or judgment being dictated in court cannot be
considered as notice of the real judgment. No judgment can be notified to the parties unless it
has previously been rendered. The notice, therefore, that a party has of a judgment that was
being dictated is of no effect because at the time no judgment has as yet been signed by the
judge and filed with the clerk.

Besides, the Rules expressly require that final orders or judgments be served personally or by
registered mail. Section 7 of Rule 27 provides as follows:

SEC. 7. Service of final orders or judgments. — Final orders or judgments shall be

served either personally or by registered mail.

In accordance with this provision, a party is not considered as having been served with the
judgment merely because he heard the judgment dictating the said judgment in open court; it is
necessary that he be served with a copy of the signed judgment that has been filed with the
clerk in order that he may legally be considered as having been served with the judgment.

For all the foregoing, the fact that the petitioner herein heard the trial judge dictating the
judgment in open court, is not sufficient to constitute the service of judgement as required by the
above-quoted section 7 of Rule 2 the signed judgment not having been served upon the
petitioner, said judgment could not be effective upon him (petitioner) who had not received it. It
follows as a consequence that the issuance of the writ of execution null and void, having been
issued before petitioner her was served, personally or by registered mail, a copy of the decision.

The second question raised in this appeal, which has been passed upon by the Court of
Appeals, concerns the validity of the proceedings of the sheriff in selling the sawmill
machineries and equipments at public auction with a notice of the sale having been previously
published.

The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill
machineries and equipments he assigned the same to the Golden Pacific Sawmill, Inc. in
payment of his subscription to the shares of stock of said corporation. Thereafter the sawmill
machinery and equipments were installed in a building and permanently attached to the ground.
By reason of such installment in a building, the said sawmill machineries and equipment
became real estate properties in accordance with the provision of Art. 415 (5) of the Civil Code,
thus:

ART. 415. The following are immovable property:

xxx xxx xxx

(5) Machinery, receptacles, instruments or implements tended by the owner of the

tenement for an industry or works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said industry or works;

This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Cu
Unjieng e Hijos, 61 Phil. 683, held that the installation of the machine and equipment in the
central of the Mabalacat Sugar Co., Inc. for use in connection with the industry carried by the
company, converted the said machinery and equipment into real estate by reason of their
purpose. Paraphrasing language of said decision we hold that by the installment of the sawmill
machineries in the building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried
on in said building, the same became a necessary and permanent part of the building or real
estate on which the same was constructed, converting the said machineries and equipments
into real estate within the meaning of Article 415(5) above-quoted of the Civil Code of the
Philippines.

Considering that the machineries and equipments in question valued at more than P15,000.00
appear to have been sold without the necessary advertisement of sale by publication in a
newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, which is as follows:

SEC. 16. Notice of sale of property on execution. — Before the sale of property on
execution, notice thereof must be given as follows:

xxx xxx xxx

(c) In case of real property, by posting a similar notice particularly describing the
property for twenty days in three public places in the municipality or city where the
property is situated, and also where the property is to be sold, and, if the assessed value
of the property exceeds four hundred pesos, by publishing a copy of the notice once a
week, for the same period, in some newspaper published or having general circulation in
the province, if there be one. If there are newspapers published in the province in both
the English and Spanish languages, then a like publication for a like period shall be
made in one newspaper published in the English language, and in one published in the
Spanish language.

the sale made by the sheriff must be declared null and void.

WHEREFORE, the decision of the Court of Appeals sought to be reviewed is hereby set aside
and We declare that the issuance of the writ of execution in this case against the sawmill
machineries and equipments purchased by petitioner Pastor D. Ago from the Grace Park
Engineering, Inc., as well as the sale of the same by the Sheriff of Surigao, are null and void.
Costs shall be against the respondent Grace Park Engineering, Inc.
G.R. No. L-15334 January 31, 1964

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF

QUEZON CITY, petitioners,
vs.
MANILA ELECTRIC COMPANY, respondent.

Assistant City Attorney Jaime R. Agloro for petitioners.

Ross, Selph and Carrascoso for respondent.

PAREDES, J.:

From the stipulation of facts and evidence adduced during the hearing, the following appear:

On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the
Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric
street railway and electric light, heat and power system in the City of Manila and its suburbs to
the person or persons making the most favorable bid. Charles M. Swift was awarded the said
franchise on March 1903, the terms and conditions of which were embodied in Ordinance No.
44 approved on March 24, 1903. Respondent Manila Electric Co. (Meralco for short), became
the transferee and owner of the franchise.

Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls,
Laguna and is transmitted to the City of Manila by means of electric transmission wires, running
from the province of Laguna to the said City. These electric transmission wires which carry high
voltage current, are fastened to insulators attached on steel towers constructed by respondent
at intervals, from its hydro-electric plant in the province of Laguna to the City of Manila. The
respondent Meralco has constructed 40 of these steel towers within Quezon City, on land
belonging to it. A photograph of one of these steel towers is attached to the petition for review,
marked Annex A. Three steel towers were inspected by the lower court and parties and the
following were the descriptions given there of by said court:

The first steel tower is located in South Tatalon, España Extension, Quezon City. The
findings were as follows: the ground around one of the four posts was excavated to a
depth of about eight (8) feet, with an opening of about one (1) meter in diameter,
decreased to about a quarter of a meter as it we deeper until it reached the bottom of the
post; at the bottom of the post were two parallel steel bars attached to the leg means of
bolts; the tower proper was attached to the leg three bolts; with two cross metals to
prevent mobility; there was no concrete foundation but there was adobe stone
underneath; as the bottom of the excavation was covered with water about three inches
high, it could not be determined with certainty to whether said adobe stone was placed
purposely or not, as the place abounds with this kind of stone; and the tower carried five
high voltage wires without cover or any insulating materials.

The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land
owned by the petitioner approximate more than one kilometer from the first tower. As in
the first tower, the ground around one of the four legs was excavate from seven to eight
(8) feet deep and one and a half (1-½) meters wide. There being very little water at the
bottom, it was seen that there was no concrete foundation, but there soft adobe beneath.
The leg was likewise provided with two parallel steel bars bolted to a square metal frame
also bolted to each corner. Like the first one, the second tower is made up of metal rods
joined together by means of bolts, so that by unscrewing the bolts, the tower could be
dismantled and reassembled.

The third tower examined is located along Kamias Road, Quezon City. As in the first two
towers given above, the ground around the two legs of the third tower was excavated to
a depth about two or three inches beyond the outside level of the steel bar foundation. It
was found that there was no concrete foundation. Like the two previous ones, the bottom
arrangement of the legs thereof were found to be resting on soft adobe, which, probably
due to high humidity, looks like mud or clay. It was also found that the square metal
frame supporting the legs were not attached to any material or foundation.
On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel
towers for real property tax under Tax declaration Nos. 31992 and 15549. After denying
respondent's petition to cancel these declarations, an appeal was taken by respondent to the
Board of Assessment Appeals of Quezon City, which required respondent to pay the amount of
P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956.
Respondent paid the amount under protest, and filed a petition for review in the Court of Tax
Appeals (CTA for short) which rendered a decision on December 29, 1958, ordering the
cancellation of the said tax declarations and the petitioner City Treasurer of Quezon City to
refund to the respondent the sum of P11,651.86. The motion for reconsideration having been
denied, on April 22, 1959, the instant petition for review was filed.

In upholding the cause of respondents, the CTA held that: (1) the steel towers come within the
term "poles" which are declared exempt from taxes under part II paragraph 9 of respondent's
franchise; (2) the steel towers are personal properties and are not subject to real property tax;
and (3) the City Treasurer of Quezon City is held responsible for the refund of the amount paid.
These are assigned as errors by the petitioner in the brief.

The tax exemption privilege of the petitioner is quoted hereunder:

PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings,
plant (not including poles, wires, transformers, and insulators), machinery and personal
property as other persons are or may be hereafter required by law to pay ... Said
percentage shall be due and payable at the time stated in paragraph nineteen of Part
One hereof, ... and shall be in lieu of all taxes and assessments of whatsoever nature
and by whatsoever authority upon the privileges, earnings, income, franchise, and poles,
wires, transformers, and insulators of the grantee from which taxes and assessments the
grantee is hereby expressly exempted. (Par. 9, Part Two, Act No. 484 Respondent's
Franchise; emphasis supplied.)

The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or
timber, as typically the stem of a small tree stripped of its branches; also by extension, a similar
typically cylindrical piece or object of metal or the like". The term also refers to "an upright
standard to the top of which something is affixed or by which something is supported; as a
dovecote set on a pole; telegraph poles; a tent pole; sometimes, specifically a vessel's master
(Webster's New International Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of
Manila, may be seen cylindrical metal poles, cubical concrete poles, and poles of the PLDT Co.
which are made of two steel bars joined together by an interlacing metal rod. They are called
"poles" notwithstanding the fact that they are no made of wood. It must be noted from paragraph
9, above quoted, that the concept of the "poles" for which exemption is granted, is not
determined by their place or location, nor by the character of the electric current it carries, nor
the material or form of which it is made, but the use to which they are dedicated. In accordance
with the definitions, pole is not restricted to a long cylindrical piece of wood or metal, but
includes "upright standards to the top of which something is affixed or by which something is
supported. As heretofore described, respondent's steel supports consists of a framework of four
steel bars or strips which are bound by steel cross-arms atop of which are cross-arms
supporting five high voltage transmission wires (See Annex A) and their sole function is to
support or carry such wires.

The conclusion of the CTA that the steel supports in question are embraced in the term "poles"
is not a novelty. Several courts of last resort in the United States have called these steel
supports "steel towers", and they denominated these supports or towers, as electric poles. In
their decisions the words "towers" and "poles" were used interchangeably, and it is well
understood in that jurisdiction that a transmission tower or pole means the same thing.

In a proceeding to condemn land for the use of electric power wires, in which the law provided
that wires shall be constructed upon suitable poles, this term was construed to mean either
wood or metal poles and in view of the land being subject to overflow, and the necessary
carrying of numerous wires and the distance between poles, the statute was interpreted to
include towers or poles. (Stemmons and Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words
and Phrases, p. 365.)
The term "poles" was also used to denominate the steel supports or towers used by an
association used to convey its electric power furnished to subscribers and members,
constructed for the purpose of fastening high voltage and dangerous electric wires alongside
public highways. The steel supports or towers were made of iron or other metals consisting of
two pieces running from the ground up some thirty feet high, being wider at the bottom than at
the top, the said two metal pieces being connected with criss-cross iron running from the bottom
to the top, constructed like ladders and loaded with high voltage electricity. In form and
structure, they are like the steel towers in question. (Salt River Valley Users' Ass'n v. Compton,
8 P. 2nd, 249-250.)

The term "poles" was used to denote the steel towers of an electric company engaged in the
generation of hydro-electric power generated from its plant to the Tower of Oxford and City of
Waterbury. These steel towers are about 15 feet square at the base and extended to a height of
about 35 feet to a point, and are embedded in the cement foundations sunk in the earth, the top
of which extends above the surface of the soil in the tower of Oxford, and to the towers are
attached insulators, arms, and other equipment capable of carrying wires for the transmission of
electric power (Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).

In a case, the defendant admitted that the structure on which a certain person met his death
was built for the purpose of supporting a transmission wire used for carrying high-tension
electric power, but claimed that the steel towers on which it is carried were so large that their
wire took their structure out of the definition of a pole line. It was held that in defining the word
pole, one should not be governed by the wire or material of the support used, but was
considering the danger from any elevated wire carrying electric current, and that regardless of
the size or material wire of its individual members, any continuous series of structures intended
and used solely or primarily for the purpose of supporting wires carrying electric currents is a
pole line (Inspiration Consolidation Cooper Co. v. Bryan 252 P. 1016).

It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the
petitioner's franchise, should not be given a restrictive and narrow interpretation, as to defeat
the very object for which the franchise was granted. The poles as contemplated thereon, should
be understood and taken as a part of the electric power system of the respondent Meralco, for
the conveyance of electric current from the source thereof to its consumers. If the respondent
would be required to employ "wooden poles", or "rounded poles" as it used to do fifty years
back, then one should admit that the Philippines is one century behind the age of space. It
should also be conceded by now that steel towers, like the ones in question, for obvious
reasons, can better effectuate the purpose for which the respondent's franchise was granted.

Granting for the purpose of argument that the steel supports or towers in question are not
embraced within the termpoles, the logical question posited is whether they
constitute real properties, so that they can be subject to a real property tax. The tax law does
not provide for a definition of real property; but Article 415 of the Civil Code does, by stating the
following are immovable property:

(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;

xxx xxx xxx

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot
be separated therefrom without breaking the material or deterioration of the object;

xxx xxx xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the

tenement for an industry or works which may be carried in a building or on a piece of
land, and which tends directly to meet the needs of the said industry or works;

xxx xxx xxx

The steel towers or supports in question, do not come within the objects mentioned in
paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They
are not construction analogous to buildings nor adhering to the soil. As per description, given by
the lower court, they are removable and merely attached to a square metal frame by means of
bolts, which when unscrewed could easily be dismantled and moved from place to place. They
can not be included under paragraph 3, as they are not attached to an immovable in a fixed
manner, and they can be separated without breaking the material or causing deterioration upon
the object to which they are attached. Each of these steel towers or supports consists of steel
bars or metal strips, joined together by means of bolts, which can be disassembled by
unscrewing the bolts and reassembled by screwing the same. These steel towers or supports
do not also fall under paragraph 5, for they are not machineries, receptacles, instruments or
implements, and even if they were, they are not intended for industry or works on the land.
Petitioner is not engaged in an industry or works in the land in which the steel supports or
towers are constructed.

It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund
the sum of P11,651.86, despite the fact that Quezon City is not a party to the case. It is argued
that as the City Treasurer is not the real party in interest, but Quezon City, which was not a
party to the suit, notwithstanding its capacity to sue and be sued, he should not be ordered to
effect the refund. This question has not been raised in the court below, and, therefore, it cannot
be properly raised for the first time on appeal. The herein petitioner is indulging in legal
technicalities and niceties which do not help him any; for factually, it was he (City Treasurer)
whom had insisted that respondent herein pay the real estate taxes, which respondent paid
under protest. Having acted in his official capacity as City Treasurer of Quezon City, he would
surely know what to do, under the circumstances.

IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the
petitioners.
G.R. No. L-58469 May 16, 1983

MAKATI LEASING and FINANCE CORPORATION, petitioner,

vs.
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF APPEALS, respondents.

Loreto C. Baduan for petitioner.

Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner.

Jose V. Mancella for respondent.

DE CASTRO, J.:

Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate
Appellate Court) promulgated on August 27, 1981 in CA-G.R. No. SP-12731, setting aside
certain Orders later specified herein, of Judge Ricardo J. Francisco, as Presiding Judge of the
Court of First instance of Rizal Branch VI, issued in Civil Case No. 36040, as wen as the
resolution dated September 22, 1981 of the said appellate court, denying petitioner's motion for
reconsideration.

It appears that in order to obtain financial accommodations from herein petitioner Makati
Leasing and Finance Corporation, the private respondent Wearever Textile Mills, Inc.,
discounted and assigned several receivables with the former under a Receivable Purchase
Agreement. To secure the collection of the receivables assigned, private respondent executed a
Chattel Mortgage over certain raw materials inventory as well as a machinery described as an
Artos Aero Dryer Stentering Range.

Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the
properties mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure
failed to gain entry into private respondent's premises and was not able to effect the seizure of
the aforedescribed machinery. Petitioner thereafter filed a complaint for judicial foreclosure with
the Court of First Instance of Rizal, Branch VI, docketed as Civil Case No. 36040, the case
before the lower court.

Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the
enforcement of which was however subsequently restrained upon private respondent's filing of
a motion for reconsideration. After several incidents, the lower court finally issued on February
11, 1981, an order lifting the restraining order for the enforcement of the writ of seizure and an
order to break open the premises of private respondent to enforce said writ. The lower court
reaffirmed its stand upon private respondent's filing of a further motion for reconsideration.

On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private
respondent and removed the main drive motor of the subject machinery.

The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein
private respondent, set aside the Orders of the lower court and ordered the return of the drive
motor seized by the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot
be the subject of replevin, much less of a chattel mortgage, because it is a real property
pursuant to Article 415 of the new Civil Code, the same being attached to the ground by means
of bolts and the only way to remove it from respondent's plant would be to drill out or destroy the
concrete floor, the reason why all that the sheriff could do to enfore the writ was to take the main
drive motor of said machinery. The appellate court rejected petitioner's argument that private
respondent is estopped from claiming that the machine is real property by constituting a chattel
mortgage thereon.

A motion for reconsideration of this decision of the Court of Appeals having been denied,
petitioner has brought the case to this Court for review by writ of certiorari. It is contended by
private respondent, however, that the instant petition was rendered moot and academic by
petitioner's act of returning the subject motor drive of respondent's machinery after the Court of
Appeals' decision was promulgated.

The contention of private respondent is without merit. When petitioner returned the subject
motor drive, it made itself unequivocably clear that said action was without prejudice to a motion
for reconsideration of the Court of Appeals decision, as shown by the receipt duly signed by
respondent's representative. 1 Considering that petitioner has reserved its right to question the
propriety of the Court of Appeals' decision, the contention of private respondent that this petition
has been mooted by such return may not be sustained.

The next and the more crucial question to be resolved in this Petition is whether the machinery
in suit is real or personal property from the point of view of the parties, with petitioner arguing
that it is a personality, while the respondent claiming the contrary, and was sustained by the
appellate court, which accordingly held that the chattel mortgage constituted thereon is null and
void, as contended by said respondent.

A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143 where this
Court, speaking through Justice J.B.L. Reyes, ruled:

Although there is no specific statement referring to the subject house as personal

property, yet by ceding, selling or transferring a property by way of chattel
mortgage defendants-appellants could only have meant to convey the house as
chattel, or at least, intended to treat the same as such, so that they should not
now be allowed to make an inconsistent stand by claiming otherwise. Moreover,
the subject house stood on a rented lot to which defendants-appellants merely
had a temporary right as lessee, and although this can not in itself alone
determine the status of the property, it does so when combined with other factors
to sustain the interpretation that the parties, particularly the mortgagors, intended
to treat the house as personality. Finally, unlike in the Iya cases, Lopez vs.
Orosa, Jr. & Plaza Theatre, Inc. & Leung Yee vs. F.L. Strong Machinery &
Williamson, wherein third persons assailed the validity of the chattel mortgage, it
is the defendants-appellants themselves, as debtors-mortgagors, who are
attacking the validity of the chattel mortgage in this case. The doctrine of
estoppel therefore applies to the herein defendants-appellants, having treated
the subject house as personality.

Examining the records of the instant case, We find no logical justification to exclude the rule out,
as the appellate court did, the present case from the application of the abovequoted
pronouncement. If a house of strong materials, like what was involved in the above Tumalad
case, may be considered as personal property for purposes of executing a chattel mortgage
thereon as long as the parties to the contract so agree and no innocent third party will be
prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its
nature and becomes immobilized only by destination or purpose, may not be likewise treated as
such. This is really because one who has so agreed is estopped from denying the existence of
the chattel mortgage.

In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of
Appeals lays stress on the fact that the house involved therein was built on a land that did not
belong to the owner of such house. But the law makes no distinction with respect to the
ownership of the land on which the house is built and We should not lay down distinctions not
contemplated by law.

It must be pointed out that the characterization of the subject machinery as chattel by the private
respondent is indicative of intention and impresses upon the property the character determined
by the parties. As stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is
undeniable that the parties to a contract may by agreement treat as personal property that
which by nature would be real property, as long as no interest of third parties would be
prejudiced thereby.

Private respondent contends that estoppel cannot apply against it because it had never
represented nor agreed that the machinery in suit be considered as personal property but was
merely required and dictated on by herein petitioner to sign a printed form of chattel mortgage
which was in a blank form at the time of signing. This contention lacks persuasiveness. As aptly
pointed out by petitioner and not denied by the respondent, the status of the subject machinery
as movable or immovable was never placed in issue before the lower court and the Court of
Appeals except in a supplemental memorandum in support of the petition filed in the appellate
court. Moreover, even granting that the charge is true, such fact alone does not render a
contract void ab initio, but can only be a ground for rendering said contract voidable, or
annullable pursuant to Article 1390 of the new Civil Code, by a proper action in court. There is
nothing on record to show that the mortgage has been annulled. Neither is it disclosed that
steps were taken to nullify the same. On the other hand, as pointed out by petitioner and again
not refuted by respondent, the latter has indubitably benefited from said contract. Equity dictates
that one should not benefit at the expense of another. Private respondent could not now
therefore, be allowed to impugn the efficacy of the chattel mortgage after it has benefited
therefrom,

From what has been said above, the error of the appellate court in ruling that the questioned
machinery is real, not personal property, becomes very apparent. Moreover, the case
of Machinery and Engineering Supplies, Inc. v. CA, 96 Phil. 70, heavily relied upon by said court
is not applicable to the case at bar, the nature of the machinery and equipment involved therein
as real properties never having been disputed nor in issue, and they were not the subject of a
Chattel Mortgage. Undoubtedly, the Tumalad case bears more nearly perfect parity with the
instant case to be the more controlling jurisprudential authority.

WHEREFORE, the questioned decision and resolution of the Court of Appeals are hereby
reversed and set aside, and the Orders of the lower court are hereby reinstated, with costs
against the private respondent.
G.R. No. 137705 August 22, 2000

SERG'S PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners,

vs.
PCI LEASING AND FINANCE, INC., respondent.

DECISION

PANGANIBAN, J.:

After agreeing to a contract stipulating that a real or immovable property be considered as

personal or movable, a party is estopped from subsequently claiming otherwise. Hence, such
property is a proper subject of a writ of replevin obtained by the other contracting party.

The Case

Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision1 of the
Court of Appeals (CA)2in CA-GR SP No. 47332 and its February 26, 1999 Resolution3 denying
reconsideration. The decretal portion of the CA Decision reads as follows:

"WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and
Resolution dated March 31, 1998 in Civil Case No. Q-98-33500 are hereby AFFIRMED. The
writ of preliminary injunction issued on June 15, 1998 is hereby LIFTED."4

In its February 18, 1998 Order,5 the Regional Trial Court (RTC) of Quezon City (Branch
218)6 issued a Writ of Seizure.7 The March 18, 1998 Resolution8 denied petitioners’ Motion for
Special Protective Order, praying that the deputy sheriff be enjoined "from seizing immobilized
or other real properties in (petitioners’) factory in Cainta, Rizal and to return to their original
place whatever immobilized machineries or equipments he may have removed."9

The Facts

The undisputed facts are summarized by the Court of Appeals as follows:10

"On February 13, 1998, respondent PCI Leasing and Finance, Inc. ("PCI Leasing" for short) filed
with the RTC-QC a complaint for [a] sum of money (Annex ‘E’), with an application for a writ of
replevin docketed as Civil Case No. Q-98-33500.

"On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ
of replevin (Annex ‘B’) directing its sheriff to seize and deliver the machineries and equipment to
PCI Leasing after 5 days and upon the payment of the necessary expenses.

"On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioner’s factory,
seized one machinery with [the] word that he [would] return for the other machineries.

"On March 25, 1998, petitioners filed a motion for special protective order (Annex ‘C’), invoking
the power of the court to control the conduct of its officers and amend and control its processes,
praying for a directive for the sheriff to defer enforcement of the writ of replevin.

"This motion was opposed by PCI Leasing (Annex ‘F’), on the ground that the properties [were]
still personal and therefore still subject to seizure and a writ of replevin.

"In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as
defined in Article 415 of the Civil Code, the parties’ agreement to the contrary notwithstanding.
They argued that to give effect to the agreement would be prejudicial to innocent third parties.
They further stated that PCI Leasing [was] estopped from treating these machineries as
personal because the contracts in which the alleged agreement [were] embodied [were] totally
sham and farcical.
"On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of
the remaining properties. He was able to take two more, but was prevented by the workers from
taking the rest.

"On April 7, 1998, they went to [the CA] via an original action for certiorari."

Ruling of the Court of Appeals

Citing the Agreement of the parties, the appellate court held that the subject machines were
personal property, and that they had only been leased, not owned, by petitioners. It also ruled
that the "words of the contract are clear and leave no doubt upon the true intention of the
contracting parties." Observing that Petitioner Goquiolay was an experienced businessman who
was "not unfamiliar with the ways of the trade," it ruled that he "should have realized the import
of the document he signed." The CA further held:

"Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon
the case below, since the merits of the whole matter are laid down before us via a petition
whose sole purpose is to inquire upon the existence of a grave abuse of discretion on the part of
the [RTC] in issuing the assailed Order and Resolution. The issues raised herein are proper
subjects of a full-blown trial, necessitating presentation of evidence by both parties. The contract
is being enforced by one, and [its] validity is attacked by the other – a matter x x x which
respondent court is in the best position to determine."

Hence, this Petition.11

The Issues

In their Memorandum, petitioners submit the following issues for our consideration:

"A. Whether or not the machineries purchased and imported by SERG’S became real property
by virtue of immobilization.

B. Whether or not the contract between the parties is a loan or a lease."12

In the main, the Court will resolve whether the said machines are personal, not immovable,
property which may be a proper subject of a writ of replevin. As a preliminary matter, the Court
will also address briefly the procedural points raised by respondent.

The Court’s Ruling

The Petition is not meritorious.

Preliminary Matter:Procedural Questions

Respondent contends that the Petition failed to indicate expressly whether it was being filed
under Rule 45 or Rule 65 of the Rules of Court. It further alleges that the Petition erroneously
impleaded Judge Hilario Laqui as respondent.

There is no question that the present recourse is under Rule 45. This conclusion finds support in
the very title of the Petition, which is "Petition for Review on Certiorari."13

While Judge Laqui should not have been impleaded as a respondent,14 substantial justice
requires that such lapse by itself should not warrant the dismissal of the present Petition. In this
light, the Court deems it proper to remove, motu proprio, the name of Judge Laqui from the
caption of the present case.

Main Issue: Nature of the Subject Machinery

Petitioners contend that the subject machines used in their factory were not proper subjects of
the Writ issued by the RTC, because they were in fact real property. Serious policy
considerations, they argue, militate against a contrary characterization.

Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of
personal property only.15Section 3 thereof reads:

"SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue
an order and the corresponding writ of replevin describing the personal property alleged to be
wrongfully detained and requiring the sheriff forthwith to take such property into his custody."

On the other hand, Article 415 of the Civil Code enumerates immovable or real property as
follows:

"ART. 415. The following are immovable property:

xxx xxx xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement
for an industry or works which may be carried on in a building or on a piece of land, and which
tend directly to meet the needs of the said industry or works;

xxx xxx x x x"

In the present case, the machines that were the subjects of the Writ of Seizure were placed by
petitioners in the factory built on their own land. Indisputably, they were essential and principal
elements of their chocolate-making industry. Hence, although each of them was movable or
personal property on its own, all of them have become "immobilized by destination because
they are essential and principal elements in the industry."16 In that sense, petitioners are correct
in arguing that the said machines are real, not personal, property pursuant to Article 415 (5) of
the Civil Code.17

Be that as it may, we disagree with the submission of the petitioners that the said machines are
not proper subjects of the Writ of Seizure.

The Court has held that contracting parties may validly stipulate that a real property be
considered as personal.18After agreeing to such stipulation, they are consequently estopped
from claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily
precluded from denying the truth of any material fact found therein.

Hence, in Tumalad v. Vicencio,19 the Court upheld the intention of the parties to treat a house as
a personal property because it had been made the subject of a chattel mortgage. The Court
ruled:

"x x x. Although there is no specific statement referring to the subject house as personal
property, yet by ceding, selling or transferring a property by way of chattel mortgage
defendants-appellants could only have meant to convey the house as chattel, or at least,
intended to treat the same as such, so that they should not now be allowed to make an
inconsistent stand by claiming otherwise."

Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile
Mills20 also held that the machinery used in a factory and essential to the industry, as in the
present case, was a proper subject of a writ of replevin because it was treated as personal
property in a contract. Pertinent portions of the Court’s ruling are reproduced hereunder:

"x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be
considered as personal property for purposes of executing a chattel mortgage thereon as long
as the parties to the contract so agree and no innocent third party will be prejudiced thereby,
there is absolutely no reason why a machinery, which is movable in its nature and becomes
immobilized only by destination or purpose, may not be likewise treated as such. This is really
because one who has so agreed is estopped from denying the existence of the chattel
mortgage."

In the present case, the Lease Agreement clearly provides that the machines in question are to
be considered as personal property. Specifically, Section 12.1 of the Agreement reads as
follows:21

"12.1 The PROPERTY is, and shall at all times be and remain, personal property
notwithstanding that the PROPERTY or any part thereof may now be, or hereafter become, in
any manner affixed or attached to or embedded in, or permanently resting upon, real property or
any building thereon, or attached in any manner to what is permanent."

Clearly then, petitioners are estopped from denying the characterization of the subject machines
as personal property. Under the circumstances, they are proper subjects of the Writ of Seizure.

It should be stressed, however, that our holding -- that the machines should be deemed
personal property pursuant to the Lease Agreement – is good only insofar as the contracting
parties are concerned.22 Hence, while the parties are bound by the Agreement, third persons
acting in good faith are not affected by its stipulation characterizing the subject machinery as
personal.23 In any event, there is no showing that any specific third party would be adversely
affected.

Validity of the Lease Agreement

In their Memorandum, petitioners contend that the Agreement is a loan and not a
lease.24 Submitting documents supposedly showing that they own the subject machines,
petitioners also argue in their Petition that the Agreement suffers from "intrinsic ambiguity which
places in serious doubt the intention of the parties and the validity of the lease agreement
itself."25 In their Reply to respondent’s Comment, they further allege that the Agreement is
invalid.26

These arguments are unconvincing. The validity and the nature of the contract are the lis
mota of the civil action pending before the RTC. A resolution of these questions, therefore, is
effectively a resolution of the merits of the case. Hence, they should be threshed out in the trial,
not in the proceedings involving the issuance of the Writ of Seizure.

Indeed, in La Tondeña Distillers v. CA,27 the Court explained that the policy under Rule 60 was
that questions involving title to the subject property – questions which petitioners are now
raising -- should be determined in the trial. In that case, the Court noted that the remedy of
defendants under Rule 60 was either to post a counter-bond or to question the sufficiency of the
plaintiff’s bond. They were not allowed, however, to invoke the title to the subject property. The
Court ruled:

"In other words, the law does not allow the defendant to file a motion to dissolve or discharge
the writ of seizure (or delivery) on ground of insufficiency of the complaint or of the grounds
relied upon therefor, as in proceedings on preliminary attachment or injunction, and thereby put
at issue the matter of the title or right of possession over the specific chattel being replevied, the
policy apparently being that said matter should be ventilated and determined only at the trial on
the merits."28

Besides, these questions require a determination of facts and a presentation of evidence, both
of which have no place in a petition for certiorari in the CA under Rule 65 or in a petition for
review in this Court under Rule 45.29

Reliance on the Lease Agreement

It should be pointed out that the Court in this case may rely on the Lease Agreement, for
nothing on record shows that it has been nullified or annulled. In fact, petitioners assailed it first
only in the RTC proceedings, which had ironically been instituted by respondent. Accordingly, it
must be presumed valid and binding as the law between the parties.
Makati Leasing and Finance Corporation30 is also instructive on this point. In that case, the Deed
of Chattel Mortgage, which characterized the subject machinery as personal property, was also
assailed because respondent had allegedly been required "to sign a printed form of chattel
mortgage which was in a blank form at the time of signing." The Court rejected the argument
and relied on the Deed, ruling as follows:

"x x x. Moreover, even granting that the charge is true, such fact alone does not render a
contract void ab initio, but can only be a ground for rendering said contract voidable, or
annullable pursuant to Article 1390 of the new Civil Code, by a proper action in court. There is
nothing on record to show that the mortgage has been annulled. Neither is it disclosed that
steps were taken to nullify the same. x x x"

Alleged Injustice Committed on the Part of Petitioners

Petitioners contend that "if the Court allows these machineries to be seized, then its workers
would be out of work and thrown into the streets."31 They also allege that the seizure would
nullify all efforts to rehabilitate the corporation.

Petitioners’ arguments do not preclude the implementation of the Writ.1âwphi1 As earlier

discussed, law and jurisprudence support its propriety. Verily, the above-mentioned
consequences, if they come true, should not be blamed on this Court, but on the petitioners for
failing to avail themselves of the remedy under Section 5 of Rule 60, which allows the filing of a
counter-bond. The provision states:

"SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicant’s
bond, or of the surety or sureties thereon, he cannot immediately require the return of the
property, but if he does not so object, he may, at any time before the delivery of the property to
the applicant, require the return thereof, by filing with the court where the action is pending a
bond executed to the applicant, in double the value of the property as stated in the applicant’s
affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the
payment of such sum to him as may be recovered against the adverse party, and by serving a
copy bond on the applicant."

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

SO ORDERED.
G.R. No. L-30173 September 30, 1971

GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees,

vs.
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants.

Castillo & Suck for plaintiffs-appellees.

Jose Q. Calingo for defendants-appellants.

REYES, J.B.L., J.:

Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-R) for the reason that
only questions of law are involved.

This case was originally commenced by defendants-appellants in the municipal court of Manila
in Civil Case No. 43073, for ejectment. Having lost therein, defendants-appellants appealed to
the court a quo (Civil Case No. 30993) which also rendered a decision against them, the
dispositive portion of which follows:

WHEREFORE, the court hereby renders judgment in favor of the plaintiffs and
against the defendants, ordering the latter to pay jointly and severally the former
a monthly rent of P200.00 on the house, subject-matter of this action, from March
27, 1956, to January 14, 1967, with interest at the legal rate from April 18, 1956,
the filing of the complaint, until fully paid, plus attorney's fees in the sum of
P300.00 and to pay the costs.

It appears on the records that on 1 September 1955 defendants-appellants executed a chattel

mortgage in favor of plaintiffs-appellees over their house of strong materials located at No. 550
Int. 3, Quezon Boulevard, Quiapo, Manila, over Lot Nos. 6-B and 7-B, Block No. 2554, which
were being rented from Madrigal & Company, Inc. The mortgage was registered in the Registry
of Deeds of Manila on 2 September 1955. The herein mortgage was executed to guarantee a
loan of P4,800.00 received from plaintiffs-appellees, payable within one year at 12% per annum.
The mode of payment was P150.00 monthly, starting September, 1955, up to July 1956, and
the lump sum of P3,150 was payable on or before August, 1956. It was also agreed that default
in the payment of any of the amortizations, would cause the remaining unpaid balance to
becomeimmediately due and Payable and —

the Chattel Mortgage will be enforceable in accordance with the provisions of

Special Act No. 3135, and for this purpose, the Sheriff of the City of Manila or
any of his deputies is hereby empowered and authorized to sell all the
Mortgagor's property after the necessary publication in order to settle the
financial debts of P4,800.00, plus 12% yearly interest, and attorney's fees... 2

When defendants-appellants defaulted in paying, the mortgage was extrajudicially foreclosed,

and on 27 March 1956, the house was sold at public auction pursuant to the said contract. As
highest bidder, plaintiffs-appellees were issued the corresponding certificate of
sale.3 Thereafter, on 18 April 1956, plaintiffs-appellant commenced Civil Case No. 43073 in the
municipal court of Manila, praying, among other things, that the house be vacated and its
possession surrendered to them, and for defendants-appellants to pay rent of P200.00 monthly
from 27 March 1956 up to the time the possession is surrendered.4 On 21 September 1956, the
municipal court rendered its decision —

... ordering the defendants to vacate the premises described in the complaint;
ordering further to pay monthly the amount of P200.00 from March 27, 1956, until
such (time that) the premises is (sic) completely vacated; plus attorney's fees of
P100.00 and the costs of the suit.5
Defendants-appellants, in their answers in both the municipal court and court a quo impugned
the legality of the chattel mortgage, claiming that they are still the owners of the house; but they
waived the right to introduce evidence, oral or documentary. Instead, they relied on their
memoranda in support of their motion to dismiss, predicated mainly on the grounds that: (a) the
municipal court did not have jurisdiction to try and decide the case because (1) the issue
involved, is ownership, and (2) there was no allegation of prior possession; and (b) failure to
prove prior demand pursuant to Section 2, Rule 72, of the Rules of Court.6

During the pendency of the appeal to the Court of First Instance, defendants-appellants failed to
deposit the rent for November, 1956 within the first 10 days of December, 1956 as ordered in
the decision of the municipal court. As a result, the court granted plaintiffs-appellees' motion for
execution, and it was actually issued on 24 January 1957. However, the judgment regarding the
surrender of possession to plaintiffs-appellees could not be executed because the subject
house had been already demolished on 14 January 1957 pursuant to the order of the court in a
separate civil case (No. 25816) for ejectment against the present defendants for non-payment of
rentals on the land on which the house was constructed.

The motion of plaintiffs for dismissal of the appeal, execution of the supersedeas bond and
withdrawal of deposited rentals was denied for the reason that the liability therefor was
disclaimed and was still being litigated, and under Section 8, Rule 72, rentals deposited had to
be held until final disposition of the appeal.7

On 7 October 1957, the appellate court of First Instance rendered its decision, the dispositive
portion of which is quoted earlier. The said decision was appealed by defendants to the Court of
Appeals which, in turn, certified the appeal to this Court. Plaintiffs-appellees failed to file a brief
and this appeal was submitted for decision without it.

Defendants-appellants submitted numerous assignments of error which can be condensed into

two questions, namely: .

(a) Whether the municipal court from which the case originated had jurisdiction to
adjudicate the same;

(b) Whether the defendants are, under the law, legally bound to pay rentals to the
plaintiffs during the period of one (1) year provided by law for the redemption of
the extrajudicially foreclosed house.

We will consider these questions seriatim.

(a) Defendants-appellants mortgagors question the jurisdiction of the municipal court from which
the case originated, and consequently, the appellate jurisdiction of the Court of First Instance a
quo, on the theory that the chattel mortgage is void ab initio; whence it would follow that the
extrajudicial foreclosure, and necessarily the consequent auction sale, are also void. Thus, the
ownership of the house still remained with defendants-appellants who are entitled to possession
and not plaintiffs-appellees. Therefore, it is argued by defendants-appellants, the issue of
ownership will have to be adjudicated first in order to determine possession. lt is contended
further that ownership being in issue, it is the Court of First Instance which has jurisdiction and
not the municipal court.

Defendants-appellants predicate their theory of nullity of the chattel mortgage on two grounds,
which are: (a) that, their signatures on the chattel mortgage were obtained through fraud, deceit,
or trickery; and (b) that the subject matter of the mortgage is a house of strong materials, and,
being an immovable, it can only be the subject of a real estate mortgage and not a chattel
mortgage.

On the charge of fraud, deceit or trickery, the Court of First Instance found defendants-
appellants' contentions as not supported by evidence and accordingly dismissed the
charge,8 confirming the earlier finding of the municipal court that "the defense of ownership as
well as the allegations of fraud and deceit ... are mere allegations."9
It has been held in Supia and Batiaco vs. Quintero and Ayala10 that "the answer is a mere
statement of the facts which the party filing it expects to prove, but it is not evidence;11 and
further, that when the question to be determined is one of title, the Court is given the authority to
proceed with the hearing of the cause until this fact is clearly established. In the case of Sy vs.
Dalman,12 wherein the defendant was also a successful bidder in an auction sale, it was
likewise held by this Court that in detainer cases the aim of ownership "is a matter of defense
and raises an issue of fact which should be determined from the evidence at the trial." What
determines jurisdiction are the allegations or averments in the complaint and the relief asked
for. 13

Moreover, even granting that the charge is true, fraud or deceit does not render a contract
void ab initio, and can only be a ground for rendering the contract voidable or annullable
pursuant to Article 1390 of the New Civil Code, by a proper action in court. 14 There is nothing
on record to show that the mortgage has been annulled. Neither is it disclosed that steps were
taken to nullify the same. Hence, defendants-appellants' claim of ownership on the basis of a
voidable contract which has not been voided fails.

It is claimed in the alternative by defendants-appellants that even if there was no fraud, deceit or
trickery, the chattel mortgage was still null and void ab initio because only personal properties
can be subject of a chattel mortgage. The rule about the status of buildings as immovable
property is stated in Lopez vs. Orosa, Jr. and Plaza Theatre Inc.,15cited in Associated Insurance
Surety Co., Inc. vs. Iya, et al. 16 to the effect that —

... it is obvious that the inclusion of the building, separate and distinct from the
land, in the enumeration of what may constitute real properties (art. 415, New
Civil Code) could only mean one thing — that a building is by itself an immovable
property irrespective of whether or not said structure and the land on which it is
adhered to belong to the same owner.

Certain deviations, however, have been allowed for various reasons. In the case of Manarang
and Manarang vs. Ofilada,17 this Court stated that "it is undeniable that the parties to a contract
may by agreement treat as personal property that which by nature would be real property",
citing Standard Oil Company of New York vs. Jaramillo. 18 In the latter case, the mortgagor
conveyed and transferred to the mortgagee by way of mortgage "the following
described personal property." 19 The "personal property" consisted of leasehold rights and a
building. Again, in the case of Luna vs. Encarnacion,20 the subject of the contract designated as
Chattel Mortgage was a house of mixed materials, and this Court hold therein that it was a valid
Chattel mortgage because it was so expressly designated and specifically that the property
given as security "is a house of mixed materials, which by its very nature is considered personal
property." In the later case of Navarro vs. Pineda,21 this Court stated that —

The view that parties to a deed of chattel mortgage may agree to consider a
house as personal property for the purposes of said contract, "is good only
insofar as the contracting parties are concerned. It is based, partly, upon the
principle of estoppel" (Evangelista vs. Alto Surety, No. L-11139, 23 April 1958). In
a case, a mortgaged house built on a rented land was held to be a personal
property, not only because the deed of mortgage considered it as such, but also
because it did not form part of the land (Evangelists vs. Abad, [CA]; 36 O.G.
2913), for it is now settled that an object placed on land by one who had only a
temporary right to the same, such as the lessee or usufructuary, does not
become immobilized by attachment (Valdez vs. Central Altagracia, 222 U.S. 58,
cited in Davao Sawmill Co., Inc. vs. Castillo, et al., 61 Phil. 709). Hence, if a
house belonging to a person stands on a rented land belonging to another
person, it may be mortgaged as a personal property as so stipulated in the
document of mortgage. (Evangelista vs. Abad, Supra.) It should be noted,
however that the principle is predicated on statements by the owner declaring his
house to be a chattel, a conduct that may conceivably estop him from
subsequently claiming otherwise. (Ladera vs. C.N. Hodges, [CA] 48 O.G.
5374): 22
In the contract now before Us, the house on rented land is not only expressly designated as
Chattel Mortgage; it specifically provides that "the mortgagor ... voluntarily CEDES, SELLS and
TRANSFERS by way of Chattel Mortgage23 the property together with its leasehold rights over
the lot on which it is constructed and participation ..." 24 Although there is no specific statement
referring to the subject house as personal property, yet by ceding, selling or transferring a
property by way of chattel mortgage defendants-appellants could only have meant to convey the
house as chattel, or at least, intended to treat the same as such, so that they should not now be
allowed to make an inconsistent stand by claiming otherwise. Moreover, the subject house
stood on a rented lot to which defendats-appellants merely had a temporary right as lessee, and
although this can not in itself alone determine the status of the property, it does so when
combined with other factors to sustain the interpretation that the parties, particularly the
mortgagors, intended to treat the house as personalty. Finally unlike in the Iya cases, Lopez vs.
Orosa, Jr. and Plaza Theatre, Inc. 25 and Leung Yee vs. F. L. Strong Machinery and
Williamson, 26 wherein third persons assailed the validity of the chattel mortgage,27 it is the
defendants-appellants themselves, as debtors-mortgagors, who are attacking the validity of the
chattel mortgage in this case. The doctrine of estoppel therefore applies to the herein
defendants-appellants, having treated the subject house as personalty.

(b) Turning to the question of possession and rentals of the premises in question. The Court of
First Instance noted in its decision that nearly a year after the foreclosure sale the mortgaged
house had been demolished on 14 and 15 January 1957 by virtue of a decision obtained by the
lessor of the land on which the house stood. For this reason, the said court limited itself to
sentencing the erstwhile mortgagors to pay plaintiffs a monthly rent of P200.00 from 27 March
1956 (when the chattel mortgage was foreclosed and the house sold) until 14 January 1957
(when it was torn down by the Sheriff), plus P300.00 attorney's fees.

Appellants mortgagors question this award, claiming that they were entitled to remain in
possession without any obligation to pay rent during the one year redemption period after the
foreclosure sale, i.e., until 27 March 1957. On this issue, We must rule for the appellants.

Chattel mortgages are covered and regulated by the Chattel Mortgage Law, Act No.
1508.28 Section 14 of this Act allows the mortgagee to have the property mortgaged sold at
public auction through a public officer in almost the same manner as that allowed by Act No.
3135, as amended by Act No. 4118, provided that the requirements of the law relative to notice
and registration are complied with. 29 In the instant case, the parties specifically stipulated that
"the chattel mortgage will be enforceable in accordance with the provisions of Special Act No.
3135 ... ." 30(Emphasis supplied).

Section 6 of the Act referred to 31 provides that the debtor-mortgagor (defendants-appellants

herein) may, at any time within one year from and after the date of the auction sale, redeem the
property sold at the extra judicial foreclosure sale. Section 7 of the same Act 32 allows the
purchaser of the property to obtain from the court the possession during the period of
redemption: but the same provision expressly requires the filing of a petition with the proper
Court of First Instance and the furnishing of a bond. It is only upon filing of the proper motion
and the approval of the corresponding bond that the order for a writ of possession issues as a
matter of course. No discretion is left to the court. 33 In the absence of such a compliance, as in
the instant case, the purchaser can not claim possession during the period of redemption as a
matter of right. In such a case, the governing provision is Section 34, Rule 39, of the Revised
Rules of Court 34 which also applies to properties purchased in extrajudicial foreclosure
proceedings.35 Construing the said section, this Court stated in the aforestated case of Reyes
vs. Hamada.

In other words, before the expiration of the 1-year period within which the
judgment-debtor or mortgagor may redeem the property, the purchaser thereof is
not entitled, as a matter of right, to possession of the same. Thus, while it is true
that the Rules of Court allow the purchaser to receive the rentals if the purchased
property is occupied by tenants, he is, nevertheless, accountable to the
judgment-debtor or mortgagor as the case may be, for the amount so received
and the same will be duly credited against the redemption price when the said
debtor or mortgagor effects the redemption. Differently stated, the rentals
receivable from tenants, although they may be collected by the purchaser during
the redemption period, do not belong to the latter but still pertain to the debtor of
 mortgagor. The rationale for the Rule, it seems, is to secure for the benefit of the
debtor or mortgagor, the payment of the redemption amount and the consequent
return to him of his properties sold at public auction. (Emphasis supplied)

The Hamada case reiterates the previous ruling in Chan vs. Espe.36

Since the defendants-appellants were occupying the house at the time of the auction sale, they
are entitled to remain in possession during the period of redemption or within one year from and
after 27 March 1956, the date of the auction sale, and to collect the rents or profits during the
said period.

It will be noted further that in the case at bar the period of redemption had not yet expired when
action was instituted in the court of origin, and that plaintiffs-appellees did not choose to take
possession under Section 7, Act No. 3135, as amended, which is the law selected by the parties
to govern the extrajudicial foreclosure of the chattel mortgage. Neither was there an allegation
to that effect. Since plaintiffs-appellees' right to possess was not yet born at the filing of the
complaint, there could be no violation or breach thereof. Wherefore, the original complaint
stated no cause of action and was prematurely filed. For this reason, the same should be
ordered dismissed, even if there was no assignment of error to that effect. The Supreme Court
is clothed with ample authority to review palpable errors not assigned as such if it finds that their
consideration is necessary in arriving at a just decision of the cases. 37

It follows that the court below erred in requiring the mortgagors to pay rents for the year
following the foreclosure sale, as well as attorney's fees.

FOR THE FOREGOING REASONS, the decision appealed from is reversed and another one
entered, dismissing the complaint. With costs against plaintiffs-appellees.
G.R. Nos. L-10817-18 February 28, 1958

ENRIQUE LOPEZ, petitioner,

vs.
VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.

Nicolas Belmonte and Benjamin T. de Peralta for petitioner.

Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co., Inc. Jose B. Macatangay
for respondent Plaza Theatre, Inc.

FELIX, J.:

Enrique Lopez is a resident of Balayan, Batangas, doing business under the trade name of
Lopez-Castelo Sawmill. Sometime in May, 1946, Vicente Orosa, Jr., also a resident of the same
province, dropped at Lopez' house and invited him to make an investment in the theatre
business. It was intimated that Orosa, his family and close friends were organizing a corporation
to be known as Plaza Theatre, Inc., that would engage in such venture. Although Lopez
expressed his unwillingness to invest of the same, he agreed to supply the lumber necessary for
the construction of the proposed theatre, and at Orosa's behest and assurance that the latter
would be personally liable for any account that the said construction might incur, Lopez further
agreed that payment therefor would be on demand and not cash on delivery basis. Pursuant to
said verbal agreement, Lopez delivered the lumber which was used for the construction of the
Plaza Theatre on May 17, 1946, up to December 4 of the same year. But of the total cost of the
materials amounting to P62,255.85, Lopez was paid only P20,848.50, thus leaving a balance of
P41,771.35.

We may state at this juncture that the Plaza Theatre was erected on a piece of land with an
area of 679.17 square meters formerly owned by Vicente Orosa, Jr., and was acquired by the
corporation on September 25, 1946, for P6,000. As Lopez was pressing Orosa for payment of
the remaining unpaid obligation, the latter and Belarmino Rustia, the president of the
corporation, promised to obtain a bank loan by mortgaging the properties of the Plaza Theatre.,
out of which said amount of P41,771.35 would be satisfied, to which assurance Lopez had to
accede. Unknown to him, however, as early as November, 1946, the corporation already got a
loan for P30,000 from the Philippine National Bank with the Luzon Surety Company as surety,
and the corporation in turn executed a mortgage on the land and building in favor of said
company as counter-security. As the land at that time was not yet brought under the operation
of the Torrens System, the mortgage on the same was registered on November 16, 1946, under
Act No. 3344. Subsequently, when the corporation applied for the registration of the land under
Act 496, such mortgage was not revealed and thus Original Certificate of Title No. O-391 was
correspondingly issued on October 25, 1947, without any encumbrance appearing thereon.

Persistent demand from Lopez for the payment of the amount due him caused Vicente Orosa,
Jr. to execute on March 17, 1947, an alleged "deed of assignment" of his 420 shares of stock of
the Plaza Theater, Inc., at P100 per share or with a total value of P42,000 in favor of the
creditor, and as the obligation still remained unsettled, Lopez filed on November 12, 1947, a
complaint with the Court of First Instance of Batangas (Civil Case No. 4501 which later became
R-57) against Vicente Orosa, Jr. and Plaza Theater, Inc., praying that defendants be sentenced
to pay him jointly and severally the sum of P41,771.35, with legal interest from the firing of the
action; that in case defendants fail to pay the same, that the building and the land covered by
OCT No. O-391 owned by the corporation be sold at public auction and the proceeds thereof be
applied to said indebtedness; or that the 420 shares of the capital stock of the Plaza Theatre,
Inc., assigned by Vicente Orosa, Jr., to said plaintiff be sold at public auction for the same
purpose; and for such other remedies as may be warranted by the circumstances. Plaintiff also
caused the annotation of a notice of lis pendens on said properties with the Register of Deeds.

Defendants Vicente Orosa, Jr. and Plaza Theatre, Inc., filed separate answers, the first denying
that the materials were delivered to him as a promoter and later treasurer of the corporation,
because he had purchased and received the same on his personal account; that the land on
which the movie house was constructed was not charged with a lien to secure the payment of
the aforementioned unpaid obligation; and that the 420 shares of stock of the Plaza Theatre,
Inc., was not assigned to plaintiff as collaterals but as direct security for the payment of his
indebtedness. As special defense, this defendant contended that as the 420 shares of stock
assigned and conveyed by the assignor and accepted by Lopez as direct security for the
payment of the amount of P41,771.35 were personal properties, plaintiff was barred from
recovering any deficiency if the proceeds of the sale thereof at public auction would not be
sufficient to cover and satisfy the obligation. It was thus prayed that he be declared exempted
from the payment of any deficiency in case the proceeds from the sale of said personal
properties would not be enough to cover the amount sought to be collected.

Defendant Plaza Theatre, Inc., on the other hand, practically set up the same line of defense by
alleging that the building materials delivered to Orosa were on the latter's personal account; and
that there was no understanding that said materials would be paid jointly and severally by Orosa
and the corporation, nor was a lien charged on the properties of the latter to secure payment of
the same obligation. As special defense, defendant corporation averred that while it was true
that the materials purchased by Orosa were sold by the latter to the corporation, such
transactions were in good faith and for valuable consideration thus when plaintiff failed to claim
said materials within 30 days from the time of removal thereof from Orosa, lumber became a
different and distinct specie and plaintiff lost whatever rights he might have in the same and
consequently had no recourse against the Plaza Theatre, Inc., that the claim could not have
been refectionary credit, for such kind of obligation referred to an indebtedness incurred in the
repair or reconstruction of something already existing and this concept did not include an
entirely new work; and that the Plaza Theatre, Inc., having been incorporated on October 14,
1946, it could not have contracted any obligation prior to said date. It was, therefore, prayed that
the complaint be dismissed; that said defendant be awarded the sum P 5,000 for damages, and
such other relief as may be just and proper in the premises.

The surety company, in the meantime, upon discovery that the land was already registered
under the Torrens System and that there was a notice of lis pendens thereon, filed on August
17, 1948, or within the 1-year period after the issuance of the certificate of title, a petition for
review of the decree of the land registration court dated October 18, 1947, which was made the
basis of OCT No. O-319, in order to annotate the rights and interests of the surety company
over said properties (Land Registration Case No. 17 GLRO Rec. No. 296). Opposition thereto
was offered by Enrique Lopez, asserting that the amount demanded by him constituted a
preferred lien over the properties of the obligors; that the surety company was guilty of
negligence when it failed to present an opposition to the application for registration of the
property; and that if any violation of the rights and interest of said surety would ever be made,
same must be subject to the lien in his favor.

The two cases were heard jointly and in a decision dated October 30, 1952, the lower Court,
after making an exhaustive and detailed analysis of the respective stands of the parties and the
evidence adduced at the trial, held that defendants Vicente Orosa, Jr., and the Plaza Theatre,
Inc., were jointly liable for the unpaid balance of the cost of lumber used in the construction of
the building and the plaintiff thus acquired the materialman's lien over the same. In making the
pronouncement that the lien was merely confined to the building and did not extend to the land
on which the construction was made, the trial judge took into consideration the fact that when
plaintiff started the delivery of lumber in May, 1946, the land was not yet owned by the
corporation; that the mortgage in favor of Luzon Surety Company was previously registered
under Act No. 3344; that the codal provision (Art. 1923 of the old Spanish Civil Code) specifying
that refection credits are preferred could refer only to buildings which are also classified as real
properties, upon which said refection was made. It was, however, declared that plaintiff's lien on
the building was superior to the right of the surety company. And finding that the Plaza Theatre,
Inc., had no objection to the review of the decree issued in its favor by the land registration court
and the inclusion in the title of the encumbrance in favor of the surety company, the court a
quo granted the petition filed by the latter company. Defendants Orosa and the Plaza Theatre,
Inc., were thus required to pay jointly the amount of P41,771.35 with legal interest and costs
within 90 days from notice of said decision; that in case of default, the 420 shares of stock
assigned by Orosa to plaintiff be sold at public auction and the proceeds thereof be applied to
the payment of the amount due the plaintiff, plus interest and costs; and that the encumbrance
in favor of the surety company be endorsed at the back of OCT No. O-391, with notation I that
with respect to the building, said mortgage was subject to the materialman's lien in favor of
Enrique Lopez.
Plaintiff tried to secure a modification of the decision in so far as it declared that the obligation of
therein defendants was joint instead of solidary, and that the lien did not extend to the land, but
same was denied by order the court of December 23, 1952. The matter was thus appealed to
the Court of appeals, which affirmed the lower court's ruling, and then to this Tribunal. In this
instance, plaintiff-appellant raises 2 issues: (1) whether a materialman's lien for the value of the
materials used in the construction of a building attaches to said structure alone and does not
extend to the land on which the building is adhered to; and (2) whether the lower court and the
Court of Appeals erred in not providing that the material mans liens is superior to the mortgage
executed in favor surety company not only on the building but also on the land.

It is to be noted in this appeal that Enrique Lopez has not raised any question against the part of
the decision sentencing defendants Orosa and Plaza Theatre, Inc., to pay jointly the sum of
P41,771.35, so We will not take up or consider anything on that point. Appellant, however,
contends that the lien created in favor of the furnisher of the materials used for the construction,
repair or refection of a building, is also extended to the land which the construction was made,
and in support thereof he relies on Article 1923 of the Spanish Civil Code, pertinent law on the
matter, which reads as follows:

ART. 1923. With respect to determinate real property and real rights of the debtor, the
following are preferred:

xxx xxx xxx

5. Credits for refection, not entered or recorded, with respect to the estate upon which
the refection was made, and only with respect to other credits different from those
mentioned in four preceding paragraphs.

It is argued that in view of the employment of the phrase real estate, or immovable property, and
inasmuch as said provision does not contain any specification delimiting the lien to the building,
said article must be construed as to embrace both the land and the building or structure
adhering thereto. We cannot subscribe to this view, for while it is true that generally, real estate
connotes the land and the building constructed thereon, it is obvious that the inclusion of the
building, separate and distinct from the land, in the enumeration of what may constitute real
properties1 could mean only one thing — that a building is by itself an immovable property, a
doctrine already pronounced by this Court in the case of Leung Yee vs. Strong Machinery Co.,
37 Phil., 644. Moreover, and in view of the absence of any specific provision of law to the
contrary, a building is an immovable property, irrespective of whether or not said structure and
the land on which it is adhered to belong to the same owner.

A close examination of the provision of the Civil Code invoked by appellant reveals that the law
gives preference to unregistered refectionary credits only with respect to the real estate upon
which the refection or work was made. This being so, the inevitable conclusion must be that the
lien so created attaches merely to the immovable property for the construction or repair of which
the obligation was incurred. Evidently, therefore, the lien in favor of appellant for the unpaid
value of the lumber used in the construction of the building attaches only to said structure and to
no other property of the obligors.

Considering the conclusion thus arrived at, i.e., that the materialman's lien could be charged
only to the building for which the credit was made or which received the benefit of refection, the
lower court was right in, holding at the interest of the mortgagee over the land is superior and
cannot be made subject to the said materialman's lien.

Wherefore, and on the strength of the foregoing considerations, the decision appealed from is
hereby affirmed, with costs against appellant. It is so ordered.
G.R. No. 168557 February 16, 2007

FELS ENERGY, INC., Petitioner,

vs.
THE PROVINCE OF BATANGAS and

THE OFFICE OF THE PROVINCIAL ASSESSOR OF BATANGAS, Respondents.

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

G.R. No. 170628 February 16, 2007

NATIONAL POWER CORPORATION, Petitioner,

vs.
LOCAL BOARD OF ASSESSMENT APPEALS OF BATANGAS, LAURO C. ANDAYA, in his
capacity as the Assessor of the Province of Batangas, and the PROVINCE OF
BATANGAS represented by its Provincial Assessor, Respondents.

DECISION

CALLEJO, SR., J.:

Before us are two consolidated cases docketed as G.R. No. 168557 and G.R. No. 170628,
which were filed by petitioners FELS Energy, Inc. (FELS) and National Power Corporation
(NPC), respectively. The first is a petition for review on certiorari assailing the August 25, 2004
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 67490 and its Resolution2 dated June
20, 2005; the second, also a petition for review on certiorari, challenges the February 9, 2005
Decision3 and November 23, 2005 Resolution4 of the CA in CA-G.R. SP No. 67491. Both
petitions were dismissed on the ground of prescription.

The pertinent facts are as follows:

On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW
diesel engine power barges moored at Balayan Bay in Calaca, Batangas. The contract,
denominated as an Energy Conversion Agreement5 (Agreement), was for a period of five years.
Article 10 reads:

10.1 RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all taxes, import
duties, fees, charges and other levies imposed by the National Government of the Republic of
the Philippines or any agency or instrumentality thereof to which POLAR may be or become
subject to or in relation to the performance of their obligations under this agreement (other than
(i) taxes imposed or calculated on the basis of the net income of POLAR and Personal Income
Taxes of its employees and (ii) construction permit fees, environmental permit fees and other
similar fees and charges) and (b) all real estate taxes and assessments, rates and other
charges in respect of the Power Barges.6

Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. The NPC
initially opposed the assignment of rights, citing paragraph 17.2 of Article 17 of the Agreement.

On August 7, 1995, FELS received an assessment of real property taxes on the power barges
from Provincial Assessor Lauro C. Andaya of Batangas City. The assessed tax, which likewise
covered those due for 1994, amounted to ₱56,184,088.40 per annum. FELS referred the matter
to NPC, reminding it of its obligation under the Agreement to pay all real estate taxes. It then
gave NPC the full power and authority to represent it in any conference regarding the real
property assessment of the Provincial Assessor.

In a letter7 dated September 7, 1995, NPC sought reconsideration of the Provincial Assessor’s
decision to assess real property taxes on the power barges. However, the motion was denied
on September 22, 1995, and the Provincial Assessor advised NPC to pay the assessment.8 This
prompted NPC to file a petition with the Local Board of Assessment Appeals (LBAA) for the
setting aside of the assessment and the declaration of the barges as non-taxable items; it also
prayed that should LBAA find the barges to be taxable, the Provincial Assessor be directed to
make the necessary corrections.9

In its Answer to the petition, the Provincial Assessor averred that the barges were real property
for purposes of taxation under Section 199(c) of Republic Act (R.A.) No. 7160.

Before the case was decided by the LBAA, NPC filed a Manifestation, informing the LBAA that
the Department of Finance (DOF) had rendered an opinion10 dated May 20, 1996, where it is
clearly stated that power barges are not real property subject to real property assessment.

On August 26, 1996, the LBAA rendered a Resolution11 denying the petition. The fallo reads:

WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real estate tax in the
amount of ₱56,184,088.40, for the year 1994.

SO ORDERED.12

The LBAA ruled that the power plant facilities, while they may be classified as movable or
personal property, are nevertheless considered real property for taxation purposes because
they are installed at a specific location with a character of permanency. The LBAA also pointed
out that the owner of the barges–FELS, a private corporation–is the one being taxed, not NPC.
A mere agreement making NPC responsible for the payment of all real estate taxes and
assessments will not justify the exemption of FELS; such a privilege can only be granted to NPC
and cannot be extended to FELS. Finally, the LBAA also ruled that the petition was filed out of
time.

Aggrieved, FELS appealed the LBAA’s ruling to the Central Board of Assessment Appeals
(CBAA).

On August 28, 1996, the Provincial Treasurer of Batangas City issued a Notice of Levy and
Warrant by Distraint13over the power barges, seeking to collect real property taxes amounting to
₱232,602,125.91 as of July 31, 1996. The notice and warrant was officially served to FELS on
November 8, 1996. It then filed a Motion to Lift Levy dated November 14, 1996, praying that the
Provincial Assessor be further restrained by the CBAA from enforcing the disputed assessment
during the pendency of the appeal.

On November 15, 1996, the CBAA issued an Order14 lifting the levy and distraint on the
properties of FELS in order not to preempt and render ineffectual, nugatory and illusory any
resolution or judgment which the Board would issue.

Meantime, the NPC filed a Motion for Intervention15 dated August 7, 1998 in the proceedings
before the CBAA. This was approved by the CBAA in an Order16 dated September 22, 1998.

During the pendency of the case, both FELS and NPC filed several motions to admit bond to
guarantee the payment of real property taxes assessed by the Provincial Assessor (in the event
that the judgment be unfavorable to them). The bonds were duly approved by the CBAA.

On April 6, 2000, the CBAA rendered a Decision17 finding the power barges exempt from real
property tax. The dispositive portion reads:

WHEREFORE, the Resolution of the Local Board of Assessment Appeals of the Province of
Batangas is hereby reversed. Respondent-appellee Provincial Assessor of the Province of
Batangas is hereby ordered to drop subject property under ARP/Tax Declaration No. 018-00958
from the List of Taxable Properties in the Assessment Roll. The Provincial Treasurer of
Batangas is hereby directed to act accordingly.

SO ORDERED.18

Ruling in favor of FELS and NPC, the CBAA reasoned that the power barges belong to NPC;
since they are actually, directly and exclusively used by it, the power barges are covered by the
exemptions under Section 234(c) of R.A. No. 7160.19 As to the other jurisdictional issue, the
CBAA ruled that prescription did not preclude the NPC from pursuing its claim for tax exemption
in accordance with Section 206 of R.A. No. 7160. The Provincial Assessor filed a motion for
reconsideration, which was opposed by FELS and NPC.

In a complete volte face, the CBAA issued a Resolution20 on July 31, 2001 reversing its earlier
decision. The fallo of the resolution reads:

WHEREFORE, premises considered, it is the resolution of this Board that:

(a) The decision of the Board dated 6 April 2000 is hereby reversed.

(b) The petition of FELS, as well as the intervention of NPC, is dismissed.

(c) The resolution of the Local Board of Assessment Appeals of Batangas is hereby
affirmed,

(d) The real property tax assessment on FELS by the Provincial Assessor of Batangas is
likewise hereby affirmed.

SO ORDERED.21

FELS and NPC filed separate motions for reconsideration, which were timely opposed by the
Provincial Assessor. The CBAA denied the said motions in a Resolution22 dated October 19,
2001.

Dissatisfied, FELS filed a petition for review before the CA docketed as CA-G.R. SP No. 67490.
Meanwhile, NPC filed a separate petition, docketed as CA-G.R. SP No. 67491.

On January 17, 2002, NPC filed a Manifestation/Motion for Consolidation in CA-G.R. SP No.
67490 praying for the consolidation of its petition with CA-G.R. SP No. 67491. In a
Resolution23 dated February 12, 2002, the appellate court directed NPC to re-file its motion for
consolidation with CA-G.R. SP No. 67491, since it is the ponente of the latter petition who
should resolve the request for reconsideration.

NPC failed to comply with the aforesaid resolution. On August 25, 2004, the Twelfth Division of
the appellate court rendered judgment in CA-G.R. SP No. 67490 denying the petition on the
ground of prescription. The decretal portion of the decision reads:

WHEREFORE, the petition for review is DENIED for lack of merit and the assailed Resolutions
dated July 31, 2001 and October 19, 2001 of the Central Board of Assessment Appeals are
AFFIRMED.

SO ORDERED.24

On September 20, 2004, FELS timely filed a motion for reconsideration seeking the reversal of
the appellate court’s decision in CA-G.R. SP No. 67490.

Thereafter, NPC filed a petition for review dated October 19, 2004 before this Court, docketed
as G.R. No. 165113, assailing the appellate court’s decision in CA-G.R. SP No. 67490. The
petition was, however, denied in this Court’s Resolution25 of November 8, 2004, for NPC’s
failure to sufficiently show that the CA committed any reversible error in the challenged decision.
NPC filed a motion for reconsideration, which the Court denied with finality in a
Resolution26 dated January 19, 2005.

Meantime, the appellate court dismissed the petition in CA-G.R. SP No. 67491. It held that the
right to question the assessment of the Provincial Assessor had already prescribed upon the
failure of FELS to appeal the disputed assessment to the LBAA within the period prescribed by
law. Since FELS had lost the right to question the assessment, the right of the Provincial
Government to collect the tax was already absolute.
NPC filed a motion for reconsideration dated March 8, 2005, seeking reconsideration of the
February 5, 2005 ruling of the CA in CA-G.R. SP No. 67491. The motion was denied in a
Resolution27 dated November 23, 2005.

The motion for reconsideration filed by FELS in CA-G.R. SP No. 67490 had been earlier denied
for lack of merit in a Resolution28 dated June 20, 2005.

On August 3, 2005, FELS filed the petition docketed as G.R. No. 168557 before this Court,
raising the following issues:

A.

Whether power barges, which are floating and movable, are personal properties and therefore,
not subject to real property tax.

B.

Assuming that the subject power barges are real properties, whether they are exempt from real
estate tax under Section 234 of the Local Government Code ("LGC").

C.

Assuming arguendo that the subject power barges are subject to real estate tax, whether or not
it should be NPC which should be made to pay the same under the law.

D.

Assuming arguendo that the subject power barges are real properties, whether or not the same
is subject to depreciation just like any other personal properties.

E.

Whether the right of the petitioner to question the patently null and void real property tax
assessment on the petitioner’s personal properties is imprescriptible.29

On January 13, 2006, NPC filed its own petition for review before this Court (G.R. No. 170628),
indicating the following errors committed by the CA:

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE APPEAL TO THE
LBAA WAS FILED OUT OF TIME.

II

THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE POWER
BARGES ARE NOT SUBJECT TO REAL PROPERTY TAXES.

III

THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE ASSESSMENT
ON THE POWER BARGES WAS NOT MADE IN ACCORDANCE WITH LAW.30

Considering that the factual antecedents of both cases are similar, the Court ordered the
consolidation of the two cases in a Resolution31 dated March 8, 2006.1awphi1.net

In an earlier Resolution dated February 1, 2006, the Court had required the parties to submit
their respective Memoranda within 30 days from notice. Almost a year passed but the parties
had not submitted their respective memoranda. Considering that taxes—the lifeblood of our
economy—are involved in the present controversy, the Court was prompted to dispense with
the said pleadings, with the end view of advancing the interests of justice and avoiding further
delay.

In both petitions, FELS and NPC maintain that the appeal before the LBAA was not time-barred.
FELS argues that when NPC moved to have the assessment reconsidered on September 7,
1995, the running of the period to file an appeal with the LBAA was tolled. For its part, NPC
posits that the 60-day period for appealing to the LBAA should be reckoned from its receipt of
the denial of its motion for reconsideration.

Petitioners’ contentions are bereft of merit.

Section 226 of R.A. No. 7160, otherwise known as the Local Government Code of 1991,
provides:

SECTION 226. Local Board of Assessment Appeals. – Any owner or person having legal
interest in the property who is not satisfied with the action of the provincial, city or municipal
assessor in the assessment of his property may, within sixty (60) days from the date of receipt
of the written notice of assessment, appeal to the Board of Assessment Appeals of the province
or city by filing a petition under oath in the form prescribed for the purpose, together with copies
of the tax declarations and such affidavits or documents submitted in support of the appeal.

We note that the notice of assessment which the Provincial Assessor sent to FELS on August 7,
1995, contained the following statement:

If you are not satisfied with this assessment, you may, within sixty (60) days from the date of
receipt hereof, appeal to the Board of Assessment Appeals of the province by filing a petition
under oath on the form prescribed for the purpose, together with copies of ARP/Tax Declaration
and such affidavits or documents submitted in support of the appeal.32

Instead of appealing to the Board of Assessment Appeals (as stated in the notice), NPC opted
to file a motion for reconsideration of the Provincial Assessor’s decision, a remedy not
sanctioned by law.

The remedy of appeal to the LBAA is available from an adverse ruling or action of the provincial,
city or municipal assessor in the assessment of the property. It follows then that the
determination made by the respondent Provincial Assessor with regard to the taxability of the
subject real properties falls within its power to assess properties for taxation purposes subject to
appeal before the LBAA.33

We fully agree with the rationalization of the CA in both CA-G.R. SP No. 67490 and CA-G.R. SP
No. 67491. The two divisions of the appellate court cited the case of Callanta v. Office of the
Ombudsman,34 where we ruled that under Section 226 of R.A. No 7160,35 the last action of the
local assessor on a particular assessment shall be the notice of assessment; it is this last action
which gives the owner of the property the right to appeal to the LBAA. The procedure likewise
does not permit the property owner the remedy of filing a motion for reconsideration before the
local assessor. The pertinent holding of the Court in Callanta is as follows:

x x x [T]he same Code is equally clear that the aggrieved owners should have brought their
appeals before the LBAA. Unfortunately, despite the advice to this effect contained in their
respective notices of assessment, the owners chose to bring their requests for a
review/readjustment before the city assessor, a remedy not sanctioned by the law. To allow this
procedure would indeed invite corruption in the system of appraisal and assessment. It
conveniently courts a graft-prone situation where values of real property may be initially set
unreasonably high, and then subsequently reduced upon the request of a property owner. In the
latter instance, allusions of a possible covert, illicit trade-off cannot be avoided, and in fact can
conveniently take place. Such occasion for mischief must be prevented and excised from our
system.36

For its part, the appellate court declared in CA-G.R. SP No. 67491:
x x x. The Court announces: Henceforth, whenever the local assessor sends a notice to the
owner or lawful possessor of real property of its revised assessed value, the former shall no
longer have any jurisdiction to entertain any request for a review or readjustment. The
appropriate forum where the aggrieved party may bring his appeal is the LBAA as provided by
law. It follows ineluctably that the 60-day period for making the appeal to the LBAA runs without
interruption. This is what We held in SP 67490 and reaffirm today in SP 67491.37

To reiterate, if the taxpayer fails to appeal in due course, the right of the local government to
collect the taxes due with respect to the taxpayer’s property becomes absolute upon the
expiration of the period to appeal.38 It also bears stressing that the taxpayer’s failure to question
the assessment in the LBAA renders the assessment of the local assessor final, executory and
demandable, thus, precluding the taxpayer from questioning the correctness of the assessment,
or from invoking any defense that would reopen the question of its liability on the merits. 39

In fine, the LBAA acted correctly when it dismissed the petitioners’ appeal for having been filed
out of time; the CBAA and the appellate court were likewise correct in affirming the dismissal.
Elementary is the rule that the perfection of an appeal within the period therefor is both
mandatory and jurisdictional, and failure in this regard renders the decision final and
executory.40

In the Comment filed by the Provincial Assessor, it is asserted that the instant petition is barred
by res judicata; that the final and executory judgment in G.R. No. 165113 (where there was a
final determination on the issue of prescription), effectively precludes the claims herein; and that
the filing of the instant petition after an adverse judgment in G.R. No. 165113 constitutes forum
shopping.

FELS maintains that the argument of the Provincial Assessor is completely misplaced since it
was not a party to the erroneous petition which the NPC filed in G.R. No. 165113. It avers that it
did not participate in the aforesaid proceeding, and the Supreme Court never acquired
jurisdiction over it. As to the issue of forum shopping, petitioner claims that no forum shopping
could have been committed since the elements of litis pendentia or res judicata are not present.

We do not agree.

Res judicata pervades every organized system of jurisprudence and is founded upon two
grounds embodied in various maxims of common law, namely: (1) public policy and necessity,
which makes it to the interest of the

State that there should be an end to litigation – republicae ut sit litium; and (2) the hardship on
the individual of being vexed twice for the same cause – nemo debet bis vexari et eadem causa.
A conflicting doctrine would subject the public peace and quiet to the will and dereliction of
individuals and prefer the regalement of the litigious disposition on the part of suitors to the
preservation of the public tranquility and happiness.41 As we ruled in Heirs of Trinidad De Leon
Vda. de Roxas v. Court of Appeals:42

x x x An existing final judgment or decree – rendered upon the merits, without fraud or collusion,
by a court of competent jurisdiction acting upon a matter within its authority – is conclusive on
the rights of the parties and their privies. This ruling holds in all other actions or suits, in the
same or any other judicial tribunal of concurrent jurisdiction, touching on the points or matters in
issue in the first suit.

xxx

Courts will simply refuse to reopen what has been decided. They will not allow the same parties
or their privies to litigate anew a question once it has been considered and decided with finality.
Litigations must end and terminate sometime and somewhere. The effective and efficient
administration of justice requires that once a judgment has become final, the prevailing party
should not be deprived of the fruits of the verdict by subsequent suits on the same issues filed
by the same parties.
This is in accordance with the doctrine of res judicata which has the following elements: (1) the
former judgment must be final; (2) the court which rendered it had jurisdiction over the subject
matter and the parties; (3) the judgment must be on the merits; and (4) there must be between
the first and the second actions, identity of parties, subject matter and causes of action. The
application of the doctrine of res judicata does not require absolute identity of parties but merely
substantial identity of parties. There is substantial identity of parties when there is community of
interest or privity of interest between a party in the first and a party in the second case even if
the first case did not implead the latter.43

To recall, FELS gave NPC the full power and authority to represent it in any proceeding
regarding real property assessment. Therefore, when petitioner NPC filed its petition for review
docketed as G.R. No. 165113, it did so not only on its behalf but also on behalf of FELS.
Moreover, the assailed decision in the earlier petition for review filed in this Court was the
decision of the appellate court in CA-G.R. SP No. 67490, in which FELS was the petitioner.
Thus, the decision in G.R. No. 165116 is binding on petitioner FELS under the principle of privity
of interest. In fine, FELS and NPC are substantially "identical parties" as to warrant the
application of res judicata. FELS’s argument that it is not bound by the erroneous petition filed
by NPC is thus unavailing.

On the issue of forum shopping, we rule for the Provincial Assessor. Forum shopping exists
when, as a result of an adverse judgment in one forum, a party seeks another and possibly
favorable judgment in another forum other than by appeal or special civil action or certiorari.
There is also forum shopping when a party institutes two or more actions or proceedings
grounded on the same cause, on the gamble that one or the other court would make a favorable
disposition.44

Petitioner FELS alleges that there is no forum shopping since the elements of res judicata are
not present in the cases at bar; however, as already discussed, res judicata may be properly
applied herein. Petitioners engaged in forum shopping when they filed G.R. Nos. 168557 and
170628 after the petition for review in G.R. No. 165116. Indeed, petitioners went from one court
to another trying to get a favorable decision from one of the tribunals which allowed them to
pursue their cases.

It must be stressed that an important factor in determining the existence of forum shopping is
the vexation caused to the courts and the parties-litigants by the filing of similar cases to claim
substantially the same reliefs.45 The rationale against forum shopping is that a party should not
be allowed to pursue simultaneous remedies in two different fora. Filing multiple petitions or
complaints constitutes abuse of court processes, which tends to degrade the administration of
justice, wreaks havoc upon orderly judicial procedure, and adds to the congestion of the heavily
burdened dockets of the courts.46

Thus, there is forum shopping when there exist: (a) identity of parties, or at least such parties as
represent the same interests in both actions, (b) identity of rights asserted and relief prayed for,
the relief being founded on the same facts, and (c) the identity of the two preceding particulars
is such that any judgment rendered in the pending case, regardless of which party is successful,
would amount to res judicata in the other.47

Having found that the elements of res judicata and forum shopping are present in the
consolidated cases, a discussion of the other issues is no longer necessary. Nevertheless, for
the peace and contentment of petitioners, we shall shed light on the merits of the case.

As found by the appellate court, the CBAA and LBAA power barges are real property and are
thus subject to real property tax. This is also the inevitable conclusion, considering that G.R. No.
165113 was dismissed for failure to sufficiently show any reversible error. Tax assessments by
tax examiners are presumed correct and made in good faith, with the taxpayer having the
burden of proving otherwise.48 Besides, factual findings of administrative bodies, which have
acquired expertise in their field, are generally binding and conclusive upon the Court; we will not
assume to interfere with the sensible exercise of the judgment of men especially trained in
appraising property. Where the judicial mind is left in doubt, it is a sound policy to leave the
assessment undisturbed.49 We find no reason to depart from this rule in this case.
In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., 50 a
power company brought an action to review property tax assessment. On the city’s motion to
dismiss, the Supreme Court of New York held that the barges on which were mounted gas
turbine power plants designated to generate electrical power, the fuel oil barges which supplied
fuel oil to the power plant barges, and the accessory equipment mounted on the barges were
subject to real property taxation.

Moreover, Article 415 (9) of the New Civil Code provides that "[d]ocks and structures which,
though floating, are intended by their nature and object to remain at a fixed place on a river,
lake, or coast" are considered immovable property. Thus, power barges are categorized as
immovable property by destination, being in the nature of machinery and other implements
intended by the owner for an industry or work which may be carried on in a building or on a
piece of land and which tend directly to meet the needs of said industry or work.51

Petitioners maintain nevertheless that the power barges are exempt from real estate tax under
Section 234 (c) of R.A. No. 7160 because they are actually, directly and exclusively used by
petitioner NPC, a government- owned and controlled corporation engaged in the supply,
generation, and transmission of electric power.

We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is
petitioner FELS, which in fine, is the entity being taxed by the local government. As stipulated
under Section 2.11, Article 2 of the Agreement:

OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures,
fittings, machinery and equipment on the Site used in connection with the Power Barges which
have been supplied by it at its own cost. POLAR shall operate, manage and maintain the Power
Barges for the purpose of converting Fuel of NAPOCOR into electricity.52

It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its
exemption in Section 234 (c) of R.A. No. 7160, which reads:

SECTION 234. Exemptions from Real Property Tax. – The following are exempted from
payment of the real property tax:

xxx

(c) All machineries and equipment that are actually, directly and exclusively used by local water
districts and government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power; x x x

Indeed, the law states that the machinery must be actually, directly and exclusively used by the
government owned or controlled corporation; nevertheless, petitioner FELS still cannot find
solace in this provision because Section 5.5, Article 5 of the Agreement provides:

OPERATION. POLAR undertakes that until the end of the Lease Period, subject to the supply of
the necessary Fuel pursuant to Article 6 and to the other provisions hereof, it will operate the
Power Barges to convert such Fuel into electricity in accordance with Part A of Article 7.53

It is a basic rule that obligations arising from a contract have the force of law between the
parties. Not being contrary to law, morals, good customs, public order or public policy, the
parties to the contract are bound by its terms and conditions.54

Time and again, the Supreme Court has stated that taxation is the rule and exemption is the
exception.55 The law does not look with favor on tax exemptions and the entity that would seek
to be thus privileged must justify it by words too plain to be mistaken and too categorical to be
misinterpreted.56 Thus, applying the rule of strict construction of laws granting tax exemptions,
and the rule that doubts should be resolved in favor of provincial corporations, we hold that
FELS is considered a taxable entity.

The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be
responsible for the payment of all real estate taxes and assessments, does not justify the
exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The covenant
is between FELS and NPC and does not bind a third person not privy thereto, in this case, the
Province of Batangas.

It must be pointed out that the protracted and circuitous litigation has seriously resulted in the
local government’s deprivation of revenues. The power to tax is an incident of sovereignty and
is unlimited in its magnitude, acknowledging in its very nature no perimeter so that security
against its abuse is to be found only in the responsibility of the legislature which imposes the tax
on the constituency who are to pay for it.57 The right of local government units to collect taxes
due must always be upheld to avoid severe tax erosion. This consideration is consistent with the
State policy to guarantee the autonomy of local governments58 and the objective of the Local
Government Code that they enjoy genuine and meaningful local autonomy to empower them to
achieve their fullest development as self-reliant communities and make them effective partners
in the attainment of national goals.59

In conclusion, we reiterate that the power to tax is the most potent instrument to raise the
needed revenues to finance and support myriad activities of the local government units for the
delivery of basic services essential to the promotion of the general welfare and the
enhancement of peace, progress, and prosperity of the people.60

WHEREFORE, the Petitions are DENIED and the assailed Decisions and Resolutions
AFFIRMED.

SO ORDERED.
G.R. No. L-61311 September 2l, 1987

FELICIDAD VILLANUEVA, FERNANDO CAISIP, ANTONIO LIANG, FELINA MIRANDA,

RICARDO PUNO, FLORENCIO LAXA, and RENE OCAMPO, petitioners,
vs.
HON. MARIANO CASTAÑEDA, JR., Presiding Judge of the Court of First Instance of
Pampanga, Branch III, VICENTE A. MACALINO, Officer-in-Charge, Office of the Mayor,
San Fernando, Pampanga, respondents.

CRUZ, J.:

There is in the vicinity of the public market of San Fernando, Pampanga, along Mercado Street,
a strip of land measuring 12 by 77 meters on which stands a conglomeration of vendors stalls
together forming what is commonly known as a talipapa. This is the subject of the herein
petition. The petitioners claim they have a right to remain in and conduct business in this area
by virtue of a previous authorization granted to them by the municipal government. The
respondents deny this and justify the demolition of their stalls as illegal constructions on public
property. At the petitioners' behest, we have issued a temporary restraining order to preserve
the status quo between the parties pending our decision. 1 Now we shall rule on the merits.

This dispute goes back to November 7, 1961, when the municipal council of San Fernando
adopted Resolution No. 218 authorizing some 24 members of the Fernandino United Merchants
and Traders Association to construct permanent stags and sell in the above-mentioned
place. 2 The action was protested on November 10, 1961, in Civil Case No. 2040, where the
Court of First Instance of Pampanga, Branch 2, issued a writ of preliminary injunction that
prevented the defendants from constructing the said stalls until final resolution of the
controversy. 3 On January 18, 1964, while this case was pending, the municipal council of San
Fernando adopted Resolution G.R. No. 29, which declared the subject area as "the parking
place and as the public plaza of the municipality, 4 thereby impliedly revoking Resolution No.
218, series of 1961. Four years later, on November 2, 1968, Judge Andres C. Aguilar decided
the aforesaid case and held that the land occupied by the petitioners, being public in nature,
was beyond the commerce of man and therefore could not be the subject of private
occupancy. 5 The writ of preliminary injunction was made permanent. 6

The decision was apparently not enforced, for the petitioners were not evicted from the place; in
fact, according to then they and the 128 other persons were in 1971 assigned specific areas or
space allotments therein for which they paid daily fees to the municipal government. 7 The
problem appears to have festered for some more years under a presumably uneasy truce
among the protagonists, none of whom made any move, for some reason that does not appear
in the record. Then, on January 12, 1982, the Association of Concerned Citizens and
Consumers of San Fernando filed a petition for the immediate implementation of Resolution No.
29, to restore the subject property "to its original and customary use as a public plaza. 8

Acting thereon after an investigation conducted by the municipal attorney, 9 respondent Vicente
A. Macalino, as officer-in-charge of the office of the mayor of San Fernando, issued on June 14,
1982, a resolution requiring the municipal treasurer and the municipal engineer to demolish the
stalls in the subject place beginning July 1, 1982. 10The reaction of the petitioners was to file a
petition for prohibition with the Court of First Instance of Pampanga, docketed as Civil Case No.
6470, on June 26, 1982. The respondent judge denied the petition on July 19, 1982, 11 and the
motion for reconsideration on August 5, 1982, 12 prompting the petitioners to come to this Court
on certiorari to challenge his decision. 13

As required, respondent Macalino filed his comment 14 on the petition, and the petitioners
countered with their reply. 15 In compliance with our resolution of February 2, 1983, the
petitioners submitted their memorandum 16 and respondent Macalino, for his part, asked that
his comment be considered his memorandum. 17 On July 28, 1986, the new officer-in-charge of
the office of the mayor of San Fernando, Paterno S. Guevarra, was impleaded in lieu of Virgilio
Sanchez, who had himself earlier replaced the original respondent Macalino. 18
After considering the issues and the arguments raised by the parties in their respective
pleadings, we rule for the respondents. The petition must be dismissed.

There is no question that the place occupied by the petitioners and from which they are sought
to be evicted is a public plaza, as found by the trial court in Civil Case No. 2040. This finding
was made after consideration of the antecedent facts as especially established by the testimony
of former San Fernando Mayor Rodolfo Hizon, who later became governor of Pampanga, that
the National Planning Commission had reserved the area for a public plaza as early as 1951.
This intention was reiterated in 1964 through the adoption of Resolution No. 29. 19

It does not appear that the decision in this case was appealed or has been reversed. In Civil
Case G.R. No. 6740, which is the subject of this petition, the respondent judge saw no reason to
disturb the finding in Civil Case No. 2040 and indeed used it as a basis for his own decision
sustaining the questioned order. 20

The basic contention of the petitioners is that the disputed area is under lease to them by virtue
of contracts they had entered into with the municipal government, first in 1961 insofar as the
original occupants were concerned, and later with them and the other petitioners by virtue of the
space allocations made in their favor in 1971 for which they saw they are paying daily
fees. 21 The municipal government has denied making such agreements. In any case, they
argue, since the fees were collected daily, the leases, assuming their validity, could be
terminated at will, or any day, as the claimed rentals indicated that the period of the leases was
from day to day. 22

The parties belabor this argument needlessly.

A public plaza is beyond the commerce of man and so cannot be the subject of lease or any
other contractual undertaking. This is elementary. Indeed, this point was settled as early as
in Municipality of Cavite vs. Rojas, 23decided in 1915, where the Court declared as null and void
the lease of a public plaza of the said municipality in favor of a private person.

Justice Torres said in that case:

According to article 344 of the Civil Code: "Property for public use in provinces
and in towns comprises the provincial and town roads, the squares, streets,
fountains, and public waters, the promenades, and public works of general
service supported by said towns or provinces.

The said Plaza Soledad being a promenade for public use, the municipal council
of Cavite could not in 1907 withdraw or exclude from public use a portion thereof
in order to lease it for the sole benefit of the defendant Hilaria Rojas. In leasing a
portion of said plaza or public place to the defendant for private use the plaintiff
municipality exceeded its authority in the exercise of its powers by executing a
contract over a thing of which it could not dispose, nor is it empowered so to do.

The Civil Code, article 1271, prescribes that everything which is not outside the
commerce of man may be the object of a contract, and plazas and streets are
outside of this commerce, as was decided by the supreme court of Spain in its
decision of February 12, 1895, which says: "communal things that cannot be sold
because they are by their very nature outside of commerce are those for public
use, such as the plazas, streets, common lands, rivers, fountains, etc."

Therefore, it must be concluded that the contract, Exhibit C, whereby the

municipality of Cavite leased to Hilaria Rojas a portion of the Plaza Soledad is
null and void and of no force or effect, because it is contrary to the law and the
thing leased cannot be the object of a was held that the City of contract.

In Muyot vs. de la Fuente, 24 it was held that the City of Manila could not lease a portion of a
public sidewalk on Plaza Sta. Cruz, being likewise beyond the commerce of man.

Echoing Rojas, the decision said:

 Appellants claim that they had obtained permit from the present of the City of
Manila, to connect booths Nos. 1 and 2, along the premises in question, and for
the use of spaces where the booths were constructed, they had paid and
continued paying the corresponding rentals. Granting this claim to be true, one
should not entertain any doubt that such permit was not legal, because the City
of Manila does not have any power or authority at all to lease a portion of a public
sidewalk. The sidewalk in question, forming part of the public plaza of Sta. Cruz,
could not be a proper subject matter of the contract, as it was not within the
commerce of man (Article 1347, new Civil Code, and article 1271, old Civil
Code). Any contract entered into by the City of Manila in connection with the
sidewalk, is ipso facto null and ultra vires. (Municipality of Cavite vs. Roxas, et
a1, 30 Phil. 603.) The sidewalk in question was intended for and was used by the
public, in going from one place to another. "The streets and public places of the
city shall be kept free and clear for the use of the public, and the sidewalks and
crossings for the pedestrians, and the same shall only be used or occupied for
other purpose as provided by ordinance or regulation; ..." (Sec. 1119, Revised
Ordinances of the City of Manila.) The booths in question served as fruit stands
for their owners and often, if not always, blocked the fire passage of pedestrians
who had to take the plaza itself which used to be clogged with vehicular traffic.

Exactly in point is Espiritu vs. Municipal Council of Pozorrubio, 25 where the Supreme Court
declared:

There is absolutely no question that the town plaza cannot be used for the
construction of market stalls, specially of residences, and that such structures
constitute a nuisance subject to abatement according to law. Town plazas are
properties of public dominion, to be devoted to public use and to be made
available to the public in general They are outside the common of man and
cannot be disposed of or even leased by the municipality to private parties.

Applying this well-settled doctrine, we rule that the petitioners had no right in the first place to
occupy the disputed premises and cannot insist in remaining there now on the strength of their
alleged lease contracts. They should have realized and accepted this earlier, considering that
even before Civil Case No. 2040 was decided, the municipalcouncil of San Fernando had
already adopted Resolution No. 29, series of 1964, declaring the area as the parking place and
public plaza of the municipality.

It is the decision in Civil Case No. 2040 and the said resolution of the municipal council of San
Fernando that respondent Macalino was seeking to enforce when he ordered the demolition of
the stags constructed in the disputed area. As officer-in-charge of the office of the mayor, he
had the duty to clear the area and restore it to its intended use as a parking place and public
plaza of the municipality of San Fernando, conformably to the aforementioned orders from the
court and the council. It is, therefore, not correct to say that he had acted without authority or
taken the law into his hands in issuing his order.

Neither can it be said that he acted whimsically in exercising his authority for it has been
established that he directed the demolition of the stalls only after, upon his instructions, the
municipal attorney had conducted an investigation, to look into the complaint filed by the
Association of Concerned Citizens and Consumers of San Fernando. 26 There is evidence that
the petitioners were notified of this hearing, 27which they chose to disregard. Photographs of the
disputed area, 28 which does look congested and ugly, show that the complaint was valid and
that the area really needed to be cleared, as recommended by the municipal attorney.

The Court observes that even without such investigation and recommendation, the respondent
mayor was justified in ordering the area cleared on the strength alone of its status as a public
plaza as declared by the judicial and legislative authorities. In calling first for the investigation
(which the petitioner saw fit to boycott), he was just scrupulously paying deference to the
requirements of due process, to remove an taint of arbitrariness in the action he was caged
upon to take.
Since the occupation of the place in question in 1961 by the original 24 stallholders (whose
number later ballooned to almost 200), it has deteriorated increasingly to the great prejudice of
the community in general. The proliferation of stags therein, most of them makeshift and of
flammable materials, has converted it into a veritable fire trap, which, added to the fact that it
obstructs access to and from the public market itself, has seriously endangered public safety.
The filthy condition of the talipapa, where fish and other wet items are sold, has aggravated
health and sanitation problems, besides pervading the place with a foul odor that has spread
into the surrounding areas. The entire place is unsightly, to the dismay and embarrassment of
the inhabitants, who want it converted into a showcase of the town of which they can all be
proud. The vendors in the talipapa have also spilled into the street and obstruct the flow of
traffic, thereby impairing the convenience of motorists and pedestrians alike. The regular
stallholders in the public market, who pay substantial rentals to the municipality, are deprived of
a sizable volume of business from prospective customers who are intercepted by
the talipapa vendors before they can reach the market proper. On top of all these, the people
are denied the proper use of the place as a public plaza, where they may spend their leisure in
a relaxed and even beautiful environment and civic and other communal activities of the town
can be held.

The problems caused by the usurpation of the place by the petitioners are covered by the police
power as delegated to the municipality under the general welfare clause. 29 This authorizes the
municipal council "to enact such ordinances and make such regulations, not repugnant to law,
as may be necessary to carry into effect and discharge the powers and duties conferred upon it
by law and such as shall seem necessary and proper to provide for the health and safety,
promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the
municipality and the inhabitants thereof, and for the protection of property therein." This
authority was validly exercised in this casethrough the adoption of Resolution No. 29, series of
1964, by the municipal council of San Fernando.

Even assuming a valid lease of the property in dispute, the resolution could have effectively
terminated the agreement for it is settled that the police power cannot be surrendered or
bargained away through the medium of a contract. 30 In fact, every contract affecting the public
interest suffers a congenital infirmity in that it contains an implied reservation of the police power
as a postulate of the existing legal order. 31 This power can be activated at any time to change
the provisions of the contract, or even abrogate it entirely, for the promotion or protection of the
general welfare. Such an act will not militate against the impairment clause, which is subject to
and limited by the paramount police power. 32

We hold that the respondent judge did not commit grave abuse of discretion in denying the
petition for prohibition. On the contrary, he acted correctly in sustaining the right and
responsibility of the mayor to evict the petitioners from the disputed area and clear it of an the
structures illegally constructed therein.

The Court feels that it would have been far more amiable if the petitioners themselves,
recognizing their own civic duty, had at the outset desisted from their original stance and
withdrawn in good grace from the disputed area to permit its peaceful restoration as a public
plaza and parking place for the benefit of the whole municipality. They owned this little sacrifice
to the community in general which has suffered all these many years because of their
intransigence. Regrettably, they have refused to recognize that in the truly democratic society,
the interests of the few should yield to those of the greater number in deference to the principles
that the welfare of the people is the supreme law and overriding purpose. We do not see any
altruism here. The traditional ties of sharing are absent here. What we find, sad to say, is a
cynical disdaining of the spirit of "bayanihan," a selfish rejection of the cordial virtues of
"pakikisama " and "pagbibigayan" which are the hallmarks of our people.

WHEREFORE, the petition is DISMISSED. The decision dated July 19, 1982, and the order-
dated August 5, 1982, are AFFIRMED. The temporary restraining order dated August 9, 1982,
is LIFTED. This decision is immediately executory. Costs against the petitioners.
G.R. No. L-66575 September 30, 1986

ADRIANO MANECLANG, JULIETA, RAMONA, VICTOR, ANTONINA, LOURDES, TEODORO

and MYRNA, all surnamed MANECLANG, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT and ALFREDO MAZA, CORLETO CASTRO,
SALOME RODRIGUEZ, EDUCARDO CUISON, FERNANDO ZARCILLA, MARIANO
GABRIEL, NICOMEDES CORDERO, CLETO PEDROZO, FELIX SALARY and JOSE
PANLILIO, respondents.

Loreto Novisteros for petitioners.

Corleto R. Castro for respondents.

FERNAN, J.:

Petitioners Adriano Maneclang, et. al. filed before the then Court of First Instance of
Pangasinan, Branch XI a complaint for quieting of title over a certain fishpond located within the
four [41 parcels of land belonging to them situated in Barrio Salomague, Bugallon, Pangasinan,
and the annulment of Resolutions Nos. 38 and 95 of the Municipal Council of Bugallon
Pangasinan. The trial court dismissed the complaint in a decision dated August 15, 1975 upon a
finding that the body of water traversing the titled properties of petitioners is a creek constituting
a tributary of the Agno River; therefore public in nature and not subject to private appropriation.
The lower court likewise held that Resolution No. 38, ordering an ocular inspection of the
Cayangan Creek situated between Barrios Salomague Sur and Salomague Norte, and
Resolution No. 95 authorizing public bidding for the lease of all municipal ferries and fisheries,
including the fishpond under consideration, were passed by respondents herein as members of
the Municipal Council of Bugallon, Pangasinan in the exercise of their legislative powers.

Petitioners appealed said decision to the Intermediate Appellate Court, which affirmed the same
on April 29, 1983. Hence, this petition for review on certiorari.

Acting on the petition, the Court required the respondents to comment thereon. However, before
respondents could do so, petitioners manifested that for lack of interest on the part of
respondent Alfredo Maza, the awardee in the public bidding of the fishpond, the parties desire to
amicably settle the case by submitting to the Court a Compromise Agreement praying that
judgment be rendered recognizing the ownership of petitioners over the land the body of water
found within their titled properties, stating therein, among other things, that "to pursue the case,
the same will not amount to any benefit of the parties, on the other hand it is to the advantage
and benefit of the municipality if the ownership of the land and the water found therein belonging
to petitioners be recognized in their favor as it is now clear that after the National Irrigation
Administration [NIA] had built the dike around the land, no water gets in or out of the land. 1

The stipulations contained in the Compromise Agreement partake of the nature of an

adjudication of ownership in favor of herein petitioners of the fishpond in dispute, which, as
clearly found by the lower and appellate courts, was originally a creek forming a tributary of the
Agno River. Considering that as held in the case of Mercado vs. Municipal President of
Macabebe, 59 Phil. 592 [1934], a creek, defined as a recess or arm extending from a river and
participating in the ebb and flow of the sea, is a property belonging to the public domain which is
not susceptible to private appropriation and acquisitive prescription, and as a public water, it
cannot be registered under the Torrens System in the name of any individual [Diego v. Court of
Appeals, 102 Phil. 494; Mangaldan v. Manaoag, 38 Phil. 4551; and considering further that
neither the mere construction of irrigation dikes by the National Irrigation Administration which
prevented the water from flowing in and out of the subject fishpond, nor its conversion into a
fishpond, alter or change the nature of the creek as a property of the public domain, the Court
finds the Compromise Agreement null and void and of no legal effect, the same being contrary
to law and public policy.
The finding that the subject body of water is a creek belonging to the public domain is a factual
determination binding upon this Court. The Municipality of Bugallon, acting thru its duly-
constituted municipal council is clothed with authority to pass, as it did the two resolutions
dealing with its municipal waters, and it cannot be said that petitioners were deprived of their
right to due process as mere publication of the notice of the public bidding suffices as a
constructive notice to the whole world.

IN VIEW OF THE FOREGOING, the Court Resolved to set aside the Compromise Agreement
and declare the same null and void for being contrary to law and public policy. The Court further
resolved to DISMISS the instant petition for lack of merit.

SO ORDERED.
GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their
representatives and agents from proceeding with the bidding for the sale of the 3,179
square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on
February 21, 1990. We granted the prayer for a temporary restraining order effective
February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes for a writ of
mandamus to compel the respondents to fully disclose to the public the basis of their
decision to push through with the sale of the Roppongi property inspire of strong public
opposition and to explain the proceedings which effectively prevent the participation of
Filipino citizens and entities in the bidding process.

The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on
March 13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the
respondents were required to file a comment by the Court's resolution dated February
22, 1990. The two petitions were consolidated on March 27, 1990 when the memoranda of
the parties in the Laurel case were deliberated upon.

The Court could not act on these cases immediately because the respondents filed a
motion for an extension of thirty (30) days to file comment in G.R. No. 92047, followed by
a second motion for an extension of another thirty (30) days which we granted on May 8,
1990, a third motion for extension of time granted on May 24, 1990 and a fourth motion
for extension of time which we granted on June 5, 1990 but calling the attention of the
respondents to the length of time the petitions have been pending. After the comment
was filed, the petitioner in G.R. No. 92047 asked for thirty (30) days to file a reply. We
noted his motion and resolved to decide the two (2) cases.

The subject property in this case is one of the four (4) properties in Japan acquired by
the Philippine government under the Reparations Agreement entered into with Japan on
May 9, 1956, the other lots being:

(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an
area of approximately 2,489.96 square meters, and is at present the site of the Philippine
Embassy Chancery;

(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72
square meters and categorized as a commercial lot now being used as a warehouse and
parking lot for the consulate staff; and

(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe,
a residential lot which is now vacant.

The properties and the capital goods and services procured from the Japanese
government for national development projects are part of the indemnification to the
Filipino people for their losses in life and property and their suffering during World War
II.

The Reparations Agreement provides that reparations valued at $550 million would be
payable in twenty (20) years in accordance with annual schedules of procurements to be
fixed by the Philippine and Japanese governments (Article 2, Reparations Agreement).
Rep. Act No. 1789, the Reparations Law, prescribes the national policy on procurement
and utilization of reparations and development loans. The procurements are divided into
those for use by the government sector and those for private parties in projects as the
then National Economic Council shall determine. Those intended for the private sector
shall be made available by sale to Filipino citizens or to one hundred (100%) percent
Filipino-owned entities in national development projects.
The Roppongi property was acquired from the Japanese government under the Second
Year Schedule and listed under the heading "Government Sector", through Reparations
Contract No. 300 dated June 27, 1958. The Roppongi property consists of the land and
building "for the Chancery of the Philippine Embassy" (Annex M-D to Memorandum for
Petitioner, p. 503). As intended, it became the site of the Philippine Embassy until the
latter was transferred to Nampeidai on July 22, 1976 when the Roppongi building needed
major repairs. Due to the failure of our government to provide necessary funds, the
Roppongi property has remained undeveloped since that time.

A proposal was presented to President Corazon C. Aquino by former Philippine

Ambassador to Japan, Carlos J. Valdez, to make the property the subject of a lease
agreement with a Japanese firm - Kajima Corporation — which shall construct two (2)
buildings in Roppongi and one (1) building in Nampeidai and renovate the present
Philippine Chancery in Nampeidai. The consideration of the construction would be the
lease to the foreign corporation of one (1) of the buildings to be constructed in Roppongi
and the two (2) buildings in Nampeidai. The other building in Roppongi shall then be
used as the Philippine Embassy Chancery. At the end of the lease period, all the three
leased buildings shall be occupied and used by the Philippine government. No change of
ownership or title shall occur. (See Annex "B" to Reply to Comment) The Philippine
government retains the title all throughout the lease period and thereafter. However, the
government has not acted favorably on this proposal which is pending approval and
ratification between the parties. Instead, on August 11, 1986, President Aquino created a
committee to study the disposition/utilization of Philippine government properties in
Tokyo and Kobe, Japan through Administrative Order No. 3, followed by Administrative
Orders Numbered 3-A, B, C and D.

On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino
citizens or entities to avail of separations' capital goods and services in the event of sale,
lease or disposition. The four properties in Japan including the Roppongi were
specifically mentioned in the first "Whereas" clause.

Amidst opposition by various sectors, the Executive branch of the government has been
pushing, with great vigor, its decision to sell the reparations properties starting with the
Roppongi lot. The property has twice been set for bidding at a minimum floor price of
$225 million. The first bidding was a failure since only one bidder qualified. The second
one, after postponements, has not yet materialized. The last scheduled bidding on
February 21, 1990 was restrained by his Court. Later, the rules on bidding were changed
such that the $225 million floor price became merely a suggested floor price.

The Court finds that each of the herein petitions raises distinct issues. The petitioner in
G.R. No. 92013 objects to the alienation of the Roppongi property to anyone while the
petitioner in G.R. No. 92047 adds as a principal objection the alleged unjustified bias of
the Philippine government in favor of selling the property to non-Filipino citizens and
entities. These petitions have been consolidated and are resolved at the same time for
the objective is the same - to stop the sale of the Roppongi property.

The petitioner in G.R. No. 92013 raises the following issues:

(1) Can the Roppongi property and others of its kind be alienated by the Philippine
Government?; and

(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction,
to sell the Roppongi property?

Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the
government to alienate the Roppongi property assails the constitutionality of Executive
Order No. 296 in making the property available for sale to non-Filipino citizens and
entities. He also questions the bidding procedures of the Committee on the Utilization or
Disposition of Philippine Government Properties in Japan for being discriminatory
against Filipino citizens and Filipino-owned entities by denying them the right to be
informed about the bidding requirements.
II

In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related
lots were acquired as part of the reparations from the Japanese government for
diplomatic and consular use by the Philippine government. Vice-President Laurel states
that the Roppongi property is classified as one of public dominion, and not of private
ownership under Article 420 of the Civil Code (See infra).

The petitioner submits that the Roppongi property comes under "property intended for
public service" in paragraph 2 of the above provision. He states that being one of public
dominion, no ownership by any one can attach to it, not even by the State. The Roppongi
and related properties were acquired for "sites for chancery, diplomatic, and consular
quarters, buildings and other improvements" (Second Year Reparations Schedule). The
petitioner states that they continue to be intended for a necessary service. They are held
by the State in anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it
cannot be appropriated, is outside the commerce of man, or to put it in more simple
terms, it cannot be alienated nor be the subject matter of contracts (Citing Municipality of
Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at the
moment, the petitioner avers that the same remains property of public dominion so long
as the government has not used it for other purposes nor adopted any measure
constituting a removal of its original purpose or use.

The respondents, for their part, refute the petitioner's contention by saying that the
subject property is not governed by our Civil Code but by the laws of Japan where the
property is located. They rely upon the rule of lex situs which is used in determining the
applicable law regarding the acquisition, transfer and devolution of the title to a property.
They also invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary
of Justice which used the lex situs in explaining the inapplicability of Philippine law
regarding a property situated in Japan.

The respondents add that even assuming for the sake of argument that the Civil Code is
applicable, the Roppongi property has ceased to become property of public dominion. It
has become patrimonial property because it has not been used for public service or for
diplomatic purposes for over thirteen (13) years now (Citing Article 422, Civil Code) and
because the intention by the Executive Department and the Congress to convert it to
private use has been manifested by overt acts, such as, among others: (1) the transfer of
the Philippine Embassy to Nampeidai (2) the issuance of administrative orders for the
possibility of alienating the four government properties in Japan; (3) the issuance of
Executive Order No. 296; (4) the enactment by the Congress of Rep. Act No. 6657 [the
Comprehensive Agrarian Reform Law] on June 10, 1988 which contains a provision
stating that funds may be taken from the sale of Philippine properties in foreign
countries; (5) the holding of the public bidding of the Roppongi property but which
failed; (6) the deferment by the Senate in Resolution No. 55 of the bidding to a future
date; thus an acknowledgment by the Senate of the government's intention to remove the
Roppongi property from the public service purpose; and (7) the resolution of this Court
dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which
sought to enjoin the second bidding of the Roppongi property scheduled on March 30,
1989.

III

In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the
constitutionality of Executive Order No. 296. He had earlier filed a petition in G.R. No.
87478 which the Court dismissed on August 1, 1989. He now avers that the executive
order contravenes the constitutional mandate to conserve and develop the national
patrimony stated in the Preamble of the 1987 Constitution. It also allegedly violates:

(1) The reservation of the ownership and acquisition of alienable lands of the public
domain to Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and
23 of Commonwealth Act 141).i•t•c-aüsl
(2) The preference for Filipino citizens in the grant of rights, privileges and concessions
covering the national economy and patrimony (Section 10, Article VI, Constitution);

(3) The protection given to Filipino enterprises against unfair competition and trade
practices;

(4) The guarantee of the right of the people to information on all matters of public
concern (Section 7, Article III, Constitution);

(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned
by Filipino citizens of capital goods received by the Philippines under the Reparations
Act (Sections 2 and 12 of Rep. Act No. 1789); and

(6) The declaration of the state policy of full public disclosure of all transactions
involving public interest (Section 28, Article III, Constitution).

Petitioner Ojeda warns that the use of public funds in the execution of an
unconstitutional executive order is a misapplication of public funds He states that since
the details of the bidding for the Roppongi property were never publicly disclosed until
February 15, 1990 (or a few days before the scheduled bidding), the bidding guidelines
are available only in Tokyo, and the accomplishment of requirements and the selection of
qualified bidders should be done in Tokyo, interested Filipino citizens or entities owned
by them did not have the chance to comply with Purchase Offer Requirements on the
Roppongi. Worse, the Roppongi shall be sold for a minimum price of $225 million from
which price capital gains tax under Japanese law of about 50 to 70% of the floor price
would still be deducted.

IV

The petitioners and respondents in both cases do not dispute the fact that the Roppongi
site and the three related properties were through reparations agreements, that these
were assigned to the government sector and that the Roppongi property itself was
specifically designated under the Reparations Agreement to house the Philippine
Embassy.

The nature of the Roppongi lot as property for public service is expressly spelled out. It
is dictated by the terms of the Reparations Agreement and the corresponding contract of
procurement which bind both the Philippine government and the Japanese government.

There can be no doubt that it is of public dominion unless it is convincingly shown that
the property has become patrimonial. This, the respondents have failed to do.

As property of public dominion, the Roppongi lot is outside the commerce of man. It
cannot be alienated. Its ownership is a special collective ownership for general use and
enjoyment, an application to the satisfaction of collective needs, and resides in the social
group. The purpose is not to serve the State as a juridical person, but the citizens; it is
intended for the common and public welfare and cannot be the object of appropration.
(Taken from 3 Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the
Philippines, 1963 Edition, Vol. II, p. 26).

The applicable provisions of the Civil Code are:

ART. 419. Property is either of public dominion or of private ownership.

ART. 420. The following things are property of public dominion

(1) Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks shores roadsteads, and
others of similar character;
 (2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.

ART. 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property.

The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil
Code as property belonging to the State and intended for some public service.

Has the intention of the government regarding the use of the property been changed
because the lot has been Idle for some years? Has it become patrimonial?

The fact that the Roppongi site has not been used for a long time for actual Embassy
service does not automatically convert it to patrimonial property. Any such conversion
happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene
Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public
domain, not available for private appropriation or ownership until there is a formal
declaration on the part of the government to withdraw it from being such (Ignacio v.
Director of Lands, 108 Phil. 335 [1960]).

The respondents enumerate various pronouncements by concerned public officials

insinuating a change of intention. We emphasize, however, that an abandonment of the
intention to use the Roppongi property for public service and to make it patrimonial
property under Article 422 of the Civil Code must be definiteAbandonment cannot be
inferred from the non-use alone specially if the non-use was attributable not to the
government's own deliberate and indubitable will but to a lack of financial support to
repair and improve the property (See Heirs of Felino Santiago v. Lazaro, 166 SCRA 368
[1988]). Abandonment must be a certain and positive act based on correct legal
premises.

A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of

the Roppongi property's original purpose. Even the failure by the government to repair
the building in Roppongi is not abandonment since as earlier stated, there simply was a
shortage of government funds. The recent Administrative Orders authorizing a study of
the status and conditions of government properties in Japan were merely directives for
investigation but did not in any way signify a clear intention to dispose of the properties.

Executive Order No. 296, though its title declares an "authority to sell", does not have a
provision in its text expressly authorizing the sale of the four properties procured from
Japan for the government sector. The executive order does not declare that the
properties lost their public character. It merely intends to make the
properties available to foreigners and not to Filipinos alone in case of a sale, lease or
other disposition. It merely eliminates the restriction under Rep. Act No. 1789 that
reparations goods may be sold only to Filipino citizens and one hundred (100%) percent
Filipino-owned entities. The text of Executive Order No. 296 provides:

Section 1. The provisions of Republic Act No. 1789, as amended, and of

other laws to the contrary notwithstanding, the above-mentioned
properties can be made available for sale, lease or any other manner of
disposition to non-Filipino citizens or to entities owned by non-Filipino
citizens.

Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi
and the three other properties were earlier converted into alienable real properties. As
earlier stated, Rep. Act No. 1789 differentiates the procurements for the government
sector and the private sector (Sections 2 and 12, Rep. Act No. 1789). Only the private
sector properties can be sold to end-users who must be Filipinos or entities owned by
Filipinos. It is this nationality provision which was amended by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources
of funds for its implementation, the proceeds of the disposition of the properties of the
Government in foreign countries, did not withdraw the Roppongi property from being
classified as one of public dominion when it mentions Philippine properties abroad.
Section 63 (c) refers to properties which are alienable and not to those reserved for
public use or service. Rep Act No. 6657, therefore, does not authorize the Executive
Department to sell the Roppongi property. It merely enumerates possible sources of
future funding to augment (as and when needed) the Agrarian Reform Fund created
under Executive Order No. 299. Obviously any property outside of the commerce of man
cannot be tapped as a source of funds.

The respondents try to get around the public dominion character of the Roppongi
property by insisting that Japanese law and not our Civil Code should apply.

It is exceedingly strange why our top government officials, of all people, should be the
ones to insist that in the sale of extremely valuable government property, Japanese law
and not Philippine law should prevail. The Japanese law - its coverage and effects, when
enacted, and exceptions to its provision — is not presented to the Court It is simply
asserted that the lex loci rei sitae or Japanese law should apply without stating what that
law provides. It is a ed on faith that Japanese law would allow the sale.

We see no reason why a conflict of law rule should apply when no conflict of law
situation exists. A conflict of law situation arises only when: (1) There is a dispute over
the title or ownership of an immovable, such that the capacity to take and transfer
immovables, the formalities of conveyance, the essential validity and effect of the
transfer, or the interpretation and effect of a conveyance, are to be determined (See
Salonga, Private International Law, 1981 ed., pp. 377-383); and (2) A foreign law on land
ownership and its conveyance is asserted to conflict with a domestic law on the same
matters. Hence, the need to determine which law should apply.

In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that
the property belongs to the Philippines. The issue is the authority of the respondent
officials to validly dispose of property belonging to the State. And the validity of the
procedures adopted to effect its sale. This is governed by Philippine Law. The rule of lex
situs does not apply.

The assertion that the opinion of the Secretary of Justice sheds light on the relevance of
the lex situs rule is misplaced. The opinion does not tackle the alienability of the real
properties procured through reparations nor the existence in what body of the authority
to sell them. In discussing who are capable of acquiring the lots, the Secretary merely
explains that it is the foreign law which should determine who can acquire the
properties so that the constitutional limitation on acquisition of lands of the public
domain to Filipino citizens and entities wholly owned by Filipinos is inapplicable. We see
no point in belaboring whether or not this opinion is correct. Why should we discuss
who can acquire the Roppongi lot when there is no showing that it can be sold?

The subsequent approval on October 4, 1988 by President Aquino of the

recommendation by the investigating committee to sell the Roppongi property was
premature or, at the very least, conditioned on a valid change in the public character of
the Roppongi property. Moreover, the approval does not have the force and effect of law
since the President already lost her legislative powers. The Congress had already
convened for more than a year.

Assuming for the sake of argument, however, that the Roppongi property is no longer of
public dominion, there is another obstacle to its sale by the respondents.

There is no law authorizing its conveyance.

Section 79 (f) of the Revised Administrative Code of 1917 provides

 Section 79 (f ) Conveyances and contracts to which the Government is a
party. — In cases in which the Government of the Republic of the
Philippines is a party to any deed or other instrument conveying the title to
real estate or to any other property the value of which is in excess of one
hundred thousand pesos, the respective Department Secretary shall
prepare the necessary papers which, together with the proper
recommendations, shall be submitted to the Congress of the Philippines
for approval by the same. Such deed, instrument, or contract shall be
executed and signed by the President of the Philippines on behalf of the
Government of the Philippines unless the Government of the Philippines
unless the authority therefor be expressly vested by law in another officer.
(Emphasis supplied)

The requirement has been retained in Section 48, Book I of the Administrative Code of
1987 (Executive Order No. 292).

SEC. 48. Official Authorized to Convey Real Property. — Whenever real

property of the Government is authorized by law to be conveyed, the deed
of conveyance shall be executed in behalf of the government by the
following:

(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly
vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in
the name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)

It is not for the President to convey valuable real property of the government on his or
her own sole will. Any such conveyance must be authorized and approved by a law
enacted by the Congress. It requires executive and legislative concurrence.

Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale
of the Roppongi property does not withdraw the property from public domain much less
authorize its sale. It is a mere resolution; it is not a formal declaration abandoning the
public character of the Roppongi property. In fact, the Senate Committee on Foreign
Relations is conducting hearings on Senate Resolution No. 734 which raises serious
policy considerations and calls for a fact-finding investigation of the circumstances
behind the decision to sell the Philippine government properties in Japan.

The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass
upon the constitutionality of Executive Order No. 296. Contrary to respondents'
assertion, we did not uphold the authority of the President to sell the Roppongi property.
The Court stated that the constitutionality of the executive order was not the real issue
and that resolving the constitutional question was "neither necessary nor finally
determinative of the case." The Court noted that "[W]hat petitioner ultimately questions
is the use of the proceeds of the disposition of the Roppongi property." In emphasizing
that "the decision of the Executive to dispose of the Roppongi property to finance the
CARP ... cannot be questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court
did not acknowledge the fact that the property became alienable nor did it indicate that
the President was authorized to dispose of the Roppongi property. The resolution should
be read to mean that in case the Roppongi property is re-classified to be patrimonial and
alienable by authority of law, the proceeds of a sale may be used for national economic
development projects including the CARP.

Moreover, the sale in 1989 did not materialize. The petitions before us question the
proposed 1990 sale of the Roppongi property. We are resolving the issues raised in
these petitions, not the issues raised in 1989.
Having declared a need for a law or formal declaration to withdraw the Roppongi
property from public domain to make it alienable and a need for legislative authority to
allow the sale of the property, we see no compelling reason to tackle the constitutional
issues raised by petitioner Ojeda.

The Court does not ordinarily pass upon constitutional questions unless these questions
are properly raised in appropriate cases and their resolution is necessary for the
determination of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass
upon a constitutional question although properly presented by the record if the case can
be disposed of on some other ground such as the application of a statute or general law
(Siler v. Louisville and Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v.
Pullman Co., 312 U.S. 496 [1941]).

The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:

The Roppongi property is not just like any piece of property. It was given to
the Filipino people in reparation for the lives and blood of Filipinos who
died and suffered during the Japanese military occupation, for the
suffering of widows and orphans who lost their loved ones and kindred, for
the homes and other properties lost by countless Filipinos during the war.
The Tokyo properties are a monument to the bravery and sacrifice of the
Filipino people in the face of an invader; like the monuments of Rizal,
Quezon, and other Filipino heroes, we do not expect economic or financial
benefits from them. But who would think of selling these monuments?
Filipino honor and national dignity dictate that we keep our properties in
Japan as memorials to the countless Filipinos who died and suffered. Even
if we should become paupers we should not think of selling them. For it
would be as if we sold the lives and blood and tears of our countrymen.
(Rollo- G.R. No. 92013, p.147)

The petitioner in G.R. No. 92047 also states:

Roppongi is no ordinary property. It is one ceded by the Japanese

government in atonement for its past belligerence for the valiant sacrifice
of life and limb and for deaths, physical dislocation and economic
devastation the whole Filipino people endured in World War II.

It is for what it stands for, and for what it could never bring back to life, that
its significance today remains undimmed, inspire of the lapse of 45 years
since the war ended, inspire of the passage of 32 years since the property
passed on to the Philippine government.

Roppongi is a reminder that cannot — should not — be dissipated ...

(Rollo-92047, p. 9)

It is indeed true that the Roppongi property is valuable not so much because of the
inflated prices fetched by real property in Tokyo but more so because of its symbolic
value to all Filipinos — veterans and civilians alike. Whether or not the Roppongi and
related properties will eventually be sold is a policy determination where both the
President and Congress must concur. Considering the properties' importance and value,
the laws on conversion and disposition of property of public dominion must be faithfully
followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of

prohibition is issued enjoining the respondents from proceeding with the sale of the
Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary Restraining Order
is made PERMANENT.

SO ORDERED.
G.R. No. L40474 August 29, 1975

CEBU OXYGEN & ACETYLENE CO., INC., petitioner,

vs.
HON. PASCUAL A. BERCILLES Presiding Judge, Branch XV, 14th Judicial District, and
JOSE L. ESPELETA, Assistant Provincial Fiscal, Province of Cebu, representing the
Solicitor General's Office and the Bureau of Lands, respondents.

Jose Antonio R Conde for petitioner.

Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Octavio
R. Ramirez and Trial Attorney David R. Hilario for respondents. .

CONCEPCION, Jr., J.:

This is a petition for the review of the order of the Court of First Instance of Cebu dismissing
petitioner's application for registration of title over a parcel of land situated in the City of Cebu.

The parcel of land sought to be registered was only a portion of M. Borces Street, Mabolo, Cebu
City. On September 23, 1968, the City Council of Cebu, through Resolution No. 2193, approved
on October 3, 1968, declared the terminal portion of M. Borces Street, Mabolo, Cebu City, as an
abandoned road, the same not being included in the City Development Plan.1 Subsequently, on
December 19, 1968, the City Council of Cebu passed Resolution No. 2755, authorizing the
Acting City Mayor to sell the land through a public bidding.2 Pursuant thereto, the lot was
awarded to the herein petitioner being the highest bidder and on March 3, 1969, the City of
Cebu, through the Acting City Mayor, executed a deed of absolute sale to the herein petitioner
for a total consideration of P10,800.00.3 By virtue of the aforesaid deed of absolute sale, the
petitioner filed an application with the Court of First instance of Cebu to have its title to the land
registered.4

On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a motion to dismiss the
application on the ground that the property sought to be registered being a public road intended
for public use is considered part of the public domain and therefore outside the commerce of
man. Consequently, it cannot be subject to registration by any private individual.5

After hearing the parties, on October 11, 1974 the trial court issued an order dismissing the
petitioner's application for registration of title.6 Hence, the instant petition for review.

For the resolution of this case, the petitioner poses the following questions:

(1) Does the City Charter of Cebu City (Republic Act No. 3857) under Section 31,
paragraph 34, give the City of Cebu the valid right to declare a road as
abandoned? and

(2) Does the declaration of the road, as abandoned, make it the patrimonial
property of the City of Cebu which may be the object of a common contract?

(1) The pertinent portions of the Revised Charter of Cebu City provides:

Section 31. Legislative Powers. Any provision of law and executive order to the
contrary notwithstanding, the City Council shall have the following legislative
powers:

xxx xxx xxx

(34) ...; to close any city road, street or alley, boulevard, avenue, park or square.
Property thus withdrawn from public servitude may be used or conveyed for any
 purpose for which other real property belonging to the City may be lawfully used
or conveyed.

From the foregoing, it is undoubtedly clear that the City of Cebu is empowered to close a city
road or street. In the case of Favis vs. City of Baguio,7 where the power of the city Council of
Baguio City to close city streets and to vacate or withdraw the same from public use was
similarly assailed, this court said:

5. So it is, that appellant may not challenge the city council's act of withdrawing a
strip of Lapu-Lapu Street at its dead end from public use and converting the
remainder thereof into an alley. These are acts well within the ambit of the power
to close a city street. The city council, it would seem to us, is the authority
competent to determine whether or not a certain property is still necessary for
public use.

Such power to vacate a street or alley is discretionary. And the discretion will not
ordinarily be controlled or interfered with by the courts, absent a plain case of
abuse or fraud or collusion. Faithfulness to the public trust will be presumed. So
the fact that some private interests may be served incidentally will not invalidate
the vacation ordinance.

(2) Since that portion of the city street subject of petitioner's application for registration of title
was withdrawn from public use, it follows that such withdrawn portion becomes patrimonial
property which can be the object of an ordinary contract.

Article 422 of the Civil Code expressly provides that "Property of public dominion, when no
longer intended for public use or for public service, shall form part of the patrimonial property of
the State."

Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and
unequivocal terms, states that: "Property thus withdrawn from public servitude may be used or
conveyed for any purpose for which other real property belonging to the City may be lawfully
used or conveyed."

Accordingly, the withdrawal of the property in question from public use and its subsequent sale
to the petitioner is valid. Hence, the petitioner has a registerable title over the lot in question.

WHEREFORE, the order dated October 11, 1974, rendered by the respondent court in Land
Reg. Case No. N-948, LRC Rec. No. N-44531 is hereby set aside, and the respondent court is
hereby ordered to proceed with the hearing of the petitioner's application for registration of title.

SO ORDERED.
 [G.R. No. 105912. June 28, 1999]

SPOUSES TEOFILO C. VILLARICO and MAXIMA A. FAUSTINO, Petitioners, v.HONORABLE

COURT OF APPEALS, REPUBLIC OF THE PHILIPPINES and MARCOS
CAMARGO, Respondents.

DECISION

PURISIMA, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals1 in CA-G.R. CV
No. 22608, affirming the decision of Branch 22 of the Regional Trial Court, Malolos, Bulacan,
which dismissed the application for confirmation of title in LRC Case No. 604-V-77.

The facts that matter are as follows:

On May 31, 1977, an application for confirmation of title was filed by the spouses, Teofilo
Villarico and Maxima Villarico, over a 1,834 square meter parcel of land in Ubihan,
Meycauayan, Bulacan, docketed as LRC Case No. 604-V-77 before the then court of First
Instance of Bulacan. Among others, applicants alleged that they are the absolute owners of
subject property, having bought the same from the spouses, Segundo Villarico (Teofilo's
father) and Mercedes Cardenas, that they and their predecessors-in-interest have been in
actual, open, adverse and continuous possession thereof for more than thirty (30) years, that
they are not aware of any mortgage or encumbrance thereon nor of any person having an
estate or interest therein, and that the land involve is not within the forest zone or government
reservation.

The application for land registration at bar was opposed by Marcos Camargo, who claims to be
the real owner thereof.2 The Government interposed its opposition, through the Director of
Forestry (now Director of Forest Management), averring that the land in question is part of the
public domain, within the unclassified area in Meycauayan, Bulacan per LC Map No. 637 dated
March 1, 1927 of the Bureau of Forest Management and consequently, not available for private
appropriation.

On May 23, 1989, the trial court of origin dismissed the case, ratiocinating thus:

"It is well settled in this jurisdiction that a certificate of title is void when it covers property of the
public domain classified as forest or timber and mineral lands. Any title thus issued on non-
disposable lots, even in the hands of an innocent purchaser for value, should be cancelled
(Lepanto Consolidated Mining vs. Dumyang, L-31666, April 30, 1979). There being no concrete
evidence presented in this case that the property in question was ever acquired by the
applicants or by the private oppositor (as attested to by the proceedings of B.L. Claim No. 38
(N) before the Bureau of Lands) or by their respective predecessors-in-interest either by
composition of title or by any other means for the acquisition of public lands, the property in
question must be held to be part of the public domain, especially so that the private parties had
not presented any Certification from the Bureau of Forestry attesting to the fact that the subject
property is no longer within the unclassified region of Meycauayan, Bulacan. Thus, if the land in
question still forms part of the public forest, then, possession thereof, however long, cannot
convert it into private property as it is within the exclusive jurisdiction of the Bureau of Forestry
and beyond the power and jurisdiction of the cadastral court to register under the Torrens
System (Republic vs. Court of Appeals, 89 SCRA 648).

WHEREFORE, premises considered, let this case be, as it is hereby DISMISSED.

No pronouncement as to costs.

SO ORDERED."3

Therefrom, petitioners appealed to the Court of Appeals, which came out with a judgment of
affirmance on June 26, 1992. Respondent court affirmed the findings of facts below, holding that
subject parcel of land is within the public domain not available for private appropriation.
Undaunted, petitioners found their way to this court via the present petition for review
on certiorari; placing reliance on the assignment of errors, that:

THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE FINDINGS OF THE

TRIAL COURT THAT BEFORE 1948 THERE WAS NO DOCUMENTATION IN FAVOR OF
EITHER PARTIES.

II

THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE FINDING OF THE

TRIAL COURT THAT BUENAVENTURA VILLARICO APPARENTLY DIED PRIOR TO 1914.

III

THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE FINDING OF THE

TRIAL COURT THAT TAX DECLARATION NO. 3912 IN THE NAME OF BUENAVENTURA
VILLARICO COULD HAVE BEEN CONTRIVED SENSING THAT A CONFLICT OVER THE
PROPERTY IN THE NEAR FUTURE WAS INEVITABLE.

IV

THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE FINDING OF THE

TRIAL COURT THAT THERE IS NO CONCRETE EVIDENCE PRESENTED TO THE EFFECT
THAT THE PROPERTY IN QUESTION WAS EVER ACQUIRED BY THE APPLICANT OR BY
THE PRIVATE OPPOSITOR OR BY THEIR RESPECTIVE PREDECESSORS-IN-INTEREST
THROUGH LAWFUL MEANS FOR THE ACQUISITION OF PUBLIC LANDS.

THE HONORABLE COURT OF APPEALS AND THE TRIAL COURT ERRED IN DISMISSING
THE CASE AT BAR.

The appeal is without merit and cannot prosper.

It bears stressing that the first, second, and third assigned errors relate to factual and
evidentiary matters which the Supreme Court does not inquire into in an appeal on certiorari.4 It
is well-settled that in a petition for review on certiorarias a mode of appeal under Rule 45 of the
Rules of Court, only questions of law may be raised.5The Supreme Court is not a trier of
facts.6Findings of fact by the trial court and the Court of Appeals are binding on the Supreme
Court.7cräläwvirtualibräry

In the case under consideration, the Court discerns no compelling reason to reverse such
findings arrived at by the trial court and affirmed by the respondent court, absent any showing of
any error, mistake, or misappreciation of facts. Records on hand indicate that the decisions
under attack accord with the law and the evidence.

As aptly observed by the respondent court, the primordial issue here is the character or
classification of the property applied for registration -- whether or not the same still forms part of
the public domain. On this crucial question, the trial court a quo and the Court of Appeals
correctly adjudged the area at stake as within the unclassified forest zone incapable of private
appropriation. Accordingly, the Court of Appeals held:

"xxx In the case at bar, as found by the court a quo, there has been no showing that a
declassification has been made by the Director of Forestry declaring the land in question as
disposable or alienable. And the record indeed discloses that applicants have not introduced
any evidence which would have led the court a quo to find or rule otherwise. xxx
And so, considering the foregoing, possession of the land in question by the applicants and/or
their predecessors-in-interest even for more than 30 years, as they allege, cannot convert the
land into private property capable of private appropriation." (Court of Appeals' Decision, pp. 4-5)

Indeed, forest lands cannot be owned by private persons.8 Possession thereof, no matter how
long, does not ripen into a registrable title. The adverse possession which may be the basis of a
grant of title or confirmation of an imperfect title refers only to alienable or disposable portions of
the public domain.9cräläwvirtualibräry

WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in CA-G.R. CV
No. 22608 AFFIRMED in toto. No pronouncements as to costs.

SO ORDERED.
G.R. No. L-57461 September 11, 1987

THE DIRECTOR OF LANDS, petitioner,

vs.
MANILA ELECTRIC COMPANY and HON. RIZALINA BONIFACIO VERA, as Presiding
Judge, Court of First Instance of Rizal, Pasig, Branch XXIII, respondents.

CORTES, J.:

This is an appeal by certiorari of a decision of the respondent Judge in Land Registration Case
No. N-10317 LRC Record No. N-54803 entitled "In Re: Application for Registration of Title,
Manila Electric Company, applicant," dated May 29, 1981.

The facts are not disputed. Manila Electric Company filed an amended application for
registration of a parcel of land located in Taguig, Metro Manila on December 4, 1979. On
August 17, 1976, applicant acquired the land applied for registration by purchase from Ricardo
Natividad (Exhibit E) who in turn acquired the same from his father Gregorio Natividad as
evidenced by a Deed of Original Absolute Sale executed on December 28, 1970 (Exhibit E).
Applicant's predecessors-in-interest have possessed the property under the concept of an
owner for more than 30 years. The property was declared for taxation purposes under the name
of the applicant (Exhibit 1) and the taxes due thereon have been paid (Exhibits J and J-1).

On May 29, 1981 respondent Judge rendered a decision ordering the registration of the
property in the name of the private respondent. The Director of Lands interposed this petition
raising the issue of whether or not a corporation may apply for registration of title to land. After
comments were filed by the respondents, the Court gave the petition due course. The legal
issue raised by the petitioner Director of Lands has been squarely dealt with in two recent cases
(The Director of Lands v. Intermediate Appellate Court and Acme Plywood & Veneer Co., Inc.,
etc., No. L-73002 (December 29, 1986), 146 SCRA 509. The Director of Lands v. Hon. Bengzon
and Dynamarine Corporation, etc., No. 54045 (July 28, 1987)], and resolved in the affirmative.
There can be no different answer in the case at bar.

In the Acme decision, this Court upheld the doctrine that open, exclusive and undisputed
possession of alienable public land for the period prescribed by law creates the legal fiction
whereby the land, upon completion of the requisite period ipso jure and without the need of
judicial or other sanction, ceases to be public land and becomes private property.

As the Court said in that case:

Nothing can more clearly demonstrate the logical inevitability of considering

possession of public land which is of the character and duration prescribed by
statute as the equivalent of an express grant from the State than the dictum of
the statute itself that the possessor(s) "... shall be conclusively presumed to have
performed all the conditions essential to a Government grant and shall be entitled
to a certificate of title .... " No proof being admissible to overcome a conclusive
presumption, confirmation proceedings would in truth be little more than a
formality, at the most limited to ascertaining whether the possession claimed is of
the required character and length of time; and registration thereunder would not
confer title, but simply recognize a title already vested. The proceedings would
not originallyconvert the land from public to private land, but only confirm such a
conversion already affected (sic) from the moment the required period of
possession became complete.

Coming to the case at bar, if the land was already private at the time Meralco bought it from
Natividad, then the prohibition in the 1973 Constitution against corporations holding alienable
lands of the public domain except by lease (1973 Const., Art. XIV, See. 11) does not apply.

Petitioner, however, contends that a corporation is not among those that may apply for
confirmation of title under Section 48 of Commonwealth Act No. 141, the Public Land Act.
As ruled in the Acme case, the fact that the confirmation proceedings were instituted by a
corporation is simply another accidental circumstance, "productive of a defect hardly more than
procedural and in nowise affecting the substance and merits of the right of ownership sought to
be confirmed in said proceedings." Considering that it is not disputed that the Natividads could
have had their title confirmed, only a rigid subservience to the letter of the law would deny
private respondent the right to register its property which was validly acquired.

WHEREFORE, the petition is DENIED. The questioned decision of the respondent Judge is
AFFIRMED.
G.R. No. L-12958 May 30, 1960

FAUSTINO IGNACIO, applicant-appellant,

vs.
THE DIRECTOR OF LANDS and LAUREANO VALERIANO, oppositors-appellees.

Acting Assistant Solicitor General Pacifico P. de Castro and Solicitor Crispin V. Bautista for
appellee Director of Lands.
Benjamin H. Aquino for appellee Laureano Veleriano.

MONTEMAYOR, J.:

Faustino Ignacio is appealing the decision of the Court of First Instance of Rizal, dismissing his
application for the registration of a parcel of land.

On January 25, 1950, Ignacio filed an application for the registration of a parcel of land
(mangrove), situated in barrio Gasac, Navotas, Rizal, with an area of 37,877 square meters.
Later, he amended his application by alleging among others that he owned the parcel applied
for by right of accretion. To the application, the Director of Lands, Laureano Valeriano and
Domingo Gutierrez filed oppositions. Gutierrez later withdrew his opposition. The Director of
Lands claimed the parcel applied for as a portion of the public domain, for the reason that
neither the applicant nor his predecessor-in-interest possessed sufficient title thereto, not having
acquired it either by composition title from the Spanish government or by possessory
information title under the Royal Decree of February 13, 1894, and that he had not possessed
the same openly, continuously and adversely under a bona fide claim of ownership since July
26, 1894. In his turn, Valeriano alleged he was holding the land by virtue of a permit granted him
by the Bureau of Fisheries, issued on January 13, 1947, and approved by the President.

It is not disputed that the land applied for adjoins a parcel owned by the applicant which he had
acquired from the Government by virtue of a free patent title in 1936. It has also been
established that the parcel in question was formed by accretion and alluvial deposits caused by
the action of the Manila Bay which boarders it on the southwest. Applicant Ignacio claims that
he had occupied the land since 1935, planting it with api-api trees, and that his possession
thereof had been continuous, adverse and public for a period of twenty years until said
possession was distributed by oppositor Valeriano.

On the other hand, the Director of Lands sought to prove that the parcel is foreshore land,
covered by the ebb and flow of the tide and, therefore, formed part of the public domain.

After hearing, the trial court dismissed the application, holding that the parcel formed part of the
public domain. In his appeal, Ignacio assigns the following errors:

I. The lower court erred in holding that the land in question, altho an accretion to the land
of the applicant-appellant, does not belong to him but forms part of the public domain.

II. Granting that the land in question forms part of the public domain, the lower court
nevertheless erred in not declaring the same to be the necessary for any public use or
purpose and in not ordering in the present registration proceedings.

III. The lower court erred in not holding that the land in question now belongs to the
applicant-appellant by virtue of acquisitive prescription, the said land having ceased to
be of the public domain and became the private or patrimonial property of the State.

IV. The lower court erred in not holding that the oppositor Director of Lands is now in
estoppel from claiming the land in question as a land of the public domain.

Appellant contends that the parcel belongs to him by the law of accretion, having been formed
by gradual deposit by action of the Manila Bay, and he cites Article 457 of the New Civil Code
(Article 366, Old Civil Code), which provides that:
 To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters.

The article cited is clearly inapplicable because it refers to accretion or deposits on the banks of
rivers, while the accretion in the present case was caused by action of the Manila Bay.

Appellant next contends that Articles 1, 4 and 5 of the Law of Waters are not applicable
because they refer to accretions formed by the sea, and that Manila Bay cannot be considered
as a sea. We find said contention untenable. A bay is a part of the sea, being a mere
indentation of the same:

Bay. — An opening into the land where the water is shut in on all sides except at the
entrance; an inlet of the sea; an arm of the sea, distinct from a river, a bending or
curbing of the shore of the sea or of a lake. 7 C.J. 1013-1014 (Cited in Francisco,
Philippine Law of Waters and Water Rights p. 6)

Moreover, this Tribunal has some cases applied the Law of Waters on Lands bordering Manila
Bay. (See the cases of Ker & Co. vs. Cauden, 6 Phil., 732, involving a parcel of land bounded
on the sides by Manila Bay, where it was held that such land formed by the action of the sea is
property of the State; Francisco vs. Government of the P.I., 28 Phil., 505, involving a land
claimed by a private person and subject to the ebb and flow of the tides of the Manila Bay).

Then the applicant argues that granting that the land in question formed part of the public
domain, having been gained from the sea, the trial court should have declared the same no
longer necessary for any public use or purpose, and therefore, became disposable and
available for private ownership. Article 4 of the Law of Waters of 1866 reads thus:

ART. 4. Lands added to the shores by accretions and alluvial deposits caused by the
action of the sea, form part of the public domain. When they are no longer washed by
the waters of the sea and are not necessary for purposes of public utility, or for the
establishment of special industries, or for the coastguard service, the Government shall
declare them to be the property of the owners of the estates adjacent thereto and as
increment thereof.

Interpreting Article 4 of the Law of Waters of 1866, in the case of Natividad vs. Director of
Lands, (CA) 37 Off. Gaz., 2905, it was there held that:

Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no
longer washed by the waters of the sea and is not necessary for purposes of public
utility, or for the establishment of special industries, or for coastguard service, the
government shall declare it to be the property of the owners of the estates adjacent
thereto and as an increment thereof. We believe that only the executive and possibly the
legislative departments have the authority and the power to make the declaration that
any land so gained by the sea, is not necessary for purposes of public utility, or for the
establishment of special industries, on for coast-guard service. If no such declaration
has been made by said departments, the lot in question forms part of the public domain.
(Natividad vs. Director of Lands, supra.)

The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y
Monteverde vs. Director of Lands, 93 Phil., 134, (cited in Velayo's Digest, VI. I, p. 52).

. . . is undoubtedly that the courts are neither primarily called upon, nor indeed in a
position to determine whether any public land are to be used for the purposes specified
in Article 4 of the Law of Waters.

Consequently, until a formal declaration on the part of the Government, through the executive
department or the Legislature, to the effect that the land in question is no longer needed for
coast guard service, for public use or for special industries, they continue to be part of the public
domain, not available for private appropriation or ownership.
Appellant next contends that he had acquired the parcel in question through acquisitive
prescription, having possessed the same for over ten years. In answer, suffice it to say that land
of the public domain is not subject to ordinary prescription. In the case of Insular Government
vs. Aldecoa & Co., 19 Phil., 505 this Court said:

The occupation or material possession of any land formed upon the shore by accretion,
without previous permission from the proper authorities, although the occupant may
have held the same as owner for seventeen years and constructed a wharf on the land,
is illegal and is a mere detainer, inasmuch as such land is outside of the sphere of
commerce; it pertains to the national domain; it is intended for public uses and for the
benefit of those who live nearby.

We deem it unnecessary to discuss the other points raised in the appeal.

In view of the foregoing, the appealed decision is hereby affirmed, with costs.
G.R. No. L-19570 April 27, 1967

JOSE V. HILARIO, JR., plaintiff-appellant,

vs.
THE CITY OF MANILA, defendant-appellee,
DIRECTOR OF PUBLIC WORKS, CITY ENGINEER OF MANILA, FERNANDO BUSUEGO
and EUGENIO SESE,defendants-appellants,
MAXIMO CALALANG, intervenor;
DIRECTOR OF MINES, intervenor.

Maximo Calalang for plaintiff and appellant.

Gregorio Ejercito and Leandro L. Arguelles for defendant-appellee City of Manila.
Office of the Solicitor General for other defendants and appellants.

BENGZON, J.P., J.:

Dr. Jose Hilario was the registered owner of a large tract of land — around 49 hectares in area
— located at Barrio Guinayang, in San Mateo, Rizal.1 Upon his death, this property was
inherited by his son, herein plaintiff-appellant Jose Hilario, Jr., to whom a new certificate of
title2 was issued.

During the lifetime of plaintiff's father, the Hilario estate was bounded on the western side by the
San Mateo River.3To prevent its entry into the land, a bamboo and lumber post dike or ditch was
constructed on the northwestern side. This was further fortified by a stonewall built on the
northern side. For years, these safeguards served their purpose. However, in 1937, a great and
extraordinary flood occurred which inundated the entire place including the neighboring barrios
and municipalities. The river destroyed the dike on the northwest, left its original bed and
meandered into the Hilario estate, segregating from the rest thereof a lenticular place of land.
The disputed area is on the eastern side of this lenticular strip which now stands between the
old riverbed site and the new course.4

In 1945 the U.S. Army opened a sand and gravel plant within the premises5 and started
scraping, excavating and extracting soil, gravel and sand from the nearby areas the River. The
operations eventually extended northward into this strip of land. Consequently, a claim for
damages was filed with the U.S. War Department by Luis Hilario, the then administrator of Dr.
Hilario's estate. The U.S. Army paid.6 In 1947, the plant was turned over to herein defendants-
appellants and appellee who took over its operations and continued the extractions and
excavations of gravel and sand from the strip of land along an area near the River.

On October 22, 1949, plaintiff filed his complaint7 for injunction and damages against the
defendants City Engineer of Manila, District Engineer of Rizal, the Director of Public Works, and
Engr. Busuego, the Engineer-in-charge of the plant. It was prayed that the latter be restrained
from excavating, bulldozing and extracting gravel, sand and soil from his property and that they
solidarily pay to him P5,000.00 as damages. Defendants' answer alleged, in affirmative
defense, that the extractions were made from the riverbed while counterclaiming with a prayer
for injunction against plaintiff—who, it was claimed, was preventing them from their operations.

Subsequently, the Bureau of Mines and Atty. Maximo Calalang were respectively allowed to join
the litigation as intervenors. The former complained that the disputed area was within the bed of
the river so that plaintiff should not only be enjoined from making extractions therefrom but
should also be ordered to pay the fees and penalties for the materials taken by him. On the
other hand, the latter claimed that he was authorized by plaintiff to extract materials from the
disputed area but this notwithstanding, the Provincial Treasurer of Rizal collected from him a
sand and gravel fee which would be an illegal exaction if the disputed area turns out to be of
private ownership. Answers to the two complaints in intervention were duly filed by the affected
parties.

On March 14, 1954, defendants filed a petition for injunction against plaintiff and intervenor
Calalang in the same case, alleging that the latter have fenced off the disputed area in
contravention of an agreement8 had between the latter and the Director of Public Works wherein
he defendants were allowed to continue their operations but subject to the final outcome of the
pending suit. It was prayed that plaintiff and intervenor Calalang be ordered to remove the fence
and allow defendants' men to continue their operations unhampered. Opposition to this petition
was filed by the other side, with a prayer for counter injunction. On March 23, 1954, the lower
court issued an order maintaining the status quo and allowing the defendants to continue their
extractions from the disputed area provided a receipt9 in plaintiff's favor be issued for all the
materials taken.

On May 13, 1954, plaintiff amended his complaint. Impleaded as additional defendants were the
City of Manila,10the Provincial Treasurer of Rizal,11 and Engr. Eugenio Sese, the new Engineer-
in-charge of the plant. Plaintiff also converted his claim to one purely for damages directed
against the City of Manila and the Director of Public Works, solidarily, in the amount of
P1,000,000.00, as the cost of materials taken since 1949, as well as those to be extracted
therefrom until defendants stop their operations.

Came the separate amended answers of the several defendants. Manila City denied ownership
of the plant and claimed that the City Engineer, acted merely as a deputy of the Public Works
Director. The other defendants12 put up, as special defense, the agreement between plaintiff
and the Public Works Director, and asserted a P1.2 million counterclaim for damages against
plaintiff. The rest13 renewed the same defense; that the disputed area was part of the public
domain, since it was situated on the riverbanks.

On November 3, 1954, the defendant City Engineer of Manila filed a petition to delimit the area
of excavation and asked the lower court to authorize his men to extend their operations west of
the camachile tree in the disputed area. This met vigorous opposition from plaintiff and
intervenor Calalang. On May 27, 1955, the petition was denied.

Finally, on December 21, 1956, the lower court rendered its decision on the merits. The
dispositive portion provided:14

WHEREFORE, judgment is hereby rendered against the defendants City of Manila and
the Director of Public Works, to pay solidarily the herein plaintiff the sum of P376,989.60,
as the cost of gravel and sand extracted from plaintiff's land, plus costs. Judgment is
likewise hereby rendered against the defendant Provincial Treasurer of Rizal, ordering
him to reimburse to intervenor Maximo Calalang the amount of P236.80 representing
gravel fees illegally collected. Finally, defendants herein are perpetually enjoined from
extracting any sand or gravel from plaintiff's property which is two-fifths northern portion
of the disputed area.

It is so ordered.

None of the parties litigants seemed satisfied with this decision and they all sought a
reconsideration of the same. On August 30, 1957, the lower court resolved the motions to
reconsider with an order, the dispositive portion of which provided:15

WHEREFORE, the court hereby denies the motion for reconsideration filed by plaintiff
and intervenor Calalang; dismisses the complaint with respect to defendant City of
Manila; holds that the northern two-fifths portion of the area in controversy belongs to the
plaintiff with right to the immediate possession thereof and hereby enjoins the
defendants and intervenor Bureau of Mines to vacate the same and to stop from
extracting gravel thereon. The Court however hereby dismisses the case against the
defendant Bureau of Public Works and its agents and employees insofar as the claim for
money is concerned without prejudice to plaintiffs taking such action as he may deem
proper to enforce said claim against the proper party in accordance with law.

It is so ordered.

Still unsatisfied, plaintiff and intervenor Calalang filed a second motion for reconsideration. The
lower court stood firm on its ruling of August 30, 1957.16
Hence, this appeal.17 The defendants Director of Public Works, City Engineer of Manila, and
Engrs. Busuego and Sese have also appealed from the declaration made by the lower court
that the northern two-fifths of the disputed area belongs to plaintiff Hilario.

The parties herein have presented before this Court mixed questions of law and fact for
resolution and adjudication. Foremost among them is this legal query; when a river, leaving its
old bed, changes its original course and opens a new one through private property, would the
new riverbanks lining said course be of public ownership also?18

The defendants answer in the affirmative. They claim that under the Law of Waters of August 3,
1866, the riverbanks are, by definition, considered part of the riverbed which is always of public
ownership. On the other hand, plaintiff would have the question resolved in the negative. He
maintains that not all riverbanks are of public ownership because: (1) Art. 372 of the old Civil
Code, which governs this particular case, speaks only of the new bed; nothing is said about the
new banks; (2) Art. 73 of the Law of Waters which defines the phrase "banks of a river" cannot
be applied in the case at bar in conjunction with the other articles cited by defendants since that
article applies only to banks of natural riverbeds and the present, River is not in its natural bed;
and (3) if all banks were of public ownership, then Art. 553 of the old Civil Code and the second
sentence, first paragraph of Art. 73 of the Law of Waters can never have any application.

Since the change in the course of the River took place in 1937, long before the present Civil
Code took effect,19 the question before Us should be determined in accordance with the
provisions of the old Civil Code and those of the Law of Waters of August 3, 1866.

We agree with defendants that under the cited laws, all riverbanks are of public ownership —
including those formed when a river leaves its old bed and opens a new course through a
private estate. Art. 339 of the old Civil Code is very clear. Without any qualifications, it provides:

Property of public ownership is —

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shores, roadsteads, and that of a similar character;
(Emphasis supplied)

Moreover, as correctly contended by defendants, the riverbank is part of the riverbed. Art. 73 of
the Law of Waters which defines the phrase "banks of a river" provides:

By the phrase "banks of a river" is understood those lateral strips or zones of its
bed which are washed by the stream only during such high floods as do not cause
inundations. ... (Emphasis supplied)

The use the of words "of its bed [de sus alveos]" clearly indicates the intent of the law to
consider the banks — for all legal purposes — as part of the riverbed. The lower court
also ruled — correctly — that the banks of the River are paint of its bed.20 Since
undeniably all beds of rivers are of public ownership,21 it follows that the banks, which
form part of them, are also of public ownership.

Plaintiff's contention that Arts. 70 and 73 of the Law of Waters cannot apply because Art. 312 of
the old Civil Code mentions only the new bed but omits the banks, and that said articles only
apply to natural — meaning original — bed and banks is untenable. Art. 70, which defines beds
of rivers and creeks, provides:

The natural bed or channel of a creek or river is the ground covered by its waters during
the highest [ordinary] floods.22 (Emphasis supplied)

Art. 372 of the old Civil Code which provides that —

Whenever a navigable or floatable river changes its course from natural causes and
opens a new bed through a private estate, the new bed shall be of public ownership, but
the owner of the estate shall recover it in the event that the waters leave it dry again
 either naturally or as the result of any work legally authorized for this purpose.
(Emphasis supplied)

did not have to mention the banks because it was unnecessary. The nature of the banks
always follows that of the bed and the running waters of the river. A river is a compound
concept consisting of three elements: (1) the running waters, (2) the bed and (3) the
banks. 23 All these constitute the river. American authorities are in accord with this view:

'River' consists of water, a bed and banks.24

A "river" consists of water, a bed and banks, these several parts constituting the river,
the whole river. It is a compound idea; it cannot exist without all its paints. Evaporate the
water, and you have a dry hollow. If you could sink the bed, instead of a river, you would
have a fathomless gulf. Remove the banks, and you have a boundless flood.25

Since a river is but one compound concept, it should have only one nature, i.e., it should either
be totally public or completely private. And since rivers are of public ownership,26 it is implicit
that all the three component elements be of the same nature also. As Manresa commented:

Realmente no puede imaginarse un rio sin alveo y sin ribera; de suerte que al decir el
Codigo Civil que los rios son de dominio publico, parece que debe ir implicito el dominio
publico de anquellos tres elementos que integran el rio.27

However, to dispel all possible doubts, the law expressly makes all three elements public. Thus,
riverbanks and beds are public under Arts. 339 and 407, respectively, of the Code, while the
flowing waters are declared so under Art. 33, par. 2 of the Law of Waters of 1866.

Articles 70, 72 and 73 of the Law of Waters speak of natural beds and their banks. Plaintiff now
equates the term "natural" with the word "original" so that a change in the course of a river
would render those articles inapplicable. However, the premise is incorrect. Diccionario De La
Real Academia Española defines the word "natural" as follows:

NATURAL — perteneciente a la naturaleza o conforme a la calidad o propriedad de las

cosas; nativo, originario de un pueblo o nacion; hecho con verdad, ni artificio, mezcla ni
composicion alguna; ingenuo y sin doblez en su modo de proceder; diceze tambien de
las cosas que imitar a la naturaleza con propiedad; regular y que comunmente sucede,
y por eso, facilmente creible; que se produce por solas las fuerzas de la naturaleza,
como contrapuesto a sobre natural y milagroso, (Emphasis supplied)

"Natural" is not made synonymous to "original" or "prior condition". On the contrary, even if a
river should leave its original bed so long as it is due to the force of nature, the new course
would still fall within the scope of the definition provided above. Hence, the law must have used
the word "natural" only because it is in keeping with the ordinary nature and concept of a river
always to have a bed and banks.

Plaintiff's third point is not lightly to be taken. Indeed, it would seem possible to acquire private
ownership of banks under Art. 553 of the old Civil Code which provides:

Las riberas de los rios, aun cuando sean de dominio privado, estan sujetas en toda su
extension y en sus margenes, en una zona de tres metros, a la servidumbre de uso
publico en interes general de la navegacion, la flotacion, la pesca y el salvamento.
(Emphasis supplied) .

And plaintiff is not without jurisprudential backing for in Commonwealth vs. Gungun,28 it
was said that the private ownership of the banks was not prohibited. His point is then
neatly brought home with the proposition that it is precisely when a river changes its
course and opens a new bed through a private estate that there can be private
ownership of the banks.

A study of the history of Art. 553 will however reveal that it was never intended to authorize the
private acquisition of riverbanks. That could not have been legally possible in view of the
legislative policy clearly enunciated in Art. 339 of the Code that all riverbanks were of public
ownership. The article merely recognized and preserved the vested rights of riparian owners
who, because of prior law or custom, were able to acquire ownership over the banks. This was
possible under the Siete Partidas which was promulgated in 1834 yet.29 Under Law 6, Title 28,
Partidas 3, the banks of rivers belonged to the riparian owners, following the Roman Law
rule.30 In other words, they were privately owned then. But subsequent legislation radically
changed this rule. By the Law of Waters of August 3, 1866, riverbanks became of public
ownership, albeit impliedly only because considered part of the bed — which was public — by
statutory definition.31 But this law, while expressly repealing all prior inconsistent laws, left
undisturbed all vested rights then existing.32 So privately owned banks then continued to be so
under the new law, but they were subjected by the latter to an easement for public use. As Art.
73 provides:

Se entienden por riberas de un rio las fajas o zonis laterales de sus alveos que
solamente sor bañadas por las aguas en las crecidas que no causan inundacion. El
dominio privado de las riberas esta suieto a la survidumbre de tres metros de zona para
uso publico, en el interest general de la navegacion, la flotacion, la pesca y el
salvamento. ... (Emphasis supplied).1äwphï1.ñët

This was perhaps the reconciliation effected between the private ownership of the banks, on the
one hand, and the policy of the law on the other hand, to devote all banks to public use.33 The
easement would preserve the private ownership of the banks and still effectuate the policy of
the law. So, the easement in Art. 73 only recognized and preserved existing privately owned
banks; it did not authorize future private appropriation of riverbanks.

The foregoing observation is confirmed by the still subsequent Law of Waters of June 13, 1879,
which was principally based on the Law of August 3, 1865.34 Art. 36 of the new law, which was a
substantial reenactment of Art. 73 of the Law of Waters of August 3, 1866, reads:

Las riberas, aun cuando sean de dominio privado en virtud de antigue ley o de
costumbre, estan sujetas en toda su extension las margenes en una zona de tres
metros, a la servidumbre de uso publico en interes general de la navegacion, la flotacion
la pesca y el salvamento. ... (Emphasis supplied)

The new law also affirmed the public ownership of rivers and their beds, and the treatment of
the banks as part of the bed.35 But nowhere in the law was there any provision authorizing the
private appropriation of the banks. What it merely did was to recognize the fact that at that time
there were privately owned banks pursuant to the SietePartidas, and to encumber these with an
easement for public use.

However, the public nature of riverbanks still obtained only by implication. But with the
promulgation of the Civil Code of 1889, this fact was finally made explicit in Art. 339 thereof.
Riverbanks were declared as public property since they were destined for public use. And the
first paragraph of Art. 36 of the Law of Waters of 1879 was substantially reenacted in Art. 553 of
the Code.36 Hence, this article must also be understood not as authorizing the private
acquisition of riverbanks but only as recognizing the vested titles of riparian owners who already
owned the banks.

The authority, then, for the private ownership of the banks is neither the old Civil Code nor the
Law of Waters of 1866 but the Siete Partidas. Unfortunately, plaintiff cannot invoke it. Law 6,
Title 28, Partida 3, which provides for private ownership of banks, ceased to be of force in this
jurisdiction as of 1871 yet when the Law of Waters of August 3, 1866, took effect.37 Since the
change in the course of the River took place in 1937, the new banks which were formed could
not have been subjected to the provisions of the Siete Partidas which had already been
superseded by then.

Coming to the factual issues: both parties assail the conclusion made by the lower court that
only the northern two-fifths of the disputed area remained as plaintiff's private property. This
conclusion was apparently based on the findings that the portion where rice and corn were
found38 in the ocular inspection of June 15, 1951, was on the northern two-fifths of the disputed
area; that this cannot be a part of the bed because of the existence of vegetation which could
not have grown underwater, and that this portion is man-made. However, there is no evidentiary
basis for these findings. The area indicated by Nos. 1 and 2 in Exh. D-1 where no excavations
had been made, appears to be more on the south-western one-fourth of the disputed area. The
American cases39 cited by the lower court cannot apply here. Our Law of Waters, in defining
"beds" and considers the latter is part of the former. Those cited cases did not involve a similar
statutory provision. That plants can and do grow on the banks which otherwise could not have
grown in the bed which is constantly subjected to the flow of the waters proves the distinction
between "beds" and "banks" in the physical order. However, We are dealing with the legal order
where legal definitions prevail. And apart from these considerations, We also note the
considerable difficulty which would attend the execution of the ruling of the lower court. The
latter failed to indicate fixed markers from which an exact delimitation of the boundaries of the
portion could be made. This flaw is conducive to future litigations.

Plaintiff's theory is that the disputed area, although covered at times by flood waters, cannot be
considered as within the banks of the River because: (1) such floods are only accidental, and
(2) even if they are regular, the flooding of the area is due to the excavations and extractions
made by defendants which have caused the widening of the channel.40 Defendants claim,
however, that the area is always covered by the normal yearly floods and that the widening of
the channel is due to natural causes.

There is a gravel pit41 located along the west side of the River. This is about 500 meters
long.42 A greater part of this pit occupies a portion of the strip of land that was sliced by the
River from the rest of the Hilario estate. As shown in Exhs. D and D-1, this strip of land is that
western segment of the Hilario estate bounded on the west by the same lines connecting stakes
23 through 27, which form part of the western boundary of the estate, and on the east, bounded
by the western waterline of the River.

Now, the disputed area, generally speaking,43 is only that part of the gravel pit which is within
the strip of land. Its northern tip is that point where the so-called "secondary bank" line
intersects the west River waterline up north; its southern boundary is along the line connecting
stakes 23 and 24. From these two ends, the disputed area measures approximately 250 meters
long. The eastern boundary is the western River waterline at low tide and the western boundary
is the "secondary bank" line, a line passing near stake 24 and running almost parallel to the line
connecting stakes 25 and 26. Around the later part of 1949, the disputed area was about 150 to
160 meters wide.44This increased to about 175 to 180 meters by the later part of 1950. And by
January, 1953, the distance from the "secondary bank" line to the west waterline was about 230
meters.45

This increasing width of the disputed area could be attributed to the gradual movement of the
River to the east. Since it entered into the Hilario estate, the River has not stayed put.46 Vicente
Vicente, plaintiff's witness declared47that after the River changed its course in 1937, the
distance between the old and the new river sites was about 100 meters. Exh. D-2 shows that in
1943, the south end of the River was about 5 meters southeast of stake 24.48Honorato Sta.
Maria, another witness for plaintiff, indicated the flow of this course with a blue line in Exh. D-
1.49 This blue line is about 100 meters from the line connecting stakes 25 and 26, which was
also the east boundary of the old River.50 Around 1945 to 1949, the River was about 193
meters51 east of this line. This measurement is based on the testimonies of two defense
witnesses52 and stated that during that period, the River passed along the Excavated Area and
the New Accretion Area53 sites, as shown in Exh. 54. By the later part of 1949 up to November
1950, the west waterline was from 248 to 270 meters54 east of the aforesaid boundary line. And
finally in January, 1953, based on the scale in Exh. 3-Calalang, the west waterline was from 300
to 305 meters away already. Hence, from 100 meters in 1937, the River had moved to 305
meters eastward in 1953.

There are two questions to be resolved here. First, where on the strip of land are the lateral
borders of the western riverbank? And second, where have defendants made their extractions?

Anent the first question, the key is supplied by Art. 73 of the Law of Waters which defines the
limits of banks of rivers —
 By the phrase "banks of a river" is understood those lateral strips or zones of its bed
which are washed by the stream only during such high floods as do not cause in
inundations. ... (Emphasis supplied)

The farthest extremity of the bank on the west side would, therefore, be that lateral line
or strip which is reached by the waters during those high floods that do not cause
inundations. In other words, the extent reached by the waters when the River is at high
tide.

However, there is a difference between the topography of the two sides immediately adjoining
the River. The line indicated as "primary bank"55 in Exh. 3-Calalang, which is on the east, is
about 3 meters high and has a steep grade right at the edge where it drops almost vertically to
the watercourse level. The precipice here, which is near the east waterline, is very easily
detectible. But the opposite side has no such steep activity. In fact, it is almost flat with the bed
of the River, especially near the water edge, where it is about 30 to 50 cms. high only. But it
gradually slopes up to a height of about 2 to 2-½ meters along the line indicated as "secondary
bank", which is quite far from the waterline. This "bank" line is about 1-½ meters higher than the
level of the gravel pit and there are erosions here. This is about 175 meters west from the
November 1950 waterline, and about 100 meters west from the camachile tree.56

During the dry season, the waterlevel of the River is quite low — about knee-deep only.
However, during the rainy season, the River generally becomes swollen, and the waterlevel
rises, reaching up to the neck.57 However, considering the peculiar characteristics of the two
sides banking the river, the rise in the waterlevel would not have the same effect on the two
sides. Thus, on the east, the water would rise vertically, until the top of the "primary bank" is
reached, but on the west, there would be a low-angled inclined rise, the water covering more
ground until the "secondary bank" line is reached. In other words, while the water expansion on
the east is vertical, that on the west is more or less lateral, or horizontal.

The evidence also shows that there are two types of floods in the area during the rainy
season.58 One is the so-called "ordinary" flood, when the river is swollen but the flowing water is
kept within the confines, of the "primary" and "secondary" banks. This occurs annually, about
three to four times during the period. Then there is the "extraordinary" flood, when the waters
overflow beyond the said banks, and even inundate the surrounding areas. However, this flood
does not happen regularly. From 1947 to 1955, there were only three such floods.59 Now,
considering that the "ordinary" flood easily cover the west side — since any vertical rise of the
waterlevel on the east would necessarily be accompanied by a lateral water expansion on the
west — the "inundations" which the law mentions must be those caused by the "extraordinary"
floods which reach and overflow beyond both "primary" and "secondary" banks. And since the
"primary" bank is higher than the "secondary" bank, it is only when the former is reached and
overflowed that there can be an inundation of the banks — the two banks. The question
therefore, may be stated thus: up to what extent on the west side do the highest flood waters
reach when the "primary" bank is not overflowed?

Defendants have presented several witnesses who testified on the extent reached by the
ordinary flood waters. David Ross, a bulldozer operator at the plant since 1945, testified60 that
from 1945 to 1949, when the River was still passing along the site where the camachile tree is
located, the annual flood waters reached up to the "secondary bank" line. These floods usually
took from 3 to 5 days to recede, during which time their work was suspended. Corroboration is
supplied by Macario Suiza, a crane operator in the plant since 1945, and by Fidel Villafuerte, a
plant employee since 1946. Suiza stated61 that from 1947 to 1949, the area enclosed within the
blue lines and marked as Exh. 54-B — which includes the New Accretion Area was always
covered by water when it rained hard and they had to stop work temporarily. The western
extremity of this area reaches up to the "secondary bank" line. Villafuerte stated62 that in the
ordinary floods when the water was just 50 cm. below the top of the "primary bank", the waters
would go beyond the camachile tree by as much as 100 meters westward and just about reach
the "secondary bank" line. Further corroboration is supplied by plaintiff's own evidence. Exh. 1-
Calalang states that from 1947 to 1949, based on the casual observations made by geologist
David Cruz, the area between the "primary" and "secondary" banks were always covered by the
non-inundating ordinary floods.
From 1950 to 1952, We have the testimony of Ross who stated63 that there were still floods but
they were not as big anymore, except one flood in 1952, since the River had already moved to
the east. Engr. Ricardo Pacheco, who made a survey of the disputed area in November 1952,
and who conducted actual observations of the extent of the water reach when the river was
swollen, testified64 that the non-inundating flood regularly reached up to the blue zigzag line
along the disputed area, as shown in Exh. I-City Engineer Manila. This blue line, at the point
where it intersects line BB,65 is about 140 meters west of the waterline and about 20 meters
west of the camachile tree. His testimony was based on three floods66 which he and his men
actually recorded. Corroboration is again supplied by Exh. 1-Calalang. According to Cruz'
report, the floods in 1950 and 1951 barely covered the disputed area. During the normal days of
the rainy season, the waters of the swollen river did not reach the higher portions of the gravel
pit which used to be submerged. One cause for this was the lesser amount of rainfall from 1949
to 1951. But two floods occurred from October 16 to 28, 1952, which overflowed the whole area
and inundated the banks. From 1953 to 1955, when the River was farther away to the east, the
flood waters still covered the west side.67 Testifying on the extent reached by the water during
the rainy season in 1954, Ross stated68 that it reached up to the camachile tree only. The last
and latest data comes from Engr. Magbayani Leaño, the Engineer-in-charge of the plant from
August 1954. He testified69 that as of December 1955, when the disputed area was underwater,
the water reach was about 20 meters or less to the east from the camachile tree.

From all the foregoing, it can be safely concluded: (1) that from 1945 to 1949, the west bank of
the River extended westward up to the "secondary bank" line; (2) that from 1950 to 1952, this
bank had moved, with the River, to the east its lateral borders running along a line just 20
meters west of the camachile tree; and (3) that from 1953 to 1955, the extremities of the west
bank further receded eastward beyond the camachile tree, until they lay just about 20 meters
east of said tree.

To counteract the testimonies of the defense witnesses, plaintiff presented two rebuttal
witnesses70 who told a somewhat different story. However, their testimonies are not convincing
enough to offset the dovetailing testimonies of the defense witnesses who were much better
qualified and acquainted with the actual situs of the floods. And said defense witnesses were
corroborated by plaintiffs' own evidence which contradicts the aforesaid rebuttal witnesses.

However, plaintiff maintains that the floods which cover the area in question are merely
accidental and hence, under Art. 77 of the Law of Waters,71 and following the ruling
in Government vs. Colegio de San Jose,72 he is deemed not to have lost the inundated area.
This is untenable. Plaintiff's own evidence73 shows that the river floods with annual regularity
during the rainy season. These floods can hardly be called "accidental." The Colegio de San
Jose case is not exactly in point. What was mainly considered there was Art. 74 of the Law of
Waters relating to lakes, ponds and pools. In the case at bar, none of these is involved.

Also untenable is plaintiff's contention that the regular flooding of the disputed area was due to
the continuous extraction of materials by defendants which had lowered the level of said area
and caused the consequent widening of the channel and the river itself. The excavations and
extractions of materials, even from the American period, have been made only on the strip of
land west of the River.74 Under the "following-the-nature-of-things" argument advanced by
plaintiff, the River should have moved westward, where the level of the ground had been
lowered. But the movement has been in the opposite direction instead. Therefore, it cannot be
attributed to defendants' operation. Moreover, plaintiff's own evidence indicates that the
movement eastward was all due to natural causes. Thus, Exh. 1-Calalang shows that the
movement eastward of the channel by as much as 31 meters, from 1950 to 1953, was due to
two typhoons which caused the erosion of the east bank and the depositing of materials on the
west side which increased its level from as much as .93 to 2 meters.

Plaintiff's assertion that the defendants also caused the unnatural widening of the River is
unfounded. Reliance is made on the finding by the lower court that in 1943, the River was only
60 meters wide as shown in Exh. D-2, whereas in 1950, it was already 140 meters wide as
shown in Exh. D. However, Exh. D-2 only shows the width of the River near the southwestern
boundary of the Hilario estate. It does not indicate how wide it was in the other parts, especially
up north. And Eligio Lorenzo, plaintiff's own witness, admitted75 on cross-examination that the
width of the new river was not uniform. This is confirmed by Exhs. D and D-1 which show that
the new river was wider by as much as 50% up north than it was down south. The 140-meter
distance in Exh. D was at the widest part up north whereas down south, near the mouth of the
Bulobok River, it was only 70 meters wide. Lastly, the scale in Exh. 3-Calalang will show that in
January 1953, the River, near the same point also, was less than 50 meters wide.

The only remaining question now is to determine if the defendants have really confined their
operations within the banks of the River as alleged by them. To resolve this, We have to find out
from what precise portion in the disputed area the defendants have extracted gravel and sand
since they did not extract indiscriminately from within the entire area. None of the parties' briefs
were very helpful but the evidence on record discloses that defendants made their extractions
only within specified areas during definite periods.

From 1947 to the early part of 1949, the defendants conducted their operations only in the New
Accretion Area along a narrow longitudinal zone contiguous to the watercourse then. This zone,
marked as Exh. 2-City Engineer Manila, is about one (1) km. long and extends northward up to
pt. 50.35 in Exh. 54. However, no extractions nor excavations were undertaken west of this
zone, i.e., above the "temporary bank" line.76 These facts are corroborated by plaintiff's
witnesses. That the extractions were near the river then finds support in Vicente's
testimony77 while Leon Angeles and Mrs. Salud Hilario confirm the fact that defendants have not
gone westward beyond the "temporary bank" line.78 This line is located east of the "secondary
bank" line, the lateral extremity of the west bank then.

In the later part of 1949, plaintiff prohibited the defendants from extracting along the New
Accretion Area and constructed a fence across the same. This forced the defendants to go
below southeast of — the "Excavated Area" and the New Accretion Area sites in Exh.
54.79 Engr. Busuego, testifying80 in 1952, indicated their are of extraction as that enclosed within
the red dotted line in Exh. D-1 which lies on the south end of the strip of land. Only a small
portion of the southeastern boundary of the disputed area is included. The ocular inspection
conducted on June 15, 1951, confirms this.81 Exh. 4-Calalang shows the total amount of
materials taken from within the area from 1949 to 1951.82 Thus, from 1950 up to 1953, although
the defendants were able to continue their operations because of the agreement between the
plaintiff and the Director of Public Works,83 they were confined only to the southeastern portion
of the disputed area. On the other hand, the lateral extremities of the west bank then ran along
a line about 20 meters west of the camachile tree in the New Accretion Area.

From 1954 to 1955, defendants' area of operation was still farther near of the New Accretion
Area. They were working within a confined area along the west waterline, the northern and
western boundaries of which were 20 meters away east from the camachile tree.84 Ross
indicated85 this zone in Exh. 54 as that portion on the southern end of the disputed area
between the blue lines going through the words "Marikina River Bed" and the red zigzag line
indicating the watercourse then. Engr. Leaño even stated, 86 that they got about 80% of the
materials from the river itself and only 20% from the dry bed. The sand and gravel covered by
Exhs. LL to LL-55 were all taken from here. The foregoing facts are not only corroborated by
Mrs. Hilario87 but even admitted by the plaintiff in his opposition88 to defendants' petition to
extend their area of operation west of the camachile tree. And because their petition was
denied, defendants could not, and have not,89 gone beyond the lateral line about 20 meters east
from said tree, which has already been established as the lateral extremity of the west bank
during the period.

It appears sufficiently established, therefore, that defendants have not gone beyond the
receding western extremities of the west riverbank. They have confined their extraction of gravel
and sand only from within the banks of the river which constitute part of the public domain —
wherein they had the right to operate. Plaintiff has not presented sufficient evidence that
defendants have gone beyond the limits of the west bank, as previously established, and have
invaded his private estate. He cannot, therefore, recover from them.

As a parting argument, plaintiff contends that to declare the entire disputed area as part of the
riverbanks would be tantamount to converting about half of his estate to public ownership
without just compensation. He even adds that defendants have already exhausted the supply in
that area and have unjustly profited at his expense. These arguments, however, do not detract
from the above conclusions.
First of all, We are not declaring that the entire channel, i.e., all that space between the
"secondary bank" line and the "primary bank" line, has permanently become part of the
riverbed. What We are only holding is that at the time the defendants made their extractions, the
excavations were within the confines of the riverbanks then. The "secondary bank" line was the
western limit of the west bank around 1945 to 1949 only. By 1955, this had greatly receded to
the line just 20 meters east of the camachile tree in the New Accretion Area. All that space to
the west of said receding line90 would still be part of plaintiff's property — and also whatever
portion adjoining the river is, at present, no longer reached by the non-inundating ordinary
floods.

Secondly, it is not correct to say that plaintiff would be deprived of his property without any
compensation at all. Under Art. 370 of the old Civil Code, the abandoned bed of the old river
belongs to the riparian owners either fully or in part with the other riparian owners. And had the
change occurred under the Civil Code of the Philippines, plaintiff would even be entitled to all of
the old bed in proportion to the area he has lost.91

And, lastly, defendants cannot be accused of unjustly profiting at plaintiff's expense. They were
not responsible for the shifting of the River. It was due to natural causes for which no one can
be blamed. And defendants were extracting from public property then, under proper
authorization. The government, through the defendants, may have been enriched by chance,
but not unjustly.

Considering the conclusions We have thus reached, the other questions involved in the
remaining assignments of errors — particularly those apropos the doctrine of state immunity
from suit and the liability of defendant City of Manila — are rendered moot.

Wherefore, the decision and orders appealed from are hereby set aside and another judgment
is hereby entered as follows:

(1) Defendants City of Manila and the Director of Public Works and his agents and
employees are hereby absolved from liability to plaintiff since they did not extract
materials from plaintiff's property but from the public domain.

(2) All that portion within the strip of land in question, starting from the line running
parallel to the western waterline of the river and twenty meters east from the camachile
tree in the New Accretion Area measured along line AA in Exhs. 3-Calalang, 13 and 54,
and going to the west up to the western boundaries of the Hilario estate, is hereby
declared as not part of the public domain and confirmed as part of plaintiff's private
property. No costs. So ordered.
G.R. No. L-61647 October 12, 1984

REPUBLIC OF THE PHILIPPINES (DIRECTOR OF LANDS), petitioner,

vs.
THE HON. COURT OF APPEALS, BENJAMIN TANCINCO, AZUCENA TANCINCO REYES,
MARINA TANCINCO IMPERIAL and MARIO C. TANCINCO, respondents.

The Solicitor General for petitioner.

Martin B. Laurea for respondents.

GUTIERREZ, JR., J.:ñé+.£ªwph!1

This is a petition for certiorari to set aside the decision of the respondent Court of Appeals (now
Intermediate Appellate Court) affirming the decision of the Court of First Instance of Bulacan,
Fifth Judicial District, Branch VIII, which found that Lots 1 and 2 of Plan Psu-131892 are
accretion to the land covered by Transfer Certificate of Title No. 89709 and ordered their
registration in the names of the private respondents.

Respondents Benjamin Tancinco, Azucena Tancinco Reyes, Marina (should be "Maria")

Tancinco Imperial and Mario C. Tancinco are registered owners of a parcel of land covered by
Transfer Certificate of Title No. T-89709 situated at Barrio Ubihan, Meycauayan, Bulacan
bordering on the Meycauayan and Bocaue rivers.

On June 24, 1973, the private respondents filed an application for the registration of three lots
adjacent to their fishpond property and particularly described as follows: têñ.£îhqwâ£

Lot 1-Psu-131892
(Maria C. Tancinco)

A parcel of land (lot 1 as shown on plan Psu-131892), situated in the Barrio of

Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by Lot 3 of plan Psu-131892; on the SE., along lines 2-3-4, by
Meycauayan River; on the S.W., along fines 4-5-6-7-8-9, by Bocaue River; on the
NE., along line 9-10, by property of Joaquina Santiago; on the E., NE., and NW.,
along lines 10-11-12-1, by property of Mariano Tancinco (Lot 2, Psu-111877). ...
containing an area of THIRTY THREE THOUSAND NINE HUNDRED THIRTY
SEVEN (33,937) SQUARE METERS. ...

Lot 2-Psu-131892
(Maria C. Tancinco)

A parcel of land (Lot 2 as shown on plan Psu-131892), situated in the Barrio of

Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the E.,
along line 1-2, by property of Rafael Singson; on the S., along line 2-3, by
Meycauayan River; on the SW., along line 3-4, by Lot 3 of plan Psu-131892; and
on the N., along line 4-1, by property of Mariano Tancinco (Lot 1, Psu-111877).
... containing an area of FIVE THOUSAND FOUR HUNDRED FIFTY THREE
(5,453) SQUARE METERS. ...

Lot 3-Psu-131892
(Maria C. Tancinco)

A parcel of land (Lot 3 as shown on plan Psu-131892), situated in the Barrio of

Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by property of Mariano Tancinco (Lot 1, Psu-111877); and along
line 2-3, by Lot 2 of plan Psu-131892; on the S., along line 3-4, by Meycauayan
River, on the SW., along line 4-5, by Lot 1 of plan Psu-131892; and along line 5-6
by property of Mariano Tancinco (Lot 2, Psu-111877), and on the NW., along line
 6-1, by property of Joaquina Santiago. ... containing an area of ONE
THOUSAND NINE HUNDRED EIGHTY FIVE (1,985) SQUARE METERS. ...

On April 5, 1974, Assistant Provincial Fiscal Amando C. Vicente, in representation of the Bureau
of Lands filed a written opposition to the application for registration.

On March 6, 1975, the private respondents filed a partial withdrawal of the application for
registration with respect to Lot 3 of Plan Psu-131892 in line with the recommendation of the
Commissioner appointed by the Court.

On March 7, 1975, Lot 3 was ordered withdrawn from the application and trial proceeded only
with respect to Lots 1 and 2 covered by Plan Psu-131892.

On June 26, 1976, the lower court rendered a decision granting the application on the finding
that the lands in question are accretions to the private respondents' fishponds covered by
Transfer Certificate of Title No. 89709. The dispositive portion of the decision
reads: têñ.£îhqwâ£

WHEREFORE, it appearing that Lots 1 & 2 of plan Psu-131892 (Exh. H) are

accretions to the land covered by Transfer Certificate of Title No. 89709 of the
Register of Deeds of Bulacan, they belong to the owner of said property. The
Court, therefore, orders the registration of lots 1 & 2 situated in the barrio of
Ubihan, municipality of Meycauayan, province of Bulacan, and more particularly
described in plan Psu-131892 (Exh. H) and their accompanying technical
descriptions (Exhs. E, E-1) in favor of Benjamin Tancinco, married to Alma
Fernandez and residing at 3662 Heatherdown, Toledo, Ohio 43614 U.S.A.;
Azucena Tancinco Reyes, married to Alex Reyes, Jr., residing at 4th St., New
Manila, Quezon City; Marina Tancinco Imperial, married to Juan Imperial,
residing at Pasay Road, Dasmariñas Village, Makati, Rizal; and Mario C.
Tancinco, married to Leticia Regidor, residing at 1616 Cypress St., Dasmariñas
Village, Makati, Rizal, all of legal age, all Filipino citizens.

On July 30, 1976, the petitioner Republic appealed to the respondent Court of Appeals.

On August, 19, 1982, the respondent Court rendered a decision affirming in toto the decision of
the lower court. The dispositive portion of the decision reads: têñ.£îhqwâ£

DAHIL DITO, ang hatol na iniakyat ay sinasangayunan at pinagtitibay sa

kanyang kabuuan nang walang bayad.

The rule that the findings of fact of the trial court and the Court of Appeals are binding upon this
Court admits of certain exceptions. Thus in Carolina Industries Inc. v. CMS Stock Brokerage,
Inc. (97 SCRA 734) we held that this Court retains the power to review and rectify the findings of
fact of said courts when (1) the conclusion is a finding grounded entirely on speculations,
surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd, and
impossible; (3) where there is grave abuse of discretion, (4) when the judgment is based on a
misapprehension of facts; and (5) when the court, in making its findings, went beyond the issues
of the case and the same are contrary to the admissions of both appellant and appellee.

There are facts and circumstances in the record which render untenable the findings of the trial
court and the Court of Appeals that the lands in question are accretions to the private
respondents' fishponds.

The petitioner submits that there is no accretion to speak of under Article 457 of the New Civil
Code because what actually happened is that the private respondents simply transferred their
dikes further down the river bed of the Meycauayan River, and thus, if there is any accretion to
speak of, it is man-made and artificial and not the result of the gradual and imperceptible
sedimentation by the waters of the river.

On the other hand, the private respondents rely on the testimony of Mrs. Virginia Acuña to the
effect that: têñ.£îhqwâ£
 xxx xxx xxx

... when witness first saw the land, namely, Lots 1 & 2, they were already dry
almost at the level of the Pilapil of the property of Dr. Tancinco, and that from the
boundaries of the lots, for about two (2) arms length the land was still dry up to
the edge of the river; that sometime in 1951, a new Pilapil was established on the
boundaries of Lots 1 & 2 and soil from the old Pilapil was transferred to the new
Pilapil and this was done sometime in 1951; that the new lots were then
converted into fishpond, and water in this fishpond was two (2) meters deep on
the side of the Pilapil facing the fishpond ... .

The private respondents submit that the foregoing evidence establishes the fact of accretion
without human intervention because the transfer of the dike occurred after the accretion was
complete.

We agree with the petitioner.

Article 457 of the New Civil Code provides: têñ.£îhqwâ£

To the owners of lands adjoining the banks of rivers belong the accretion which
they gradually receive from the effects of the current of the waters.

The above-quoted article requires the concurrence of three requisites before an accretion
covered by this particular provision is said to have taken place. They are (1) that the deposit be
gradual and imperceptible; (2) that it be made through the effects of the current of the water;
and (3) that the land where accretion takes place is adjacent to the banks of rivers.

The requirement that the deposit should be due to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the New Civil Code all deposits caused by human
intervention. Alluvion must be the exclusive work of nature. In the instant case, there is no
evidence whatsoever to prove that the addition to the said property was made gradually through
the effects of the current of the Meycauayan and Bocaue rivers. We agree with the observation
of the Solicitor General that it is preposterous to believe that almost four (4) hectares of land
came into being because of the effects of the Meycauayan and Bocaue rivers. The lone witness
of the private respondents who happens to be their overseer and whose husband was first
cousin of their father noticed the four hectare accretion to the twelve hectare fishpond only in
1939. The respondents claim that at this point in time, accretion had already taken place. If so,
their witness was incompetent to testify to a gradual and imperceptible increase to their land in
the years before 1939. However, the witness testified that in that year, she observed an
increase in the area of the original fishpond which is now the land in question. If she was telling
the truth, the accretion was sudden. However, there is evidence that the alleged alluvial
deposits were artificial and man-made and not the exclusive result of the current of the
Meycauayan and Bocaue rivers. The alleged alluvial deposits came into being not because of
the sole effect of the current of the rivers but as a result of the transfer of the dike towards the
river and encroaching upon it. The land sought to be registered is not even dry land cast
imperceptibly and gradually by the river's current on the fishpond adjoining it. It is under two
meters of water. The private respondents' own evidence shows that the water in the fishpond is
two meters deep on the side of the pilapil facing the fishpond and only one meter deep on the
side of the pilapil facing the river

The reason behind the law giving the riparian owner the right to any land or alluvion deposited
by a river is to compensate him for the danger of loss that he suffers because of the location of
his land. If estates bordering on rivers are exposed to floods and other evils produced by the
destructive force of the waters and if by virtue of lawful provisions, said estates are subject to
incumbrances and various kinds of easements, it is proper that the risk or danger which may
prejudice the owners thereof should be compensated by the right of accretion. (Cortes v. City of
Manila, 10 Phil. 567). Hence, the riparian owner does not acquire the additions to his land
caused by special works expressly intended or designed to bring about accretion. When the
private respondents transferred their dikes towards the river bed, the dikes were meant for
reclamation purposes and not to protect their property from the destructive force of the waters of
the river.
We agree with the submission of the Solicitor General that the testimony of the private
respondents' lone witness to the effect that as early as 1939 there already existed such alleged
alluvial deposits, deserves no merit. It should be noted that the lots in question were not
included in the survey of their adjacent property conducted on May 10, 1940 and in the
Cadastral Survey of the entire Municipality of Meycauayan conducted between the years 1958
to 1960. The alleged accretion was declared for taxation purposes only in 1972 or 33 years after
it had supposedly permanently formed. The only valid conclusion therefore is that the said areas
could not have been there in 1939. They existed only after the private respondents transferred
their dikes towards the bed of the Meycauayan river in 1951. What private respondents claim as
accretion is really an encroachment of a portion of the Meycauayan river by reclamation.

The lower court cannot validly order the registration of Lots 1 & 2 in the names of the private
respondents. These lots were portions of the bed of the Meycauayan river and are therefore
classified as property of the public domain under Article 420 paragraph 1 and Article 502,
paragraph 1 of the Civil Code of the Philippines. They are not open to registration under the
Land Registration Act. The adjudication of the lands in question as private property in the
names of the private respondents is null and void.

WHEREFORE, the instant petition is GRANTED. The decision appealed from is hereby
REVERSED and SET ASIDE. The private respondents are ordered to move back the dikes of
their fishponds to their original location and return the disputed property to the river to which it
belongs.

SO ORDERED.1äwphï1.ñët
G.R. No. 98045 June 26, 1996

DESAMPARADO VDA. DE NAZARENO and LETICIA NAZARENO TAPIA, petitioners,

vs.
THE COURT OF APPEALS, MR. & MRS. JOSE SALASALAN, MR. & MRS. LEO RABAYA,
AVELINO LABIS, HON. ROBERTO G. HILARIO, ROLLEO I. IGNACIO, ALBERTO M.
GILLERA and HON. ABELARDO G. PALAD, JR., in their official and/or private
capacities, respondents.

ROMERO, J.:p

Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia challenge the decision
of the Court of Appeals which affirmed the dismissal of petitioners' complaint by the Regional
Trial Court of Misamis Oriental, Branch 22. The complaint was for annulment of the verification,
report and recommendation, decision and order of the Bureau of Lands regarding a parcel of
public land.

The only issue involved in this petition is whether or not petitioners exhausted administrative
remedies before having recourse to the courts.

The subject of this controversy is a parcel of land situated in Telegrapo, Puntod, Cagayan de
Oro City. Said land was formed as a result of sawdust dumped into the dried-up Balacanas
Creek and along the banks of the Cagayan river.

Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya leased the subject lots
on which their houses stood from one Antonio Nazareno, petitioners' predecessor-in-interest. In
the latter part of 1982, private respondents allegedly stopped paying rentals. As a result,
Antonio Nazareno and petitioners filed a case for ejectment with the Municipal Trial Court of
Cagayan de Oro City, Branch 4. A decision was rendered against private respondents, which
decision was affirmed by the Regional Trial Court of Misamis Oriental, Branch 20.

The case was remanded to the municipal trial court for execution of judgment after the same
became final and executory. Private respondents filed a case for annulment of judgment before
the Regional Trial Court of Misamis Oriental, Branch 24 which dismissed the same. Antonio
Nazareno and petitioners again moved for execution of judgment but private respondents filed
another case for certiorari with prayer for restraining order and/or writ of preliminary injunction
with the Regional Trial Court of Misamis Oriental, Branch 25 which was likewise dismissed. The
decision of the lower court was finally enforced with the private respondents being ejected from
portions of the subject lots they occupied..

Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the survey
plan designated as Plan Csd-106-00571 with a view to perfecting his title over the accretion
area being claimed by him. Before the approved survey plan could be released to the applicant,
however, it was protested by private respondents before the Bureau of Lands.

In compliance with the order of respondent District Land Officer Alberto M. Gillera, respondent
Land Investigator Avelino G. Labis conducted an investigation and rendered a report to the
Regional Director recommending that Survey Plan No. MSI-10-06-000571-D (equivalent to Lot
No. 36302, Cad. 237) in the name of Antonio Nazareno, be cancelled and that private
respondents be directed to file appropriate public land applications.

Based on said report, respondent Regional Director of the Bureau of Lands Roberto Hilario
rendered a decision ordering the amendment of the survey plan in the name of Antonio
Nazareno by segregating therefrom the areas occupied by the private respondents who, if
qualified, may file public land applications covering their respective portions.

Antonio Nazareno filed a motion for reconsideration with respondent Rolleo Ignacio,
Undersecretary of the Department of Natural Resources and Officer-in-Charge of the Bureau of
Lands who denied the motion. Respondent Director of Lands Abelardo Palad then ordered him
to vacate the portions adjudicated to private respondents and remove whatever improvements
they have introduced thereon. He also ordered that private respondents be placed in
possession thereof.

Upon the denial of the late Antonio Nazareno's motion for reconsideration, petitioners
Desamparado Vda. de Nazareno and Leticia Tapia Nazareno, filed a case before the RTC,
Branch 22 for annulment of the following: order of investigation by respondent Gillera, report
and recommendation by respondent Labis, decision by respondent Hilario, order by respondent
Ignacio affirming the decision of respondent Hilario and order of execution by respondent Palad.
The RTC dismissed the complaint for failure to exhaust administrative remedies which resulted
in the finality of the administrative decision of the Bureau of Lands.

On appeal, the Court of Appeals affirmed the decision of the RTC dismissing the complaint.
Applying Section 4 of C.A. No. 141, as amended, it contended that the approval of the survey
plan belongs exclusively to the Director of Lands. Hence, factual findings made by the
Metropolitan Trial Court respecting the subject land cannot be held to be controlling as the
preparation and approval of said survey plans belong to the Director of Lands and the same
shall be conclusive when approved by the Secretary of Agriculture and Natural resources. 1

Furthermore, the appellate court contended that the motion for reconsideration filed by Antonio
Nazareno cannot be considered as an appeal to the Office of the Secretary of Agriculture and
Natural Resources, as mandated by C.A. No. 141 inasmuch as the same had been acted upon
by respondent Undersecretary Ignacio in his capacity as Officer-in-charge of the Bureau of
Lands and not as Undersecretary acting for the Secretary of Agriculture and Natural Resources.
For the failure of Antonio Nazareno to appeal to the Secretary of Agriculture and Natural
Resources, the present case does not fall within the exception to the doctrine of exhaustion of
administrative remedies. It also held that there was no showing of oppressiveness in the
manner in which the orders were issued and executed..

Hence, this petition.

Petitioners assign the following errors:

I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,

ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION OF THE
LOWER COURT WHICH IS CONTRARY TO THE PREVAILING FACTS AND
THE LAW ON THE MATTER;

II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,

ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION OF THE
LOWER COURT DISMISSING THE ORIGINAL CASE WHICH FAILED TO
CONSIDER THAT THE EXECUTION ORDER OF PUBLIC RESPONDENT
ABELARDO G. PALAD, JR., DIRECTOR OF LANDS, MANILA, PRACTICALLY
CHANGED THE DECISION OF PUBLIC RESPONDENT ROBERTO HILARIO,
REGIONAL DIRECTOR, BUREAU OF LANDS, REGION 10, THUS MAKING
THE CASE PROPER SUBJECT FOR ANNULMENT WELL WITHIN THE
JURISDICTION OF THE LOWER COURT.

The resolution of the above issues, however, hinges on the question of whether or not the
subject land is public land. Petitioners claim that the subject land is private land being an
accretion to his titled property, applying Article 457 of the Civil Code which provides:

To the owners of lands adjoining the banks of rivers belong the accretion which
they gradually receive from the effects of the current of the waters.

In the case of Meneses v. CA, 2 this Court held that accretion, as a mode of acquiring property
under Art. 457 of the Civil Code, requires the concurrence of these requisites : (1) that the
deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action
of the waters of the river (or sea); and (3) that the land where accretion takes place is adjacent
to the banks of rivers (or the sea coast). These are called the rules on alluvion which if present
in a case, give to the owners of lands adjoining the banks of rivers or streams any accretion
gradually received from the effects of the current of waters.

For petitioners to insist on the application of these rules on alluvion to their case, the above-
mentioned requisites must be present. However, they admit that the accretion was formed by
the dumping of boulders, soil and other filling materials on portions of the Balacanas Creek and
the Cagayan River bounding their land. 3 It cannot be claimed, therefore, that the accumulation
of such boulders, soil and other filling materials was gradual and imperceptible, resulting from
the action of the waters or the current of the Balacanas Creek and the Cagayan River. In Hilario
v. City of Manila, 4 this Court held that the word "current" indicates the participation of the body
of water in the ebb and flow of waters due to high and low tide. Petitioners' submission not
having met the first and second requirements of the rules on alluvion, they cannot claim the
rights of a riparian owner.

In any case, this court agrees with private respondents that petitioners are estopped from
denying the public character of the subject land, as well as the jurisdiction of the Bureau of
Lands when the late Antonio Nazareno filed his Miscellaneous Sales Application MSA (G-6)
571. 5 The mere filing of said Application constituted an admission that the land being applied
for was public land, having been the subject of Survey Plan No. MSi-10-06-000571-D
(Equivalent to Lot No. 36302, Cad-237) which was conducted as a consequence of Antonio
Nazareno's Miscellaneous Sales Application wherein said land was described as an orchard.
Said description by Antonio Nazareno was, however, controverted by respondent Labis in his
investigation report to respondent Hilario based on the findings of his ocular inspection that said
land actually covers a dry portion of Balacanas Creek and a swampy portion of Cagayan River.
The investigation report also states that, except for the swampy portion which is fully planted to
nipa palms, the whole area is fully occupied by a part of a big concrete bodega of petitioners
and several residential houses made of light materials, including those of private respondents
which were erected by themselves sometime in the early part of 1978. 6

Furthermore, the Bureau of Lands classified the subject land as an accretion area which was
formed by deposits of sawdust in the Balacanas Creek and the Cagayan river, in accordance
with the ocular inspection conducted by the Bureau of Lands. 7 This Court has often enough
held that findings of administrative agencies which have acquired expertise because their
jurisdiction is confined to specific matters are generally accorded not only respect but even
finality. 8 Again, when said factual findings are affirmed by the Court of Appeals, the same are
conclusive on the parties and not reviewable by this Court. 9

It is this Court's irresistible conclusion, therefore, that the accretion was man-made or artificial.
In Republic v. CA, 10this Court ruled that the requirement that the deposit should be due to the
effect of the current of the river is indispensable. This excludes from Art. 457 of the Civil Code
all deposits caused by human intervention. Putting it differently, alluvion must be the exclusive
work of nature. Thus, in Tiongco v. Director of Lands, et al., 11 where the land was not formed
solely by the natural effect of the water current of the river bordering said land but is also the
consequence of the direct and deliberate intervention of man, it was deemed a man-made
accretion and, as such, part of the public domain.

In the case at bar, the subject land was the direct result of the dumping of sawdust by the Sun
Valley Lumber Co. consequent to its sawmill
operations. 12 Even if this Court were to take into consideration petitioners' submission that the
accretion site was the result of the late Antonio Nazareno's labor consisting in the dumping of
boulders, soil and other filling materials into the Balacanas Creek and Cagayan River bounding
his land, 13 the same would still be part of the public domain.

Having determined that the subject land is public land, a fortiori, the Bureau of Lands, as well as
the Office of the Secretary of Agriculture and Natural Resources have jurisdiction over the same
in accordance with the Public Land Law. Accordingly, the court a quo dismissed petitioners'
complaint for non-exhaustion of administrative remedies which ruling the Court of Appeals
affirmed.

However, this Court agrees with petitioners that administrative remedies have been exhausted.
Petitioners could not have intended to appeal to respondent Ignacio as an Officer-In-Charge of
the Bureau of Lands. The decision being appealed from was the decision of respondent Hilario
who was the Regional Director of the Bureau of Lands. Said decision was made "for and by
authority of the Director of Lands". 14 It would be incongruous to appeal the decision of the
Regional Director of the Bureau of Lands acting for the Director of the Bureau of Lands to an
Officer-In-Charge of the Bureau of Lands.

In any case, respondent Rolleo Ignacio's official designation was "Undersecretary of the
Department of Agriculture and Natural Resources." He was only an "Officer-In-Charge" of the
Bureau of Lands. When he acted on the late Antonio Nazareno's motion for reconsideration by
affirming or adopting respondent Hilario's decision, he was acting on said motion as an
Undersecretary on behalf of the Secretary of the Department. In the case of Hamoy v. Secretary
of Agriculture and Natural Resources, 15 this Court held that the Undersecretary of Agriculture
and Natural Resources may modify, adopt, or set aside the orders or decisions of the Director of
Lands with respect to questions involving public lands under the administration and control of
the Bureau of Lands and the Department of Agriculture and Natural Resources. He cannot,
therefore, be said to have acted beyond the bounds of his jurisdiction under Sections 3, 4 and 5
of Commonwealth Act No. 141 16

As borne out by the administrative findings, the controverted land is public land, being an
artificial accretion of sawdust. As such, the Director of Lands has jurisdiction, authority and
control over the same, as mandated under Sections 3 and 4 of the Public Land Law (C.A. No.
141) which states, thus:

Sec. 3. The Secretary of Agriculture and Natural Resources shall be the

exclusive officer charged with carrying out the provisions of this Act through the
Director of Lands who shall act under his immediate control.

Sec. 4. Subject to said control, the Director of Lands shall have direct executive
control of the survey, classification, lease, sale or any other form of concession
or disposition and management of the lands of the public domain, and his
decisions as to questions of fact shall be conclusive when approved by the
Secretary of Agriculture and Natural Resources.

In connection with the second issue, petitioners ascribe whim, arbitrariness or capriciousness in
the execution order of public respondent Abelardo G. Palad, the Director of Lands. This Court
finds otherwise since said decision was based on the conclusive finding that the subject land
was public land. Thus, this Court agrees with the Court of Appeals that the Director of Lands
acted within his rights when he issued the assailed execution order, as mandated by the
aforecited provisions.

Petitioners' allegation that respondent Palad's execution order directing them to vacate the
subject land practically changed respondent Hilario's decision is baseless. It is incorrect for
petitioners to assume that respondent Palad awarded portions of the subject land to private
respondents Salasalans and Rabayas as they had not yet been issued patents or titles over the
subject land. The execution order merely directed the segregation of petitioners' titled lot from
the subject land which was actually being occupied by private respondents before they were
ejected from it. Based on the finding that private respondents were actually in possession or
were actually occupying the subject land instead of petitioners, respondent Palad, being the
Director of Lands and in the exercise of his administrative discretion, directed petitioners to
vacate the subject land on the ground that private respondents have a preferential right, being
the occupants thereof.

While private respondents may not have filed their application over the land occupied by them,
they nevertheless filed their protest or opposition to petitioners' Miscellaneous Sales
Application, the same being preparatory to the filing of an application as they were in fact
directed to do so. In any case, respondent Palad's execution order merely implements
respondent Hilario's order. It should be noted that petitioners' own application still has to be
given due course. 17

As Director of Lands, respondent Palad is authorized to exercise executive control over any
form of concession, disposition and management of the lands of the public domain. 18 He may
issue decisions and orders as he may see fit under the circumstances as long as they are
based on the findings of fact.

In the case of Calibo v. Ballesteros, 19 this Court held that where, in the disposition of public
lands, the Director of Lands bases his decision on the evidence thus presented, he clearly acts
within his jurisdiction, and if he errs in appraising the evidence, the error is one of judgment, but
not an act of grave abuse of discretion annullable by certiorari. Thus, except for the issue of
non-exhaustion of administrative remedies, this Court finds no reversible error nor grave abuse
of discretion in the decision of the Court of Appeals.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.
 G.R. No. L-31934 July 29, 1977

RAMON LANZAR, petitioner

vs.
DIRECTOR OF LANDS and CITY OF ILOILO, Respondents.

Ramon A. Gonzales for petitioner.chanrobles virtual law library

Solicitor General Felix Q. Antonio, Assistant Solicitor General Bernardo P. Pardo and Solicitor
Jose A. Janolo for respondents.

FERNANDEZ, J.:chanrobles virtual law library

This is a petition to review on certiorari the decision of the Court of Appeals in CA-G. R. No.
34333-R entitled "Ramon Lanzar, Applicant-Appellee, versus The Director of Lands and The
City of Iloilo, Oppositors-Appellants", declaring the property sought to be registered as the
property of the public domain devoted to public use not susceptible of private
appropriation.chanroblesvirtualawlibrarychanrobles virtual law library

In May 1960, the petitioner, Ramon Lanzar, filed an application for registration of title to a parcel
of land located in the District of Molo, Iloilo City in the Court of First Instance of Iloilo alleging
that he is the owner in fee simple of the land in question and asking that the title thereto be
registered in his name.chanroblesvirtualawlibrarychanrobles virtual law library

In August 1961, the Director of Lands and the City of Iloilo filed an opposition to the application
on the ground that the land in question a foreshore land which forms part of the public domain
and is needed by the City of Iloilo as a road right of way of the Molo Arevalo Boulevard, and that
the applicant had not possessed the property in such a manner as to warrant an implied grant
entitled him to confirmation of his title thereto.chanroblesvirtualawlibrarychanrobles virtual law
library

After trial, the Court of First Instance of Iloilo rendered a decision in March 1963 holding that the
property in question, having been possessed by the applicant and his predecessors-in-interest,
publicly, continuously and adversely for more than 30 years, the same was adjudicated to the
petitioner, it appearing that no proof had been adduced that the said land is necessary for public
utility or establishment of special industries (Record on Appeal, pp. 30-
37).chanroblesvirtualawlibrarychanrobles virtual law library

The Director of Lands and the City of Iloilo appealed to the Court of Appeals which on March 24,
1970 reversed the decision of the Court of First Instance of Iloilo and held that the land in
question, being an accretion formed by the action of the sea, is property of the public domain
and not susceptible of private appropriation.chanroblesvirtualawlibrarychanrobles virtual law
library

Hence, the applicant-appellee, Ramon Lanzar, filed this petition for certiorari to review the
aforesaid decision of the Court of Appeals. The petitioner assigns the following errors:

Ichanrobles virtual law library

THE COURT OF APPEALS ERRED IN HOLDING THAT LANDS FORMED BY ACTION OF

THE SEA AS ACCRETION TO THE SHORES ARE PROPERTY OF PUBLIC DOMINION, ON
THE AUTHORITY OF ART. 4, LAW OF WATERS, KER & CO. VS GAUDEN AND
GOVERNMENT VS. ALDECOA.chanroblesvirtualawlibrarychanrobles virtual law library

IIchanrobles virtual law library

THE COURT OF APPEALS ERRED IN RELYING ON MONTEVERDE VS. DIRECTOR OF

LANDS, 93 PHIL. 134 HOLDING THAT ONLY THE EXECUTIVE OR LEGISLATURE CAN
DECLARE THE LAND AS NO LONGER INTENDED FOR PUBLIC USE AND SO SHALL
BELONG TO THE ADJACENT OWNER.chanroblesvirtualawlibrarychanrobles virtual law library
IIIchanrobles virtual law library

THE COURT OF APPEALS ERRED IN HOLDING THAT SINCE ART. 422 OF THE NEW CIVIL
CODE PROVIDES THAT PROPERTY OF PUBLIC DOMAIN WHEN NO LONGER INTENDED
FOR PUBLIC USE, SUCH INTENTION CAN ONLY BE SPELLED OUT BY THE EXECUTIVE
OR LEGISLATURE, NOT BY THE COURTS.chanroblesvirtualawlibrarychanrobles virtual law
library

IVchanrobles virtual law library

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONER HAS ACQUIRED
THE PROPERTY THRU ACQUISITIVE PRESCRIPTION.chanroblesvirtualawlibrarychanrobles
virtual law library

(Petitioner's Brief, pp. 1-2)

The pertinent facts are not disputed.chanroblesvirtualawlibrarychanrobles virtual law library

The petitioner has applied for the registration of his title to a parcel of land which is admittedly
an accretion of Lot No. 1899 of the Cadastral Survey of Iloilo, it having been formed by the
gradual action of the sea before 1,922. Ignacio Arroyo, the registered owner of Lot 1899, leased
in 19M the property to Maximo Tonogbanua who possessed the whole of Lot 1899 and its
accretion. In 1927, Ignacio Arroyo donated Lot 1899 of the Cadastral Survey of Iloilo, together
with its accretion, to Beaterio de Santissimo Rosario de Molo, which in turn the property to the
applicant, Ramon Lanzar. The lessee planted coconuts and bananas on the land and a portion
thereof was devoted to palay. A verification of Lot 1899 by the Bureau of Lands disclosed that
the portion of land applied for and described in the plan, Exhibit A, and in its technical
description, is outside of Lot 1899, the same being an accretion thereto formed by the action of
the sea. Beaterio de Santissimo Rosario de Molo and the applicant entered into an agreement,
Exhibit 1, on August 13,1959, under which Beaterio de Santissimo Rosario de Molo assigned all
its rights to the accretion, the title to which is sought to be registered by the applicant. Beaterio
de Santissimo Rosario de Molo had possessed Lot 1899 and its accretion through its lessee,
openly, publicly, uninterruptedly and adversely to all claimants and under claim of ownership.
The Beaterio had declared Lot 1899 for taxation and when it assigned the rights to the
applicant, he caused the tax declaration to be transferred to his name in May 1960, Exhibit
J.chanroblesvirtualawlibrarychanrobles virtual law library

During the Cadastral Survey of 1911-1912, the lot in question was non-existent (Exhibit 2,
Director of Lands). Hence, said land as an accretion to Lot 1899 must have gradually developed
from 1912 to 1922 and thereafter. It is now separated by the Arevalo-Molo Boulevard from the
sea.chanroblesvirtualawlibrarychanrobles virtual law library

The only issue to be resolved is whether or not the title to the land in question which was formed
by action of the sea as an accretion to Lot 1899 may be registered in the name of the applicant
on the basis of adverse possession for over 30 years.chanroblesvirtualawlibrarychanrobles
virtual law library

Article 4 of the Law of Waters provides:

ART. 4. Lands added to the shores by accretions and alluvium deposits caused by the action of
the sea, form part of the public domain. When they are no longer washed by the waters of the
sea, and are not necessary for the purposes of public utility, or for the establishment of special
industries, or for the coastguard service, the Government shall declare them to be the property
of the owners of the estates adjacent thereto and as an increment thereof.

In Ker & Co. vs. Cauden, 6 Phil. 732, this Court said:

This case is directly covered by the first part of said article 4. There is therein an express
declaration that land formed in the way this land was formed is public property. Nothing could be
more explicit and the effect of this declaration is not in any way limited by the subsequent
provisions of the same article. The claim of the appellants that these subsequent provisions
indicate that the ownership of such land is in the private persons who own the adjoining
property, and that the declaration which is spoken of is simply proof of that ownership, can not
be sustained. It is in direct conflict with the statement made in the first part of the article. The
true construction of the article is that when these lands which belong to the State are not
needed for the purposes mentioned therein, then the State shall grant them to the adjoining
owners. No attempt was made by the appellants to prove any such grant or concession in this
case and, in fact, it is apparent from the evidence that the conditions upon which the adjoining
owners would be entitled to such a grant have never existed because for a long time the
property was by the Spanish navy and it is now occupied by the present government as a naval
station, and works costing more than $500,000, money of the United States, have been erected
thereon. (Idem. p. 736)

It is contended by the petitioner that:

As found by the Court of Appeals, the accretion began before 1922, but after 1912, as shown by
the undisputed evidence, hence, during the regime of the Spanish Civil Code, which became
effective on December 8, 1889, and consequently, its nature shall be determined by the said
code. Now, the said code provides:

ARTICLE 399. The following are property of public domain: chanrobles virtual law library

l. Those things intended for public use, as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shores, roadsteads and others of a like nature.

(Brief for Petitioner-Appellant, pp. 10-11)

However, in Insular Government vs. Aldecoa and Company, 19 Phil. 505, this Court held:

The Civil Code, which went into effect in these Islands on December 7, 1889, the twentieth day
of its publication in the Gaceta de Manila of the 17th of November of the same year, confirms
the provisions of the said Law of Waters, since, in its article 339, it prescribes that: chanrobles
virtual law library

Property of public ownership is -chanrobles virtual law library

l. That destined to the public use, such as roads, canals, rivers, torrents, ports, and bridges
constructed by the State, and banks, shores, roadsteads, and that of a similar
character.chanroblesvirtualawlibrarychanrobles virtual law library

Article 341 of the same code provides: chanrobles virtual law library

Property of public ownership, when no longer devoted to general uses or to the requirements of
the defense of the territory, shall become a part of the State
property.chanroblesvirtualawlibrarychanrobles virtual law library

The shores and the lands reclaimed from the sea, while they continue to be devoted to public
uses and no grant whatever has been made of any portion of them to private persons, remain a
part of the public domain and are for public uses, and, until they are converted into patrimonial
property of the State, such lands, thrown up by the action of the sea, and the shores adjacent
thereto, are not susceptible of prescription, inasmuch as, being dedicated to the public uses,
they are not subject of commerce among men, in accordance with the provision of article 1936
of the Civil Code.chanroblesvirtualawlibrarychanrobles virtual law library

The occupation or material possession of any land formed upon the shore by accretions and
alluvium deposits occasioned by the sea, where the occupant or possessor is a private person
and holds without previous permission or authorization from the Government, granted in due
form, although he may have had the intention to hold it for the purpose of making it his own, is
illegal possession on his part and amounts to nothing more than a mere detainer of the land,
which is out of the sphere of the commerce of men, as belonging to the public domain and being
alloted to public uses and for the use of all persons who live at the place where it is situated.
(Idem, pp. 514-515)
It is thus seen that the petitioner could not acquire the land in question by
prescription.chanroblesvirtualawlibrarychanrobles virtual law library

The contention of the petitioner-appellant that by "thus expanding the meaning of shores to
include inland property formed by the action of the sea, Government vs. Aldecoa is guilty of
judicial legislation ..." (Brief of Petitioner-Appellant, p. 15) has no
merit.chanroblesvirtualawlibrarychanrobles virtual law library

Articles 339 and 340 of the Spanish Civil Code are not repugnant to Article 4 of the Spanish
Law of Waters of 1866. The said provisions of the said Spanish Code did not provide that lands
added to the shores by action of the sea form part of the patrimonial property of the
State.chanroblesvirtualawlibrarychanrobles virtual law library

As stated by this Court in Insular Government vs. Aldecoa, supra, p. 541, the Civil Code of
Spain confirms the provisions of Article 4 of the Law of Waters, citing Article 339 of said code.
This Court has been consistent in ruling that lands formed by the action of the sea belong to the
public domain. Thus in Monteverde vs. Director of Lands, 93 Phil. 134, it was held:

Lots Nos. 1 and 2 were admittedly formed and added to the shores by the natural. action of the
sea, and the petitioners herein have claimed title thereto as accretion to their adjoining lots, in
accordance with article 4 of the Law of Waters of August 3, 1966, which provides as follows:

'Lands added to the shores by accretion and alluvial deposits caused by action of the sea, form
part of the public domain. When they are no longer washed by the water of the sea and are not
necessary for purposes of public utility, or for the establishment of special industries, or for
coast-guard service, the Government shall declare them to be property of the owners of the
estates adjacent thereto and as increment thereof.'

(Idem. pp. 135-136)

In view of the foregoing, the Court of Appeals did not err in declaring the property sought to be
registered as part of the public domain devoted to public use not susceptible of private
appropriation. The land in question is needed by the City of Iloilo for the expansion of the
Arevalo-Molo Boulevard.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, the petition for review is hereby dismissed and the decision of the Court of
Appeals sought to be reviewed is affirmed, without pronouncement as to
costs.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.
G.R. No. 133250 July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,

vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
CORPORATION, respondents.

CARPIO, J.:

This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a
temporary restraining order. The petition seeks to compel the Public Estates Authority ("PEA"
for brevity) to disclose all facts on PEA's then on-going renegotiations with Amari Coastal Bay
and Development Corporation ("AMARI" for brevity) to reclaim portions of Manila Bay. The
petition further seeks to enjoin PEA from signing a new agreement with AMARI involving such
reclamation.

The Facts

On November 20, 1973, the government, through the Commissioner of Public Highways, signed
a contract with the Construction and Development Corporation of the Philippines ("CDCP" for
brevity) to reclaim certain foreshore and offshore areas of Manila Bay. The contract also
included the construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated
itself to carry out all the works in consideration of fifty percent of the total reclaimed land.

On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084
creating PEA. PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged
areas," and "to develop, improve, acquire, x x x lease and sell any and all kinds of lands." 1 On
the same date, then President Marcos issued Presidential Decree No. 1085 transferring to PEA
the "lands reclaimed in the foreshore and offshore of the Manila Bay"2 under the Manila-Cavite
Coastal Road and Reclamation Project (MCCRRP).

On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend
its contract with CDCP, so that "[A]ll future works in MCCRRP x x x shall be funded and owned
by PEA." Accordingly, PEA and CDCP executed a Memorandum of Agreement dated
December 29, 1981, which stated:

"(i) CDCP shall undertake all reclamation, construction, and such other works in the
MCCRRP as may be agreed upon by the parties, to be paid according to progress of
works on a unit price/lump sum basis for items of work to be agreed upon, subject to
price escalation, retention and other terms and conditions provided for in Presidential
Decree No. 1594. All the financing required for such works shall be provided by PEA.

xxx

(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and
transfer in favor of PEA, all of the rights, title, interest and participation of CDCP in and
to all the areas of land reclaimed by CDCP in the MCCRRP as of December 30, 1981
which have not yet been sold, transferred or otherwise disposed of by CDCP as of said
date, which areas consist of approximately Ninety-Nine Thousand Four Hundred
Seventy Three (99,473) square meters in the Financial Center Area covered by land
pledge No. 5 and approximately Three Million Three Hundred Eighty Two Thousand
Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at varying
elevations above Mean Low Water Level located outside the Financial Center Area and
the First Neighborhood Unit."3

On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517,
granting and transferring to PEA "the parcels of land so reclaimed under the Manila-Cavite
Coastal Road and Reclamation Project (MCCRRP) containing a total area of one million nine
hundred fifteen thousand eight hundred ninety four (1,915,894) square meters." Subsequently,
on April 9, 1988, the Register of Deeds of the Municipality of Parañaque issued Transfer
Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the three
reclaimed islands known as the "Freedom Islands" located at the southern portion of the Manila-
Cavite Coastal Road, Parañaque City. The Freedom Islands have a total land area of One
Million Five Hundred Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square
meters or 157.841 hectares.

On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI,
a private corporation, to develop the Freedom Islands. The JVA also required the reclamation of
an additional 250 hectares of submerged areas surrounding these islands to complete the
configuration in the Master Development Plan of the Southern Reclamation Project-MCCRRP.
PEA and AMARI entered into the JVA through negotiation without public bidding.4 On April 28,
1995, the Board of Directors of PEA, in its Resolution No. 1245, confirmed the JVA.5 On June 8,
1995, then President Fidel V. Ramos, through then Executive Secretary Ruben Torres,
approved the JVA.6

On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in
the Senate and denounced the JVA as the "grandmother of all scams." As a result, the Senate
Committee on Government Corporations and Public Enterprises, and the Committee on
Accountability of Public Officers and Investigations, conducted a joint investigation. The Senate
Committees reported the results of their investigation in Senate Committee Report No. 560
dated September 16, 1997.7 Among the conclusions of their report are: (1) the reclaimed lands
PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot alienate these
lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3) the JVA
itself is illegal.

On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order
No. 365 creating a Legal Task Force to conduct a study on the legality of the JVA in view of
Senate Committee Report No. 560. The members of the Legal Task Force were the Secretary
of Justice,8 the Chief Presidential Legal Counsel,9 and the Government Corporate
Counsel.10 The Legal Task Force upheld the legality of the JVA, contrary to the conclusions
reached by the Senate Committees.11

On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there
were on-going renegotiations between PEA and AMARI under an order issued by then
President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA
Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz composed the negotiating panel of
PEA.

On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with
Application for the Issuance of a Temporary Restraining Order and Preliminary
Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the
petition "for unwarranted disregard of judicial hierarchy, without prejudice to the refiling of the
case before the proper court."12

On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the
instant Petition for Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction
and Temporary Restraining Order. Petitioner contends the government stands to lose billions of
pesos in the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly
disclose the terms of any renegotiation of the JVA, invoking Section 28, Article II, and Section 7,
Article III, of the 1987 Constitution on the right of the people to information on matters of public
concern. Petitioner assails the sale to AMARI of lands of the public domain as a blatant violation
of Section 3, Article XII of the 1987 Constitution prohibiting the sale of alienable lands of the
public domain to private corporations. Finally, petitioner asserts that he seeks to enjoin the loss
of billions of pesos in properties of the State that are of public dominion.

After several motions for extension of time,13 PEA and AMARI filed their Comments on October
19, 1998 and June 25, 1998, respectively. Meanwhile, on December 28, 1998, petitioner filed an
Omnibus Motion: (a) to require PEA to submit the terms of the renegotiated PEA-AMARI
contract; (b) for issuance of a temporary restraining order; and (c) to set the case for hearing on
oral argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999,
which the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and required
the parties to file their respective memoranda.

On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement
("Amended JVA," for brevity). On May 28, 1999, the Office of the President under the
administration of then President Joseph E. Estrada approved the Amended JVA.

Due to the approval of the Amended JVA by the Office of the President, petitioner now prays
that on "constitutional and statutory grounds the renegotiated contract be declared null and
void."14

The Issues

The issues raised by petitioner, PEA15 and AMARI16 are as follows:

I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT
AND ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;

II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE
PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;

III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF

ADMINISTRATIVE REMEDIES;

IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;

V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES

OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL
AGREEMENT;

VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE

AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED
AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND

VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF
WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY
DISADVANTAGEOUS TO THE GOVERNMENT.

The Court's Ruling

First issue: whether the principal reliefs prayed for in the petition are moot and academic
because of subsequent events.

The petition prays that PEA publicly disclose the "terms and conditions of the on-going
negotiations for a new agreement." The petition also prays that the Court enjoin PEA from
"privately entering into, perfecting and/or executing any new agreement with AMARI."

PEA and AMARI claim the petition is now moot and academic because AMARI furnished
petitioner on June 21, 1999 a copy of the signed Amended JVA containing the terms and
conditions agreed upon in the renegotiations. Thus, PEA has satisfied petitioner's prayer for a
public disclosure of the renegotiations. Likewise, petitioner's prayer to enjoin the signing of the
Amended JVA is now moot because PEA and AMARI have already signed the Amended JVA
on March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on
May 28, 1999.

Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-
tracking the signing and approval of the Amended JVA before the Court could act on the issue.
Presidential approval does not resolve the constitutional issue or remove it from the ambit of
judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the
President cannot operate to moot the petition and divest the Court of its jurisdiction. PEA and
AMARI have still to implement the Amended JVA. The prayer to enjoin the signing of the
Amended JVA on constitutional grounds necessarily includes preventing its implementation if in
the meantime PEA and AMARI have signed one in violation of the Constitution. Petitioner's
principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII of
the Constitution, which prohibits the government from alienating lands of the public domain to
private corporations. If the Amended JVA indeed violates the Constitution, it is the duty of the
Court to enjoin its implementation, and if already implemented, to annul the effects of such
unconstitutional contract.

The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title
and ownership to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay
to a single private corporation. It now becomes more compelling for the Court to resolve the
issue to insure the government itself does not violate a provision of the Constitution intended to
safeguard the national patrimony. Supervening events, whether intended or accidental, cannot
prevent the Court from rendering a decision if there is a grave violation of the Constitution. In
the instant case, if the Amended JVA runs counter to the Constitution, the Court can still prevent
the transfer of title and ownership of alienable lands of the public domain in the name of AMARI.
Even in cases where supervening events had made the cases moot, the Court did not hesitate
to resolve the legal or constitutional issues raised to formulate controlling principles to guide the
bench, bar, and the public.17

Also, the instant petition is a case of first impression. All previous decisions of the Court
involving Section 3, Article XII of the 1987 Constitution, or its counterpart provision in the 1973
Constitution,18 covered agricultural lands sold to private corporations which acquired the lands
from private parties. The transferors of the private corporations claimed or could claim the right
to judicial confirmation of their imperfect titles19 under Title II of Commonwealth Act. 141
("CA No. 141" for brevity). In the instant case, AMARI seeks to acquire from PEA, a public
corporation, reclaimed lands and submerged areas for non-agricultural purposes
by purchase under PD No. 1084 (charter of PEA) and Title III of CA No. 141. Certain
undertakings by AMARI under the Amended JVA constitute the consideration for the purchase.
Neither AMARI nor PEA can claim judicial confirmation of their titles because the lands covered
by the Amended JVA are newly reclaimed or still to be reclaimed. Judicial confirmation of
imperfect title requires open, continuous, exclusive and notorious occupation of agricultural
lands of the public domain for at least thirty years since June 12, 1945 or earlier. Besides, the
deadline for filing applications for judicial confirmation of imperfect title expired on December 31,
1987.20

Lastly, there is a need to resolve immediately the constitutional issue raised in this petition
because of the possible transfer at any time by PEA to AMARI of title and ownership to portions
of the reclaimed lands. Under the Amended JVA, PEA is obligated to transfer to AMARI the
latter's seventy percent proportionate share in the reclaimed areas as the reclamation
progresses. The Amended JVA even allows AMARI to mortgage at any time
the entire reclaimed area to raise financing for the reclamation project.21

Second issue: whether the petition merits dismissal for failing to observe the principle
governing the hierarchy of courts.

PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the
Court. The principle of hierarchy of courts applies generally to cases involving factual questions.
As it is not a trier of facts, the Court cannot entertain cases involving factual issues. The instant
case, however, raises constitutional issues of transcendental importance to the public.22 The
Court can resolve this case without determining any factual issue related to the case. Also, the
instant case is a petition for mandamus which falls under the original jurisdiction of the Court
under Section 5, Article VIII of the Constitution. We resolve to exercise primary jurisdiction over
the instant case.

Third issue: whether the petition merits dismissal for non-exhaustion of administrative
remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly
certain information without first asking PEA the needed information. PEA claims petitioner's
direct resort to the Court violates the principle of exhaustion of administrative remedies. It also
violates the rule that mandamus may issue only if there is no other plain, speedy and adequate
remedy in the ordinary course of law.

PEA distinguishes the instant case from Tañada v. Tuvera23 where the Court granted the
petition for mandamus even if the petitioners there did not initially demand from the Office of the
President the publication of the presidential decrees. PEA points out that in Tañada, the
Executive Department had an affirmative statutory duty under Article 2 of the Civil Code24 and
Section 1 of Commonwealth Act No. 63825 to publish the presidential decrees. There was,
therefore, no need for the petitioners in Tañada to make an initial demand from the Office of the
President. In the instant case, PEA claims it has no affirmative statutory duty to disclose publicly
information about its renegotiation of the JVA. Thus, PEA asserts that the Court must apply the
principle of exhaustion of administrative remedies to the instant case in view of the failure of
petitioner here to demand initially from PEA the needed information.

The original JVA sought to dispose to AMARI public lands held by PEA, a government
corporation. Under Section 79 of the Government Auditing Code,26 the disposition of
government lands to private parties requires public bidding. PEA was under a positive legal
duty to disclose to the public the terms and conditions for the sale of its lands. The law
obligated PEA to make this public disclosure even without demand from petitioner or from
anyone. PEA failed to make this public disclosure because the original JVA, like the Amended
JVA, was the result of a negotiated contract, not of a public bidding. Considering that PEA had
an affirmative statutory duty to make the public disclosure, and was even in breach of this legal
duty, petitioner had the right to seek direct judicial intervention.

Moreover, and this alone is determinative of this issue, the principle of exhaustion of
administrative remedies does not apply when the issue involved is a purely legal or
constitutional question.27 The principal issue in the instant case is the capacity of AMARI to
acquire lands held by PEA in view of the constitutional ban prohibiting the alienation of lands of
the public domain to private corporations. We rule that the principle of exhaustion of
administrative remedies does not apply in the instant case.

Fourth issue: whether petitioner has locus standi to bring this suit

PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his
constitutional right to information without a showing that PEA refused to perform an affirmative
duty imposed on PEA by the Constitution. PEA also claims that petitioner has not shown that he
will suffer any concrete injury because of the signing or implementation of the Amended JVA.
Thus, there is no actual controversy requiring the exercise of the power of judicial review.

The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel
PEA to comply with its constitutional duties. There are two constitutional issues involved here.
First is the right of citizens to information on matters of public concern. Second is the application
of a constitutional provision intended to insure the equitable distribution of alienable lands of the
public domain among Filipino citizens. The thrust of the first issue is to compel PEA to disclose
publicly information on the sale of government lands worth billions of pesos, information which
the Constitution and statutory law mandate PEA to disclose. The thrust of the second issue is to
prevent PEA from alienating hundreds of hectares of alienable lands of the public domain in
violation of the Constitution, compelling PEA to comply with a constitutional duty to the nation.

Moreover, the petition raises matters of transcendental importance to the public. In Chavez v.
PCGG,28 the Court upheld the right of a citizen to bring a taxpayer's suit on matters of
transcendental importance to the public, thus -

"Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the
Marcoses is an issue of 'transcendental importance to the public.' He asserts that
ordinary taxpayers have a right to initiate and prosecute actions questioning the validity
of acts or orders of government agencies or instrumentalities, if the issues raised are of
 'paramount public interest,' and if they 'immediately affect the social, economic and
moral well being of the people.'

Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest,
when the proceeding involves the assertion of a public right, such as in this case. He
invokes several decisions of this Court which have set aside the procedural matter
of locus standi, when the subject of the case involved public interest.

xxx

In Tañada v. Tuvera, the Court asserted that when the issue concerns a public right and
the object of mandamus is to obtain the enforcement of a public duty, the people are
regarded as the real parties in interest; and because it is sufficient that petitioner is a
citizen and as such is interested in the execution of the laws, he need not show that he
has any legal or special interest in the result of the action. In the aforesaid case, the
petitioners sought to enforce their right to be informed on matters of public concern, a
right then recognized in Section 6, Article IV of the 1973 Constitution, in connection with
the rule that laws in order to be valid and enforceable must be published in the Official
Gazette or otherwise effectively promulgated. In ruling for the petitioners' legal standing,
the Court declared that the right they sought to be enforced 'is a public right recognized
by no less than the fundamental law of the land.'

Legaspi v. Civil Service Commission, while reiterating Tañada, further declared that
'when a mandamus proceeding involves the assertion of a public right, the requirement
of personal interest is satisfied by the mere fact that petitioner is a citizen and, therefore,
part of the general 'public' which possesses the right.'

Further, in Albano v. Reyes, we said that while expenditure of public funds may not have
been involved under the questioned contract for the development, management and
operation of the Manila International Container Terminal, 'public interest [was] definitely
involved considering the important role [of the subject contract] . . . in the economic
development of the country and the magnitude of the financial consideration involved.'
We concluded that, as a consequence, the disclosure provision in the Constitution would
constitute sufficient authority for upholding the petitioner's standing.

Similarly, the instant petition is anchored on the right of the people to information and
access to official records, documents and papers — a right guaranteed under Section 7,
Article III of the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino
citizen. Because of the satisfaction of the two basic requisites laid down by decisional
law to sustain petitioner's legal standing, i.e. (1) the enforcement of a public right (2)
espoused by a Filipino citizen, we rule that the petition at bar should be allowed."

We rule that since the instant petition, brought by a citizen, involves the enforcement of
constitutional rights - to information and to the equitable diffusion of natural resources - matters
of transcendental public importance, the petitioner has the requisite locus standi.

Fifth issue: whether the constitutional right to information includes official information
on on-going negotiations before a final agreement.

Section 7, Article III of the Constitution explains the people's right to information on matters of
public concern in this manner:

"Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used
as basis for policy development, shall be afforded the citizen, subject to such limitations
as may be provided by law." (Emphasis supplied)

The State policy of full transparency in all transactions involving public interest reinforces the
people's right to information on matters of public concern. This State policy is expressed in
Section 28, Article II of the Constitution, thus:
 "Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public
interest." (Emphasis supplied)

These twin provisions of the Constitution seek to promote transparency in policy-making and in
the operations of the government, as well as provide the people sufficient information to
exercise effectively other constitutional rights. These twin provisions are essential to the
exercise of freedom of expression. If the government does not disclose its official acts,
transactions and decisions to citizens, whatever citizens say, even if expressed without any
restraint, will be speculative and amount to nothing. These twin provisions are also essential to
hold public officials "at all times x x x accountable to the people,"29 for unless citizens have the
proper information, they cannot hold public officials accountable for anything. Armed with the
right information, citizens can participate in public discussions leading to the formulation of
government policies and their effective implementation. An informed citizenry is essential to the
existence and proper functioning of any democracy. As explained by the Court in Valmonte v.
Belmonte, Jr.30 –

"An essential element of these freedoms is to keep open a continuing dialogue or

process of communication between the government and the people. It is in the interest
of the State that the channels for free political discussion be maintained to the end that
the government may perceive and be responsive to the people's will. Yet, this open
dialogue can be effective only to the extent that the citizenry is informed and thus able to
formulate its will intelligently. Only when the participants in the discussion are aware of
the issues and have access to information relating thereto can such bear fruit."

PEA asserts, citing Chavez v. PCGG,31 that in cases of on-going negotiations the right to
information is limited to "definite propositions of the government." PEA maintains the right does
not include access to "intra-agency or inter-agency recommendations or communications during
the stage when common assertions are still in the process of being formulated or are in the
'exploratory stage'."

Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or
before the closing of the transaction. To support its contention, AMARI cites the following
discussion in the 1986 Constitutional Commission:

"Mr. Suarez. And when we say 'transactions' which should be distinguished from
contracts, agreements, or treaties or whatever, does the Gentleman refer to the steps
leading to the consummation of the contract, or does he refer to the contract itself?

Mr. Ople: The 'transactions' used here, I suppose is generic and therefore, it can
cover both steps leading to a contract and already a consummated contract, Mr.
Presiding Officer.

Mr. Suarez: This contemplates inclusion of negotiations leading to the

consummation of the transaction.

Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.

Mr. Suarez: Thank you."32 (Emphasis supplied)

AMARI argues there must first be a consummated contract before petitioner can invoke the
right. Requiring government officials to reveal their deliberations at the pre-decisional stage will
degrade the quality of decision-making in government agencies. Government officials will
hesitate to express their real sentiments during deliberations if there is immediate public
dissemination of their discussions, putting them under all kinds of pressure before they decide.

We must first distinguish between information the law on public bidding requires PEA to disclose
publicly, and information the constitutional right to information requires PEA to release to the
public. Before the consummation of the contract, PEA must, on its own and without demand
from anyone, disclose to the public matters relating to the disposition of its property. These
include the size, location, technical description and nature of the property being disposed of, the
terms and conditions of the disposition, the parties qualified to bid, the minimum price and
similar information. PEA must prepare all these data and disclose them to the public at the start
of the disposition process, long before the consummation of the contract, because the
Government Auditing Code requires public bidding. If PEA fails to make this disclosure, any
citizen can demand from PEA this information at any time during the bidding process.

Information, however, on on-going evaluation or review of bids or proposals being undertaken

by the bidding or review committee is not immediately accessible under the right to information.
While the evaluation or review is still on-going, there are no "official acts, transactions, or
decisions" on the bids or proposals. However, once the committee makes its official
recommendation, there arises a "definite proposition" on the part of the government. From
this moment, the public's right to information attaches, and any citizen can access all the non-
proprietary information leading to such definite proposition. In Chavez v. PCGG,33 the Court
ruled as follows:

"Considering the intent of the framers of the Constitution, we believe that it is incumbent
upon the PCGG and its officers, as well as other government representatives, to
disclose sufficient public information on any proposed settlement they have decided to
take up with the ostensible owners and holders of ill-gotten wealth. Such information,
though, must pertain to definite propositions of the government, not necessarily to
intra-agency or inter-agency recommendations or communications during the stage
when common assertions are still in the process of being formulated or are in the
"exploratory" stage. There is need, of course, to observe the same restrictions on
disclosure of information in general, as discussed earlier – such as on matters involving
national security, diplomatic or foreign relations, intelligence and other classified
information." (Emphasis supplied)

Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission

understood that the right to information "contemplates inclusion of negotiations leading to
the consummation of the transaction."Certainly, a consummated contract is not a
requirement for the exercise of the right to information. Otherwise, the people can never
exercise the right if no contract is consummated, and if one is consummated, it may be too late
for the public to expose its defects.1âwphi1.nêt

Requiring a consummated contract will keep the public in the dark until the contract, which may
be grossly disadvantageous to the government or even illegal, becomes a fait accompli. This
negates the State policy of full transparency on matters of public concern, a situation which the
framers of the Constitution could not have intended. Such a requirement will prevent the
citizenry from participating in the public discussion of any proposed contract, effectively
truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of
a constitutional right, nor a retreat by the State of its avowed "policy of full disclosure of all its
transactions involving public interest."

The right covers three categories of information which are "matters of public concern," namely:
(1) official records; (2) documents and papers pertaining to official acts, transactions and
decisions; and (3) government research data used in formulating policies. The first category
refers to any document that is part of the public records in the custody of government agencies
or officials. The second category refers to documents and papers recording, evidencing,
establishing, confirming, supporting, justifying or explaining official acts, transactions or
decisions of government agencies or officials. The third category refers to research data,
whether raw, collated or processed, owned by the government and used in formulating
government policies.

The information that petitioner may access on the renegotiation of the JVA includes evaluation
reports, recommendations, legal and expert opinions, minutes of meetings, terms of reference
and other documents attached to such reports or minutes, all relating to the JVA. However, the
right to information does not compel PEA to prepare lists, abstracts, summaries and the like
relating to the renegotiation of the JVA.34 The right only affords access to records, documents
and papers, which means the opportunity to inspect and copy them. One who exercises the
right must copy the records, documents and papers at his expense. The exercise of the right is
also subject to reasonable regulations to protect the integrity of the public records and to
minimize disruption to government operations, like rules specifying when and how to conduct
the inspection and copying.35

The right to information, however, does not extend to matters recognized as privileged
information under the separation of powers.36 The right does not also apply to information on
military and diplomatic secrets, information affecting national security, and information on
investigations of crimes by law enforcement agencies before the prosecution of the accused,
which courts have long recognized as confidential.37 The right may also be subject to other
limitations that Congress may impose by law.

There is no claim by PEA that the information demanded by petitioner is privileged information
rooted in the separation of powers. The information does not cover Presidential conversations,
correspondences, or discussions during closed-door Cabinet meetings which, like internal
deliberations of the Supreme Court and other collegiate courts, or executive sessions of either
house of Congress,38 are recognized as confidential. This kind of information cannot be pried
open by a co-equal branch of government. A frank exchange of exploratory ideas and
assessments, free from the glare of publicity and pressure by interested parties, is essential to
protect the independence of decision-making of those tasked to exercise Presidential,
Legislative and Judicial power.39 This is not the situation in the instant case.

We rule, therefore, that the constitutional right to information includes official information on on-
going negotiationsbefore a final contract. The information, however, must constitute definite
propositions by the government and should not cover recognized exceptions like privileged
information, military and diplomatic secrets and similar matters affecting national security and
public order.40 Congress has also prescribed other limitations on the right to information in
several legislations.41

Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands,
reclaimed or to be reclaimed, violate the Constitution.

The Regalian Doctrine

The ownership of lands reclaimed from foreshore and submerged areas is rooted in the
Regalian doctrine which holds that the State owns all lands and waters of the public domain.
Upon the Spanish conquest of the Philippines, ownership of all "lands, territories and
possessions" in the Philippines passed to the Spanish Crown.42 The King, as the sovereign ruler
and representative of the people, acquired and owned all lands and territories in the Philippines
except those he disposed of by grant or sale to private individuals.

The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however,
the State, in lieu of the King, as the owner of all lands and waters of the public domain. The
Regalian doctrine is the foundation of the time-honored principle of land ownership that "all
lands that were not acquired from the Government, either by purchase or by grant, belong to the
public domain."43 Article 339 of the Civil Code of 1889, which is now Article 420 of the Civil
Code of 1950, incorporated the Regalian doctrine.

Ownership and Disposition of Reclaimed Lands

The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and
disposition of reclaimed lands in the Philippines. On May 18, 1907, the Philippine Commission
enacted Act No. 1654 which provided for the lease, but not the sale, of reclaimed lands of
the government to corporations and individuals. Later, on November 29, 1919, the
Philippine Legislature approved Act No. 2874, the Public Land Act, which authorized the lease,
but not the sale, of reclaimed lands of the government to corporations and individuals.
On November 7, 1936, the National Assembly passed Commonwealth Act No. 141, also known
as the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of
the government to corporations and individuals. CA No. 141 continues to this day as the
general law governing the classification and disposition of lands of the public domain.

The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within
the maritime zone of the Spanish territory belonged to the public domain for public use.44 The
Spanish Law of Waters of 1866 allowed the reclamation of the sea under Article 5, which
provided as follows:

"Article 5. Lands reclaimed from the sea in consequence of works constructed by the
State, or by the provinces, pueblos or private persons, with proper permission, shall
become the property of the party constructing such works, unless otherwise provided by
the terms of the grant of authority."

Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party
undertaking the reclamation, provided the government issued the necessary permit and did not
reserve ownership of the reclaimed land to the State.

Article 339 of the Civil Code of 1889 defined property of public dominion as follows:

"Art. 339. Property of public dominion is –

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shores, roadsteads, and that of a similar character;

2. That belonging exclusively to the State which, without being of general public use, is
employed in some public service, or in the development of the national wealth, such as
walls, fortresses, and other works for the defense of the territory, and mines, until
granted to private individuals."

Property devoted to public use referred to property open for use by the public. In contrast,
property devoted to public service referred to property used for some specific public service and
open only to those authorized to use the property.

Property of public dominion referred not only to property devoted to public use, but also to
property not so used but employed to develop the national wealth. This class of property
constituted property of public dominion although employed for some economic or commercial
activity to increase the national wealth.

Article 341 of the Civil Code of 1889 governed the re-classification of property of public
dominion into private property, to wit:

"Art. 341. Property of public dominion, when no longer devoted to public use or to the
defense of the territory, shall become a part of the private property of the State."

This provision, however, was not self-executing. The legislature, or the executive department
pursuant to law, must declare the property no longer needed for public use or territorial defense
before the government could lease or alienate the property to private parties.45

Act No. 1654 of the Philippine Commission

On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of
reclaimed and foreshore lands. The salient provisions of this law were as follows:

"Section 1. The control and disposition of the foreshore as defined in existing law,
and the title to all Government or public lands made or reclaimed by the
Government by dredging or filling or otherwise throughout the Philippine
Islands, shall be retained by the Government without prejudice to vested rights and
without prejudice to rights conceded to the City of Manila in the Luneta Extension.

Section 2. (a) The Secretary of the Interior shall cause all Government or public lands
made or reclaimed by the Government by dredging or filling or otherwise to be divided
into lots or blocks, with the necessary streets and alleyways located thereon, and shall
cause plats and plans of such surveys to be prepared and filed with the Bureau of
Lands.
 (b) Upon completion of such plats and plans the Governor-General shall give notice
to the public that such parts of the lands so made or reclaimed as are not needed
for public purposes will be leased for commercial and business purposes, x x x.

xxx

(e) The leases above provided for shall be disposed of to the highest and best
bidder therefore, subject to such regulations and safeguards as the Governor-General
may by executive order prescribe." (Emphasis supplied)

Act No. 1654 mandated that the government should retain title to all lands reclaimed by the
government. The Act also vested in the government control and disposition of foreshore lands.
Private parties could lease lands reclaimed by the government only if these lands were no
longer needed for public purpose. Act No. 1654 mandated public bidding in the lease of
government reclaimed lands. Act No. 1654 made government reclaimed lands sui generis in
that unlike other public lands which the government could sell to private parties, these reclaimed
lands were available only for lease to private parties.

Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No.
1654 did not prohibit private parties from reclaiming parts of the sea under Section 5 of the
Spanish Law of Waters. Lands reclaimed from the sea by private parties with government
permission remained private lands.

Act No. 2874 of the Philippine Legislature

On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land
Act.46 The salient provisions of Act No. 2874, on reclaimed lands, were as follows:

"Sec. 6. The Governor-General, upon the recommendation of the Secretary of

Agriculture and Natural Resources, shall from time to time classify the lands of
the public domain into –

(a) Alienable or disposable,

(b) Timber, and

(c) Mineral lands, x x x.

Sec. 7. For the purposes of the government and disposition of alienable or disposable
public lands, the Governor-General, upon recommendation by the Secretary of
Agriculture and Natural Resources, shall from time to time declare what lands are
open to disposition or concession under this Act."

Sec. 8. Only those lands shall be declared open to disposition or concession

which have been officially delimited or classified x x x.

xxx

Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral
land, shall be classified as suitable for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural purposes, and shall
be open to disposition or concession, shall be disposed of under the provisions of this
chapter, and not otherwise.

Sec. 56. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the Government by dredging, filling, or other

means;

(b) Foreshore;
 (c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;

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

x x x.

Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be
disposed of to private parties by lease only and not otherwise, as soon as the
Governor-General, upon recommendation by the Secretary of Agriculture and
Natural Resources, shall declare that the same are not necessary for the public
service and are open to disposition under this chapter. The lands included in class
(d) may be disposed of by sale or lease under the provisions of this Act."
(Emphasis supplied)

Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the public
domain into x x x alienable or disposable"47 lands. Section 7 of the Act empowered the
Governor-General to "declare what lands are open to disposition or concession." Section 8 of
the Act limited alienable or disposable lands only to those lands which have been "officially
delimited and classified."

Section 56 of Act No. 2874 stated that lands "disposable under this title48 shall be classified" as
government reclaimed, foreshore and marshy lands, as well as other lands. All these lands,
however, must be suitable for residential, commercial, industrial or other productive non-
agricultural purposes. These provisions vested upon the Governor-General the power to
classify inalienable lands of the public domain into disposable lands of the public domain. These
provisions also empowered the Governor-General to classify further such disposable lands of
the public domain into government reclaimed, foreshore or marshy lands of the public domain,
as well as other non-agricultural lands.

Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain
classified as government reclaimed, foreshore and marshy lands "shall be disposed of to
private parties by lease only and not otherwise." The Governor-General, before allowing the
lease of these lands to private parties, must formally declare that the lands were "not necessary
for the public service." Act No. 2874 reiterated the State policy to lease and not to sell
government reclaimed, foreshore and marshy lands of the public domain, a policy first
enunciated in 1907 in Act No. 1654. Government reclaimed, foreshore and marshy lands
remained sui generis, as the only alienable or disposable lands of the public domain that the
government could not sell to private parties.

The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy
public lands for non-agricultural purposes retain their inherent potential as areas for public
service. This is the reason the government prohibited the sale, and only allowed the lease, of
these lands to private parties. The State always reserved these lands for some future public
service.

Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and
marshy lands into other non-agricultural lands under Section 56 (d). Lands falling under Section
56 (d) were the only lands for non-agricultural purposes the government could sell to private
parties. Thus, under Act No. 2874, the government could not sell government reclaimed,
foreshore and marshy lands to private parties, unless the legislature passed a law allowing
their sale.49

Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section
5 of the Spanish Law of Waters of 1866. Lands reclaimed from the sea by private parties with
government permission remained private lands.

Dispositions under the 1935 Constitution

On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people.
The 1935 Constitution, in adopting the Regalian doctrine, declared in Section 1, Article XIII, that
–

"Section 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy and other
natural resources of the Philippines belong to the State, and their disposition,
exploitation, development, or utilization shall be limited to citizens of the Philippines or to
corporations or associations at least sixty per centum of the capital of which is owned by
such citizens, subject to any existing right, grant, lease, or concession at the time of the
inauguration of the Government established under this Constitution. Natural resources,
with the exception of public agricultural land, shall not be alienated, and no license,
concession, or lease for the exploitation, development, or utilization of any of the natural
resources shall be granted for a period exceeding twenty-five years, renewable for
another twenty-five years, except as to water rights for irrigation, water supply, fisheries,
or industrial uses other than the development of water power, in which cases beneficial
use may be the measure and limit of the grant." (Emphasis supplied)

The 1935 Constitution barred the alienation of all natural resources except public agricultural
lands, which were the only natural resources the State could alienate. Thus, foreshore lands,
considered part of the State's natural resources, became inalienable by constitutional fiat,
available only for lease for 25 years, renewable for another 25 years. The government could
alienate foreshore lands only after these lands were reclaimed and classified as alienable
agricultural lands of the public domain. Government reclaimed and marshy lands of the public
domain, being neither timber nor mineral lands, fell under the classification of public agricultural
lands.50 However, government reclaimed and marshy lands, although subject to classification as
disposable public agricultural lands, could only be leased and not sold to private parties
because of Act No. 2874.

The prohibition on private parties from acquiring ownership of government reclaimed and
marshy lands of the public domain was only a statutory prohibition and the legislature could
therefore remove such prohibition. The 1935 Constitution did not prohibit individuals and
corporations from acquiring government reclaimed and marshy lands of the public domain that
were classified as agricultural lands under existing public land laws. Section 2, Article XIII of the
1935 Constitution provided as follows:

"Section 2. No private corporation or association may acquire, lease, or hold public

agricultural lands in excess of one thousand and twenty four hectares, nor may
any individual acquire such lands by purchase in excess of one hundred and forty
hectares, or by lease in excess of one thousand and twenty-four hectares, or by
homestead in excess of twenty-four hectares. Lands adapted to grazing, not exceeding
two thousand hectares, may be leased to an individual, private corporation, or
association." (Emphasis supplied)

Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act
No. 2874 to open for sale to private parties government reclaimed and marshy lands of the
public domain. On the contrary, the legislature continued the long established State policy of
retaining for the government title and ownership of government reclaimed and marshy lands of
the public domain.

Commonwealth Act No. 141 of the Philippine National Assembly

On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also
known as the Public Land Act, which compiled the then existing laws on lands of the public
domain. CA No. 141, as amended, remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral
lands.51

Section 6 of CA No. 141 empowers the President to classify lands of the public domain into
"alienable or disposable"52 lands of the public domain, which prior to such classification are
inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes the President
to "declare what lands are open to disposition or concession." Section 8 of CA No. 141 states
that the government can declare open for disposition or concession only lands that are "officially
delimited and classified." Sections 6, 7 and 8 of CA No. 141 read as follows:

"Sec. 6. The President, upon the recommendation of the Secretary of Agriculture

and Commerce, shall from time to time classify the lands of the public domain
into –

(a) Alienable or disposable,

(b) Timber, and

(c) Mineral lands,

and may at any time and in like manner transfer such lands from one class to
another,53 for the purpose of their administration and disposition.

Sec. 7. For the purposes of the administration and disposition of alienable or disposable
public lands, the President, upon recommendation by the Secretary of Agriculture
and Commerce, shall from time to time declare what lands are open to disposition
or concession under this Act.

Sec. 8. Only those lands shall be declared open to disposition or concession

which have been officially delimited and classified and, when practicable,
surveyed, and which have not been reserved for public or quasi-public uses, nor
appropriated by the Government, nor in any manner become private property, nor those
on which a private right authorized and recognized by this Act or any other valid law may
be claimed, or which, having been reserved or appropriated, have ceased to be so. x x
x."

Thus, before the government could alienate or dispose of lands of the public domain, the
President must first officially classify these lands as alienable or disposable, and then declare
them open to disposition or concession. There must be no law reserving these lands for public
or quasi-public uses.

The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of
the public domain, are as follows:

"Sec. 58. Any tract of land of the public domain which, being neither timber nor
mineral land, is intended to be used for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural, and is open to
disposition or concession, shall be disposed of under the provisions of this
chapter and not otherwise.

Sec. 59. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the Government by dredging, filling, or other

means;

(b) Foreshore;

(c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;

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

Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case
may be, to any person, corporation, or association authorized to purchase or lease
public lands for agricultural purposes. x x x.
 Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall
be disposed of to private parties by lease only and not otherwise, as soon as the
President, upon recommendation by the Secretary of Agriculture, shall declare that
the same are not necessary for the public service and are open to disposition under
this chapter. The lands included in class (d) may be disposed of by sale or lease
under the provisions of this Act." (Emphasis supplied)

Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of
Act No. 2874 prohibiting the sale of government reclaimed, foreshore and marshy disposable
lands of the public domain. All these lands are intended for residential, commercial, industrial or
other non-agricultural purposes. As before, Section 61 allowed only the lease of such lands to
private parties. The government could sell to private parties only lands falling under Section 59
(d) of CA No. 141, or those lands for non-agricultural purposes not classified as government
reclaimed, foreshore and marshy disposable lands of the public domain. Foreshore lands,
however, became inalienable under the 1935 Constitution which only allowed the lease of these
lands to qualified private parties.

Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended
for residential, commercial, industrial or other productive purposes other than agricultural "shall
be disposed of under the provisions of this chapter and not otherwise." Under Section 10
of CA No. 141, the term "disposition" includes lease of the land. Any disposition of government
reclaimed, foreshore and marshy disposable lands for non-agricultural purposes must comply
with Chapter IX, Title III of CA No. 141,54 unless a subsequent law amended or repealed these
provisions.

In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court
of Appeals,55Justice Reynato S. Puno summarized succinctly the law on this matter, as follows:

"Foreshore lands are lands of public dominion intended for public use. So too are lands
reclaimed by the government by dredging, filling, or other means. Act 1654 mandated
that the control and disposition of the foreshore and lands under water remained in the
national government. Said law allowed only the 'leasing' of reclaimed land. The Public
Land Acts of 1919 and 1936 also declared that the foreshore and lands reclaimed by the
government were to be "disposed of to private parties by lease only and not otherwise."
Before leasing, however, the Governor-General, upon recommendation of the Secretary
of Agriculture and Natural Resources, had first to determine that the land reclaimed was
not necessary for the public service. This requisite must have been met before the land
could be disposed of. But even then, the foreshore and lands under water were not
to be alienated and sold to private parties. The disposition of the reclaimed land
was only by lease. The land remained property of the State." (Emphasis supplied)

As observed by Justice Puno in his concurring opinion, "Commonwealth Act No. 141 has
remained in effect at present."

The State policy prohibiting the sale to private parties of government reclaimed, foreshore and
marshy alienable lands of the public domain, first implemented in 1907 was thus reaffirmed in
CA No. 141 after the 1935 Constitution took effect. The prohibition on the sale of foreshore
lands, however, became a constitutional edict under the 1935 Constitution. Foreshore lands
became inalienable as natural resources of the State, unless reclaimed by the government and
classified as agricultural lands of the public domain, in which case they would fall under the
classification of government reclaimed lands.

After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable
lands of the public domain continued to be only leased and not sold to private parties.56 These
lands remained sui generis, as the only alienable or disposable lands of the public domain the
government could not sell to private parties.

Since then and until now, the only way the government can sell to private parties government
reclaimed and marshy disposable lands of the public domain is for the legislature to pass a law
authorizing such sale. CA No. 141 does not authorize the President to reclassify government
reclaimed and marshy lands into other non-agricultural lands under Section 59 (d). Lands
classified under Section 59 (d) are the only alienable or disposable lands for non-agricultural
purposes that the government could sell to private parties.

Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands
under Section 59 that the government previously transferred to government units or entities
could be sold to private parties. Section 60 of CA No. 141 declares that –

"Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the
Secretary of Agriculture and Natural Resources, be reasonably necessary for the
purposes for which such sale or lease is requested, and shall not exceed one hundred
and forty-four hectares: Provided, however, That this limitation shall not apply to grants,
donations, or transfers made to a province, municipality or branch or subdivision of the
Government for the purposes deemed by said entities conducive to the public
interest; but the land so granted, donated, or transferred to a province,
municipality or branch or subdivision of the Government shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its title, except when
authorized by Congress: x x x." (Emphasis supplied)

The congressional authority required in Section 60 of CA No. 141 mirrors the legislative
authority required in Section 56 of Act No. 2874.

One reason for the congressional authority is that Section 60 of CA No. 141 exempted
government units and entities from the maximum area of public lands that could be acquired
from the State. These government units and entities should not just turn around and sell these
lands to private parties in violation of constitutional or statutory limitations. Otherwise, the
transfer of lands for non-agricultural purposes to government units and entities could be used to
circumvent constitutional limitations on ownership of alienable or disposable lands of the public
domain. In the same manner, such transfers could also be used to evade the statutory
prohibition in CA No. 141 on the sale of government reclaimed and marshy lands of the public
domain to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on
these lands.57

In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA
No. 141, Sections 63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141 provide
as follows:

"Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for
public purposes, the Director of Lands shall ask the Secretary of Agriculture and
Commerce (now the Secretary of Natural Resources) for authority to dispose of the
same. Upon receipt of such authority, the Director of Lands shall give notice by public
advertisement in the same manner as in the case of leases or sales of agricultural public
land, x x x.

Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be
made to the highest bidder. x x x." (Emphasis supplied)

Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of
alienable or disposable lands of the public domain.58

Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the
Spanish Law of Waters of 1866. Private parties could still reclaim portions of the sea with
government permission. However, the reclaimed land could become private land only if
classified as alienable agricultural land of the public domain open to disposition under CA
No. 141. The 1935 Constitution prohibited the alienation of all natural resources except public
agricultural lands.

The Civil Code of 1950

The Civil Code of 1950 readopted substantially the definition of property of public dominion
found in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state that –
 "Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;

(2) Those which belong to the State, without being for public use, and are intended for
some public service or for the development of the national wealth.

x x x.

Art. 422. Property of public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the State."

Again, the government must formally declare that the property of public dominion is no longer
needed for public use or public service, before the same could be classified as patrimonial
property of the State.59 In the case of government reclaimed and marshy lands of the public
domain, the declaration of their being disposable, as well as the manner of their disposition, is
governed by the applicable provisions of CA No. 141.

Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion
those properties of the State which, without being for public use, are intended for public service
or the "development of the national wealth." Thus, government reclaimed and marshy lands
of the State, even if not employed for public use or public service, if developed to enhance the
national wealth, are classified as property of public dominion.

Dispositions under the 1973 Constitution

The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian
doctrine. Section 8, Article XIV of the 1973 Constitution stated that –

"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources
of the Philippines belong to the State. With the exception of agricultural, industrial or
commercial, residential, and resettlement lands of the public domain, natural
resources shall not be alienated, and no license, concession, or lease for the
exploration, development, exploitation, or utilization of any of the natural resources shall
be granted for a period exceeding twenty-five years, renewable for not more than
twenty-five years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, in which cases, beneficial
use may be the measure and the limit of the grant." (Emphasis supplied)

The 1973 Constitution prohibited the alienation of all natural resources with the exception of
"agricultural, industrial or commercial, residential, and resettlement lands of the public domain."
In contrast, the 1935 Constitution barred the alienation of all natural resources except "public
agricultural lands." However, the term "public agricultural lands" in the 1935 Constitution
encompassed industrial, commercial, residential and resettlement lands of the public
domain.60 If the land of public domain were neither timber nor mineral land, it would fall under
the classification of agricultural land of the public domain. Both the 1935 and 1973
Constitutions, therefore, prohibited the alienation of all natural resources except
agricultural lands of the public domain.

The 1973 Constitution, however, limited the alienation of lands of the public domain to
individuals who were citizens of the Philippines. Private corporations, even if wholly owned by
Philippine citizens, were no longer allowed to acquire alienable lands of the public domain unlike
in the 1935 Constitution. Section 11, Article XIV of the 1973 Constitution declared that –

"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and
development requirements of the natural resources, shall determine by law the size of
land of the public domain which may be developed, held or acquired by, or leased to,
any qualified individual, corporation, or association, and the conditions therefor. No
 private corporation or association may hold alienable lands of the public domain
except by lease not to exceed one thousand hectares in area nor may any citizen hold
such lands by lease in excess of five hundred hectares or acquire by purchase,
homestead or grant, in excess of twenty-four hectares. No private corporation or
association may hold by lease, concession, license or permit, timber or forest lands and
other timber or forest resources in excess of one hundred thousand hectares. However,
such area may be increased by the Batasang Pambansa upon recommendation of the
National Economic and Development Authority." (Emphasis supplied)

Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public
domain only through lease. Only individuals could now acquire alienable lands of the public
domain, and private corporations became absolutely barred from acquiring any kind of
alienable land of the public domain. The constitutional ban extended to all kinds of alienable
lands of the public domain, while the statutory ban under CA No. 141 applied only to
government reclaimed, foreshore and marshy alienable lands of the public domain.

PD No. 1084 Creating the Public Estates Authority

On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084
creating PEA, a wholly government owned and controlled corporation with a special charter.
Sections 4 and 8 of PD No. 1084, vests PEA with the following purposes and powers:

"Sec. 4. Purpose. The Authority is hereby created for the following purposes:

(a) To reclaim land, including foreshore and submerged areas, by dredging, filling
or other means, or to acquire reclaimed land;

(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell
any and all kinds of lands, buildings, estates and other forms of real property, owned,
managed, controlled and/or operated by the government;

(c) To provide for, operate or administer such service as may be necessary for the
efficient, economical and beneficial utilization of the above properties.

Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the
purposes for which it is created, have the following powers and functions:

(a)To prescribe its by-laws.

xxx

(i) To hold lands of the public domain in excess of the area permitted to private
corporations by statute.

(j) To reclaim lands and to construct work across, or otherwise, any stream,
watercourse, canal, ditch, flume x x x.

xxx

(o) To perform such acts and exercise such functions as may be necessary for the
attainment of the purposes and objectives herein specified." (Emphasis supplied)

PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public
domain. Foreshore areas are those covered and uncovered by the ebb and flow of the
tide.61 Submerged areas are those permanently under water regardless of the ebb and flow of
the tide.62 Foreshore and submerged areas indisputably belong to the public domain63 and are
inalienable unless reclaimed, classified as alienable lands open to disposition, and further
declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the
public domain did not apply to PEA since it was then, and until today, a fully owned government
corporation. The constitutional ban applied then, as it still applies now, only to "private
corporations and associations." PD No. 1084 expressly empowers PEA "to hold lands of the
public domain" even "in excess of the area permitted to private corporations by statute." Thus,
PEA can hold title to private lands, as well as title to lands of the public domain.

In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public
domain, there must be legislative authority empowering PEA to sell these lands. This legislative
authority is necessary in view of Section 60 of CA No.141, which states –

"Sec. 60. x x x; but the land so granted, donated or transferred to a province,

municipality, or branch or subdivision of the Government shall not be alienated,
encumbered or otherwise disposed of in a manner affecting its title, except when
authorized by Congress; x x x." (Emphasis supplied)

Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and
submerged alienable lands of the public domain. Nevertheless, any legislative authority granted
to PEA to sell its reclaimed alienable lands of the public domain would be subject to the
constitutional ban on private corporations from acquiring alienable lands of the public domain.
Hence, such legislative authority could only benefit private individuals.

Dispositions under the 1987 Constitution

The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian
doctrine. The 1987 Constitution declares that all natural resources are "owned by the State,"
and except for alienable agricultural lands of the public domain, natural resources cannot be
alienated. Sections 2 and 3, Article XII of the 1987 Constitution state that –

"Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated. The
exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. x x x.

Section 3. Lands of the public domain are classified into agricultural, forest or timber,
mineral lands, and national parks. Agricultural lands of the public domain may be further
classified by law according to the uses which they may be devoted. Alienable lands of
the public domain shall be limited to agricultural lands. Private corporations or
associations may not hold such alienable lands of the public domain except by
lease, for a period not exceeding twenty-five years, renewable for not more than
twenty-five years, and not to exceed one thousand hectares in area. Citizens of the
Philippines may lease not more than five hundred hectares, or acquire not more than
twelve hectares thereof by purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and
subject to the requirements of agrarian reform, the Congress shall determine, by law, the
size of lands of the public domain which may be acquired, developed, held, or leased
and the conditions therefor." (Emphasis supplied)

The 1987 Constitution continues the State policy in the 1973 Constitution banning private
corporations from acquiring any kind of alienable land of the public domain. Like the 1973
Constitution, the 1987 Constitution allows private corporations to hold alienable lands of the
public domain only through lease. As in the 1935 and 1973 Constitutions, the general law
governing the lease to private corporations of reclaimed, foreshore and marshy alienable lands
of the public domain is still CA No. 141.

The Rationale behind the Constitutional Ban

The rationale behind the constitutional ban on corporations from acquiring, except through
lease, alienable lands of the public domain is not well understood. During the deliberations of
the 1986 Constitutional Commission, the commissioners probed the rationale behind this ban,
thus:

"FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which
says:

`No private corporation or association may hold alienable lands of the public domain
except by lease, not to exceed one thousand hectares in area.'

If we recall, this provision did not exist under the 1935 Constitution, but this was
introduced in the 1973 Constitution. In effect, it prohibits private corporations from
acquiring alienable public lands. But it has not been very clear in jurisprudence what
the reason for this is. In some of the cases decided in 1982 and 1983, it was
indicated that the purpose of this is to prevent large landholdings. Is that the intent
of this provision?

MR. VILLEGAS: I think that is the spirit of the provision.

FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances
where the Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land
where a chapel stood because the Supreme Court said it would be in violation of this."
(Emphasis supplied)

In Ayog v. Cusi,64 the Court explained the rationale behind this constitutional ban in this way:

"Indeed, one purpose of the constitutional prohibition against purchases of public

agricultural lands by private corporations is to equitably diffuse land ownership or to
encourage 'owner-cultivatorship and the economic family-size farm' and to prevent a
recurrence of cases like the instant case. Huge landholdings by corporations or private
persons had spawned social unrest."

However, if the constitutional intent is to prevent huge landholdings, the Constitution could have
simply limited the size of alienable lands of the public domain that corporations could acquire.
The Constitution could have followed the limitations on individuals, who could acquire not more
than 24 hectares of alienable lands of the public domain under the 1973 Constitution, and not
more than 12 hectares under the 1987 Constitution.

If the constitutional intent is to encourage economic family-size farms, placing the land in the
name of a corporation would be more effective in preventing the break-up of farmlands. If the
farmland is registered in the name of a corporation, upon the death of the owner, his heirs would
inherit shares in the corporation instead of subdivided parcels of the farmland. This would
prevent the continuing break-up of farmlands into smaller and smaller plots from one generation
to the next.

In actual practice, the constitutional ban strengthens the constitutional limitation on individuals
from acquiring more than the allowed area of alienable lands of the public domain. Without the
constitutional ban, individuals who already acquired the maximum area of alienable lands of the
public domain could easily set up corporations to acquire more alienable public lands. An
individual could own as many corporations as his means would allow him. An individual could
even hide his ownership of a corporation by putting his nominees as stockholders of the
corporation. The corporation is a convenient vehicle to circumvent the constitutional limitation on
acquisition by individuals of alienable lands of the public domain.

The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only
a limited area of alienable land of the public domain to a qualified individual. This constitutional
intent is safeguarded by the provision prohibiting corporations from acquiring alienable lands of
the public domain, since the vehicle to circumvent the constitutional intent is removed. The
available alienable public lands are gradually decreasing in the face of an ever-growing
population. The most effective way to insure faithful adherence to this constitutional intent is to
grant or sell alienable lands of the public domain only to individuals. This, it would seem, is the
practical benefit arising from the constitutional ban.

The Amended Joint Venture Agreement

The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of
three properties, namely:

1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo
Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area of
1,578,441 square meters;"

2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and

3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to
regularize the configuration of the reclaimed area."65

PEA confirms that the Amended JVA involves "the development of the Freedom Islands and
further reclamation of about 250 hectares x x x," plus an option "granted to AMARI to
subsequently reclaim another 350 hectares x x x."66

In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares
of the 750-hectare reclamation project have been reclaimed, and the rest of the 592.15
hectares are still submerged areas forming part of Manila Bay.

Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's
"actual cost" in partially reclaiming the Freedom Islands. AMARI will also complete, at its own
expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the
reclamation costs of all the other areas, totaling 592.15 hectares, still to be reclaimed. AMARI
and PEA will share, in the proportion of 70 percent and 30 percent, respectively, the total net
usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent
earmarked for common areas. Title to AMARI's share in the net usable area, totaling 367.5
hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides
that –

"x x x, PEA shall have the duty to execute without delay the necessary deed of transfer
or conveyance of the title pertaining to AMARI's Land share based on the Land
Allocation Plan. PEA, when requested in writing by AMARI, shall then cause the
issuance and delivery of the proper certificates of title covering AMARI's Land
Share in the name of AMARI, x x x; provided, that if more than seventy percent (70%)
of the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only
seventy percent (70%) of the titles pertaining to AMARI, until such time when a
corresponding proportionate area of additional land pertaining to PEA has been titled."
(Emphasis supplied)

Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5
hectares of reclaimed land which will be titled in its name.

To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint
venture PEA's statutory authority, rights and privileges to reclaim foreshore and submerged
areas in Manila Bay. Section 3.2.a of the Amended JVA states that –

"PEA hereby contributes to the joint venture its rights and privileges to perform Rawland
Reclamation and Horizontal Development as well as own the Reclamation Area, thereby
granting the Joint Venture the full and exclusive right, authority and privilege to
undertake the Project in accordance with the Master Development Plan."

The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and
its supplemental agreement dated August 9, 1995.

The Threshold Issue

The threshold issue is whether AMARI, a private corporation, can acquire and own under the
Amended JVA 367.5 hectares of reclaimed foreshore and submerged areas in Manila Bay in
view of Sections 2 and 3, Article XII of the 1987 Constitution which state that:

"Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated. x x x.

xxx

Section 3. x x x Alienable lands of the public domain shall be limited to agricultural

lands. Private corporations or associations may not hold such alienable lands of
the public domain except by lease, x x x."(Emphasis supplied)

Classification of Reclaimed Foreshore and Submerged Areas

PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay
are alienable or disposable lands of the public domain. In its Memorandum,67 PEA admits that –

"Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as
alienable and disposable lands of the public domain:

'Sec. 59. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the government by dredging, filling, or other means;

x x x.'" (Emphasis supplied)

Likewise, the Legal Task Force68 constituted under Presidential Administrative Order No. 365
admitted in its Report and Recommendation to then President Fidel V. Ramos, "[R]eclaimed
lands are classified as alienable and disposable lands of the public domain."69 The Legal
Task Force concluded that –

"D. Conclusion

Reclaimed lands are lands of the public domain. However, by statutory authority, the
rights of ownership and disposition over reclaimed lands have been transferred to PEA,
by virtue of which PEA, as owner, may validly convey the same to any qualified person
without violating the Constitution or any statute.

The constitutional provision prohibiting private corporations from holding public land,
except by lease (Sec. 3, Art. XVII,70 1987 Constitution), does not apply to reclaimed
lands whose ownership has passed on to PEA by statutory grant."

Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of
Manila Bay are part of the "lands of the public domain, waters x x x and other natural resources"
and consequently "owned by the State." As such, foreshore and submerged areas "shall not be
alienated," unless they are classified as "agricultural lands" of the public domain. The mere
reclamation of these areas by PEA does not convert these inalienable natural resources of the
State into alienable or disposable lands of the public domain. There must be a law or
presidential proclamation officially classifying these reclaimed lands as alienable or disposable
and open to disposition or concession. Moreover, these reclaimed lands cannot be classified as
alienable or disposable if the law has reserved them for some public or quasi-public use.71

Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or
concession which have been officially delimited and classified."72 The President has the
authority to classify inalienable lands of the public domain into alienable or disposable lands of
the public domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,73 the Executive
Department attempted to sell the Roppongi property in Tokyo, Japan, which was acquired by
the Philippine Government for use as the Chancery of the Philippine Embassy. Although the
Chancery had transferred to another location thirteen years earlier, the Court still ruled that,
under Article 42274 of the Civil Code, a property of public dominion retains such character until
formally declared otherwise. The Court ruled that –

"The fact that the Roppongi site has not been used for a long time for actual Embassy
service does not automatically convert it to patrimonial property. Any such conversion
happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene
Co. v. Bercilles, 66 SCRA 481 [1975]. A property continues to be part of the public
domain, not available for private appropriation or ownership 'until there is a formal
declaration on the part of the government to withdraw it from being such' (Ignacio
v. Director of Lands, 108 Phil. 335 [1960]." (Emphasis supplied)

PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for
lands reclaimed by PEA from the foreshore or submerged areas of Manila Bay. On January 19,
1988 then President Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA for
the 157.84 hectares comprising the partially reclaimed Freedom Islands. Subsequently, on April
9, 1999 the Register of Deeds of the Municipality of Paranaque issued TCT Nos. 7309, 7311
and 7312 in the name of PEA pursuant to Section 103 of PD No. 1529 authorizing the issuance
of certificates of title corresponding to land patents. To this day, these certificates of title are still
in the name of PEA.

PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the
Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as
alienable or disposable lands of the public domain. PD No. 1085 and President Aquino's
issuance of a land patent also constitute a declaration that the Freedom Islands are no longer
needed for public service. The Freedom Islands are thus alienable or disposable lands of
the public domain, open to disposition or concession to qualified parties.

At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed
the Freedom Islands although subsequently there were partial erosions on some areas. The
government had also completed the necessary surveys on these islands. Thus, the Freedom
Islands were no longer part of Manila Bay but part of the land mass. Section 3, Article XII of the
1987 Constitution classifies lands of the public domain into "agricultural, forest or timber, mineral
lands, and national parks." Being neither timber, mineral, nor national park lands, the reclaimed
Freedom Islands necessarily fall under the classification of agricultural lands of the public
domain. Under the 1987 Constitution, agricultural lands of the public domain are the only natural
resources that the State may alienate to qualified private parties. All other natural resources,
such as the seas or bays, are "waters x x x owned by the State" forming part of the public
domain, and are inalienable pursuant to Section 2, Article XII of the 1987 Constitution.

AMARI claims that the Freedom Islands are private lands because CDCP, then a private
corporation, reclaimed the islands under a contract dated November 20, 1973 with the
Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law of Waters of
1866, argues that "if the ownership of reclaimed lands may be given to the party constructing
the works, then it cannot be said that reclaimed lands are lands of the public domain which the
State may not alienate."75 Article 5 of the Spanish Law of Waters reads as follows:

"Article 5. Lands reclaimed from the sea in consequence of works constructed by the
State, or by the provinces, pueblos or private persons, with proper permission, shall
become the property of the party constructing such works, unless otherwise provided
by the terms of the grant of authority." (Emphasis supplied)

Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea
only with "proper permission" from the State. Private parties could own the reclaimed land only if
not "otherwise provided by the terms of the grant of authority." This clearly meant that no one
could reclaim from the sea without permission from the State because the sea is property of
public dominion. It also meant that the State could grant or withhold ownership of the reclaimed
land because any reclaimed land, like the sea from which it emerged, belonged to the State.
Thus, a private person reclaiming from the sea without permission from the State could not
acquire ownership of the reclaimed land which would remain property of public dominion like the
sea it replaced.76 Article 5 of the Spanish Law of Waters of 1866 adopted the time-honored
principle of land ownership that "all lands that were not acquired from the government, either by
purchase or by grant, belong to the public domain."77

Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted
on the disposition of public lands. In particular, CA No. 141 requires that lands of the public
domain must first be classified as alienable or disposable before the government can alienate
them. These lands must not be reserved for public or quasi-public purposes.78 Moreover, the
contract between CDCP and the government was executed after the effectivity of the 1973
Constitution which barred private corporations from acquiring any kind of alienable land of the
public domain. This contract could not have converted the Freedom Islands into private lands of
a private corporation.

Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the
reclamation of areas under water and revested solely in the National Government the power to
reclaim lands. Section 1 of PD No. 3-A declared that –

"The provisions of any law to the contrary notwithstanding, the reclamation of areas
under water, whether foreshore or inland, shall be limited to the National Government
or any person authorized by it under a proper contract. (Emphasis supplied)

x x x."

PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of
areas under water could now be undertaken only by the National Government or by a person
contracted by the National Government. Private parties may reclaim from the sea only under a
contract with the National Government, and no longer by grant or permission as provided in
Section 5 of the Spanish Law of Waters of 1866.

Executive Order No. 525, issued on February 14, 1979, designated PEA as the National
Government's implementing arm to undertake "all reclamation projects of the government,"
which "shall be undertaken by the PEA or through a proper contract executed by it with
any person or entity." Under such contract, a private party receives compensation for
reclamation services rendered to PEA. Payment to the contractor may be in cash, or in kind
consisting of portions of the reclaimed land, subject to the constitutional ban on private
corporations from acquiring alienable lands of the public domain. The reclaimed land can be
used as payment in kind only if the reclaimed land is first classified as alienable or disposable
land open to disposition, and then declared no longer needed for public service.

The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares
which are still submerged and forming part of Manila Bay. There is no legislative or
Presidential act classifying these submerged areas as alienable or disposable lands of
the public domain open to disposition. These submerged areas are not covered by any
patent or certificate of title. There can be no dispute that these submerged areas form part of
the public domain, and in their present state are inalienable and outside the commerce of
man. Until reclaimed from the sea, these submerged areas are, under the Constitution, "waters
x x x owned by the State," forming part of the public domain and consequently inalienable. Only
when actually reclaimed from the sea can these submerged areas be classified as public
agricultural lands, which under the Constitution are the only natural resources that the State
may alienate. Once reclaimed and transformed into public agricultural lands, the government
may then officially classify these lands as alienable or disposable lands open to disposition.
Thereafter, the government may declare these lands no longer needed for public service. Only
then can these reclaimed lands be considered alienable or disposable lands of the public
domain and within the commerce of man.

The classification of PEA's reclaimed foreshore and submerged lands into alienable or
disposable lands open to disposition is necessary because PEA is tasked under its charter to
undertake public services that require the use of lands of the public domain. Under Section 5 of
PD No. 1084, the functions of PEA include the following: "[T]o own or operate railroads,
tramways and other kinds of land transportation, x x x; [T]o construct, maintain and operate
such systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate
such storm drains as may be necessary." PEA is empowered to issue "rules and regulations as
may be necessary for the proper use by private parties of any or all of the highways, roads,
utilities, buildings and/or any of its properties and to impose or collect fees or tolls for their
use." Thus, part of the reclaimed foreshore and submerged lands held by the PEA would
actually be needed for public use or service since many of the functions imposed on PEA by its
charter constitute essential public services.

Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily
responsible for integrating, directing, and coordinating all reclamation projects for and on behalf
of the National Government." The same section also states that "[A]ll reclamation projects shall
be approved by the President upon recommendation of the PEA, and shall be undertaken by
the PEA or through a proper contract executed by it with any person or entity; x x x." Thus,
under EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA became the primary
implementing agency of the National Government to reclaim foreshore and submerged lands of
the public domain. EO No. 525 recognized PEA as the government entity "to undertake the
reclamation of lands and ensure their maximum utilization in promoting public welfare and
interests."79 Since large portions of these reclaimed lands would obviously be needed for public
service, there must be a formal declaration segregating reclaimed lands no longer needed for
public service from those still needed for public service.1âwphi1.nêt

Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be
owned by the PEA," could not automatically operate to classify inalienable lands into alienable
or disposable lands of the public domain. Otherwise, reclaimed foreshore and submerged lands
of the public domain would automatically become alienable once reclaimed by PEA, whether or
not classified as alienable or disposable.

The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525,
vests in the Department of Environment and Natural Resources ("DENR" for brevity) the
following powers and functions:

"Sec. 4. Powers and Functions. The Department shall:

(1) x x x

xxx

(4) Exercise supervision and control over forest lands, alienable and disposable
public lands, mineral resources and, in the process of exercising such control, impose
appropriate taxes, fees, charges, rentals and any such form of levy and collect such
revenues for the exploration, development, utilization or gathering of such resources;

xxx

(14) Promulgate rules, regulations and guidelines on the issuance of licenses,

permits, concessions, lease agreements and such other privileges concerning the
development, exploration and utilization of the country's marine, freshwater, and
brackish water and over all aquatic resources of the country and shall continue to
oversee, supervise and police our natural resources; cancel or cause to cancel such
privileges upon failure, non-compliance or violations of any regulation, order, and for all
other causes which are in furtherance of the conservation of natural resources and
supportive of the national interest;

(15) Exercise exclusive jurisdiction on the management and disposition of all

lands of the public domain and serve as the sole agency responsible for
classification, sub-classification, surveying and titling of lands in consultation with
appropriate agencies."80 (Emphasis supplied)

As manager, conservator and overseer of the natural resources of the State, DENR exercises
"supervision and control over alienable and disposable public lands." DENR also exercises
"exclusive jurisdiction on the management and disposition of all lands of the public domain."
Thus, DENR decides whether areas under water, like foreshore or submerged areas of Manila
Bay, should be reclaimed or not. This means that PEA needs authorization from DENR before
PEA can undertake reclamation projects in Manila Bay, or in any part of the country.

DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain.
Hence, DENR decides whether reclaimed lands of PEA should be classified as alienable under
Sections 681 and 782 of CA No. 141. Once DENR decides that the reclaimed lands should be so
classified, it then recommends to the President the issuance of a proclamation classifying the
lands as alienable or disposable lands of the public domain open to disposition. We note that
then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141.

In short, DENR is vested with the power to authorize the reclamation of areas under water,
while PEA is vested with the power to undertake the physical reclamation of areas under water,
whether directly or through private contractors. DENR is also empowered to classify lands of the
public domain into alienable or disposable lands subject to the approval of the President. On the
other hand, PEA is tasked to develop, sell or lease the reclaimed alienable lands of the public
domain.

Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not
make the reclaimed lands alienable or disposable lands of the public domain, much less
patrimonial lands of PEA. Likewise, the mere transfer by the National Government of lands of
the public domain to PEA does not make the lands alienable or disposable lands of the public
domain, much less patrimonial lands of PEA.

Absent two official acts – a classification that these lands are alienable or disposable and open
to disposition and a declaration that these lands are not needed for public service, lands
reclaimed by PEA remain inalienable lands of the public domain. Only such an official
classification and formal declaration can convert reclaimed lands into alienable or disposable
lands of the public domain, open to disposition under the Constitution, Title I and Title III83 of CA
No. 141 and other applicable laws.84

PEA's Authority to Sell Reclaimed Lands

PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public
domain, the reclaimed lands shall be disposed of in accordance with CA No. 141, the Public
Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a
branch or subdivision of the government "shall not be alienated, encumbered, or otherwise
disposed of in a manner affecting its title, except when authorized by Congress: x x
x."85 (Emphasis by PEA)

In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised Administrative Code of 1987,
which states that –

"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following: x x x."

Thus, the Court concluded that a law is needed to convey any real property belonging to the
Government. The Court declared that -

"It is not for the President to convey real property of the government on his or her own
sole will. Any such conveyance must be authorized and approved by a law enacted
by the Congress. It requires executive and legislative concurrence." (Emphasis
supplied)

PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing
PEA to sell its reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that –

"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to
the contract for the reclamation and construction of the Manila-Cavite Coastal Road
Project between the Republic of the Philippines and the Construction and Development
 Corporation of the Philippines dated November 20, 1973 and/or any other contract or
reclamation covering the same area is hereby transferred, conveyed and assigned to
the ownership and administration of the Public Estates Authority established
pursuant to PD No. 1084; Provided, however, That the rights and interests of the
Construction and Development Corporation of the Philippines pursuant to the aforesaid
contract shall be recognized and respected.

Henceforth, the Public Estates Authority shall exercise the rights and assume the
obligations of the Republic of the Philippines (Department of Public Highways) arising
from, or incident to, the aforesaid contract between the Republic of the Philippines and
the Construction and Development Corporation of the Philippines.

In consideration of the foregoing transfer and assignment, the Public Estates Authority
shall issue in favor of the Republic of the Philippines the corresponding shares of stock
in said entity with an issued value of said shares of stock (which) shall be deemed fully
paid and non-assessable.

The Secretary of Public Highways and the General Manager of the Public Estates
Authority shall execute such contracts or agreements, including appropriate agreements
with the Construction and Development Corporation of the Philippines, as may be
necessary to implement the above.

Special land patent/patents shall be issued by the Secretary of Natural Resources

in favor of the Public Estates Authority without prejudice to the subsequent
transfer to the contractor or his assignees of such portion or portions of the land
reclaimed or to be reclaimed as provided for in the above-mentioned contract. On
the basis of such patents, the Land Registration Commission shall issue the
corresponding certificate of title." (Emphasis supplied)

On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -

"Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which
shall be responsible for its administration, development, utilization or disposition in
accordance with the provisions of Presidential Decree No. 1084. Any and all income that
the PEA may derive from the sale, lease or use of reclaimed lands shall be used in
accordance with the provisions of Presidential Decree No. 1084."

There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its
reclaimed lands. PD No. 1085 merely transferred "ownership and administration" of lands
reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA
"shall belong to or be owned by PEA." EO No. 525 expressly states that PEA should dispose of
its reclaimed lands "in accordance with the provisions of Presidential Decree No. 1084," the
charter of PEA.

PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds of lands x x x owned, managed,
controlled and/or operated by the government."87(Emphasis supplied) There is, therefore,
legislative authority granted to PEA to sell its lands, whether patrimonial or alienable
lands of the public domain. PEA may sell to private parties its patrimonial propertiesin
accordance with the PEA charter free from constitutional limitations. The constitutional ban on
private corporations from acquiring alienable lands of the public domain does not apply to the
sale of PEA's patrimonial lands.

PEA may also sell its alienable or disposable lands of the public domain to private
individuals since, with the legislative authority, there is no longer any statutory prohibition
against such sales and the constitutional ban does not apply to individuals. PEA, however,
cannot sell any of its alienable or disposable lands of the public domain to private corporations
since Section 3, Article XII of the 1987 Constitution expressly prohibits such sales. The
legislative authority benefits only individuals. Private corporations remain barred from acquiring
any kind of alienable land of the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred
by PEA to the "contractor or his assignees" (Emphasis supplied) would not apply to private
corporations but only to individuals because of the constitutional ban. Otherwise, the provisions
of PD No. 1085 would violate both the 1973 and 1987 Constitutions.

The requirement of public auction in the sale of reclaimed lands

Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to
disposition, and further declared no longer needed for public service, PEA would have to
conduct a public bidding in selling or leasing these lands. PEA must observe the provisions of
Sections 63 and 67 of CA No. 141 requiring public auction, in the absence of a law exempting
PEA from holding a public auction.88 Special Patent No. 3517 expressly states that the patent is
issued by authority of the Constitution and PD No. 1084, "supplemented by Commonwealth Act
No. 141, as amended." This is an acknowledgment that the provisions of CA No. 141 apply to
the disposition of reclaimed alienable lands of the public domain unless otherwise provided by
law. Executive Order No. 654,89 which authorizes PEA "to determine the kind and manner of
payment for the transfer" of its assets and properties, does not exempt PEA from the
requirement of public auction. EO No. 654 merely authorizes PEA to decide the mode of
payment, whether in kind and in installment, but does not authorize PEA to dispense with public
auction.

Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing
Code, the government is required to sell valuable government property through public bidding.
Section 79 of PD No. 1445 mandates that –

"Section 79. When government property has become unserviceable for any cause, or
is no longer needed, it shall, upon application of the officer accountable therefor, be
inspected by the head of the agency or his duly authorized representative in the
presence of the auditor concerned and, if found to be valueless or unsaleable, it may be
destroyed in their presence. If found to be valuable, it may be sold at public auction
to the highest bidder under the supervision of the proper committee on award or
similar body in the presence of the auditor concerned or other authorized representative
of the Commission, after advertising by printed notice in the Official Gazette, or for
not less than three consecutive days in any newspaper of general circulation, or
where the value of the property does not warrant the expense of publication, by notices
posted for a like period in at least three public places in the locality where the property is
to be sold. In the event that the public auction fails, the property may be sold at a
private sale at such price as may be fixed by the same committee or body
concerned and approved by the Commission."

It is only when the public auction fails that a negotiated sale is allowed, in which case the
Commission on Audit must approve the selling price.90 The Commission on Audit implements
Section 79 of the Government Auditing Code through Circular No. 89-29691 dated January 27,
1989. This circular emphasizes that government assets must be disposed of only through public
auction, and a negotiated sale can be resorted to only in case of "failure of public auction."

At the public auction sale, only Philippine citizens are qualified to bid for PEA's reclaimed
foreshore and submerged alienable lands of the public domain. Private corporations are barred
from bidding at the auction sale of any kind of alienable land of the public domain.

PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA
imposed a condition that the winning bidder should reclaim another 250 hectares of submerged
areas to regularize the shape of the Freedom Islands, under a 60-40 sharing of the additional
reclaimed areas in favor of the winning bidder.92 No one, however, submitted a bid. On
December 23, 1994, the Government Corporate Counsel advised PEA it could sell the Freedom
Islands through negotiation, without need of another public bidding, because of the failure of the
public bidding on December 10, 1991.93

However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the
additional 250 hectares still to be reclaimed, it also granted an option to AMARI to reclaim
another 350 hectares. The original JVA, a negotiated contract, enlarged the reclamation area
to 750 hectares.94 The failure of public bidding on December 10, 1991, involving only 407.84
hectares,95 is not a valid justification for a negotiated sale of 750 hectares, almost double the
area publicly auctioned. Besides, the failure of public bidding happened on December 10, 1991,
more than three years before the signing of the original JVA on April 25, 1995. The economic
situation in the country had greatly improved during the intervening period.

Reclamation under the BOT Law and the Local Government Code

The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and
clear: "Private corporations or associations may not hold such alienable lands of the public
domain except by lease, x x x." Even Republic Act No. 6957 ("BOT Law," for brevity), cited by
PEA and AMARI as legislative authority to sell reclaimed lands to private parties, recognizes the
constitutional ban. Section 6 of RA No. 6957 states –

"Sec. 6. Repayment Scheme. - For the financing, construction, operation and

maintenance of any infrastructure projects undertaken through the build-operate-and-
transfer arrangement or any of its variations pursuant to the provisions of this Act, the
project proponent x x x may likewise be repaid in the form of a share in the revenue of
the project or other non-monetary payments, such as, but not limited to, the grant of a
portion or percentage of the reclaimed land, subject to the constitutional
requirements with respect to the ownership of the land: x x x." (Emphasis supplied)

A private corporation, even one that undertakes the physical reclamation of a government BOT
project, cannot acquire reclaimed alienable lands of the public domain in view of the
constitutional ban.

Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes
local governments in land reclamation projects to pay the contractor or developer in kind
consisting of a percentage of the reclaimed land, to wit:

"Section 302. Financing, Construction, Maintenance, Operation, and Management of

Infrastructure Projects by the Private Sector. x x x

xxx

In case of land reclamation or construction of industrial estates, the repayment plan may
consist of the grant of a portion or percentage of the reclaimed land or the industrial
estate constructed."

Although Section 302 of the Local Government Code does not contain a proviso similar to that
of the BOT Law, the constitutional restrictions on land ownership automatically apply even
though not expressly mentioned in the Local Government Code.

Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if
a corporate entity, can only be paid with leaseholds on portions of the reclaimed land. If the
contractor or developer is an individual, portions of the reclaimed land, not exceeding 12
hectares96 of non-agricultural lands, may be conveyed to him in ownership in view of the
legislative authority allowing such conveyance. This is the only way these provisions of the BOT
Law and the Local Government Code can avoid a direct collision with Section 3, Article XII of
the 1987 Constitution.

Registration of lands of the public domain

Finally, PEA theorizes that the "act of conveying the ownership of the reclaimed lands to public
respondent PEA transformed such lands of the public domain to private lands." This theory is
echoed by AMARI which maintains that the "issuance of the special patent leading to the
eventual issuance of title takes the subject land away from the land of public domain and
converts the property into patrimonial or private property." In short, PEA and AMARI contend
that with the issuance of Special Patent No. 3517 and the corresponding certificates of titles, the
157.84 hectares comprising the Freedom Islands have become private lands of PEA. In support
of their theory, PEA and AMARI cite the following rulings of the Court:
 1. Sumail v. Judge of CFI of Cotabato,97 where the Court held –

"Once the patent was granted and the corresponding certificate of title was issued, the
land ceased to be part of the public domain and became private property over which the
Director of Lands has neither control nor jurisdiction."

2. Lee Hong Hok v. David,98 where the Court declared -

"After the registration and issuance of the certificate and duplicate certificate of title
based on a public land patent, the land covered thereby automatically comes under the
operation of Republic Act 496 subject to all the safeguards provided therein."3. Heirs of
Gregorio Tengco v. Heirs of Jose Aliwalas,99 where the Court ruled -

"While the Director of Lands has the power to review homestead patents, he may do so
only so long as the land remains part of the public domain and continues to be under his
exclusive control; but once the patent is registered and a certificate of title is issued, the
land ceases to be part of the public domain and becomes private property over which
the Director of Lands has neither control nor jurisdiction."

4. Manalo v. Intermediate Appellate Court,100 where the Court held –

"When the lots in dispute were certified as disposable on May 19, 1971, and free patents
were issued covering the same in favor of the private respondents, the said lots ceased
to be part of the public domain and, therefore, the Director of Lands lost jurisdiction over
the same."

5.Republic v. Court of Appeals,101 where the Court stated –

"Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected
a land grant to the Mindanao Medical Center, Bureau of Medical Services, Department
of Health, of the whole lot, validly sufficient for initial registration under the Land
Registration Act. Such land grant is constitutive of a 'fee simple' title or absolute title in
favor of petitioner Mindanao Medical Center. Thus, Section 122 of the Act, which
governs the registration of grants or patents involving public lands, provides that
'Whenever public lands in the Philippine Islands belonging to the Government of the
United States or to the Government of the Philippines are alienated, granted or
conveyed to persons or to public or private corporations, the same shall be brought
forthwith under the operation of this Act (Land Registration Act, Act 496) and shall
become registered lands.'"

The first four cases cited involve petitions to cancel the land patents and the corresponding
certificates of titles issued to private parties. These four cases uniformly hold that the Director
of Lands has no jurisdiction over private lands or that upon issuance of the certificate of title the
land automatically comes under the Torrens System. The fifth case cited involves the
registration under the Torrens System of a 12.8-hectare public land granted by the National
Government to Mindanao Medical Center, a government unit under the Department of Health.
The National Government transferred the 12.8-hectare public land to serve as the site for the
hospital buildings and other facilities of Mindanao Medical Center, which performed a public
service. The Court affirmed the registration of the 12.8-hectare public land in the name of
Mindanao Medical Center under Section 122 of Act No. 496. This fifth case is an example of a
public land being registered under Act No. 496 without the land losing its character as a
property of public dominion.

In the instant case, the only patent and certificates of title issued are those in the name of PEA,
a wholly government owned corporation performing public as well as proprietary functions. No
patent or certificate of title has been issued to any private party. No one is asking the Director of
Lands to cancel PEA's patent or certificates of title. In fact, the thrust of the instant petition is
that PEA's certificates of title should remain with PEA, and the land covered by these
certificates, being alienable lands of the public domain, should not be sold to a private
corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or
public ownership of the land. Registration is not a mode of acquiring ownership but is merely
evidence of ownership previously conferred by any of the recognized modes of acquiring
ownership. Registration does not give the registrant a better right than what the registrant had
prior to the registration.102 The registration of lands of the public domain under the Torrens
system, by itself, cannot convert public lands into private lands.103

Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the
alienable land of the public domain automatically becomes private land cannot apply to
government units and entities like PEA. The transfer of the Freedom Islands to PEA was made
subject to the provisions of CA No. 141 as expressly stated in Special Patent No. 3517 issued
by then President Aquino, to wit:

"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines
and in conformity with the provisions of Presidential Decree No. 1084, supplemented
by Commonwealth Act No. 141, as amended, there are hereby granted and conveyed
unto the Public Estates Authority the aforesaid tracts of land containing a total area of
one million nine hundred fifteen thousand eight hundred ninety four (1,915,894) square
meters; the technical description of which are hereto attached and made an integral part
hereof." (Emphasis supplied)

Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD
No. 1084. Section 60 of CA No. 141 prohibits, "except when authorized by Congress," the sale
of alienable lands of the public domain that are transferred to government units or entities.
Section 60 of CA No. 141 constitutes, under Section 44 of PD No. 1529, a "statutory lien
affecting title" of the registered land even if not annotated on the certificate of title.104Alienable
lands of the public domain held by government entities under Section 60 of CA No. 141 remain
public lands because they cannot be alienated or encumbered unless Congress passes a law
authorizing their disposition. Congress, however, cannot authorize the sale to private
corporations of reclaimed alienable lands of the public domain because of the constitutional
ban. Only individuals can benefit from such law.

The grant of legislative authority to sell public lands in accordance with Section 60 of CA No.
141 does not automatically convert alienable lands of the public domain into private or
patrimonial lands. The alienable lands of the public domain must be transferred to qualified
private parties, or to government entities not tasked to dispose of public lands, before these
lands can become private or patrimonial lands. Otherwise, the constitutional ban will become
illusory if Congress can declare lands of the public domain as private or patrimonial lands in the
hands of a government agency tasked to dispose of public lands. This will allow private
corporations to acquire directly from government agencies limitless areas of lands which, prior
to such law, are concededly public lands.

Under EO No. 525, PEA became the central implementing agency of the National
Government to reclaim foreshore and submerged areas of the public domain. Thus, EO No. 525
declares that –

"EXECUTIVE ORDER NO. 525

Designating the Public Estates Authority as the Agency Primarily Responsible for all
Reclamation Projects

Whereas, there are several reclamation projects which are ongoing or being proposed to
be undertaken in various parts of the country which need to be evaluated for consistency
with national programs;

Whereas, there is a need to give further institutional support to the Government's

declared policy to provide for a coordinated, economical and efficient reclamation of
lands;

Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be
limited to the National Government or any person authorized by it under proper contract;
 Whereas, a central authority is needed to act on behalf of the National
Government which shall ensure a coordinated and integrated approach in the
reclamation of lands;

Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a
government corporation to undertake reclamation of lands and ensure their
maximum utilization in promoting public welfare and interests; and

Whereas, Presidential Decree No. 1416 provides the President with continuing authority
to reorganize the national government including the transfer, abolition, or merger of
functions and offices.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by

virtue of the powers vested in me by the Constitution and pursuant to Presidential
Decree No. 1416, do hereby order and direct the following:

Section 1. The Public Estates Authority (PEA) shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf
of the National Government. All reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken by the PEA or
through a proper contract executed by it with any person or entity; Provided, that,
reclamation projects of any national government agency or entity authorized under its
charter shall be undertaken in consultation with the PEA upon approval of the President.

x x x ."

As the central implementing agency tasked to undertake reclamation projects nationwide, with
authority to sell reclaimed lands, PEA took the place of DENR as the government agency
charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands being
leased or sold by PEA are not private lands, in the same manner that DENR, when it disposes
of other alienable lands, does not dispose of private lands but alienable lands of the public
domain. Only when qualified private parties acquire these lands will the lands become private
lands. In the hands of the government agency tasked and authorized to dispose of
alienable of disposable lands of the public domain, these lands are still public, not
private lands.

Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain"
as well as "any and all kinds of lands." PEA can hold both lands of the public domain and
private lands. Thus, the mere fact that alienable lands of the public domain like the Freedom
Islands are transferred to PEA and issued land patents or certificates of title in PEA's name
does not automatically make such lands private.

To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private
lands will sanction a gross violation of the constitutional ban on private corporations from
acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA
has now done under the Amended JVA, and transfer several hundreds of hectares of these
reclaimed and still to be reclaimed lands to a single private corporation in only one transaction.
This scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987
Constitution which was intended to diffuse equitably the ownership of alienable lands of the
public domain among Filipinos, now numbering over 80 million strong.

This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain
since PEA can "acquire x x x any and all kinds of lands." This will open the floodgates to
corporations and even individuals acquiring hundreds of hectares of alienable lands of the
public domain under the guise that in the hands of PEA these lands are private lands. This will
result in corporations amassing huge landholdings never before seen in this country - creating
the very evil that the constitutional ban was designed to prevent. This will completely reverse
the clear direction of constitutional development in this country. The 1935 Constitution allowed
private corporations to acquire not more than 1,024 hectares of public lands.105 The 1973
Constitution prohibited private corporations from acquiring any kind of public land, and the 1987
Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD
No. 1529, automatically become private lands is contrary to existing laws. Several laws
authorize lands of the public domain to be registered under the Torrens System or Act No. 496,
now PD No. 1529, without losing their character as public lands. Section 122 of Act No. 496,
and Section 103 of PD No. 1529, respectively, provide as follows:

Act No. 496

"Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x
Government of the Philippine Islands are alienated, granted, or conveyed to persons or
the public or private corporations, the same shall be brought forthwith under the
operation of this Act and shall become registered lands."

PD No. 1529

"Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government
alienated, granted or conveyed to any person, the same shall be brought forthwith
under the operation of this Decree." (Emphasis supplied)

Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No.
1529 includes conveyances of public lands to public corporations.

Alienable lands of the public domain "granted, donated, or transferred to a province,

municipality, or branch or subdivision of the Government," as provided in Section 60 of CA No.
141, may be registered under the Torrens System pursuant to Section 103 of PD No. 1529.
Such registration, however, is expressly subject to the condition in Section 60 of CA No. 141
that the land "shall not be alienated, encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by Congress." This provision refers to government
reclaimed, foreshore and marshy lands of the public domain that have been titled but still cannot
be alienated or encumbered unless expressly authorized by Congress. The need for legislative
authority prevents the registered land of the public domain from becoming private land that can
be disposed of to qualified private parties.

The Revised Administrative Code of 1987 also recognizes that lands of the public domain may
be registered under the Torrens System. Section 48, Chapter 12, Book I of the Code states –

"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following:

(1) x x x

(2) For property belonging to the Republic of the Philippines, but titled in the name
of any political subdivision or of any corporate agency or instrumentality, by the
executive head of the agency or instrumentality." (Emphasis supplied)

Thus, private property purchased by the National Government for expansion of a public wharf
may be titled in the name of a government corporation regulating port operations in the country.
Private property purchased by the National Government for expansion of an airport may also be
titled in the name of the government agency tasked to administer the airport. Private property
donated to a municipality for use as a town plaza or public school site may likewise be titled in
the name of the municipality.106 All these properties become properties of the public domain,
and if already registered under Act No. 496 or PD No. 1529, remain registered land. There is no
requirement or provision in any existing law for the de-registration of land from the Torrens
System.

Private lands taken by the Government for public use under its power of eminent domain
become unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529
authorizes the Register of Deeds to issue in the name of the National Government new
certificates of title covering such expropriated lands. Section 85 of PD No. 1529 states –
 "Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest
therein, is expropriated or taken by eminent domain, the National Government, province,
city or municipality, or any other agency or instrumentality exercising such right shall file
for registration in the proper Registry a certified copy of the judgment which shall state
definitely by an adequate description, the particular property or interest expropriated, the
number of the certificate of title, and the nature of the public use. A memorandum of the
right or interest taken shall be made on each certificate of title by the Register of Deeds,
and where the fee simple is taken, a new certificate shall be issued in favor of the
National Government, province, city, municipality, or any other agency or
instrumentality exercising such right for the land so taken. The legal expenses incident to
the memorandum of registration or issuance of a new certificate of title shall be for the
account of the authority taking the land or interest therein." (Emphasis supplied)

Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or
patrimonial lands. Lands of the public domain may also be registered pursuant to existing laws.

AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom
Islands or of the lands to be reclaimed from submerged areas of Manila Bay. In the words of
AMARI, the Amended JVA "is not a sale but a joint venture with a stipulation for reimbursement
of the original cost incurred by PEA for the earlier reclamation and construction works
performed by the CDCP under its 1973 contract with the Republic." Whether the Amended JVA
is a sale or a joint venture, the fact remains that the Amended JVA requires PEA to "cause the
issuance and delivery of the certificates of title conveying AMARI's Land Share in the name of
AMARI."107

This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides
that private corporations "shall not hold such alienable lands of the public domain except by
lease." The transfer of title and ownership to AMARI clearly means that AMARI will "hold" the
reclaimed lands other than by lease. The transfer of title and ownership is a "disposition" of the
reclaimed lands, a transaction considered a sale or alienation under CA No. 141,108 the
Government Auditing Code,109 and Section 3, Article XII of the 1987 Constitution.

The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas
form part of the public domain and are inalienable. Lands reclaimed from foreshore and
submerged areas also form part of the public domain and are also inalienable, unless converted
pursuant to law into alienable or disposable lands of the public domain. Historically, lands
reclaimed by the government are sui generis, not available for sale to private parties unlike
other alienable public lands. Reclaimed lands retain their inherent potential as areas for public
use or public service. Alienable lands of the public domain, increasingly becoming scarce
natural resources, are to be distributed equitably among our ever-growing population. To insure
such equitable distribution, the 1973 and 1987 Constitutions have barred private corporations
from acquiring any kind of alienable land of the public domain. Those who attempt to dispose of
inalienable natural resources of the State, or seek to circumvent the constitutional ban on
alienation of lands of the public domain to private corporations, do so at their own risk.

We can now summarize our conclusions as follows:

1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now
covered by certificates of title in the name of PEA, are alienable lands of the public
domain. PEA may lease these lands to private corporations but may not sell or transfer
ownership of these lands to private corporations. PEA may only sell these lands to
Philippine citizens, subject to the ownership limitations in the 1987 Constitution and
existing laws.

2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural
resources of the public domain until classified as alienable or disposable lands open to
disposition and declared no longer needed for public service. The government can make
such classification and declaration only after PEA has reclaimed these submerged
areas. Only then can these lands qualify as agricultural lands of the public domain,
which are the only natural resources the government can alienate. In their present state,
 the 592.15 hectares of submerged areas are inalienable and outside the commerce
of man.

3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership
of 77.34 hectares110of the Freedom Islands, such transfer is void for being contrary to
Section 3, Article XII of the 1987 Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares111 of still submerged areas of Manila Bay, such transfer is void for being
contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of
natural resources other than agricultural lands of the public domain. PEA may reclaim
these submerged areas. Thereafter, the government can classify the reclaimed lands as
alienable or disposable, and further declare them no longer needed for public service.
Still, the transfer of such reclaimed alienable lands of the public domain to AMARI will be
void in view of Section 3, Article XII of the 1987 Constitution which prohibits private
corporations from acquiring any kind of alienable land of the public domain.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409112 of the Civil Code, contracts whose "object or purpose is
contrary to law," or whose "object is outside the commerce of men," are "inexistent and void
from the beginning." The Court must perform its duty to defend and uphold the Constitution, and
therefore declares the Amended JVA null and void ab initio.

Seventh issue: whether the Court is the proper forum to raise the issue of whether the
Amended JVA is grossly disadvantageous to the government.

Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this
last issue. Besides, the Court is not a trier of facts, and this last issue involves a determination
of factual matters.

WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay
Development Corporation are PERMANENTLY ENJOINED from implementing the Amended
Joint Venture Agreement which is hereby declared NULL and VOID ab initio.

SO ORDERED.
G.R. No. L-43938 April 15, 1988

REPUBLIC OF THE PHILIPPINES (DIRECTOR OF FOREST DEVELOPMENT), petitioner,

vs.
HON. COURT OF APPEALS (THIRD DIVISION) and JOSE Y. DE LA ROSA, respondents.

G.R. No. L-44081 April 15, 1988

BENGUET CONSOLIDATED, INC., petitioner,

vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORIA, BENJAMIN and
EDUARDO, all surnamed DE LA ROSA, represented by their father JOSE Y. DE LA
ROSA, respondents.

G.R. No. L-44092 April 15, 1988

ATOK-BIG WEDGE MINING COMPANY, petitioner,

vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORlA, BENJAMIN and
EDUARDO, all surnamed DE LA ROSA, represented by their father, JOSE Y. DE LA
ROSA, respondents.

CRUZ, J.:

The Regalian doctrine reserves to the State all natural wealth that may be found in the bowels
of the earth even if the land where the discovery is made be private. 1 In the cases at bar, which
have been consolidated because they pose a common issue, this doctrine was not correctly
applied.

These cases arose from the application for registration of a parcel of land filed on February 11,
1965, by Jose de la Rosa on his own behalf and on behalf of his three children, Victoria,
Benjamin and Eduardo. The land, situated in Tuding, Itogon, Benguet Province, was divided into
9 lots and covered by plan Psu-225009. According to the application, Lots 1-5 were sold to Jose
de la Rosa and Lots 6-9 to his children by Mamaya Balbalio and Jaime Alberto, respectively, in
1964. 2

The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5, Atok Big
Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the Republic of the
Philippines, through the Bureau of Forestry Development, as to lots 1-9. 3

In support of the application, both Balbalio and Alberto testified that they had acquired the
subject land by virtue of prescription Balbalio claimed to have received Lots 1-5 from her father
shortly after the Liberation. She testified she was born in the land, which was possessed by her
parents under claim of ownership. 4 Alberto said he received Lots 6-9 in 1961 from his mother,
Bella Alberto, who declared that the land was planted by Jaime and his predecessors-in-interest
to bananas, avocado, nangka and camote, and was enclosed with a barbed-wire fence. She
was corroborated by Felix Marcos, 67 years old at the time, who recalled the earlier possession
of the land by Alberto's father. 5 Balbalio presented her tax declaration in 1956 and the realty tax
receipts from that year to 1964, 6 Alberto his tax declaration in 1961 and the realty tax receipts
from that year to 1964. 7

Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to
it on September 22, 1934, by the successors-in-interest of James Kelly, who located the claim in
September 1909 and recorded it on October 14, 1909. From the date of its purchase, Benguet
had been in actual, continuous and exclusive possession of the land in concept of owner, as
evidenced by its construction of adits, its affidavits of annual assessment, its geological
mappings, geological samplings and trench side cuts, and its payment of taxes on the land. 8
For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the
Emma and Fredia mineral claims located by Harrison and Reynolds on December 25, 1930,
and recorded on January 2, 1931, in the office of the mining recorder of Baguio. These claims
were purchased from these locators on November 2, 1931, by Atok, which has since then been
in open, continuous and exclusive possession of the said lots as evidenced by its annual
assessment work on the claims, such as the boring of tunnels, and its payment of annual taxes
thereon. 9

The location of the mineral claims was made in accordance with Section 21 of the Philippine Bill
of 1902 which provided that:

SEC. 21. All valuable mineral deposits in public lands in the philippine Islands
both surveyed and unsurveyed are hereby declared to be free and open to
exploration, occupation and purchase and the land in which they are found to
occupation and purchase by the citizens of the United States, or of said islands.

The Bureau of Forestry Development also interposed its objection, arguing that the land sought
to be registered was covered by the Central Cordillera Forest Reserve under Proclamation No.
217 dated February 16, 1929. Moreover, by reason of its nature, it was not subject to alienation
under the Constitutions of 1935 and 1973. 10

The trial court * denied the application, holding that the applicants had failed to prove their claim
of possession and ownership of the land sought to be registered. 11 The applicants appealed to
the respondent court, * which reversed the trial court and recognized the claims of the applicant,
but subject to the rights of Benguet and Atok respecting their mining claims. 12 In other words,
the Court of Appeals affirmed the surface rights of the de la Rosas over the land while at the
same time reserving the sub-surface rights of Benguet and Atok by virtue of their mining claims.

Both Benguet and Atok have appealed to this Court, invoking their superior right of ownership.
The Republic has filed its own petition for review and reiterates its argument that neither the
private respondents nor the two mining companies have any valid claim to the land because it is
not alienable and registerable.

It is true that the subject property was considered forest land and included in the Central
Cordillera Forest Reserve, but this did not impair the rights already vested in Benguet and Atok
at that time. The Court of Appeals correctly declared that:

There is no question that the 9 lots applied for are within the June Bug mineral
claims of Benguet and the "Fredia and Emma" mineral claims of Atok. The June
Bug mineral claim of plaintiff Benguet was one of the 16 mining claims of James
E. Kelly, American and mining locator. He filed his declaration of the location of
the June Bug mineral and the same was recorded in the Mining Recorder's Office
on October 14, 1909. All of the Kelly claims ha subsequently been acquired by
Benguet Consolidated, Inc. Benguet's evidence is that it had made improvements
on the June Bug mineral claim consisting of mine tunnels prior to 1935. It had
submitted the required affidavit of annual assessment. After World War II,
Benguet introduced improvements on mineral claim June Bug, and also
conducted geological mappings, geological sampling and trench side cuts. In
1948, Benguet redeclared the "June Bug" for taxation and had religiously paid
the taxes.

The Emma and Fredia claims were two of the several claims of Harrison
registered in 1931, and which Atok representatives acquired. Portions of Lots 1
to 5 and all of Lots 6 to 9 are within the Emma and Fredia mineral claims of Atok
Big Wedge Mining Company.

The June Bug mineral claim of Benguet and the Fredia and Emma mineral
claims of Atok having been perfected prior to the approval of the Constitution of
the Philippines of 1935, they were removed from the public domain and had
become private properties of Benguet and Atok.
 It is not disputed that the location of the mining claim under
consideration was perfected prior to November 15, 1935, when
the Government of the Commonwealth was inaugurated; and
according to the laws existing at that time, as construed and
applied by this court in McDaniel v. Apacible and Cuisia (42 Phil.
749), a valid location of a mining claim segregated the area from
the public domain. Said the court in that case: The moment the
locator discovered a valuable mineral deposit on the lands
located, and perfected his location in accordance with law, the
power of the United States Government to deprive him of the
exclusive right to the possession and enjoyment of the located
claim was gone, the lands had become mineral lands and they
were exempted from lands that could be granted to any other
person. The reservations of public lands cannot be made so as to
include prior mineral perfected locations; and, of course, if a valid
mining location is made upon public lands afterwards included in a
reservation, such inclusion or reservation does not affect the
validity of the former location. By such location and perfection, the
land located is segregated from the public domain even as against
the Government. (Union Oil Co. v. Smith, 249 U.S. 337; Van Mess
v. Roonet, 160 Cal. 131; 27 Cyc. 546).

"The legal effect of a valid location of a mining claim is not only to

segregate the area from the public domain, but to grant to the
locator the beneficial ownership of the claim and the right to a
patent therefor upon compliance with the terms and conditions
prescribed by law. Where there is a valid location of a mining
claim, the area becomes segregated from the public domain and
the property of the locator." (St. Louis Mining & Milling Co. v.
Montana Mining Co., 171 U.S. 650; 655; 43 Law ed., 320, 322.)
"When a location of a mining claim is perfected it has the effect of
a grant by the United States of the right of present and exclusive
possession, with the right to the exclusive enjoyment of all the
surface ground as well as of all the minerals within the lines of the
claim, except as limited by the extralateral right of adjoining
locators; and this is the locator's right before as well as after the
issuance of the patent. While a lode locator acquires a vested
property right by virtue of his location made in compliance with the
mining laws, the fee remains in the government until patent
issues."(18 R.C.L. 1152) (Gold Creek Mining Corporation v. Hon.
Eulogio Rodriguez, Sec. of Agriculture and Commerce, and
Quirico Abadilla, Director of the Bureau of Mines, 66 Phil. 259,
265-266)

It is of no importance whether Benguet and Atok had secured a patent for as held
in the Gold Creek Mining Corp. Case, for all physical purposes of ownership, the
owner is not required to secure a patent as long as he complies with the
provisions of the mining laws; his possessory right, for all practical purposes of
ownership, is as good as though secured by patent.

We agree likewise with the oppositors that having complied with all the
requirements of the mining laws, the claims were removed from the public
domain, and not even the government of the Philippines can take away this right
from them. The reason is obvious. Having become the private properties of the
oppositors, they cannot be deprived thereof without due process of law. 13

Such rights were not affected either by the stricture in the Commonwealth Constitution against
the alienation of all lands of the public domain except those agricultural in nature for this was
made subject to existing rights. Thus, in its Article XIII, Section 1, it was categorically provided
that:
 SEC. 1. All agricultural, timber and mineral lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all forces of potential energy
and other natural resources of the Philipppines belong to the State, and their
disposition, exploitation, development, or utilization shall be limited to citizens of
the Philippines or to corporations or associations at least 60% of the capital of
which is owned by such citizens, subject to any existing right, grant, lease or
concession at the time of the inauguration of the government established under
this Constitution. Natural resources with the exception of public agricultural lands,
shall not be alienated, and no license, concession, or lease for the exploitation,
development or utilization of any of the natural resources shall be granted for a
period exceeding 25 years, except as to water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, in which
case beneficial use may be the measure and the limit of the grant.

Implementing this provision, Act No. 4268, approved on November 8, 1935, declared:

Any provision of existing laws, executive order, proclamation to the contrary

notwithstanding, all locations of mining claim made prior to February 8, 1935
within lands set apart as forest reserve under Sec. 1826 of the Revised
Administrative Code which would be valid and subsisting location except to the
existence of said reserve are hereby declared to be valid and subsisting locations
as of the date of their respective locations.

The perfection of the mining claim converted the property to mineral land and under the laws
then in force removed it from the public domain. 14 By such act, the locators acquired exclusive
rights over the land, against even the government, without need of any further act such as the
purchase of the land or the obtention of a patent over it. 15As the land had become the private
property of the locators, they had the right to transfer the same, as they did, to Benguet and
Atok.

It is true, as the Court of Appeals observed, that such private property was subject to the
"vicissitudes of ownership," or even to forfeiture by non-user or abandonment or, as the private
respondents aver, by acquisitive prescription. However, the method invoked by the de la Rosas
is not available in the case at bar, for two reasons.

First, the trial court found that the evidence of open, continuous, adverse and exclusive
possession submitted by the applicants was insufficient to support their claim of ownership.
They themselves had acquired the land only in 1964 and applied for its registration in 1965,
relying on the earlier alleged possession of their predecessors-in-interest. 16The trial judge, who
had the opportunity to consider the evidence first-hand and observe the demeanor of the
witnesses and test their credibility was not convinced. We defer to his judgment in the absence
of a showing that it was reached with grave abuse of discretion or without sufficient basis. 17

Second, even if it be assumed that the predecessors-in-interest of the de la Rosas had really
been in possession of the subject property, their possession was not in the concept of owner of
the mining claim but of the property as agricultural land, which it was not. The property was
mineral land, and they were claiming it as agricultural land. They were not disputing the lights of
the mining locators nor were they seeking to oust them as such and to replace them in the
mining of the land. In fact, Balbalio testified that she was aware of the diggings being
undertaken "down below" 18 but she did not mind, much less protest, the same although she
claimed to be the owner of the said land.

The Court of Appeals justified this by saying there is "no conflict of interest" between the owners
of the surface rights and the owners of the sub-surface rights. This is rather doctrine, for it is a
well-known principle that the owner of piece of land has rights not only to its surface but also to
everything underneath and the airspace above it up to a reasonable height. 19 Under the
aforesaid ruling, the land is classified as mineral underneath and agricultural on the surface,
subject to separate claims of title. This is also difficult to understand, especially in its practical
application.
Under the theory of the respondent court, the surface owner will be planting on the land while
the mining locator will be boring tunnels underneath. The farmer cannot dig a well because he
may interfere with the operations below and the miner cannot blast a tunnel lest he destroy the
crops above. How deep can the farmer, and how high can the miner, go without encroaching on
each other's rights? Where is the dividing line between the surface and the sub-surface rights?

The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either
completely mineral or completely agricultural. In the instant case, as already observed, the land
which was originally classified as forest land ceased to be so and became mineral — and
completely mineral — once the mining claims were perfected. 20 As long as mining operations
were being undertaken thereon, or underneath, it did not cease to be so and become
agricultural, even if only partly so, because it was enclosed with a fence and was cultivated by
those who were unlawfully occupying the surface.

What must have misled the respondent court is Commonwealth Act No. 137, providing as
follows:

Sec. 3. All mineral lands of the public domain and minerals belong to the State,
and their disposition, exploitation, development or utilization, shall be limited to
citizens of the Philippines, or to corporations, or associations, at least 60% of the
capital of which is owned by such citizens, subject to any existing right, grant,
lease or concession at the time of the inauguration of government established
under the Constitution.

SEC. 4. The ownership of, and the right to the use of land for agricultural,
industrial, commercial, residential, or for any purpose other than mining does not
include the ownership of, nor the right to extract or utilize, the minerals which
may be found on or under the surface.

SEC. 5. The ownership of, and the right to extract and utilize, the minerals
included within all areas for which public agricultural land patents are granted are
excluded and excepted from all such patents.

SEC. 6. The ownership of, and the right to extract and utilize, the minerals
included within all areas for which Torrens titles are granted are excluded and
excepted from all such titles.

This is an application of the Regalian doctrine which, as its name implies, is intended for the
benefit of the State, not of private persons. The rule simply reserves to the State all minerals
that may be found in public and even private land devoted to "agricultural, industrial,
commercial, residential or (for) any purpose other than mining." Thus, if a person is the owner of
agricultural land in which minerals are discovered, his ownership of such land does not give him
the right to extract or utilize the said minerals without the permission of the State to which such
minerals belong.

The flaw in the reasoning of the respondent court is in supposing that the rights over the land
could be used for both mining and non-mining purposes simultaneously. The correct
interpretation is that once minerals are discovered in the land, whatever the use to which it is
being devoted at the time, such use may be discontinued by the State to enable it to extract the
minerals therein in the exercise of its sovereign prerogative. The land is thus converted to
mineral land and may not be used by any private party, including the registered owner thereof,
for any other purpose that will impede the mining operations to be undertaken therein, For the
loss sustained by such owner, he is of course entitled to just compensation under the Mining
Laws or in appropriate expropriation proceedings. 21

Our holding is that Benguet and Atok have exclusive rights to the property in question by virtue
of their respective mining claims which they validly acquired before the Constitution of 1935
prohibited the alienation of all lands of the public domain except agricultural lands, subject to
vested rights existing at the time of its adoption. The land was not and could not have been
transferred to the private respondents by virtue of acquisitive prescription, nor could its use be
shared simultaneously by them and the mining companies for agricultural and mineral purposes.

WHEREFORE, the decision of the respondent court dated April 30, 1976, is SET ASIDE and
that of the trial court dated March 11, 1969, is REINSTATED, without any pronouncement as to
costs.

SO ORDERED.
 [G.R. No. L-11028. April 17, 1959.]

LAO CHIT, Plaintiff-Appellee, v. SECURITY BANK & TRUST CO. and CONSOLIDATED
INVESTMENT, INC., Defendants-Appellants.

Nicetas A. Suanes for Appellee.

Augusto S. Francisco for appellant Security Bank & Trust Co.

Jesus S. Nava for appellant Consolidated Investments, Inc.

SYLLABUS

1. LEASE; IMMOVABLE PROPERTY; PERMANENT IMPROVEMENTS INTRODUCED BY

LESSEE; LIABILITY OF LESSOR FOR VALUE OF IMPROVEMENTS. — Pursuant to the lease
contract between the parties, the lessee undertook to construct at his expense such
improvements as may be necessary to make the leased premises suitable for banking
purposes, and such improvements shall become the property of the lessor upon the termination
and/or rescission of said contract. It appears that, pursuant to another contract, entered into
between the lessee and plaintiff, the latter furnished the materials and the work for said
improvements. For failure of the lessee to pay the rents the lease contract was rescinded.
Unable to collect the cost of the improvements from the lessee, the plaintiff demanded payment
thereof, as well as rents for the use of said improvements, from the lessor. Held: The
improvement in the question became the property of the lessor not only by operation of law, as
accession to the building, but also by specific stipulation in the lease contract. Although plaintiff
was not a party to said contract, this stipulation is binding upon him, he having introduced said
improvements pursuant to his contract with the lessee form whom he derived, therefore, his
right to enter the building and make the improvements. In short, insofar as the construction
thereof, plaintiff was, vis-a-vis the lessor, a mere agent or representative of the lessee and, as
such was privy to the undertakings of the lessee under his contract of lease with the lessor.

DECISION

CONCEPCION, J.:

In May, 1949, the Consolidated Investments, Inc., hereafter referred to as the lessor, leased to
Domingo T. Dikit part of the lobby, on the ground floor of the Consolidated Building, at Plaza
Goiti, Manila, to be used as offices of a proposed Bank of Manila, then being organized by said
Dikit and one Jose Silva. Pursuant to the lease contract between the parties (Exhibit 2, 2-A and
2-B), the lessee undertook to construct, at the expense thereof, such walls, partitions and other
improvements as may be necessary to make the leased premises suitable for banking
purposes, and such partitions and improvements "shall become the property" of the lessor
"upon the termination and/or rescission" of said contract. It appears that, pursuant to another
contract, entered into in June, 1949, between Dikit and Silva on the one hand, and plaintiff Lao
Chit, on the other (Exhibit A-1, A-2 and A-3), the latter furnished the materials and the work for
said walls, partitions and improvements, at a total cost of P59,365, payable "as soon as the
Bank of Manila opens for business, and is given a permit by the Central Bank." This permit,
however, was never issued. The proposed Bank of Manila did not open for business, and the
rentals due under said lease contract, at the rate of P5,000 a month, beginning from October,
1949, were not paid. On December 3, 1949, the lessor instituted Civil Case No. 9708 of the
Municipal Court of Manila, against Dikit, for unlawful detainer. After appropriate proceedings,
said court rendered judgment on March 27, 1950, sentencing Dikit.

". . . to vacate the premises described in the complaint, and to pay the plaintiff the sum of
P10,000.00, under the first cause of action, corresponding rentals due from October to
November, 1949, plus the sum of P227.80, under the second cause of action, for electric
consumption up to November 30, 1949; plus the rents that will become due from December 1,
1949, at the rate of P5,000.00 per month until the date said defendant finally vacates and
surrenders possession to the plaintiff and costs of this suit." (Exhibit 3.)

Dikit appealed from this decision to the Court of First Instance of Manila, where the case was
docketed as Civil Case No. 11214 of said court. He, likewise, applied, in the Supreme Court —
in Case G. R. No. L-3621, entitled "Domingo Dikit v. Hon. Ramon Ino" — for writ
of certiorari against the municipal judge who had rendered the aforementioned decision in the
ejectment case. Said cases No. 11214 and L-3621 were soon dismissed, however, upon
agreement of the parties, dated May 22, 1951, whereby Dikit, among other things, relinquished
whatever rights he might have to the possession of the leased premises and disclaimed all
rights to and over any and all improvement introduced therein while he was in possession
thereof.

Prior to said decision, but after the commencement of said Case No. 9708, Lao Chit had filed
Civil Case No. 10178 of the Court of First Instance of Manila, against Dikit and Silva, for the
recovery of what was due from them by reason of the aforementioned improvements introduced
by Lao Chit. On June 30, 1953, judgment was rendered in said Case No. 10178 the dispositive
part of which reads as follows:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants,
sentencing the latter to pay the former, jointly and severally, the sum of P59,365.00, which is the
total of the claim under the second, third and fourth causes of action, the same to be paid within
15 days from notice, with legal interest from the date of the filing of the complaint until its full
payment; and in the event the defendants fail to pay within the period of grace herein fixed, the
fixtures herein referred to (which by express agreement of the parties shall remain the plaintiff’s
property until are fully paid for) shall return to the plaintiff. The defendants shall also pay jointly
and severally the plaintiff by way of damages an amount equivalent to 12% of the
aforementioned sum of P59,365.00. The defendants shall likewise pay the plaintiff, jointly and
severally, another sum equivalent to 25% of the amounts claimed in the first and sixth causes of
action, besides the equivalent to six (6%) of the sums due and payable under the second and
third causes of action as attorney’s fees, with costs against them." (Exhibit A.)

In due course, the corresponding writ of execution (Exhibit D-1 and D-3) of this judgment was
subsequently issued. Later on it was returned by the sheriff unsatisfied, with the statement that
neither Dikit nor Silva had any property registered in their respective names, and that the
whereabouts of Silva was known (Exhibits D-2 and D-4). Meanwhile, or on September 10, 1953,
Lao Chit brought the present action against the Security Bank and Trust Company (Hereafter
referred to as the Bank), to which the lessor had, since July 1, 1951, leased the premises in
question (after it had been vacated by Silva), together with the fixtures and improvements
introduced therein by Lao Chit. In its complaint, Lao Chit demanded payment of P1,000 a
month, by way of rental for the use of said fixtures and improvement by the Bank, in addition to
expenses of litigation, attorney’s fees and costs. In its answer, the Bank alleged that it held and
used said improvements pursuant to its contract of lease with the lessor and that it had paid the
rentals due and complied with its other obligations under said contract, and set up a
counterclaim for damages. Soon thereafter, or on November 5, 1953, Lao Chit demanded
payment of the aforementioned sum of P59,365, plus P1,000 a month from June, 1951, from
the lessor, which did not heed the demand whereupon the complaint herein was, on December
18, 1953, amended to include said lessor as one of the defendants. The latter alleged, in its
answer, that the improvements in question were introduced at the initiative and expense of Dikit
and Silva, as lessees of the premises above referred to, and that, as permanent fixtures, said
improvement form an integral part of the Consolidated Investments Building, and belong to the
lessor and owner juridical relation with the lessor. The lessor, likewise, sought to recover, by
way of counterclaim, the sum of P50,000, as damages for its inclusion as defendant herein,
aside from attorney’s fees and costs. In due course, the Court of First Instance of Manila
rendered judgment on December 28, 1955, the dispositive part of which
reads:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered, sentencing the defendant, Consolidated

Investments, Inc., to pay to the plaintiff the value of the permanent improvement in the sum of
P59,365.00, and, together with the defendant, Security Bank and Trust Company, to pay, jointly
and severally, for the use of the permanent improvements, at the rate of P1,000.00 monthly
from June, 1951 to July 31, 1954, and thereafter, until January, 1955, by the defendant,
Consolidated Investments, Inc., alone, at the same rate, and in both instances, plus legal
interest until full payment thereof; in addition, the defendant, Consolidated Investments, Inc., is
further ordered to pay to the plaintiff the amount equivalent to 80% of whatever amount is due
from it, as reimbursement for plaintiff’s litigation expenses, including attorney’s contingent fees,
aside from moral, nominal, moderate and exemplary damages in the amount of P2,000.00, and
the costs of suit.

"Defendants’ counterclaims are hereby both dismissed for lack of merits and in view of the
above conclusion of the Court."cralaw virtua1aw library

Their respective motions for reconsideration and new trial having been denied, the defendants
have appealed from this decision.

It is apparent to us that the lower court erred in rendering judgment against the Bank. This
defendant had occupied and used the premises in question, including the partitions, fixtures and
other improvements made therein by Lao Chit, pursuant to a contract of lease entered into with
the lessor, the right of which to enter into said contract is not disputed. Moreover, the Bank had
paid the rentals and fulfilled its other obligations under said contract. Again, it cannot be denied
that the improvements introduced by Lao Chit became property of the lessor, not only because
such improvements are permanent in nature and cannot be removed without impairing the
building to which they were attacked, but also, because the contract of lease between Dikit and
Silva on the one hand, and the lessor, on the other improvements "upon the expiration and/or
rescission" of said contract, and the same has already been resolved. Although Lao Chit was
not a party to said contract, this stipulation is binding upon him, he having introduced said
improvements pursuant to his right to enter the building and make the improvements. In short,
insofar as the construction thereof, Lao Chit was, vis-a-vis the lessor, a mere agent or
representative of Dikit and, as such was privy to the undertakings of Dikit under his contract of
lease with the lessor.

The lower court held the latter liable to Lao Chit upon the ground that Lao Chit was a builder in
good faith, under the provisions of the Old Civil Code, and under the theory of undue
enrichment.

As regards the first ground, Article 361 of the Civil Code of Spain, on which the lower court
relied, provides:jgc:chanrobles.com.ph

"The owner of land on which anything has been built, sown, or planted, in good faith, shall be
entitled to appropriate the thing so built, sown, or planted, upon paying the compensation
mentioned in Article 453 and 454, or to compel the person who has built or planted to pay him
the value of the land, and the person who sowed thereon to pay the proper rent therefor."cralaw
virtua1aw library

It is well settled, however, that this provisions refers to one who builds upon a land which he
believes to be his property (Alburo v. Villanueva, 7 Phil., 277; Cortes v. Ramos, 46 Phil., Rivera
v. Trinidad, 48 Phil., 396; Fojas v. Velasco, 51 Phil., 520; Montinola v. Bantug, 71 Phil., 499-
450; Lopez Inc. v. Philippines & Eastern Trading Co., Inc., 98 Phil., 348; 52 Off. Gaz., 1452).
Neither Lao Chit, nor Dikit, claimed the Consolidated Investments Building as his own. Dikit was
a mere lessee and Lao Chit was his agent, as such, in the construction of the improvement
under consideration. In any event, the Spanish text of said Article 361, which is the original,
reads:jgc:chanrobles.com.ph

"El dueno del terreno en que se edificare, sembrane o plantare de buena fe, tendra derecho a
hacer suya la obra, siembra o plantacion, previa la indemnizacion establecida en los articulous
453 y 454, o a obligar al que edifico o planto a pagar el precio del terreno, y al que sembro, la
renta correspondiente." (Emphasis supplied.)

Clearly this provision is limited in its application to "buildings" constructed on another’s land or
"terreno", not to partitions, railings, counters, shelves and other fixtures made in a building
belonging to the owner of the land. although the verb "edificar" in Spanish is roughly
synonymous with "build" in English, the latter is broader in its connotation than the former.
Literally "edificar" is to undertake the construction of an edifice, such as a fort, castle, house,
church, market, tower, stadium, barrack, stable or other similar structure. Upon the other hand,
one may build a house, as well as a fence, partition, window, door, or even a desk or a chair,
but, it would be improper to use the verb "edificar" to describe the making of such fense,
partition, window, door, desk or chair. It is apparent, therefore, that Lao Chit is not entitled to the
benefits of said Article 361.

The lower court, moreover, said:jgc:chanrobles.com.ph

". . . convincing evidence abounds, to wit: that the improvements were made in presence of, and
with the knowledge and consent, and even under the personal supervision, on the part of
Investments, Inc., which owns the building. Thus, it may even be said that it was the defendant,
Consolidated Investments Inc., which had acted in a bad faith." (Record on Appeal of
Consolidated Investments, Inc., p. 56.)

and quoted, in support thereof, the second paragraph of Article 364 of the Spanish Civil Code,
reading:jgc:chanrobles.com.ph

"Bad faith on the part of the owner is deemed to exist whenever the act had been done in his
presence, with his knowledge and tolerance, and without opposition on his part."cralaw
virtua1aw library

The foregoing view is, likewise, untenable. To begin with, this Article 364, like Article 361,
involves a person who builds, plants or sows upon a land not knowing that it belongs to another.
Inasmuch as, there is no contractual relation between them, their rights are governed by law,
not by contract.

Secondly, under his contract of lease with the lessor, Dikit had a legal right to make the
improvements in question and the lessor was legally bound to permit Dikit and his agent Lao
Chit to enter the leased premises and construct said improvements. Surely, compliance with this
valid contractual obligation does not, and cannot, constituted bad faith on the part of the lessor.
Upon the other hand, the lessor could not legally object to, or obstruct, the work done by Lao
Chit, without being chargeable with bad faith in the performance of said contractual obligation
with Dikit.

In order to justify the application of the principle that no one should be permitted to unjustly
enrich himself at the expense of another, His Honor the Trial Judge cited Article 356 of the Civil
Code of Spain, which provides:jgc:chanrobles.com.ph

"He who receives fruits is obliged to pay any expense which may have been incurred by another
in the production, gathering, and gathering, and preservation thereof."cralaw virtua1aw library

We agree with the lessor that this Article is not in point for:chanrob1es virtual 1aw library

(a) Said provision is part of Section I, Chapter II, Title II, Book II, of the Spanish Civil Code,
which section regulates the "right of accession with respect to the products of property," and the
work done and the improvements introduced by Lao Chit are not "products" of the lessor’s
property.

(b) Said Article 356 refers to "expenses" of production, gathering and preservation" of fruits
received by the owner of a property, not to improvements, whereas the claim of Lao Chit is
based upon "improvements" introduced, not "expenses" incurred by him for the "production,
gathering and preservation" of fruits. In the language of Manresa:jgc:chanrobles.com.ph

". . . el Codigo exige que el propietario pague al tercer poseedor que fue de la cosa los gastos
de produccion, y en su caso los de recoleccion y conservacion. El propietario no puede
excusarse alegando la mal fe del tercero, porque sea de buena o de mala fe, lo cierto es que
este ha hecho un gastto, no solo util para el propietario, sino necesario, y sin el cual el
propietario no hubiera obtenido frutos de su fundo, resultando ademas que, de no mediar
indemnizacio, se consagraria el injusto principio de uno puede enriquecerse a costa y con dano
de otro. Para afirmarse por completo en esta opinion debe concotdarse el articulo que
comentamos con los 452 a 456, relavitos a los efectos de la posesion de buena y mala fe, y
que no examinamos ahora porque el asunto se trata luego con mas detalles.
"Los gastos de produccion y demas, para que puedan conceptuarse reembolsables por el
propietario en el caso que suponemos, deben tener dos caracteres: primero, que enten
dedicados a la produccion annual; es decir, que no se trata en este supuesto de la
bonificaciones generales del fundo. Semejantes bonificaciones entran en la categoria de las
mejoras, que se regulan en otro lugar del Codigo (al tratar de la posesion), y segundo, que no
sean superfluous, excesivos o de puro lujo, sino que deben ser hechos en aquella medida
natural que la condicion del cultivo o trabajo de que se trata exige." (3 Manresa [6th ed. ],
196; Emphasis supplied.)

(c) The right to recover under the principle of undue enrichments in justifiable under Article 1887
of the Spanish Civil Code, reading:jgc:chanrobles.com.ph

"Quasi contracts are licit and purely voluntary acts which create an obligation on the part of the
actor in favor of a third person and, at times, a reciprocal obligation between the parties
concerned."cralaw virtua1aw library

Its counterpart in the Civil Code of the Philippines is Article 2142, which we
quote:jgc:chanrobles.com.ph

"Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to
the end that no one shall be unjustly enriched or benefited at the expense of another."cralaw
virtua1aw library

The former is part of Title XVI, Book IV of the Civil Code of the Philippines, regulating "extra-
contractual obligations" or obligations beyond, outside of, or outside the scope of, a contract.
The constructions of the improvements in question was not a "purely voluntary act" or "unilateral
act" of Lao Chit. He introduced them in compliance with a bilateral "obligation" he undertook
under his contract with Dikit. The right of Dikit to enter into such contract, in turn, sprang from
his lease contract with the lessor. As a privy to Dikit’s rights under this contract, insofar as said
improvement are concerned, Lao Chit’s title thereto, as against the lessor, is governed,
therefore, by such contract of lease, not by any quasi-contract, or by the principles of equity, as
distinguished from law, contracts or quasi-contracts.

(d) For the principle of undue enrichment to apply, there must be "enrichment" and the same
must be "undue" or "unjust."

In the case at bar, Dikit failed to pay the agreed monthly rental of P5,000 from October, 1949.
Up to July 1, 1951, when the premises in question were leased to the Bank, the rentals due
from Dikit aggregated, therefore, P105,000. Thus, despite the fact that the lessor had become
the owner of the improvements in question, worth P59,365.00, it still suffered a loss of over
P45,000.00. Such "loss" negates the idea of "enrichment." Neither may the latter be deemed to
have taken place in the sense that said improvements had increased the productive capacity of
the leased premises, for, despite said improvements, the Bank agreed to pay, beginning from
July 1, 1951, only P4,000 a month, or P1,000 a month less than the rental stipulated with Dikit.

Regardless of the foregoing, Lao Chit had no reason to believe — and he does not claim to
have acted under the belief — that Dikit owned the leased premises. In fact, the circumstances
surrounding the case are such such as to leave no room for doubt that Lao Chit knew that Dikit
was not the owner of said property and that the same belonged to the lessor. Besides, Lao Chit
should have known that, as Dikit’s agent, in the construction of the improvements, he (Lao Chit)
was subject to the limitations imposed upon Dikit by his contract with the lessor and that the
improvements in question became property of the owner of the building, not only by operation of
law, as accessions to said building, but, also, by specific stipulation in the contract of lease
between Dikit and the lessor. Inasmuch as the acquisition of said improvements by the owner of
the building and lessor is ordained by law and provided for by said contract, which is admittedly
valid, the resulting enrichment — if any — by said owner and lessor, is neither "undue" nor
"unjustly."

Upon the other hand, had been reasonably vigilant, Lao Chit could have demanded from Dikit a
mortgage, or a bond, or some other security, for the protection of his rights, yet he (Lao Chit) did
not do so. Should the lessor be required to pay Lao Chit what he is entitled to recover from Dikit,
but which he (Lao Chit) cannot — due to his oversight, carelessness or negligence — collect
from Dikit, the effect would be to relieve Lao Chit of the consequences of his own inadvertence
or negligence, and hold the lessor responsible therefor. This would be neither fair, nor just, nor
equitable.

Lastly, the lower court declared that the improvements in question belong to Lao Chit, because
it had been so held in Case No. 10718 instituted by him against Dikit and Silva. Obviously,
however, the proceedings in that case and the decision therein rendered are not binding upon
the lessor, the same being neither a party in said case, nor a successor to the interest of the
defendants therein. Besides, the aforementioned finding is not borne out by Lao Chit’s contract
with Dikit and Silva (Exhibits A-1, A-2, A-2-a and A-3). Indeed, even if Dikit and Silva had
agreed with Lao Chit — and they had no such agreement — that he would own the
improvements until payment of the price thereof, the stipulation would be, neither valid, nor
binding upon the lessor, for Dikit and Silva had not authority whatsoever to waive the statutory
right of accession of the lessor to and over said improvements (Arts. 353 and 358, Civil Code of
Spain; Arts. 440 and 445, Civil Code of the Philippines).

Wherefore, the decision appealed from is hereby reversed and another one shall be entered
dismissing the complaint, with costs against plaintiff-appellee Lao Chit. It is so ordered.
G.R. No. L-57348 May 16, 1985

FRANCISCO DEPRA, plaintiff-appellee,

vs.
AGUSTIN DUMLAO, defendant-appellant.

Roberto D. Dineros for plaintiff-appellee.

Veil D. Hechanova for defendant-appellant.

MELENCIO-HERRERA, J.:

This is an appeal from the Order of the former Court of First Instance of Iloilo to the then Court of
Appeals, which the latter certified to this instance as involving pure questions of law

Plaintiff-appellee, Francisco Depra, is the owner of a parcel of land registered under Transfer
Certificate of Title No. T3087, known as Lot No. 685, situated in the municipality of Dumangas, Iloilo,
with an area of approximately 8,870 square meters. Agustin Dumlao, defendant-appellant, owns an
adjoining lot, designated as Lot No. 683, with an approximate area of 231 sq. ms.

Sometime in 1972, when DUMLAO constructed his house on his lot, the kitchen thereof had
encroached on an area of thirty four (34) square meters of DEPRA's property, After the
encroachment was discovered in a relocation survey of DEPRA's lot made on November 2,1972, his
mother, Beatriz Depra after writing a demand letter asking DUMLAO to move back from his
encroachment, filed an action for Unlawful Detainer on February 6,1973 against DUMLAO in the
Municipal Court of of Dumangas, docketed as Civil Case No 1, Said complaint was later amended to
include DEPRA as a party plain. plaintiff.

After trial, the Municipal Court found that DUMLAO was a builder in good faith, and applying Article
448 of the Civil Code, rendered judgment on September 29, 1973, the dispositive portion of which
reads:

Ordering that a forced lease is created between the parties with the plaintiffs, as
lessors, and the defendants as lessees, over the disputed portion with an area of
thirty four (34) square meters, the rent to be paid is five (P5.00) pesos a month,
payable by the lessee to the lessors within the first five (5) days of the month the rent
is due; and the lease shall commence on the day that this decision shall have
become final.

From the foregoing judgment, neither party appeal so that, ff it were a valid judgment, it would have
ordinarily lapsed into finality, but even then, DEPRA did not accept payment of rentals so that
DUMLAO deposited such rentals with the Municipal Court.

On July 15,1974, DEPRA filed a Complaint for Quieting of Title against DUMLAO before the then
Court of First Instance of Iloilo, Branch IV (Trial Court), involving the very same 34 square meters,
which was the bone of contention in the Municipal Court. DUMLAO, in his Answer, admitted the
encroachment but alleged, in the main, that the present suit is barred by res judicata by virtue of the
Decision of the Municipal Court, which had become final and executory.

After the case had been set for pre-trial, the parties submitted a Joint Motion for Judgment based on
the Stipulation of Facts attached thereto. Premised thereon, the Trial Court on October 31, 1974,
issued the assailed Order, decreeing:

WHEREFORE, the Court finds and so holds that the thirty four (34) square meters
subject of this litigation is part and parcel of Lot 685 of the Cadastral Survey of
Dumangas of which the plaintiff is owner as evidenced by Transfer Certificate of Title
No. 3087 and such plaintiff is entitled to possess the same.

Without pronouncement as to costs.

 SO ORDERED.

Rebutting the argument of res judicata relied upon by DUMLAO, DEPRA claims that the Decision of
the Municipal Court was null and void ab initio because its jurisdiction is limited to the sole issue of
possession, whereas decisions affecting lease, which is an encumbrance on real property, may only
be rendered by Courts of First Instance.

Addressing out selves to the issue of validity of the Decision of the Municipal Court, we hold the
same to be null and void. The judgment in a detainer case is effective in respect of possession only
(Sec. 7, Rule 70, Rules of Court). 1 The Municipal Court over-stepped its bounds when it imposed
upon the parties a situation of "forced lease", which like "forced co-ownership" is not favored in law.
Furthermore, a lease is an interest in real property, jurisdiction over which belongs to Courts of First
Instance (now Regional Trial Courts) (Sec. 44(b), Judiciary Act of 1948; 2 Sec. 19 (2) Batas
Pambansa Blg. 129). 3 Since the Municipal Court, acted without jurisdiction, its Decision was null and
void and cannot operate as res judicata to the subject complaint for Queting of Title. Besides, even if
the Decision were valid, the rule on res judicata would not apply due to difference in cause of action.
In the Municipal Court, the cause of action was the deprivation of possession, while in the action to
quiet title, the cause of action was based on ownership. Furthermore, Sec. 7, Rule 70 of the Rules of
Court explicitly provides that judgment in a detainer case "shall not bar an action between the same
parties respecting title to the land. " 4

Conceded in the Stipulation of Facts between the parties is that DUMLAO was a builder in good
faith. Thus,

8. That the subject matter in the unlawful detainer case, Civil Case No. 1, before the
Municipal Court of Dumangas, Iloilo involves the same subject matter in the present
case, the Thirty-four (34) square meters portion of land and built thereon in good faith
is a portion of defendant's kitchen and has been in the possession of the defendant
since 1952 continuously up to the present; ... (Emphasis ours)

Consistent with the principle that our Court system, like any other, must be a dispute resolving
mechanism, we accord legal effect to the agreement of the parties, within the context of their mutual
concession and stipulation. They have, thereby, chosen a legal formula to resolve their dispute to
appeal ply to DUMLAO the rights of a "builder in good faith" and to DEPRA those of a "landowner in
good faith" as prescribed in Article 448. Hence, we shall refrain from further examining whether the
factual situations of DUMLAO and DEPRA conform to the juridical positions respectively defined by
law, for a "builder in good faith" under Article 448, a "possessor in good faith" under Article 526 and
a "landowner in good faith' under Article 448.

In regards to builders in good faith, 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, 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 (Paragraphing
supplied)

Pursuant to the foregoing provision, DEPRA has the option either to pay for the encroaching part of
DUMLAO's kitchen, or to sell the encroached 34 square meters of his lot to DUMLAO. He cannot
refuse to pay for the encroaching part of the building, and to sell the encroached part of his land, 5 as
he had manifested before the Municipal Court. But that manifestation is not binding because it was
made in a void proceeding.
However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of First Instance.
It was thus error for the Trial Court to have ruled that DEPRA is "entitled to possession," without
more, of the disputed portion implying thereby that he is entitled to have the kitchen removed. He is
entitled to such removal only when, after having chosen to sell his encroached land, DUMLAO fails
to pay for the same. 6 In this case, DUMLAO had expressed his willingness to pay for the land, but
DEPRA refused to sell.

The owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his building,
under article 453 (now Article 546). The owner of the land, upon the other hand, has
the option, under article 361 (now Article 448), either to pay for the building or to sell
his land to the owner of the building. But he cannot as respondents here did refuse
both to pay for the building and to sell the land and compel the owner of the building
to remove it from the land where it erected. He is entitled to such remotion only
when, after having chosen to sell his land. the other party fails to pay for the same
(italics ours).

We hold, therefore, that the order of Judge Natividad compelling defendants-

petitioners to remove their buildings from the land belonging to plaintiffs-respondents
only because the latter chose neither to pay for such buildings nor to sell the land, is
null and void, for it amends substantially the judgment sought to be executed and is.
furthermore, offensive to articles 361 (now Article 448) and 453 (now Article 546) of
the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608[1946]).

A word anent the philosophy behind Article 448 of the Civil rode.

The original provision was found in Article 361 of the Spanish Civil Code; which provided:

ART. 361. The owner of land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the work, sowing or
planting, after the payment of the indemnity stated in Articles 453 and 454, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent.

As will be seen, the Article favors the owner of the land, by giving him one of the two options
mentioned in the Article. Some commentators have questioned the preference in favor of the owner
of the land, but Manresa's opinion is that the Article is just and fair.

. . . es justa la facultad que el codigo da al dueno del suelo en el articulo 361, en el

caso de edificacion o plantacion? Algunos comentaristas la conceptuan injusta, y
como un extraordinario privilegio en favor de la propiedad territorial. Entienden que
impone el Codigo una pena al poseedor de buena fe y como advierte uno de los
comentaristas aludidos 'no se ve claro el por que de tal pena . . . al obligar al que
obro de buena fe a quedarse con el edificio o plantacion, previo el pago del terreno
que ocupa, porque si bien es verdad que cuando edifico o planto demostro con este
hecho, que queria para si el edificio o plantio tambien lo es que el que edifico o
planto de buena fe lo hizo en la erronea inteligencia de creerse dueno del terreno
Posible es que, de saber lo contrario, y de tener noticia de que habia que comprar y
pagar el terreno, no se hubiera decidido a plantar ni a edificar. La ley obligandole a
hacerlo fuerza su voluntad, y la fuerza por un hecho inocente de que no debe ser
responsable'. Asi podra suceder pero la realidad es que con ese hecho voluntario,
aunque sea inocente, se ha enriquecido torticeramente con perjuicio de otro a quien
es justo indemnizarle,

En nuestra opinion, el Codigo ha resuelto el conflicto de la manera mas justa y

equitativa y respetando en lo possible el principio que para la accesion se establece
en el art. 358. 7

Our own Code Commission must have taken account of the objections to Article 361 of the Spanish
Civil Code. Hence, the Commission provided a modification thereof, and Article 448 of our Code has
been made to provide:

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.

Additional benefits were extended to the builder but the landowner retained his options.

The fairness of the rules in Article 448 has also been explained as follows:

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 to pay for the proper rent. It is the owner of the land who is authorized
to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing. (3 Manresa 213;
Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G.R. No. 49167,
April 30, 1949; Article applied: see Cabral, et al vs. Ibanez [S.C.] 52 Off. Gaz. 217;
Marfori vs. Velasco, [C.A.] 52 Off. Gaz. 2050). 8

WHEREFORE, the judgment of the trial Court is hereby set aside, and this case is hereby ordered
remanded to the Regional Trial Court of Iloilo for further proceedings consistent with Articles 448 and
546 of the Civil Code, as follows:

1. The trial Court shall determine

a) the present fair price of DEPRA's 34 square meter area of land;

b) the amount of the expenses spent by DUMLAO for the building of the kitchen;

c) the increase in value ("plus value") which the said area of 34 square meters may
have acquired by reason thereof, and

d) whether the value of said area of land is considerably more than that of the kitchen
built thereon.

2. After said amounts shall have been determined by competent evidence, the Regional, Trial Court
shall render judgment, as follows:

a) The trial Court shall grant DEPRA a period of fifteen (15) days within which to
exercise his option under the law (Article 448, Civil Code), whether to appropriate the
kitchen as his own by paying to DUMLAO either the amount of tile expenses spent
by DUMLAO f or the building of the kitchen, or the increase in value ("plus value")
which the said area of 34 square meters may have acquired by reason thereof, or to
oblige DUMLAO to pay the price of said area. The amounts to be respectively paid
by DUMLAO and DEPRA, in accordance with the option thus exercised by written
notice of the other party and to the Court, shall be paid by the obligor within fifteen
(15) days from such notice of the option by tendering the amount to the Court in favor
of the party entitled to receive it;

b) The trial Court shall further order that if DEPRA exercises the option to oblige
DUMLAO to pay the price of the land but the latter rejects such purchase because,
as found by the trial Court, the value of the land is considerably more than that of the
kitchen, DUMLAO shall give written notice of such rejection to DEPRA and to the
Court within fifteen (15) days from notice of DEPRA's option to sell the land. In that
event, the parties shall be given a period of fifteen (15) days from such notice of
rejection within which to agree upon the terms of the lease, and give the Court formal
written notice of such agreement and its provisos. If no agreement is reached by the
 parties, the trial Court, within fifteen (15) days from and after the termination of the
said period fixed for negotiation, shall then fix the terms of the lease, provided that
the monthly rental to be fixed by the Court shall not be less than Ten Pesos (P10.00)
per month, payable within the first five (5) days of each calendar month. The period
for the forced lease shall not be more than two (2) years, counted from the finality of
the judgment, considering the long period of time since 1952 that DUMLAO has
occupied the subject area. The rental thus fixed shall be increased by ten percent
(10%) for the second year of the forced lease. DUMLAO shall not make any further
constructions or improvements on the kitchen. Upon expiration of the two-year
period, or upon default by DUMLAO in the payment of rentals for two (2) consecutive
months, DEPRA shall be entitled to terminate the forced lease, to recover his land,
and to have the kitchen removed by DUMLAO or at the latter's expense. The rentals
herein provided shall be tendered by DUMLAO to the Court for payment to DEPRA,
and such tender shall constitute evidence of whether or not compliance was made
within the period fixed by the Court.

c) In any event, DUMLAO shall pay DEPRA an amount computed at Ten Pesos
(P10.00) per month as reasonable compensation for the occupancy of DEPRA's land
for the period counted from 1952, the year DUMLAO occupied the subject area, up to
the commencement date of the forced lease referred to in the preceding paragraph;

d) The periods to be fixed by the trial Court in its Precision shall be inextendible, and
upon failure of the party obliged to tender to the trial Court the amount due to the
obligee, the party entitled to such payment shall be entitled to an order of execution
for the enforcement of payment of the amount due and for compliance with such
other acts as may be required by the prestation due the obligee.

No costs,

SO ORDERED.
G.R. No. L-57288 April 30, 1984

LEONILA SARMINETO, petitioner,

vs.
HON. ENRIQUE A. AGANA, District Judge, Court of First Instance of Rizal, Seventh
Judicial District, Branch XXVIII, Pasay City, and SPOUSES ERNESTO VALENTINO and
REBECCA LORENZO-VALENTINO, respondents.

Mercedes M. Respicio for petitioner.

Romulo R. Bobadilla for private respondents.

MELENCIO-HERRERA, J.:ñé+.£ªwph!1

This Petition for certiorari questions a March 29, 1979 Decision rendered by the then Court of
First Instance of Pasay City. The Decision was one made on memoranda, pursuant to the
provisions of RA 6031, and it modified, on October 17, 1977, a judgment of the then Municipal
Court of Paranaque, Rizal, in an Ejectment suit instituted by herein petitioner Leonila
SARMIENTO against private respondents, the spouses ERNESTO Valentino and Rebecca
Lorenzo. For the facts, therefore, we have to look to the evidence presented by the parties at
the original level.

It appears that while ERNESTO was still courting his wife, the latter's mother had told him the
couple could build a RESIDENTIAL HOUSE on a lot of 145 sq. ms., being Lot D of a subdivision
in Paranaque (the LAND, for short). In 1967, ERNESTO did construct a RESIDENTIAL HOUSE
on the LAND at a cost of P8,000.00 to P10,000.00. It was probably assumed that the wife's
mother was the owner of the LAND and that, eventually, it would somehow be transferred to the
spouses.

It subsequently turned out that the LAND had been titled in the name of Mr. & Mrs. Jose C.
Santo, Jr. who, on September 7 , 1974, sold the same to petitioner SARMIENTO. The following
January 6, 1975, SARMIENTO asked ERNESTO and wife to vacate and, on April 21, 1975, filed
an Ejectment suit against them. In the evidentiary hearings before the Municipal Court,
SARMIENTO submitted the deed of sale of the LAND in her favor, which showed the price to be
P15,000.00. On the other hand, ERNESTO testified that the then cost of the RESIDENTIAL
HOUSE would be from P30,000.00 to P40,000.00. The figures were not questioned by
SARMIENTO.

The Municipal Court found that private respondents had built the RESIDENTIAL HOUSE in
good faith, and, disregarding the testimony of ERNESTO, that it had a value of P20,000.00. It
then ordered ERNESTO and wife to vacate the LAND after SARMIENTO has paid them the
mentioned sum of P20,000.00.

The Ejectment suit was elevated to the Court of First Instance of Pasay where, after the
submission of memoranda, said Court rendered a modifying Decision under Article 448 of the
Civil Code. SARMIENTO was required, within 60 days, to exercise the option to reimburse
ERNESTO and wife the sum of 40,000.00 as the value of the RESIDENTIAL HOUSE, or the
option to allow them to purchase the LAND for P25,000.00. SARMIENTO did not exercise any
of the two options within the indicated period, and ERNESTO was then allowed to deposit the
sum of P25,000.00 with the Court as the purchase price for the LAND. This is the hub of the
controversy. SARMIENTO then instituted the instant certiorari proceedings.

We agree that ERNESTO and wife were builders in good faith in view of the peculiar
circumstances under which they had constructed the RESIDENTIAL HOUSE. As far as they
knew, the LAND was owned by ERNESTO's mother-in-law who, having stated they could build
on the property, could reasonably be expected to later on give them the LAND.

In regards to builders in good faith, Article 448 of the Code provides:têñ.£îhqwâ£

 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.
(Paragraphing supplied)

The value of the LAND, purchased for P15,000.00 on September 7, 1974, could not have been
very much more than that amount during the following January when ERNESTO and wife were
asked to vacate. However, ERNESTO and wife have not questioned the P25,000.00 valuation
determined by the Court of First Instance.

In regards to the valuation of the RESIDENTIAL HOUSE, the only evidence presented was the
testimony of ERNESTO that its worth at the time of the trial should be from P30,000.00 to
P40,000.00. The Municipal Court chose to assess its value at P20,000.00, or below the
minimum testified by ERNESTO, while the Court of First Instance chose the maximum of
P40,000.00. In the latter case, it cannot be said that the Court of First Instance had abused its
discretion.

The challenged decision of respondent Court, based on valuations of P25,000.00 for the LAND
and P40,000.00 for the RESIDENTIAL HOUSE, cannot be viewed as not supported by the
evidence. The provision for the exercise by petitioner SARMIENTO of either the option to
indemnify private respondents in the amount of P40,000.00, or the option to allow private
respondents to purchase the LAND at P25,000.00, in our opinion, was a correct
decision.têñ.£îhqwâ£

The owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his
building, under article 453 (now Article 546). The owner, of the land. upon, the
other hand, has the option, under article 361 (now Article 448), either to pay for
the building or to sell his land to the owner of the building. But he cannot, as
respondents here did, refuse both to pay for the building and to sell the land and
compel the owner of the building to remove it from the land where it is erected.
He is entitled to such remotion only when, after having chosen to sell his land,
the other party fails to pay for the same. (Emphasis ours)

We hold, therefore, that the order of Judge Natividad compelling defendants-

petitioners to remove their buildings from the land belonging to plaintiffs-
respondents only because the latter chose neither to pay for such buildings nor
to sell the land, is null and void, for it amends substantially the judgment sought
to be executed and is, furthermore, offensive to articles 361 (now Article 448)
and 453 (now Article 546) of the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608
[1946]).

WHEREFORE, the Petition for Certiorari is hereby ordered dismissed, without pronouncement
as to costs.
 G.R. No. 108894. February 10, 1997.]

TECNOGAS PHILIPPINES MANUFACTURING CORPORATION, Petitioner, v. COURT OF APPEALS

(FORMER SPECIAL SEVENTEENTH DIVISION) and EDUARDO UY, Respondents.

De Jesus Paguio and Manimtim for Petitioner.

M.R. Pamaran Law Offices for Private Respondent.

Acebes Del Carmen Cinco & Cordova for Private Respondent.

SYLLABUS

1. CIVIL LAW; PROPERTY; POSSESSION; GOOD FAITH, PRESUMED. — When

petitioner purchased the land from Pariz Industries, the buildings and other
structures were already in existence. The record is not clear as to who actually built
those structures, but it may well be assumed that petitioner’s predecessor-in-
interest, Pariz Industries, did so. Article 527 of the Civil Code presumes good faith,
and since no proof exists to show that the encroachment over a narrow, needle-
shaped portion of private respondent’s land was done in bad faith by the builder of
the encroaching structures, the latter should be presumed to have built them in
good faith. It is presumed that possession continues to be enjoyed in the same
character in which it was acquired, until the contrary is proved. 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. Hence, such good faith, by law passed on to Pariz’s
successor, petitioner in this case. Further," (w)here one derives title to property
from another, the act, declaration, or omission of the latter, while holding the title,
in relation to the property, is evidence against the former." And possession
acquired in good faith does not lose this character except in case and from the
moment facts exist which show that the possessor is not unaware that he
possesses the thing improperly or wrongfully. The good faith ceases 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.

2. ID.; ID.; OWNERSHIP; RIGHT OF ACCESSION; IMMOVABLE PROPERTY; BUILDER

IN GOOD FAITH CAN COMPEL THE LANDOWNER TO EXERCISE HIS OPTION UNDER
ART. 448; APPLICABLE TO BUYER IN GOOD FAITH. — The builder in good faith
under Article 448 of the Civil Code, instead of being outrightly ejected from the
land, can compel the landowner to make a choice between the two options: (1) to
appropriate the building by paying the indemnity required by law, or (2) sell the
land to the builder. The landowner cannot refuse to exercise either option and
compel instead the owner of the building to remove it from the land. The same
benefit can be invoked by petitioner who is not the builder of the offending
structures but possesses them in good faith as buyer. Petitioner is deemed to have
stepped into the shoes of the seller in regard to all rights of ownership over the
immovable sold, including the right to compel the private respondent to exercise
either of the two options provided under Article 448 of the Civil Code.

3. ID.; ID.; ID.; ID.; ID.; ID.; ID. — Petitioner did not lose its rights under Article
448 of the Civil Code on the basis merely of the fact that some years after acquiring
the property in good faith, it learned about — and aptly recognized — the right of
private respondent to a portion of the land occupied by its building. The
supervening awareness of the encroachment by petitioner does not militate against
its right to claim the status of a builder in good faith. In fact, a judicious reading of
said Article 448 will readily show that the landowner’s exercise of his option can
only take place after the builder shall have come to know of the intrusion — in
short, when both parties shall have become aware of it. Only then will the occasion
for exercising the option arise, for it is only then that both parties will have been
aware that a problem exists in regard to their property rights.

4. ID.; ID.; ID.; ID.; ID.; ARTICLE 148; APPLICATION IN CASE AT BAR;
ATTORNEY’S FEES, AWARD OF, UNWARRANTED. — In line with the case of Depra v.
Dumlao, this case will have to be remanded to the trial court for further
proceedings to fully implement the mandate of Art. 448. It is a rule of procedure for
the Supreme Court to strive to settle the entire controversy in a single proceeding
leaving no root or branch to bear the seeds of future litigation. Petitioner, however,
must also pay the rent for the property occupied by its building as prescribed by
respondent Court from October 4, 1979, but only up to the date private respondent
serves notice of its option upon petitioner and the trial court; that is, if such option
is for private respondent to appropriate the encroaching structure. In such event,
petitioner would have a right of retention which negates the obligation to pay rent.
The rent should however continue if the option chosen is compulsory sale, but only
up to the actual transfer of ownership. The award of attorney’s fees by respondent
Court against petitioner is unwarranted since the action appears to have been filed
in good faith. Besides, there should be no penalty on the right to litigate.

DECISION

PANGANIBAN, J.:

The parties in this case are owners of adjoining lots in Parañaque, Metro Manila. It was discovered in a
survey that a portion of a building of petitioner, which was presumably constructed by its predecessor-in-
interest, encroached on a portion of the lot owned by private Respondent. What are the rights and
obligations of the parties? Is petitioner considered a builder in bad faith because, as held by respondent
Court, he is "presumed to know the metes and bounds of his property as described in his certificate of title"
? Does petitioner succeed into the good faith or bad faith of his predecessor-in-interest which presumably
constructed the building?

These are the questions raised in the petition for review of the Decision 1 dated August 28, 1992, in CA-G.R.
CV No. 28293 of respondent Court 2 where the disposition reads: 3

"WHEREFORE, premises considered, the Decision of the Regional Trial Court is hereby reversed and set
aside and another one entered —

1. Dismissing the complaint for lack of cause of action;

2. Ordering Tecnogas to pay the sum of P2,000.00 per month as reasonable rental from October 4, 1979
until appellee vacates the land;

3. To remove the structures and surrounding walls on the encroached area;

4. Ordering appellee to pay the value of the land occupied by the two-storey building;

5. Ordering appellee to pay the sum of P20,000.00 for and as attorney’s fees;
6. Costs against appellee." cralaw virtua1a w libra ry

Acting on the motions for reconsideration of both petitioner and private respondent, respondent Court
ordered the deletion of paragraph 4 of the dispositive portion in an Amended Decision dated February 9,
1993, as follows: 4

"WHEREFORE, premises considered, our decision of August 28, 1992 is hereby modified deleting paragraph
4 of the dispositive portion of our decision which reads: chan rob 1es vi rtual 1aw lib rary

‘4. Ordering appellee to pay the value of the land occupied by the two-storey building.’

The motion for reconsideration of appellee is hereby DENIED for lack of merit." cralaw virtua1aw l ibra ry

The foregoing Amended Decision is also challenged in the instant petition.

The Facts

The facts are not disputed. Respondent Court merely reproduced the factual findings of the trial court, as
follows: 5

"That plaintiff (herein petitioner) which is a corporation duly organized and existing under and by virtue of
Philippine laws is the registered owner of a parcel of land situated in Barrio San Dionisio, Parañaque, Metro
Manila known as Lot 4331-A (should be 4531-A) of Lot 4531 of the Cadastral Survey of Parañaque, Metro
Manila, covered by Transfer Certificate of Title No. 409316 of the Registry of Deeds of the Province of Rizal;
that said land was purchased by plaintiff from Pariz Industries, Inc. in 1970, together with all the buildings
and improvements including the wall existing thereon; that the defendant (herein private respondent) is the
registered owner of a parcel of land known as Lot No. 4531-B of Lot 4531 of the Cadastral Survey of
Parañaque, LRC (GLRO) Rec. No. 19645 covered by Transfer Certificate of Title No. 279838, of the Registry
of Deeds for the Province of Rizal; that said land which adjoins plaintiff’s land was purchased by defendant
from a certain Enrile Antonio also in 1970; that in 1971, defendant purchased another lot also adjoining
plaintiff’s land from a certain Miguel Rodriguez and the same was registered in defendant’s name under
Transfer Certificate of Title No. 31390, of the Registry of Deeds for the Province of Rizal; that portions of the
buildings and wall bought by plaintiff together with the land from Pariz Industries are occupying a portion of
defendant’s adjoining land; that upon learning of the encroachment or occupation by its buildings and wall
of a portion of defendant’s land, plaintiff offered to buy from defendant that particular portion of defendant’s
land occupied by portions of its buildings and wall with an area of 770 square meters, more or less, but
defendant, however, refused the offer. In 1973, the parties entered into a private agreement before a
certain Col. Rosales in Malacañang, wherein plaintiff agreed to demolish the wall at the back portion of its
land thus giving to defendant possession of a portion of his land previously enclosed by plaintiff’s wall; that
defendant later filed a complaint before the office of Municipal Engineer of Parañaque, Metro Manila as well
as before the Office of the Provincial Fiscal of Rizal against plaintiff in connection with the encroachment or
occupation by plaintiff’s buildings and walls of a portion of its land but said complaint did not prosper; that
defendant dug or caused to be dug a canal along plaintiff’s wall, a portion of which collapsed in June, 1980,
and led to the filing by plaintiff of the supplemental complaint in the above-entitled case and a separate
criminal complaint for malicious mischief against defendant and his wife which ultimately resulted into the
conviction in court of defendant’s wife for the crime of malicious mischief; that while trial of the case was in
progress, plaintiff filed in Court a formal proposal for settlement of the case but said proposal, however, was
ignored by defendant." cralaw vi rtua1aw l ibra ry

After trial on the merits, the Regional Trial Court 6 of Pasay City, Branch 117, in Civil Case No. PQ-7631-P,
rendered a decision dated December 4, 1989 in favor of petitioner who was the plaintiff therein. The
dispositive portion reads: 7

"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant and ordering the
latter to sell to plaintiff that portion of land owned by him and occupied by portions of plaintiff’s buildings
and wall at the price of P2,000.00 per square meter and to pay the former: chanrob 1es vi rtua l 1aw lib rary

1. The sum of P44,000.00 to compensate for the losses in materials and properties incurred by plaintiff
through thievery as a result of the destruction of its wall;

2. The sum of P7,500.00 as and by way of attorney’s fees; and

3. The costs of this suit." cralaw virtua 1aw lib rary

Appeal was duly interposed with respondent Court, which as previously stated, reversed and set aside the
decision of the Regional Trial Court and rendered the assailed Decision and Amended Decision. Hence, this
recourse under Rule 45 of the Rules of Court.

The Issues
The petition raises the following issues: 8

"(A)

Whether or not the respondent Court of Appeals erred in holding the petitioner a builder in bad faith because
it is ‘presumed to know the metes and bounds of his property.’

(B)

Whether or not the respondent Court of Appeals erred when it used the amicable settlement between the
petitioner and the private respondent, where both parties agreed to the demolition of the rear portion of the
fence, as estoppel amounting to recognition by petitioner of respondent’s right over his property including
the portions of the land where the other structures and the building stand, which were not included in the
settlement.

(C)

Whether or not the respondent Court of Appeals erred in ordering the removal of the ‘structures and
surrounding walls on the encroached area’ and in withdrawing its earlier ruling in its August 28, 1992
decision for the petitioner ‘to pay for the value of the land occupied’ by the building, only because the
private respondent has ‘manifested its choice to demolish’ it despite the absence of compulsory sale where
the builder fails to pay for the land, and which ‘choice’ private respondent deliberately deleted from its
September 1, 1980 answer to the supplemental complaint in the Regional Trial Court." cralaw virtua 1aw lib rary

In its Memorandum, petitioner poses the following issues: jgc:chan roble s.com.p h

"A.

The time when to determine the good faith of the builder under Article 448 of the New Civil Code, is
reckoned during the period when it was actually being built; and in a case where no evidence was presented
nor introduced as to the good faith or bad faith of the builder at that time, as in this case, he must be
presumed to be a ‘builder in good faith,’ since ‘bad faith cannot be presumed.’ 9

B.

In a specific ‘boundary overlap situation’ which involves a builder in good faith, as in this case, it is now well
settled that the lot owner, who builds on the adjacent lot is not charged with ‘constructive notice’ of the
technical metes and bounds contained in their torrens titles to determine the exact and precise extent of his
boundary perimeter. 10

C.

The respondent court’s citation of the twin cases of Tuason & Co. v. Lumanlan and Tuason & Co. v.
Macalindong is not the ‘judicial authority’ for a boundary dispute situation between adjacent torrens titled lot
owners, as the facts of the present case do not fall within nor square with the involved principle of a
dissimilar case. 11

D.

Quite contrary to respondent Uy’s reasoning, petitioner Tecnogas continues to be a builder in good faith,
even if it subsequently built/repaired the walls/other permanent structures thereon while the case a quo was
pending and even while respondent sent the petitioner many letters/filed cases thereon. 12

D. (E.)

The amicable settlement between the parties should be interpreted as a contract and enforced only in
accordance with its explicit terms, and not over and beyond that agreed upon; because the courts do not
have the power to create a contract nor expand its scope. 13

E. (F.)

As a general rule, although the landowner has the option to choose between: (1) ‘buying the building built in
good faith’, or (2) ‘selling the portion of his land on which stands the building’ under Article 448 of the Civil
Code; the first option is not absolute, because an exception thereto, once it would be impractical for the
landowner to choose to exercise the first alternative, i.e. buy that portion of the house standing on his land,
for the whole building might be rendered useless. The workable solution is for him to select the second
alternative, namely, to sell to the builder that part of his land on which was constructed a portion of the
house." 14
Private respondent, on the other hand, argues that the petition is "suffering from the following flaws: 15

1. It did not give the exact citations of cases decided by the Honorable Supreme Court that allegedly
contradicts the ruling of the Hon. Court of Appeals based on the doctrine laid down in Tuason v. Lumanlan
case citing also Tuason v. Macalindong case (Supra).

2. Assuming that the doctrine in the alleged Co Tao v. Chico case is contradictory to the doctrine in Tuason
v. Lumanlan and Tuason v. Macalindong, the two cases being more current, the same should prevail." cralaw vi rt ua1aw lib rary

Further, private respondent contends that the following "unmistakably" point to the bad faith of petitioner:
(1) private respondent’s purchase of the two lots, "was ahead of the purchase by petitioner of the building
and lot from Pariz Industries" ; (2) the declaration of the General Manager of Tecnogas that the sale
between petitioner and Pariz Industries "was not registered" because of some problems with China Banking
Corporation; and (3) the Deed of Sale in favor of petitioner was registered in its name only in "the month of
May 1973." 16

The Court’s Ruling

The petition should be granted.

Good Faith or Bad Faith

Respondent Court, citing the cases of J. M. Tuason & Co., Inc. v. Vda. de Lumanlan 17 and J. M. Tuason or
Co., Inc. v. Macalindong, 18 ruled that petitioner "cannot be considered in good faith" because as a land
owner, it is "presumed to know the metes and bounds of his own property, specially if the same are
reflected in a properly issued certificate of title. One who erroneously builds on the adjoining lot should be
considered a builder in (b)ad (f)aith, there being presumptive knowledge of the Torrens title, the area, and
the extent of the boundaries." 19 chanroble svirtuallaw lib rary:re d

We disagree with respondent Court. The two cases it relied upon do not support its main pronouncement
that a registered owner of land has presumptive knowledge of the metes and bounds of its own land, and is
therefore in bad faith if he mistakenly builds on an adjoining land. Aside from the fact that those cases had
factual moorings radically different from those obtaining here, there is nothing in those cases which would
suggest, however remotely, that bad faith is imputable to a registered owner of land when a part of his
building encroaches upon a neighbor’s land, simply because he is supposedly presumed to know the
boundaries of his land as described in his certificate of title. No such doctrinal statement could have been
made in those cases because such issue was not before the Supreme Court. Quite the contrary, we have
rejected such a theory in Co Tao v. Chico, 20 where we held that unless one is versed in the science of
surveying, "no one can determine the precise extent or location of his property by merely examining his
paper title."
cra law virt ua1aw lib ra ry

There is no question that when petitioner purchased the land from Pariz Industries, the buildings and other
structures were already in existence. The record is not clear as to who actually built those structures, but it
may well be assumed that petitioner’s predecessor-in-interest, Pariz Industries, did so. Article 527 of the
Civil Code presumes good faith, and since no proof exists to show that the encroachment over a narrow,
needle-shaped portion of private respondent’s land was done in bad faith by the builder of the encroaching
structures, the latter should be presumed to have built them in good faith. 21 It is presumed that
possession continues to be enjoyed in the same character in which it was acquired, until the contrary is
proved. 22 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. 23 Hence, such good faith, by law, passed on to Pariz’s
successor, petitioner in this case. Further," (w)here one derives title to property from another, the act,
declaration, or omission of the latter, while holding the title, in relation to the property, is evidence against
the former." 24 And possession acquired in good faith does not lose this character except in case and from
the moment facts exist which show that the possessor is not unaware that he possesses the thing
improperly or wrongfully. 25 The good faith ceases 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. 26

Recall that the encroachment in the present case was caused by a very slight deviation of the erected wall
(as fence) which was supposed to run in a straight line from point 9 to point 1 of petitioner’s lot. It was an
error which, in the context of the attendant facts, was consistent with good faith. Consequently, the builder,
if sued by the aggrieved landowner for recovery of possession, could have invoked the provisions of Art. 448
of the Civil Code, which reads: jgc:chan roble s.com.p h

"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." cralaw virtua1aw l ibra ry
The obvious benefit to the builder under this article is that, instead of being outrightly ejected from the land,
he can compel the landowner to make a choice between the two options: (1) to appropriate the building by
paying the indemnity required by law, or (2) sell the land to the builder. The landowner cannot refuse to
exercise either option and compel instead the owner of the building to remove it from the land. 27

The question, however, is whether the same benefit can be invoked by petitioner who, as earlier stated, is
not the builder of the offending structures but possesses them as buyer.

We answer such question in the affirmative.

In the first place, there is no sufficient showing that petitioner was aware of the encroachment at the time it
acquired the property from Pariz Industries. We agree with the trial court that various factors in evidence
adequately show petitioner’s lack of awareness thereof. In any case, contrary proof has not overthrown the
presumption of good faith under Article 527 of the Civil Code, as already stated, taken together with the
disputable presumptions of the law on evidence. These presumptions state, under Section 3 (a) of Rule 131
of the Rules of Court, that the person is innocent of a crime or wrong; and under Section 3 (ff) of Rule 131,
that the law has been obeyed. In fact, private respondent Eduardo Uy himself was unaware of such intrusion
into his property until after 1971 when he hired a surveyor, following his purchase of another adjoining lot,
to survey all his newly acquired lots. Upon being apprised of the encroachment, petitioner immediately
offered to buy the area occupied by its building — a species of conduct consistent with good faith.

In the second place, upon delivery of the property by Pariz Industries, as seller, to the petitioner, as buyer,
the latter acquired ownership of the property. Consequently and as earlier discussed, petitioner is deemed to
have stepped into the shoes of the seller in regard to all rights of ownership over the immovable sold,
including the right to compel the private respondent to exercise either of the two options provided under
Article 448 of the Civil Code.

Estoppel

Respondent Court ruled that the amicable settlement entered into between petitioner and private
respondent estops the former from questioning the private respondent’s "right" over the disputed property.
It held that by undertaking to demolish the fence under said settlement, petitioner recognized private
respondent’s right over the property, and "cannot later on compel" private respondent "to sell to it the land
since" private respondent "is under no obligation to sell." 28

We do not agree. Petitioner cannot be held in estoppel for entering into the amicable settlement, the
pertinent portions of which read: 29

"That the parties hereto have agreed that the rear portion of the fence that separates the property of the
complainant and respondent shall be demolished up to the back of the building housing the machineries
which demolision (sic) shall be undertaken by the complainant at anytime.

That the fence which serve(s) as a wall housing the electroplating machineries shall not be demolished in
the mean time which portion shall be subject to negotiation by herein parties." cra law virt ua1aw lib ra ry

From the foregoing, it is clear that petitioner agreed only to the demolition of a portion of the wall
separating the adjoining properties of the parties — i.e. "up to the back of the building housing the
machineries." But that portion of the fence which served as the wall housing the electro-plating machineries
was not to be demolished. Rather, it was to "be subject to negotiation by herein parties." The settlement
may have recognized the ownership of private respondent but such admission cannot be equated with bad
faith. Petitioner was only trying to avoid a litigation, one reason for entering into an amicable settlement.

As was ruled in Osmeña v. Commission on Audit, 30

"A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical agreement by
the Civil Code and is therein dealt with in some detail.’A compromise,’ declares Article 2208 of said Code, ‘is
a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one
already commenced.’

x x x

The Civil Code not only defines and authorizes compromises, it in fact encourages them in civil actions. Art.
2029 states that ‘The Court shall endeavor to persuade the litigants in a civil case to agree upon some fair
compromise.’ . . ."cralaw virtua 1aw lib rary

In the context of the established facts, we hold that petitioner did not lose its rights under Article 448 of the
Civil Code on the basis merely of the fact that some years after acquiring the property in good faith, it
learned about — and aptly recognized — the right of private respondent to a portion of the land occupied by
its building. The supervening awareness of the encroachment by petitioner does not militate against its right
to claim the status of a builder in good faith. In fact, a judicious reading of said Article 448 will readily show
that the landowner’s exercise of his option can only take place after the builder shall have come to know of
the intrusion — in short, when both parties shall have become aware of it. Only then will the occasion for
exercising the option arise, for it is only then that both parties will have been aware that a problem exists in
regard to their property rights.

Options of Private Respondent

What then is the applicable provision in this case which private respondent may invoke as his remedy:
Article 448 or Article 450 31 of the Civil Code?

In view of the good faith of both petitioner and private respondent, their rights and obligations are to be
governed by Art. 448. The essential fairness of this codal provision has been pointed out by Mme. Justice
Ameurfina Melencio-Herrera, citing Manresa and applicable precedents, in the case of Depra v. Dumlao, 32
to wit:
jgc:chan roble s.com. ph

"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 impracticality 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 to pay the proper
rent. It is the owner of the land who is authorized to exercise the option, because his right is older, and
because, by the principle of accession, he is entitled to the ownership of the accessory thing (3 Manresa
213; Bernardo v. Bataclan, 37 Off. Gaz. 1382; Co Tao v. Chan Chico, G. R. No. 49167, April 30, 1949;
Article applied; see Cabral, Et. Al. v. Ibañez [S.C.] 52 Off. Gaz. 217; Marfori v. Velasco, [C.A.] 52 Off. Gaz.
2050)." cralaw virtua1aw l ibra ry

The private respondent’s insistence on the removal of the encroaching structures as the proper remedy,
which respondent Court sustained in its assailed Decisions, is thus legally flawed. This is not one of the
remedies bestowed upon him by law. It would be available only if and when he chooses to compel the
petitioner to buy the land at a reasonable price but the latter fails to pay such price. 33 This has not taken
place. Hence, his options are limited to: (1) appropriating the encroaching portion of petitioner’s building
after payment of proper indemnity, or (2) obliging the latter to buy the lot occupied by the structure. He
cannot exercise a remedy of his own liking.

Neither is petitioner’s prayer that private respondent be ordered to sell the land 34 the proper remedy.
While that was dubbed as the "more workable solution in Grana and Torralba v. The Court of Appeals, Et Al.,
35 it was not the relief granted in that case as the landowners were directed to exercise "within 30 days
from this decision their option to either buy the portion of the petitioners’ house on their land or sell to said
petitioners the portion of their land on which it stands." 36 Moreover, in Grana and Torralba, the area
involved was only 87 square meters while this case involves 520 square meters 37 . In line with the case of
Depra v. Dumlao, 38 this case will have to be remanded to the trial court for further proceedings to fully
implement the mandate of Art. 448. It is a rule of procedure for the Supreme Court to strive to settle the
entire controversy in a single proceeding leaving no root or branch to bear the seeds of future litigation. 39

Petitioner, however, must also pay the rent for the property occupied by its building as prescribed by
respondent Court from October 4, 1979, but only up to the date private respondent serves notice of its
option upon petitioner and the trial court; that is, if such option is for private respondent to appropriate the
encroaching structure. In such event, petitioner would have a right of retention which negates the obligation
to pay rent. 40 The rent should however continue if the option chosen is compulsory sale, but only up to the
actual transfer of ownership.

The award of attorney’s fees by respondent Court against petitioner is unwarranted since the action appears
to have been filed in good faith. Besides, there should be no penalty on the right to litigate. 41

WHEREFORE, premises considered, the petition is hereby GRANTED and the assailed Decision and the
Amended Decision are REVERSED and SET ASIDE. In accordance with the case of Depra v. Dumlao, 42 this
case is REMANDED to the Regional Trial Court of Pasay City, Branch 117, for further proceedings consistent
with Articles 448 and 546 43 of the Civil Code, as follows: chan roblesv irt uallawl ibra ry

1. The trial court shall determine: chan rob 1es vi rtual 1aw lib rary

a) the present fair price of private respondent’s 520 square-meter area of land;

b) the increase in value ("plus value") which the said area of 520 square meters may have acquired by
reason of the existence of the portion of the building on the area;

c) the fair market value of the encroaching portion of the building; and

d) whether the value of said area of land is considerably more than the fair market value of the portion of
the building thereon.
2. After said amounts shall have been determined by competent evidence, the regional trial court shall
render judgment as follows: c ha nrob1e s virtual 1aw lib rary

a) The private respondent shall be granted a period of fifteen (15) days within which to exercise his option
under the law (Article 448, Civil Code), whether to appropriate the portion of the building as his own by
paying to petitioner its fair market value, or to oblige petitioner to pay the price of said area. The amounts
to be respectively paid by petitioner and private respondent, in accordance with the option thus exercised by
written notice of the other party and to the court, shall be paid by the obligor within fifteen (15) days from
such notice of the option by tendering the amount to the trial court in favor of the party entitled to receive
it;

b) If private respondent exercises the option to oblige petitioner to pay the price of the land but the latter
rejects such purchase because, as found by the trial court, the value of the land is considerably more than
that of the portion of the building, petitioner shall give written notice of such rejection to private respondent
and to the trial court within fifteen (15) days from notice of private respondent’s option to sell the land. In
that event, the parties shall be given a period of fifteen (15) days from such notice of rejection within which
to agree upon the terms of the lease, and give the trial court formal written notice of the agreement and its
provisos. If no agreement is reached by the parties, the trial court, within fifteen (15) days from and after
the termination of the said period fixed for negotiation, shall then fix the terms of the lease provided that
the monthly rental to be fixed by the Court shall not be less than two thousand pesos (P2,000.00) per
month, payable within the first five (5) days of each calendar month. The period for the forced lease shall
not be more than two (2) years, counted from the finality of the judgment, considering the long period of
time since 1970 that petitioner has occupied the subject area. The rental thus fixed shall be increased by ten
percent (10%) for the second year of the forced lease. Petitioner shall not make any further constructions or
improvements on the building. Upon expiration of the two-year period, or upon default by petitioner in the
payment of rentals for two (2) consecutive months, private respondent shall be entitled to terminate the
forced lease, to recover his land, and to have the portion of the building removed by petitioner or at latter’s
expense. The rentals herein provided shall be tendered by petitioner to the trial court for payment to private
respondent, and such tender shall constitute evidence of whether or not compliance was made within the
period fixed by the said court.

c) In any event, petitioner shall pay private respondent an amount computed at two thousand pesos
(P2,000.00) per month as reasonable compensation for the occupancy of private respondent’s land for the
period counted from October 4, 1979, up to the date private respondent serves notice of its option to
appropriate the encroaching structures, otherwise up to the actual transfer of ownership to petitioner or, in
case a forced lease has to be imposed, up to the commencement date of the forced lease referred to in the
preceding paragraph;

d) The periods to be fixed by the trial court in its decision shall be non-extendible, and upon failure of the
party obliged to tender to the trial court the amount due to the obligee, the party entitled to such payment
shall be entitled to an order of execution for the enforcement of payment of the amount due and for
compliance with such other acts as may be required by the prestation due the obligee.

No costs.

SO ORDERED.
G.R. No. L-49219 April 15, 1988

SPOUSES CONCEPCION FERNANDEZ DEL CAMPO and ESTANISLAO DEL

CANTO, plaintiffs-appellees,
vs.
BERNARDA FERNANDEZ ABESIA, defendant-appellant.

Geronimo Creer, Jr. for plaintiffs-appellees.

Benedicto G. Cobarde for defendant, defendant-appellant

GANCAYCO, J.:

In this appeal from the decision of the Court of First Instance (CFI) of Cebu, certified to this
Court by the Court of Appeals on account of the question of law involved, the sole issue is the
applicability of the provisions of Article 448 of the Civil Code relating to a builder in good faith
when the property involved is owned in common.

This case involves a parcel of land, Lot No. 1161 of the Cadastral Survey of Cebu, with an area
of only about 45 square meters, situated at the corner of F. Flores and Cavan Streets, Cebu
City covered by TCT No. 61850. An action for partition was filed by plaintiffs in the CFI of Cebu.
Plaintiffs and defendants are co-owners pro indiviso of this lot in the proportion of and 1/3 share
each, respectively. The trial court appointed a commissioner in accordance with the agreement
of the parties. ,the Id commissioner conducted a survey, prepared a sketch plan and submitted
a report to the trial court on May 29, 1976, recommending that the property be divided into two
lots: Lot 1161-A with an area of 30 square meters for plaintiffs and Lot No. 1161-B with an area
of 15 square meters for the defendants. The houses of plaintiffs and defendants were surveyed
and shown on the sketch plan. The house of defendants occupied the portion with an area of 5
square meters of Lot 1161-A of plaintiffs. The parties manifested their conformity to the report
and asked the trial court to finally settle and adjudicate who among the parties should take
possession of the 5 square meters of the land in question.

In solving the issue the trial court held as follows:

The Court believed that the plaintiffs cannot be obliged to pay for the value of the
portion of the defendants' house which has encroached an area of five (5) sq.
meters of the land alloted to them. The defendants cannot also be obliged to pay
for the price of the said five (5) square meters. The rights of a builder in good
faith under Article 448 of the New Civil Code does (sic) not apply to a case where
one co-owner has built, planted or sown on the land owned in common.
"Manresa agreeing with Sanchez Roman, says that as a general rule this article
is not applicable because the matter should be governed more by the provisions
on co-ownership than on accession. Planiol and Ripert are also of the opinion
that this article is not applicable to a co-owner who constructs, plants or sows on
the community property, even if the land where the construction, planting or
sowing is made is a third person under the circumstances, and the situation is
governed by the rules of co-ownership. Our Court of Appeals has held that this
article cannot be invoked by one co-owner against another who builds, plants or
sows upon their land, since the latter does not do so on land not belonging to
him. (C.A.), O.G. Supp., Aug. 30, 194, p. 126). In the light of the foregoing
authorities and considering that the defendants have expressed their conformity
to the partition that was made by the commissioner as shown in the sketch plan
attached to the commissioner's report, said defendants have no other alternative
except to remove and demolish part of their house that has encroached an area
of five (5) sq. meters of the land allotted to the plaintiffs.

WHEREFORE, judgment is hereby rendered assigning Lot 1161-A with an area

of thirty (30) sq. meters to the plaintiffs spouses Concepcion Fernandez Abesia,
Lourdes Fernandez Rodil, Genaro Fernandez and Dominga A. Fernandez, in the
 respective metes and bounds as shown in the subdivision sketch plan attached
to the Commissioner's Report dated may 29, 1976 prepared by the
Commissioner, Geodetic Engineer Espiritu Bunagan. Further, the defendants are
hereby ordered at their expense to remove and demolish part of their house
which has encroached an area of five (5) square meters from Lot 1161-A of the
plaintiffs; within sixty (60) days from date hereof and to deliver the possession of
the same to the plaintiffs. For the Commissioner's fee of P400.00, the defendants
are ordered to pay, jointly and severally, the sum of P133.33 and the balance
thereof to be paid by the plaintiffs. The costs of suit shall be paid by the plaintiffs
and the defendants in the proportion of two-thirds (2/3) and one-third (1/3) shares
respectively. A certified copy of this judgment shall be recorded in the office of
the Register of Deeds of the City of Cebu and the expense of such recording
shall be taxed as a part of the costs of the action.

Hence, this appeal interposed by the defendants with the following assignments of errors:

THE TRIAL COURT ERRED IN NOT APPLYING THE RIGHTS OF A BUILDER

IN GOOD FAITH UNDER ART. 448 OF THE NEW CIVIL CODE TO
DEFENDANTS-APPELLANTS WITH RESPECT TO THAT PART OF THEIR
HOUSE OCCUPYING A PROTION OF THE LOT ASSIGNED TO PLAINTIFFS-
APPELLEES.

II

THE TRIAL COURT ERRED IN ORDERING DEFENDANTS-APPELLANTS TO

REMOVE AND DEMOLISH AT THEIR EXPENSE, THAT PART OF THEIR
HOUSE WHICH HAS ENCROACHED ON AN AREA OF FIVE SQUARE
METERS OF LOT 1161-A OF PLAINTIFFS-APPELLEES.

Article 448 of the New Civil Code provides as follows:

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.

The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner
builds, plants or sows on the land owned in common for then he did not build, plant or sow upon
land that exclusively belongs to another but of which he is a co-owner. The co-owner is not a
third person under the circumstances, and the situation is governed by the rules of co-
ownership. 1

However, when, as in this case, the co-ownership is terminated by the partition and it appears
that the house of defendants overlaps or occupies a portion of 5 square meters of the land
pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions of
Article 448 of the new Civil Code should apply. Manresa and Navarro Amandi agree that the
said provision of the Civil Code may apply even when there was co-ownership if good faith has
been established. 2

Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to appropriate
said portion of the house of defendants upon payment of indemnity to defendants as provided
for in Article 546 of the Civil Code. Otherwise, the plaintiffs may oblige the defendants to pay the
price of the land occupied by their house. However, if the price asked for is considerably much
more than the value of the portion of the house of defendants built thereon, then the latter
cannot be obliged to buy the land. The defendants shall then pay the reasonable rent to the
plaintiff upon such terms and conditions that they may agree. In case of disagreement, the trial
court shall fix the terms thereof. Of course, defendants may demolish or remove the said portion
of their house, at their own expense, if they so decide.

WHEREFORE, the decision appealed from is hereby MODIFIED by ordering plaintiff to

indemnify defendants for the value of the Id portion of the house of defendants in accordance
with Article 546 of the Civil Code, if plaintiffs elect to appropriate the same. Otherwise, the
defendants shall pay the value of the 5 square meters of land occupied by their house at such
price as may be agreed upon with plaintiffs and if its value exceeds the portion of the house that
defendants built thereon, the defendants may choose not to buy the land but defendants must
pay a reasonable rental for the use of the portion of the land of plaintiffs As may be agreed upon
between the parties. In case of disagreement, the rate of rental shall be determined by the trial
court. Otherwise, defendants may remove or demolish at their own expense the said portion of
their house. No costs.

SO ORDERED.
G.R. No. 72876 January 18, 1991

FLORENCIO IGNAO, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT, JUAN IGNAO, substituted by his Legal Heirs,
and ISIDRO IGNAO, respondents.

Dolorfino and Dominguez Law Offices for petitioner.

Ambrosio Padilla, Mempin & Reyes Law Offices for private respondents.

FERNAN, C.J.:

In this petition for review by certiorari, petitioner seeks the reversal of the decision of the
Intermediate Appellate Court (now Court of Appeals) affirming in toto the decision of the Court
of First Instance of Cavite, ordering petitioner Florencio Ignao to sell to private respondents
Juan and Isidro Ignao, that part of his property where private respondents had built a portion of
their houses.

The antecedent facts are as follows:

Petitioner Florencio Ignao and his uncles private respondents Juan Ignao and Isidro Ignao were
co-owners of a parcel of land with an area of 534 square meters situated in Barrio Tabon,
Municipality of Kawit, Cavite. Pursuant to an action for partition filed by petitioner docketed as
Civil Case No. N-1681, the then Court of First Instance of Cavite in a decision dated February 6,
1975 directed the partition of the aforesaid land, alloting 133.5 square meters or 2/8 thereof to
private respondents Juan and Isidro, and giving the remaining portion with a total area of 266.5
square meters to petitioner Florencio. However, no actual partition was ever effected. 1

On July 17, 1978, petitioner instituted a complaint for recovery of possession of real property
against private respondents Juan and Isidro before the Court of First Instance of Cavite,
docketed as Civil Case No. 2662. In his complaint petitioner alleged that the area occupied by
the two (2) houses built by private respondents exceeded the 133.5 square meters previously
alloted to them by the trial court in Civil Case No. N-1681.

Consequently, the lower court conducted an ocular inspection. It was found that the houses of
Juan and Isidro actually encroached upon a portion of the land belonging to Florencio. Upon
agreement of the parties, the trial court ordered a licensed geodetic engineer to conduct a
survey to determine the exact area occupied by the houses of private respondents. The survey
subsequently disclosed that the house of Juan occupied 42 square meters while that of Isidro
occupied 59 square meters of Florencio's land or a total of 101 square meters.

In its decision, the trial court (thru Judge Luis L. Victor) ruled that although private respondents
occupied a portion of Florencio's property, they should be considered builders in good faith. The
trial court took into account the decision of the Court of First Instance of Cavite in the action for
partition2 and quoted:

. . . . Hence, it is the well-considered opinion of the Court that although it turned out that
the defendants had, before partition, been in possession of more than what rightfully
belongs to them, their possession of what is in excess of their rightful share can at worst
be possession in good faith which exempts them from being condemned to pay
damages by reason thereof.3

Furthermore, the trial court stated that pursuant to Article 448 of the Civil Code, the owner of the
land (Florencio) should have the choice to either appropriate that part of the house standing on
his land after payment of indemnity or oblige the builders in good faith (Juan and Isidro) to pay
the price of the land. However, the trial court observed that based on the facts of the case, it
would be useless and unsuitable for Florencio to exercise the first option since this would render
the entire houses of Juan and Isidro worthless. The trial court then applied the ruling in the
similar case of Grana vs. Court of Appeals,4 where the Supreme Court had advanced a more
"workable solution". Thus, it ordered Florencio to sell to Juan and Isidro those portions of his
land respectively occupied by the latter. The dispositive portion of said decision reads as
follows:

WHEREFORE, judgment is hereby rendered in favor of the defendants and—

(a) Ordering the plaintiff Florencio Ignao to sell to the defendants Juan and Isidro Ignao
that portion of his property with an area of 101 square meters at P40.00 per square
meter, on which part the defendants had built their houses; and

(b) Ordering the said plaintiff to execute the necessary deed of conveyance to the
defendants in accordance with paragraph (a) hereof.

Without pronouncement as to costs.5

Petitioner Florencio Ignao appealed to the Intermediate Appellate Court. On August 27, 1985,
the Appellate Court, Second Civil Cases Division, promulgated a decision,6 affirming the
decision of the trial court.

Hence the instant petition for review which attributes to the Appellate Court the following errors:

1. That the respondent Court has considered private respondents builders in good faith
on the land on question, thus applying Art. 448 of the Civil Code, although the land in
question is still owned by the parties in co-ownership, hence, the applicable provision is
Art. 486 of the Civil Code, which was not applied.

2. That, granting for the sake of argument that Art. 448 . . . is applicable, the respondent
Court has adjudged the working solution suggested in Grana and Torralba vs. CA. (109
Phil. 260), which is just an opinion by way of passing, and not the judgment rendered
therein, which is in accordance with the said provision of the Civil Code, wherein the
owner of the land to buy (sic) the portion of the building within 30 days from the
judgment or sell the land occupied by the building.

3. That, granting that private respondents could buy the portion of the land occupied by
their houses, the price fixed by the court is unrealistic and pre-war price.7

The records of the case reveal that the disputed land with an area of 534 square meters was
originally owned by Baltazar Ignao who married twice. In his first marriage, he had four children,
namely Justo (the father of petitioner Florencio), Leon and private respondents Juan and Isidro.
In his second marriage, Baltazar had also four children but the latter waived their rights over the
controverted land in favor of Justo. Thus, Justo owned 4/8 of the land which was waived by his
half-brothers and sisters plus his 1/8 share or a total of 5/8. Thereafter, Justo acquired the 1/8
share of Leon for P500.00 which he later sold to his son Florencio for the same amount. When
Justo died, Florencio inherited the 5/8 share of his father Justo plus his 1/8 share of the land
which he bought or a total of 6/8 (representing 400.5 square meters). Private respondents, Juan
and Isidro, on the other hand, had 1/8 share (66.75 square meters) each of the land or a total of
133.5 square meters.

Before the decision in the partition case was promulgated, Florencio sold 134 square meters of
his share to a certain Victa for P5,000.00 on January 27, 1975. When the decision was handed
down on February 6,1975, the lower court alloted 2/8 of the land to private respondents Juan
and Isidro, or a total of 133.5 square meters.

It should be noted that prior to partition, all the co-owners hold the property in common dominion
but at the same time each is an owner of a share which is abstract and undetermined until
partition is effected. As cited in Eusebio vs. Intermediate Appellate Court,8 "an undivided estate
is co-ownership by the heirs."

As co-owners, the parties may have unequal shares in the common property, quantitatively
speaking. But in a qualitative sense, each co-owner has the same right as any one of the other
co-owners. Every co-owner is therefore the owner of the whole, and over the whole he
exercises the right of dominion, but he is at the same time the owner of a portion which is truly
abstract, because until division is effected such portion is not concretely determined.9

Petitioner Florencio, in his first assignment of error, asseverates that the court a quo erred in
applying Article 448 of the Civil Code, since this article contemplates a situation wherein the
land belongs to one person and the thing built, sown or planted belongs to another. In the
instant case, the land in dispute used to be owned in common by the contending parties.

Article 448 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, 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.

Whether or not the provisions of Article 448 should apply to a builder in good faith on a property
held in common has been resolved in the affirmative in the case of Spouses del Campo vs.
Abesia,10 wherein the Court ruled that:

The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-
owner builds, plants or sows on the land owned in common for then he did not build,
plant or sow upon land that exclusively belongs to another but of which he is a co-owner.
The co-owner is not a third person under the circumstances, and the situation is
governed by the rules of co-ownership.

However, when, as in this case, the ownership is terminated by the partition and it
appears that the home of defendants overlaps or occupies a portion of 5 square meters
of the land pertaining to plaintiffs which the defendants obviously built in good faith, then
the provisions of Article 448 of the new Civil Code should apply. Manresa and Navarro
Amandi agree that the said provision of the Civil Code may apply even when there is a
co-ownership if good faith has been established.11

In other words, when the co-ownership is terminated by a partition and it appears that the house
of an erstwhile co-owner has encroached upon a portion pertaining to another co-owner which
was however made in good faith, then the provisions of Article 448 should apply to determine
the respective rights of the parties.

Petitioner's second assigned error is however well taken. Both the trial court and the Appellate
Court erred when they peremptorily adopted the "workable solution" in the case of Grana vs.
Court of appeals,12 and ordered the owner of the land, petitioner Florencio, to sell to private
respondents, Juan and Isidro, the part of the land they intruded upon, thereby depriving
petitioner of his right to choose. Such ruling contravened the explicit provisions of Article 448 to
the effect that "(t)he owner of the land . . . shall have the right to appropriate . . .or to oblige the
one who built . . . to pay the price of the land . . . ." The law is clear and unambiguous when it
confers the right of choice upon the landowner and not upon the builder and the courts.

Thus, in Quemuel vs. Olaes,13 the Court categorically ruled that the right to appropriate the
works or improvements or to oblige the builder to pay the price of the land belongs to the
landowner.

As to the third assignment of error, the question on the price to be paid on the land need not be
discussed as this would be premature inasmuch as petitioner Florencio has yet to exercise his
option as the owner of the land.
WHEREFORE, the decision appealed from is hereby MODIFIED as follows: Petitioner Florencio
Ignao is directed within thirty (30) days from entry of judgment to exercise his option to either
appropriate as his own the portions of the houses of Juan and Isidro Ignao occupying his land
upon payment of indemnity in accordance with Articles 546 and 548 of the Civil Code, or sell to
private respondents the 101 square meters occupied by them at such price as may be agreed
upon. Should the value of the land exceed the value of the portions of the houses that private
respondents have erected thereon, private respondents may choose not to buy the land but
they must pay reasonable rent for the use of the portion of petitioner's land as may be agreed
upon by the parties. In case of disagreement, the rate of rental and other terms of the lease
shall be determined by the trial court. Otherwise, private respondents may remove or demolish
at their own expense the said portions of their houses encroaching upon petitioner's land.14 No
costs.

SO ORDERED.
G.R. No. 73418 September 20, 1988

PELICULA SABIDO and MAXIMO RANCES, petitioners,

vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT and DOMINADOR STA.
ANA, respondents.

GUTIERREZ, JR., J.:

This petition for review on certiorari seeks to set aside the decision of the then Intermediate
Appellate Court which nullified the orders of the trial court for the issuance of the writs of
execution and demolition in favor of the petitioners and which ordered the trial court to assess
the value of the demolished properties of the private respondent for the purposes of set-off
against respondent's liability to the petitioners.

This case originated from an action for quieting of title which was filed by the spouses Victor
Dasal and Maria Pecunio against herein petitioners, Maximo Rances and Pelicula Sabido on the
question of ownership over two parcels of land otherwise known as Lots "B" and "D".

On October 7, 1969, the trial court presided by Judge Delfin Sunga declared the petitioners as
owners of Lots "B" and "D". The decision became final. However, when the decision was being
carried out to put the petitioners in possession of Lot "B", the Provincial Sheriff found three (3)
persons occupying portions of Lot "B". One of them was private respondent Dominador Sta.
Ana.

The petitioners filed a motion to require the private respondent to show cause why he should
not be ejected from the portion of Lot "B". In his answer, Sta. Ana claimed ownership by
purchase from one Prudencio Lagarto, of a bigger area of which Lot "B" is a part. He stated that
the two other persons occupying the disputed portion are his tenants.

Subsequently, an order of demolition was issued by the trial court against the private
respondent. This order was challenged by the private respondent and upon his filing of certiorari
proceedings, this Court on November 26, 1973, set aside the order of the trial court and
remanded the case to the latter for further reception of evidence to determine: 1) Whether or not
the private respondent is privy to the spouses Victor Dasal and Maria Pecunio as the losing
parties in the action below; and 2) Whether or not the petitioners and the private respondent are
litigating over the same parcel of land or whether there is overlapping of boundaries of their
respective lands.

On December 12, 1974, after conducting an ocular inspection and hearing, Judge Sunga issued
an order for the private respondent to vacate Lot "B" upon finding that there is no proof that
what the respondent allegedly purchased from Lagarto covers a portion of Lot "B" but on the
contrary, the deed of sale and tax declaration show that what was sold to the respondent was
bounded on the south by Tigman river and therefore, the respondent's ownership could not
have extended to Lot "B" which was separated by the Tigman river and mangrove swamps from
the portion he purchased.

Before the order of December 12, 1974, could be executed, however, Judge Sunga inhibited
himself from the case so the same was transferred to the then Court of First Instance (now
Branch M, Regional Trial Court) of Naga City presided by Judge Mericia B. Palma.

The execution of the order met with some further delay when the records were reconstituted.
Judge Palma, feeling the need for a clearer understanding of the facts and issues involved in
the case, proceeded to hear and received evidence.

On May 16, 1983, Judge Palma issued a resolution finding that there was privity between the
private respondent and the spouses Victor Dasal and Maria Pecunio as to the ownership of Lot
"C" and as to the possession over the western portion of the private road and the disputed Lot
"B"; and that Lot "B" and the private road are not included in the land purchased by the
respondent from Lagarto.

According to the trial court, the private respondent was in the company of Dasal (from whom he
was renting Lot "C' and who was also the brother-in-law of Lagarto) and was present when
Commissioner Tubianosa inspected the land in question in 1953 supporting the claim that the
respondent knew that the land was already in dispute between Dasal and the petitioners; and if
the respondent really believed that he owns the entire Lot "B" and the private road, he should
have raised his claim of ownership when Tubianosa inspected the land. The respondent also
failed to include the land in dispute in the survey of his purchased lot with the flimsy excuse that
the surveyor failed to return to finish the survey and include the disputed land.

Before arriving at the above findings, however, the trial court clarified the issues involved in the
case. It said:

WE NOW come to the RESOLUTION OF THE TWO ISSUES: (1) Was there
privity between Petitioner Sta. Ana and Plaintiffs Dasal? and (2) Is the disputed
area Identified in paragraph 1 of the foregoing enumeration, part of the land
purchased by Petitioner from Prudencio Lagarto?

If there is a privity between the Petitioner and Dasal, then the Petitioner is bound
by the final decision in this CC No. R-396 (2040) against Dasal and therefore
Petitioner is subject to the order of execution and is bound to vacate the land in
question or subject a portion of his house and the surrounding walls to
demolition. If there is no privity then he is not bound by said final decision. (Rollo,
pp. 48-49).

In the dispositive portion, however, the trial court held:

WHEREFORE, premises considered, the Court finds:

1.) That there is privity between the petitioner and the plaintiffs spouses Victor
Dasal and Maria Pecunio as to ownership of Lot C and as to the possession over
the western portion of the private road and the disputed Lot B as so Identified in
Exhibit 5;

2.) That the private road Identified as within points 1, 2, 3, 4, 5, 6 and 1 in Exh. 5
is owned by the respondents as already decided in CC No. 1103, and the same
private road and the Lot B in Exhibit 5 are both owned by the respondents as
already decided in this CC No. R-396 (2040);

3.) That the balcony of the present house of the petitioner is located in the
disputed Lot B and its southern (or southeastern) part of the western portion of
the 'private road';

xxx xxx xxx

6.) That therefore, this Court recommends to the Honorable Supreme Court, that
the petitioner be ordered to remove the entire balcony and the northern portion of
the main house to the extent of about one meter found to be standing on the
private road, as well as the northern extension of the hollow block walls on the
eastern boundary of Lot C that stand on the private road and to the northern end
of Lot B which wall measures to a total length of about 15 meters from the
northern boundary of Lot B to the southern edge of the private road; or in the
alternative to require the petitioner to pay the respondents the value of the
western portion of the disputed area which is now enclosed in the wall
constructed by the petitioner;

7.) And to hold the petitioner liable to the respondents for reasonable attorney's
fees and damages. (Rollo, p. 52)
On June 7, 1983, the private respondent filed with this Court a pleading captioned "Notice of
Appeal for Review." Said petition was denied in this Court's resolution on October 26,1983, to
wit:

L-32642 (Dominador Sta. Ana v. Hon. Delfin Vir, Sunga, etc., et al.). Considering
the petition of petitioner for review of trial court resolution dated May 16, 1983,
the Court Resolved to DENY the petition, said resolution of May 16, 1983, being
in accord with the decision of November 26, 1973 (Rec., p. 438) and the
resolution of May 16, 1975 (idem, p. 595) as well as the order of December
12,1974 (idem, p. 500) which ordered the petitioner to vacate the premises
(which is presumably final). As stated in the aforesaid resolution of May 16, 1975,
any review has to be sought by timely appeal to the appellate court and cannot
be sought in this case. (Rollo, p. 65).

A series of resolutions were subsequently issued by this Court denying the private respondent's
motion to reconsider the above-quoted resolution. Finally, on February 27, 1984, this Court
issued a resolution ordering "the Chief of the Judgment Division of this Court to RETURN the
records thereof to the respondent court for execution of judgment."

On August 9, 1984, the petitioners filed motion for execution of judgment, accompanied by a bill
of costs, as follows: 1) Attorney's fees — P 25,000.00; 2) Cost of litigation — P7,000.00; 3)
Expenses for transcript of record — P600.00; 4) Expenses for xeroxing of important papers and
documents-P 500.00; 5) Accrued rentals for the lot in question P11,800.00 and 6) Legal interest
of accrued rentals at 12% a year — P1,436.00 for a total of P46,336.00.

On October 5, 1984, the trial court issued an order granting the petitioners' motion for execution
and application for a writ of attachment and approving the bill of costs. In said order, the trial
court ordered the demolition of any part of the private respondent's building and all other
construction within Lot "B" and the private road. The demolition was effected.

The private respondent appealed to the then Intermediate Appellate Court, contending that the
order of the trial court departed from the intention of the Supreme Court's resolution ordering
execution of the judgment, for it thereby deprived him of the alternative choice of paying the
value of the disputed area which was allowed in the trial court's resolution of May 16, 1983,
which the Supreme Court found to be in accord with, among others, its decision in G.R. No. L-
32642 (Sta. Ana v. Sunga, 54 SCRA 36).

On September 20, 1985, the appellate court rendered the assailed decision, the dispositive
portion of which provided;

WHEREFORE, the writs of certiorari and prohibition applied for are granted. The
Order of October 5, 1984 approving the bill of courts and granting execution of
'previous orders', as well as the order/writ of demolition are hereby set aside,
Respondent Court is ordered to forthwith determine the value of the demolished
portion of petition of petitioner's residential building and other structures affected
by the demolition and also, to assess the value of the disputed area for purposes
of set off and whatever is the excess in value should be paid to the party entitled
thereto. (Rollo, pp. 40-41)

In its decision, the appellate court explained the rationale behind the dispositive portion. It said:

xxx xxx xxx

The unqualified affirmance of said resolution of May 16, 1983, to Our Mind,
carried with it the approval of the above recommendation. The fact that the
Supreme Court was silent on the recommended alternative choice of demolition
and payment of the disputed area and merely returned the records for execution
of judgment, did not indicate that the recommended demolition was preferred.
The sufficiency and efficacy of the resolution of May 16, 1983, as the judgment to
be enforced or executed, cannot be doubted considering its substance rather
than its form. The aforequoted recommendation, itself the dispositive portion, can
 be ascertained as to its meaning and operation. Thereby, the petitioner is given
the option to pay the value of the western portion of the disputed area which is
enclosed in the wall constructed by said petitioner. It is petitioner who is given the
alternative choice since if he does not pay, then he can be ordered to remove
whatever structure he had introduced in the questioned premises. Notably,
petitioner indicated his willingness to pay the price of the disputed area or
otherwise exercised that option.

Respondent Court therefore acted with grave abuse of discretion tantamount to

lack or excess of jurisdiction in abandoning the alternative choice of payment of
the value of the area in dispute, which it authorized in its final resolution of May
16, 1983, when it ordered execution of its 'previous orders' for the petitioner to
vacate the land in question and for demolition, which was set aside when the
case was remanded for hearing pursuant to the Supreme Court decision of
November 26, 1973. The previous orders referred to have not been specified by
the respondent Court in its Order of October 6, 1984. If it is the Order of
December 12, 1974 which is being referred to by respondent Court, it should
have so specified; however, it did not presumably because it was reconsidered
as can be deduced from the fact that thereafter, respondent Court further heard
the parties and received their respective evidence in compliance with the
decision of November 26, 1973, or which proceedings, the respondent Court
issued its resolution of May 16, 1983. (Rollo, p. 38)

In the petition before us, the petitioners maintain that the appellate court committed grave abuse
of discretion when it granted the private respondent the option of exercising the alternative
choice of staying in the disputed land when it has been established that the private respondent
was in privy with the spouses Victor Dasal and Maria Pecunio and, therefore, he could not be
considered a builder in good faith as to entitle him to the alternative choice of retention; and that
the demolition of the private respondent's construction on Lot "B" and on the private road is a
logical consequence of the finding that he was privy to the losing parties who were also the
adversaries of the petitioners in the original case.

We agree.

When this Court ordered the remand of the case between the petitioners and the private
respondent in our decision of November 26, 1973 (see Sta. Ana v. Sunga, supra), it was
precisely to determine whether herein respondent was privy to the spouses Dasals as to make
the decision against the latter and in favor of the petitioners over Lot "B" binding upon him. And
this fact was clearly pointed out by Judge Palma in her resolution of May 16, 1983 stating that if
there is privity between the private respondent and the spouses Dasals, then the former is
bound by the final decision in CC No. R-396 (2040) which is the case between the Dasals and
the petitioners. However, an apparent confusion was brought about by the dispositive portion of
the aforementioned resolution when it recommended to this Court either to order the respondent
to remove all his constructions over Lot "B" or to require said respondent to pay the petitioners
the value of the disputed area which was already enclosed by a wall constructed by the
respondent. This, nevertheless, was rectified when we issued the series of resolutions denying
the respondent's petition and motions for reconsideration before this Court wherein we stated
that the resolution of May 16, 1983 was in accord, among others, with the order of December
12, 1974 "which ordered the petitioner (private respondent) to vacate the premises (which is
presumably final)."

Hence, it is clear that the private respondent has to remove all his constructions over Lot "B"
and vacate the premises. This is his only option. Being adjudged in privy with the spouses
Dasals, he cannot avail himself of the rights granted to a builder in good faith. He, therefore,
must remove all his useful improvements over Lot "B" at his own expense and if the same have
already been removed, he cannot be entitled to the right of retention or to any reimbursement.
Thus, in the case of Metropolitan Waterworks and Sewarage System v. Court of Appeals, (143
SCRA 623, 629), we ruled:

Article 449 of the Civil Code of the Philippines provides that "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." As a builder in bad faith, NAWASA lost
whatever useful improvements it had made without right to indemnity (Santos v.
Mojica, Jan. 31, 1969, 26 SCRA 703)

Moreover, under Article 546 of said code, only a possessor in good faith shall be
refunded for useful expenses with the right of retention until reimbursed; and
under Article 547 thereof, only a possessor in good faith may remove useful
improvements if this can be done without damage to the principal thing and if the
person who recovers the possession does not exercise the option of reimbursing
the useful expenses. The right given a possessor in bad faith to remove
improvements applies only to improvements for pure luxury or mere pleasure,
provided the thing suffers no injury thereby and the lawful possessor does not
prefer to retain them by paying the value they have at the time he enters into
possession (Article 549, Id.).

We, therefore, find that the appellate court committed reversible error in holding that the private
respondent is entitled to exercise the option to pay the value of the disputed area of Lot "B" and
to reimbursement for the value of the demolished portion of his building. We, however, affirm its
ruling that the petitioner's bill of costs must be set aside and that while the resolution of May 16,
1983 included attorney's fees and damages, the necessity of proof cannot be dispensed with.
Since no proof was presented before the trial regarding any of these claims, they cannot be
awarded.

WHEREFORE, the petition is GRANTED and the decision of the court of Appeals dated
September 20, 1985 is ANNULED and SET ASIDE. The writ of attachment issued by the trial
court for the purpose of satisfying the award for damages and the bill of costs is, however,
permanently SET ASIDE.

SO ORDERED.
 G.R. No. 117642 April 24, 1998

EDITHA ALVIOLA and PORFERIO ALVIOLA, Petitioners, vs.HONORABLE COURT OF

APPEALS, FORENCIA BULING Vda de TINAGAN, DEMOSTHENES TINAGAN, JESUS
TINAGAN, ZENAIDA T., JOSEP and JOSEPHINE TINAGAN, Respondents.

MARTINEZ, J.:

In this petition for review on certiorari, petitioners assail the decision 1 of the Court of Appeals
dated April 8, 1994 which affirmed the decision of the lower court ordering petitioners to
peacefully vacate and surrender the possession of the disputed properties to the private
respondents.

Culled from the record are the following antecedent facts of this case to wit:

On April 1, 1950, Victoria Sonjaconda Tinagan purchased from Mauro Tinagan two (2) parcels
of land situated at Barangay Bongbong, Valencia, Negros Oriental. 2 One parcel of land contains
an area of 5,704 square meters, more or less; 3 while the other contains 10,860 square
meters. 4 Thereafter, Victoria and her son Agustin Tinagan, took possession of said parcels of
land.

Sometime in 1960, petitioners occupied portions thereof whereat they built a copra dryer and
put up a store wherein they engaged in the business of buying and selling copra.

On June 23, 1975, Victoria died. On October 26, 1975, Agustin died, survived by herein private
respondents, namely his wife, Florencia Buling Vda. de Tinagan and their children
Demosthenes, Jesus, Zenaida and Josephine, all surnamed Tinagan.

On December 24, 1976, petitioner Editha assisted by her husband filed a complaint for partition
and damages before the then Court of First Instance of Negros Oriental, Branch 1, Dumaguete
City, docketed as Civil Case No. 6634, claiming to be an acknowledged natural child of
deceased Agustin Tinagan and demanding the delivery of her shares in the properties left by
the deceased. 5

On October 4, 1979, the aforesaid case was dismissed by the trial court on the ground that
recognition of natural children may be brought only during the lifetime of the presumed parent
and petitioner Editha did not fall in any of the exceptions enumerated in Article 285 of the Civil
Code. 6

Petitioners assailed the order of dismissal by filing a petition for certiorari and mandamus before
this Court. 7 On August 9, 1982, this Court dismissed the petition for lack of merit. 8 Petitioners
filed a motion for reconsideration but the same was denied on October 19, 1982. 9

On March 29, 1988, private respondents filed a complaint for recovery of possession against
Editha and her husband Porferio Alviola before the Regional Trial Court of Negros Oriental,
Branch 35, Dumaguete City, docketed as Civil Case No. 9148, praying, among others, that they
be declared absolute owners of the said parcels of land, and that petitioners be ordered to
vacate the same, to remove their copra dryer and store, to pay actual damages (in the form of
rentals), moral and punitive damages, litigation expenses and attorney's fees. 10

In their answer, petitioners contend that they own the improvements in the disputed properties
which are still public land; that they are qualified to be beneficiaries of the comprehensive
agrarian reform program and that they are rightful possessors by occupation of the said
properties for more than twenty years. 11

After trial, the lower court rendered judgment in favor of the private respondents, the dispositive
portion of which reads:
WHEREFORE, premises considered, in Civil Case No. 9148, for Recovery of Property, the
court hereby renders judgment:

a) Declaring plaintiffs as the absolute owners of the land in question including the portion
claimed and occupied by defendants;

b) Ordering defendants Editha Alviola and her husband Porfirio Alviola to peacefully vacate and
to surrender the possession of the premises in question to plaintiffs; Defendants may remove
their store and dryer on the premises without injury and prejudice to the plaintiffs;

c) Ordering defendants to pay the following amounts to the plaintiffs:

1. P150.00 monthly rentals from April 1988 up to the time the improvements in the questioned
portions are removed;

2. P5,000.00 for attorney's fees;

3. P3,000.00 for litigation expenses and to pay the costs.

SO ORDERED. 12

Petitioners appealed to the Court of Appeals. On April 8, 1994, the respondent court rendered
its decision, 13 affirming the judgment of the lower court. Petitioners filed a motion for
reconsideration 14but the same was denied by the respondent court in an order dated October 6,
1994. 15

Hence, this petition.

Petitioners aver that respondent court erred in declaring private respondents the owners of the
disputed properties. They contend that ownership of a public land cannot be declared by the
courts but by the Executive Department of the Government, citing the case of Busante
vs. Hon. Court of Appeals, Oct. 20, 1992, 214 SCRA 774; and that the respondent court erred in
not considering that private respondents' predecessor-in-interest, Victoria Sonjaco Tinagan,
during her lifetime, ceded her right to the disputed properties in favor of petitioners.

Moreover, petitioners maintain that the respondent court erred in holding that they were in bad
faith in possessing the disputed properties and in ruling that the improvements thereon are
transferable. They claim that the copra dryer and the store are permanent structures, the walls
thereof being made of hollow-blocks and the floors made of cement.

Private respondents counter that the question of whether or not the disputed properties are
public land has been resolved by overwhelming evidence showing ownership and possession
by the Tinagans and their predecessors-in-interest prior to 1949. They further aver that they
merely tolerated petitioners' possession of the disputed properties for a period which was less
than that required for extraordinary prescription.

The petition must fail.

Petitioners claim that the disputed properties are public lands. This is a factual issue. The
private respondents adduced overwhelming evidence to prove their ownership and possession
of the two (2) parcels of land on portions of which petitioners built the copra dryer and a store.
Private respondents' tax declarations and receipts of payment of real estate taxes, as well as
other related documents, prove their ownership of the disputed properties. As stated previously
in the narration of facts, these two (2) parcels of land were originally owned by Mauro Tinagan,
who sold the same to Victoria S. Tinagan on April 1, 1950, as evidenced by a Deed of
Sale, 16 wherein the two (2) lots, Parcels 1 and 2, are described. 17 Anent Parcel 1, tax
declarations indicate that the property has always been declared in the name of the Tinagans.
The first, Tax Declaration No. 3335 18 is in the name of Mauro Tinagan. It was thereafter
cancelled by Tax Declaration No. 19534 effective 1968, 19 still in the name of Mauro. This
declaration was cancelled by Tax Declaration No. 016740 now in the name of Agustin
Tinagan, 20 effective 1974, followed by Tax Declaration No. 08-421 in the name of Jesus
Tinagan, effective 1980; 21 and finally by Tax Declaration No. 08-816 in the name of Jesus
Tinagan, effective 1985. 22

With regard to Parcel 2, private respondents presented Tax Declaration No. 20973 in the name
of Mauro Tinagan, effective 1959, 23 Tax Declaration No. 016757, effective 1974; 24 Tax
Declaration No. 08-405-C in the name of Agustin Tinagan, effective 1980 25 and Tax Declaration
No. 08-794 in the name of Agustin Tinagan, effective 1985. 26 Moreover, the realty taxes on the
two lots have always been paid by the private respondents. 27There can be no doubt, therefore,
that the two parcels of land are owned by the private respondents.

The record further discloses that Victoria S. Tinagan and her son, Agustin Tinagan, took
possession of the said properties in 1950, introduced improvements thereon, and for more than
40 years, have been in open, continuous, exclusive and notorious occupation thereof in the
concept of owners.

Petitioners' own evidence recognized the ownership of the land in favor of Victoria Tinagan. In
their tax declarations, 28 petitioners stated that the house and copra dryer are located on the
land of Victoria S. Tinagan/Agustin Tinagan. By acknowledging that the disputed portions
belong to Victoria/Agustin Tinagan in their tax declarations, petitioners' claim as owners thereof
must fail.

The assailed decision of the respondent court states that "Appellants do not dispute that the two
parcels of land subject matter of the present complaint for recovery of possession belonged to
Victoria S. Tinagan, the grandmother of herein plaintiffs-appellees; that Agustin Tinagan
inherited the parcels of land from his mother Victoria; and that plaintiffs-appellees, in turn,
inherited the same from Agustin." 29

Taking exception to the aforequoted finding, petitioners contend that while the 2 parcels of land
are owned by private respondents, the portions wherein the copra dryers and store stand were
ceded to them by Victoria S. Tinagan in exchange for an alleged indebtedness of Agustin
Tinagan in the sum of P7,602.04. 30

This claim of the petitioners was brushed aside by the respondent court as merely an
afterthought, thus -

Appellants' claim that they have acquired ownership over the floor areas of the store and dryer
"in consideration of the account of Agustin Tinagan in the sum of P7,602.04" is not plausible. It
is more of an "after-thought" defense which was not alleged in their answer. Although the
evidence presented by them in support of this particular claim was not duly objected to by
counsel for appellees at the proper time and therefore deemed admissible in evidence, an
examination of the oral and documentary evidence submitted in support thereof, reveals the
weakness of their claim.

Appellant testified that the areas on which their store and dryer were located were exchanged
for the amount of P7,602.04 owed to them by Agustin in 1967 (TSN, Hearing of April 14, 1989,
p. 9); that he did not bother to execute a document reflecting such agreement "because they
were our parents and we had used the land for quite sometime already they had also sold their
copra to us for a long time." (id.) Yet, as earlier discussed, the tax declarations in appellants'
answer show that even after 1967, they expressly declared that the parcels of land on which
their store and dryer were constructed, belonged to Victoria and Agustin (Exhs. 2-A, 2-B, 2-C, 3-
A, 3-B). If appellants really believed that they were in possession of the said particular areas in
the concept of owners, they could have easily declared it in said tax declarations. 31

Concededly, petitioners have been on the disputed portions since 1961. However, their stay
thereon was merely by tolerance on the part of the private respondents and their predecessor-
in-interest. The evidence shows that the petitioners were permitted by Victoria Sanjoco Tinagan
to build a copra dryer on the land when they got married. Subsequently, petitioner Editha
Alviola, claiming to be the illegitimate daughter of Agustin Tinagan, filed a petition for partition
demanding her share in the estate of the deceased Agustin Tinagan on December 6, 1976.
However, the petition was dismissed since it was brought only after the death of Agustin
Tinagan. This Court dismissed the petition for certiorari and mandamus filed by petitioner Editha
Alviola on August 9, 1982. It was on March 29, 1988, when private respondents filed this
complaint for recovery of possession against petitioners. Considering that the petitioners'
occupation of the properties in dispute was merely tolerated by private respondents, their
posture that they have acquired the property by "occupation" for 20 years does not have any
factual or legal foundation.

As correctly ruled by the respondent court, there was bad faith on the part of the petitioners
when they constructed the copra dryer and store on the disputed portions since they were fully
aware that the parcels of land belonged to Victoria Tinagan. And, there was likewise bad faith
on the part of the private respondents, having knowledge of the arrangement between
petitioners and Victoria Tinagan relative to the construction of the copra dryer and store. Thus,
for purposes of indemnity, Article 448 of the New Civil Code should be applied. 32 However, the
copra dryer and the store, as determined by the trial court and respondent court, are
transferable in nature. Thus, it would not fall within the coverage of Article 448. As the noted civil
law authority, Senator Arturo Tolentino, aptly explains: "To fall within the provision of this Article,
the construction must be of permanent character, attached to the soil with an idea of perpetuity;
but if it is of a transitory character or is transferable, there is no accession, and the builder must
remove the construction. The proper remedy of the landowner is an action to eject the builder
from the land." 33

The private respondents' action for recovery of possession was the suitable solution to eject
petitioners from the premises.

WHEREFORE, this petition should be, as it is hereby, DISMISSED.

The assailed decision is hereby AFFIRMED.

SO ORDERED.
G.R. No. L-33422 May 30, 1983

ROSENDO BALUCANAG, petitioner,

vs.
HON. JUDGE ALBERTO J. FRANCISCO and RICHARD STOHNER, respondents.

Alfredo C. Estrella for petitioner.

Pascual C. Garcia for respondents.

ESCOLIN, J.:

This petition for review of the decision of the Court of First Instance of Manila in Civil Case No.
67503 calls for a determination of the respective rights of the lessor and the lessee over the
improvements introduced by the latter in the leased premises.

Cecilia dela Cruz Charvet was the owner of a 177.50 square meter lot located in Zamora Street,
Pandacan, Manila, covered by Transfer Certificate of Title No. 25664. On August 31, 1952, Mrs.
Charvet leased said lot to respondent Richard Stohner for a period of five [5] years at the
monthly rental of 2140.00, payable in advance within the first ten [10] days of each month. The
lease contract 1 provided, among others, that:

IV. The lessee may erect such buildings upon and make such improvements to
the leased land as he shag see fit. All such buildings and improvements shall
remain the property of the lessee and he may remove them at any nine, it being
agreed, however, that should he not remove the said buildings and
improvements within a period of two months after the expiration of this
Agreement, the Lessor may remove the said buildings and improvements or
cause them to be removed at the expense of the Lessee.

During the existence of the lease, Stohner made fillings on the land and constructed a house
thereon, said improvements being allegedly valued at P35,000.00.

On March 8, 1966, Mrs. Charvet sold the said lot to petitioner Rosendo Balucanag.2

For Stohner's failure to pay the rents, Balucanag, thru counsel, wrote Stohner a letter
demanding that he vacate the premises. 3 In reply thereto, Stohner, also thru counsel, claimed
that he was a builder in good faith of the residential house erected in the land. He offered the
following proposals for a possible compromise, to wit:

[a] Mr. Stohner will purchase the said lot from your client with the interest of 12%
per annum on the value, or

[b] Your client Mr. Rosendo Balucanag will reimburse our client in the total
amount of P35,000.00 for the improvements and construction he has made on
the lot in question.

As no agreement was reached, Balucanag instituted in the City Court of Manila an ejectment
suit against Stohner and, after due trial, the court rendered a decision, the decretal portion of
which reads as follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby

rendered, ordering the defendant to pay the plaintiff the sum of P360.00 as back
rentals from December, 1965 to August 1966 at the rate of P40.00 a month and
to vacate the premises. The defendant is further ordered to pay the sum of
P100.00 as Attomey's fees which is considered reasonable within the premises.
On appeal, the Court of First Instance of Manila, Branch IX, presided by respondent Judge
Alberto J. Francisco, after conducting a trial de novo, rendered a decision, setting aside the
judgment of the city court and dismissing the petitioner's complaint. Respondent judge held that
Stohner was a builder in good faith because he had constructed the residential house with the
consent of the original lessor, Mrs. Charvet, and also because the latter, after the expiration of
the lease contract on August 31, 1957, had neither sought Stohner's ejectment from the
premises, nor the removal of his house therefrom. Invoking Articles 448 and 546 of the Civil
Code. 4 respondent judge concluded that Stohner, being a builder in good faith, cannot be
ejected until he is reimbursed of the value of the improvements.

Frustrated in his effort to have the decision reconsidered, Balucanag filed the instant petition for
review.

We find the petition impressed with merit. Paragraph IV of the lease contract entered into by
Stohner with Mrs. Charvet specifically provides that "... such buildings and improvements shan
remain the property of the lessee and he may remove them at any time, it being agreed,
however, that should he not remove the said buildings and improvements within a period of two
months after the expiration of this Agreement, the Lessor may remove the said buildings and
improvements or cause them to be removed at the expense of the Lessee." Respondent
Stohner does not assail the validity of this stipulation, Neither has he advanced any reason why
he should not be bound by it.

But even in the absence of said stipulation, respondent Stohner cannot be considered a builder
in good faith. Article 448 of the Civil Code, relied upon by respondent judge, applies only to a
case where one builds on land in the belief that he is the owner thereof and it does not apply
where one's only interest in the land is that of a lessee under a rental contract. In the case at
bar, there is no dispute that the relation between Balucanag and Stohner is that of lessor and
lessee, the former being the successor in interest of the original owner of the lot. As we ruled
in Lopez, Inc. vs. Phil. and Eastern Trading Co., Inc., 5 "... the principle of possessor in good
faith refers only to a party who occupies or possess property in the belief that he is the owner
thereof and said good faith ends only when he discovers a flaw in his title so as to reasonably
advise or inform him that after all he may not be the legal owner of said property. It cannot apply
to a lessee because as such lessee he knows that he is not the owner of he leased premises.
Neither can he deny the ownership or title of his lessor. ... A lessee who introduces
improvements in the leased premises, does so at his own risk in the sense that he cannot
recover their value from the lessor, much less retain the premises until such reimbursement. ..."

The law applicable to the case at bar is Article 1678 of the Civil Code, which We quote:

Art. 1678. If the lessee makes, in good faith, useful improvements which are
suitable to the use for which the lease is intended, without altering the form or
substance of the property leased, the lessor upon the termination of the lease
shall pay the lessee one-half of the value of the improvements at the time.
Should the lessor refuse to reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer damage thereby. He
shall not, however, cause any more impairment upon the property leased than is
necessary. ...

This article gives the lessor the option to appropriate the useful improvements by paying one-
half of their value, 6And the lessee cannot compel the lessor to appropriate the improvements
and make reimbursement, for the lessee's right under the law is to remove the improvements
even if the leased premises may suffer damage thereby. But he shall not cause any more
damage upon the property than is necessary.

One last point. It appears that while the lease contract entered into by Stohner and Mrs. Charvet
had expired on August 31, 1957, he nevertheless continued in possession of the premises with
the acquiescence of Mrs. Charvet and later, of Balucanag. An implied new lease or tacita
reconduccion was thus created between the parties, the period of which is established by Article
1687 of the Civil Code thus:
 Art. 1687. If the period for the lease has not been fixed, it is understood to be
from year to year, if the rent agreed upon is annual; from month to month, if it is
monthly: from week to week, if the rent is weekly: and from day to day, if the rent
is to be paid daily. ...

Under the above article, the duration of the new lease must be deemed from month to month,
the agreed rental in the instant case being payable on a monthly basis. The lessor may thus
terminate the lease after each month with due notice upon the lessee. After such notice, the
lessee's right to continue in possession ceases and his possession becomes one of detainer.
Furthermore, Stohner's failure to pay the stipulated rentals entities petitioner to recover
possession of the premises.

WHEREFORE, the decision in Civil Case No. 67503 is hereby set aside, with costs against
respondent Stohner. The latter is ordered to vacate the premises in question and to pay Rogelio
Balucanag the rentals due from March 1969 up to the time he surrenders the premises, at the
rate of P40.00 a month.

SO ORDERED.

Makasiar (Chairman), Aquino, Concepcion, Jr., and Guerrero, JJ., concur.

De Castro, J., took no part.

Separate Opinions

ABAD SANTOS, J., concurring and dissenting:

I concur in setting aside the decision in Civil Case No. 67503 of the defunct Court of First
Instance of Manila; and in ordering the respondent Stohner to pay the costs, to vacate the
premises in question, and to pav the petitioner the rentals due from March 1969 to the time he
surrenders the premises at the rate of P40.00 monthly. However, I cannot give my assent to that
portion of the judgment with respect to the house constructed by Stohner.

Stohner as a lessee is not a builder in good faith. This is elementary in property law.

Article 1678 of the Civil Code concerning improvements made by the lessee on the leased
premises applies only in the absence of stipulation on the matter between the lessor and the
lessee. In the instant case theres such a stipulation. A copy of the Lease Agreement which is
found on page 13 of the Rollo reads:

IV. The lessee may erect such buildings upor and make such improvements to
the leased land as he shall see fit. AR such buildings and improvements shall
remain the property of the lessee and he may remove them at any nine, it being
agreed, however, that should he not remove the 96d buildings and improvements
within a period of two months after the expiration of this Agreement, the Lessor
may remove the said buildings and improvements or cause them to be removed
at the expense of the Lessee.

The above-quoted stipulation has the force of law between the parties (Art. 1159, Civil Code)
and supersedes Art. 1678 of the Civil Code. Accordingly, the judgment with respect to the house
which was constructed by Stohner should be in line with the contract of lease.
Separate Opinions

ABAD SANTOS, J., concurring and dissenting:

I concur in setting aside the decision in Civil Case No. 67503 of the defunct Court of First
Instance of Manila; and in ordering the respondent Stohner to pay the costs, to vacate the
premises in question, and to pav the petitioner the rentals due from March 1969 to the time he
surrenders the premises at the rate of P40.00 monthly. However, I cannot give my assent to that
portion of the judgment with respect to the house constructed by Stohner.

Stohner as a lessee is not a builder in good faith. This is elementary in property law.

Article 1678 of the Civil Code concerning improvements made by the lessee on the leased
premises applies only in the absence of stipulation on the matter between the lessor and the
lessee. In the instant case theres such a stipulation. A copy of the Lease Agreement which is
found on page 13 of the Rollo reads:

IV. The lessee may erect such buildings upor and make such improvements to
the leased land as he shall see fit. AR such buildings and improvements shall
remain the property of the lessee and he may remove them at any nine, it being
agreed, however, that should he not remove the 96d buildings and improvements
within a period of two months after the expiration of this Agreement, the Lessor
may remove the said buildings and improvements or cause them to be removed
at the expense of the Lessee.

The above-quoted stipulation has the force of law between the parties (Art. 1159, Civil Code)
and supersedes Art. 1678 of the Civil Code. Accordingly, the judgment with respect to the house
which was constructed by Stohner should be in line with the contract of lease.
G.R. No. 134329 January 19, 2000

VERONA PADA-KILARIO and RICARDO KILARIO, petitioners,

vs.
COURT OF APPEALS and SILVERIO PADA, respondents.

DE LEON, JR., J.:

The victory1 of petitioner spouses Ricardo and Verona Kilario in the Municipal Circuit Trial
Court2 in an ejectment suit3 filed against them by private respondent Silverio Pada, was foiled by
its reversal4 by the Regional Trial Court5on appeal. They elevated their cause6 to respondent
Court of Appeals7 which, however, promulgated a Decision8 on May 20, 1998, affirming the
Decision of the Regional Trial Court.

The following facts are undisputed:

One Jacinto Pada had six (6) children, namely, Marciano, Ananias, Amador, Higino, Valentina
and Ruperta. He died intestate. His estate included a parcel of land of residential and coconut
land located at Poblacion, Matalom, Leyte, denominated as Cadastral Lot No. 5581 with an area
of 1,301.92 square meters. It is the northern portion of Cadastral Lot No. 5581 which is the
subject of the instant controversy.

During the lifetime of Jacinto Pada, his half-brother, Feliciano Pada, obtained permission from
him to build a house on the northern portion of Cadastral Lot No. 5581. When Feliciano died, his
son, Pastor, continued living in the house together with his eight children. Petitioner Verona
Pada-Kilario, one of Pastor's children, has been living in that house since 1960.

Sometime in May, 1951, the heirs of Jacinto Pada entered into an extra-judicial partition of his
estate. For this purpose, they executed a private document which they, however, never
registered in the Office of the Registrar of Deeds of Leyte.

At the execution of the extra-judicial partition, Ananias was himself present while his other
brothers were represented by their children. Their sisters, Valentina and Ruperta, both died
without any issue. Marciano was represented by his daughter, Maria; Amador was represented
by his daughter, Concordia; and Higina was represented by his son, Silverio who is the private
respondent in this case. It was to both Ananias and Marciano, represented by his daughter,
Maria, that Cadastral Lot No. 5581 was allocated during the said partition. When Ananias died,
his daughter, Juanita, succeeded to his right as co-owner of said property.

On June 14, 1978, Juanita Pada sold to Engr. Ernesto Paderes, the right of his father, Ananias,
as co-owner of Cadastral Lot No. 5881.

On November 17, 1993, it was the turn of Maria Pada to sell the co-ownership right of his father,
Marciano. Private respondent, who is the first cousin of Maria, was the buyer.

Thereafter, private respondent demanded that petitioner spouses vacate the northern portion of
Cadastral Lot No. 5581 so his family can utilize the said area. They went through a series of
meetings with the barangay officials concerned for the purpose of amicable settlement, but all
earnest efforts toward that end, failed.

On June 26, 1995, private respondent filed in the Municipal Circuit Trial Court of Matalom,
Leyte, a complaint for ejectment with prayer for damages against petitioner spouses.

On July 24, 1995, the heirs of Amador Pada, namely, Esperanza Pada-Pavo, Concordia Pada-
Bartolome, and Angelito Pada, executed a Deed of Donation9 transferring to petitioner Verona
Pada-Kilario, their respective shares as co-owners of Cadastral Lot No. 5581.

On February 12, 1996, petitioner spouses filed their Answer averring that the northern portion of
Cadastral Lot No. 5581 had already been donated to them by the heirs of Amador Pada. They
contended that the extra-judicial partition of the estate of Jacinto Pada executed in 1951 was
invalid and ineffectual since no special power of attorney was executed by either Marciano,
Amador or Higino in favor of their respective children who represented them in the extra-judicial
partition. Moreover, it was effectuated only through a private document that was never
registered in the office of the Registrar of Deeds of Leyte.

The Municipal Circuit Trial Court rendered judgment in favor of petitioner spouses. It made the
following findings:

After a careful study of the evidence submitted by both parties, the court finds that the
evidence adduced by plaintiff failed to establish his ownership over . . . Cadastral Lot No.
5581 . . . while defendants has [sic] successfully proved by preponderance of evidence
that said property is still under a community of ownership among the heirs of the late
Jacinto Pada who died intestate. If there was some truth that Marciano Pada and
Ananias Pada has [sic] been adjudicated jointly of [sic] the above-described residential
property . . . as their share of the inheritance on the basis of the alleged extra judicial
settlement, how come that since 1951, the date of partition, the share of the late
Marciano Pada was not transferred in the name of his heirs, one of them Maria Pada-
Pavo and still remain [sic] in the name of Jacinto Pada up to the present while the part
pertaining to the share of Ananias Pada was easily transferred in the name of his heirs .
. ..

The alleged extra judicial settlement was made in private writing and the genuineness
and due execution of said document was assailed as doubtful and it appears that most
of the heirs were not participants and signatories of said settlement, and there was lack
of special power of attorney to [sic] those who claimed to have represented their co-heirs
in the participation [sic] and signing of the said extra judicial statement.

Defendants were already occupying the northern portion of the above-described

property long before the sale of said property on November 17, 1993 was executed
between Maria Pada-Pavo, as vendor and the plaintiff, as vendee. They are in
possession of said portion of the above-described property since the year 1960 with the
consent of some of the heirs of Jacinto Pada and up to the [sic] present some of the
heirs of Jacinto Pada has [sic] donated . . . their share of [sic] the above-described
property to them, virtually converting defendants' standing as co-owners of the land
under controversy. Thus, defendants as co-owners became the undivided owners of the
whole estate . . . . As co-owners of . . . Cadastral Lot No. 5581 . . . their possession in
the northern portion is being [sic] lawful.10

From the foregoing decision, private respondent appealed to the Regional Trial Court. On
November 6, 1997, it rendered a judgment of reversal. It held:

. . . [T]he said conveyances executed by Juanita Pada and Maria Pada Pavo were never
questioned or assailed by their co-heirs for more than 40 years, thereby lending
credence on [sic] the fact that the two vendors were indeed legal and lawful owners of
properties ceded or sold. . . . At any rate, granting that the co-heirs of Juanita Pada and
Maria Pada Pavo have some interests on the very lot assigned to Marciano and
Ananias, nevertheless, said interests had long been sadly lost by prescription, if not
laches or estoppel.

It is true that an action for partition does not prescribe, as a general rule, but this doctrine
of imprescriptibility cannot be invoked when one of the heirs possessed the property as
an owner and for a period sufficient to acquire it by prescription because from the
moment one of the co-heirs claim [sic] that he is the absolute owner and denies the rest
their share of the community property, the question then involved is no longer one for
partition but of ownership. . . . Since [sic] 1951 up to 1993 covers a period of 42 long
years. Clearly, whatever right some of the co-heirs may have, was long extinguished by
laches, estoppel or prescription.

xxx xxx xxx

. . . [T]he deed of donation executed by the Heirs of Amador Pada, a brother of Marciano
Pada, took place only during the inception of the case or after the lapse of more than 40
 years reckoned from the time the extrajudicial partition was made in 1951. Therefore,
said donation is illegal and invalid [sic] the donors, among others, were absolutely bereft
of any right in donating the very property in question.11

The dispositive portion of the decision of the Regional Trial Court reads as follows:

WHEREFORE, a judgment is hereby rendered, reversing the judgment earlier

promulgated by the Municipal Circuit Trial Court of Matalom, Leyte, [sic] consequently,
defendants-appellees are hereby ordered:

1. To vacate the premises in issue and return peaceful possession to the appellant,
being the lawful possessor in concept of owner;

2. To remove their house at their expense unless appellant exercises the option of
acquiring the same, in which case the pertinent provisions of the New Civil Code has to
be applied;

3. Ordering the defendants-appellees to pay monthly rental for their occupancy and use
of the portion of the land in question in the sum of P100.00 commencing on June 26,
1995 when the case was filed and until the termination of the present case;

4. Ordering the defendants to pay to the appellant the sum of P5,000.00 as moral
damages and the further sum of P5,000.00 as attorney's fees;

5. Taxing defendants to pay the costs of suit.12

Petitioners filed in the Court of Appeals a petition for review of the foregoing decision of the
Regional Trial Court.

On May 20, 1998, respondent Court of Appeals rendered judgment dismissing said petition. It
explained:

Well-settled is the rule that in an ejectment suit, the only issue is possession de facto or
physical or material possession and not de jure. Hence, even if the question of
ownership is raised in the pleadings, the court may pass upon such issue but only to
determine the question of possession, specially if the former is inseparably linked with
the latter. It cannot dispose with finality the issue of ownership, such issue being inutile
in an ejectment suit except to throw light on the question of possession . . . .

Private respondent Silverio Pada anchors his claim to the portion of the land possessed
by petitioners on the Deed of Sale executed in his favor by vendor Maria Pada-Pavo, a
daughter of Marciano, son of Jacinto Pada who was the registered owner of the subject
lot. The right of vendee Maria Pada to sell the property was derived from the extra-
judicial partition executed in May 1951 among the heirs of Jacinto Pada, which was
written in a Bisayan dialect signed by the heirs, wherein the subject land was
adjudicated to Marciano, Maria Pavo's father, and Ananias Pada. Although the
authenticity and genuineness of the extra-judicial partition is now being questioned by
the heirs of Amador Pada, no action was ever previously filed in court to question the
validity of such partition.1âwphi1.nêt

Notably, petitioners in their petition admitted among the antecedent facts that Maria
Pavo is one of the co-owners of the property originally owned by Jacinto Pada . . . and
that the disputed lot was adjudicated to Marciano (father of Maria Pavo) and Ananias,
and upon the death of Marciano and Ananias, their heirs took possession of said lot, i.e.
Maria Pavo the vendor for Marciano's share and Juanita for Ananias' share . . . .
Moreover, petitioners do not dispute the findings of the respondent court that during the
cadastral survey of Matalom, Leyte, the share of Maria Pada Pavo was denominated as
Lot No. 5581, while the share of Juanita Pada was denominated as Lot No. 6047, and
that both Maria Pada Pavo and Juanita were in possession of their respective hereditary
shares. Further, petitioners in their Answer admitted that they have been occupying a
portion of Lot No. 5581, now in dispute without paying any rental owing to the liberality of
 the plaintiff . . . . Petitioners cannot now impugn the aforestated extrajudicial partition
executed by the heirs in 1951. As owner and possessor of the disputed property, Maria
Pada, and her vendee, private respondent, is entitled to possession. A voluntary division
of the estate of the deceased by the heirs among themselves is conclusive and confers
upon said heirs exclusive ownership of the respective portions assigned to them . . ..

The equally belated donation of a portion of the property in dispute made by the heirs of
Amador Pada, namely, Concordia, Esperanza and Angelito, in favor of petitioner Verona
Pada is a futile attempt to confer upon the latter the status of co-owner, since the donors
had no interest nor right to transfer. . . . This gesture appears to be a mere afterthought
to help petitioners to prolong their stay in the premises. Furthermore, the respondent
court correctly pointed out that the equitable principle of laches and estoppel come into
play due to the donors' failure to assert their claims and alleged ownership for more than
forty (40) years . . . . Accordingly, private respondent was subrogated to the rights of the
vendor over Lot No. 5581 which include [sic] the portion occupied by petitioners.13

Petitioner spouses filed a Motion for Reconsideration of the foregoing decision.

On June 16, 1998, respondent Court of Appeals issued a Resolution denying said motion.

Hence this petition raising the following issues:

I.

WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT

PETITIONERS, AS CO-OWNERS, CANNOT BE EJECTED FROM THE PREMISES
CONSIDERING THAT THE HEIRS OF JACINTO PADA DONATED TO THEM THEIR
UNDIVIDED INTEREST IN THE PROPERTY IN DISPUTE.

II.

WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT WHAT MARIA
PADA SOLD WAS HER UNDIVIDED SHARE IN THE PROPERTY IN DISPUTE.

III.

WHETHER OR NOT THE PETITIONERS ARE BUILDERS IN GOOD FAITH.14

There is no merit to the instant petition.

First. We hold that the extrajudicial partition of the estate of Jacinto Pada among his heirs made
in 1951 is valid, albeit executed in an unregistered private document. No law requires partition
among heirs to be in writing and be registered in order to be valid.15 The requirement in Sec. 1,
Rule 74 of the Revised Rules of Court that a partition be put in a public document and
registered, has for its purpose the protection of creditors and the heirs themselves against tardy
claims.16 The object of registration is to serve as constructive notice to others. It follows then that
the intrinsic validity of partition not executed with the prescribed formalities is not undermined
when no creditors are involved.17 Without creditors to take into consideration, it is competent for
the heirs of an estate to enter into an agreement for distribution thereof in a manner and upon a
plan different from those provided by the rules from which, in the first place, nothing can be
inferred that a writing or other formality is essential for the partition to be valid.18 The partition of
inherited property need not be embodied in a public document so as to be effective as regards
the heirs that participated therein.19 The requirement of Article 1358 of the Civil Code that acts
which have for their object the creation, transmission, modification or extinguishment of real
rights over immovable property, must appear in a public instrument, is only for convenience,
non-compliance with which does not affect the validity or enforceability of the acts of the parties
as among themselves.20 And neither does the Statute of Frauds under Article 1403 of the New
Civil Code apply because partition among heirs is not legally deemed a conveyance of real
property, considering that it involves not a transfer of property from one to the other but rather, a
confirmation or ratification of title or right of property that an heir is renouncing in favor of
another heir who accepts and receives the inheritance.21 The 1951 extrajudicial partition of
Jacinto Pada's estate being legal and effective as among his heirs, Juanita and Maria Pada
validly transferred their ownership rights over Cadastral Lot No. 5581 to Engr. Paderes and
private respondent, respectively.22

Second. The extrajudicial partition which the heirs of Jacinto Pada executed voluntarily and
spontaneously in 1951 has produced a legal status.23 When they discussed and agreed on the
division of the estate Jacinto Pada, it is presumed that they did so in furtherance of their mutual
interests. As such, their division is conclusive, unless and until it is shown that there were debts
existing against the estate which had not been paid.24 No showing, however, has been made of
any unpaid charges against the estate of Jacinto Pada. Thus, there is no reason why the heirs
should not be bound by their voluntary acts.

The belated act of Concordia, Esperanza and Angelito, who are the heirs of Amador Pada, of
donating the subject property to petitioners after forty four (44) years of never having disputed
the validity of the 1951 extrajudicial partition that allocated the subject property to Marciano and
Ananias, produced no legal effect. In the said partition, what was allocated to Amador Pada was
not the subject property which was a parcel of residential land in Sto. Nino, Matalom, Leyte, but
rather, one-half of a parcel of coconut land in the interior of Sto. Nino St., Sabang, Matalom,
Leyte and one-half of a parcel of rice land in Itum, Sta. Fe, Matalom, Leyte. The donation made
by his heirs to petitioners of the subject property, thus, is void for they were not the owners
thereof. At any rate it is too late in the day for the heirs of Amador Pada to repudiate the legal
effects of the 1951 extrajudicial partition as prescription and laches have equally set in.

Third. Petitioners are estopped from impugning the extrajudicial partition executed by the heirs
of Jacinto Pada after explicitly admitting in their Answer that they had been occupying the
subject property since 1960 without ever paying any rental as they only relied on the liberality
and tolerance of the Pada family.25 Their admissions are evidence of a high order and bind them
insofar as the character of their possession of the subject property is concerned.

Considering that petitioners were in possession of the subject property by sheer tolerance of its
owners, they knew that their occupation of the premises may be terminated any time. Persons
who occupy the land of another at the latter's tolerance or permission, without any contract
between them, is necessarily bound by an implied promise that they will vacate the same upon
demand, failing in which a summary action for ejectment is the proper remedy against
them.26 Thus, they cannot be considered possessors nor builders in good faith. It is well-settled
that both Article 44827 and Article 54628 of the New Civil Code which allow full reimbursement of
useful improvements and retention of the premises until reimbursement is made, apply only to a
possessor in good faith, i.e., one who builds on land with the belief that he is the owner
thereof.29 Verily, persons whose occupation of a realty is by sheer tolerance of its owners are
not possessors in good faith. Neither did the promise of Concordia, Esperanza and Angelito
Pada that they were going to donate the premises to petitioners convert them into builders in
good faith for at the time the improvements were built on the premises, such promise was not
yet fulfilled, i.e., it was a mere expectancy of ownership that may or may not be realized.30 More
importantly, even as that promise was fulfilled, the donation is void for Concordia, Esperanza
and Angelito Pada were not the owners of Cadastral Lot No. 5581. As such, petitioners cannot
be said to be entitled to the value of the improvements that they built on the said lot.

WHEREFORE, the petition for review is HEREBY DENIED.

Costs against petitioners.

SO ORDERED.
G.R. No. L-25359 September 28, 1968

ARADA LUMUNGO, JUHURI DAWA, ET AL., petitioners,

vs.
ASAAD USMAN, JOSE ANGELES and DOMINGA USMAN, ET AL., respondents.

Dominador Sobreviñas for petitioners.

Marciano Almario for respondents.

CONCEPCION, C.J.:

Review on certiorari of a decision of the Court of Appeals, on appeal from a decision of the
Court of First Instance of Sulu in Civil Cases Nos. 155 and 156 of said court, both instituted by
plaintiffs herein, Arada Lumungo (deceased), substituted by her heirs, Juhuri Dawa, Kayajuja,
Sadatul, Sarapatul, Jaramatul, Alma, Kalukasa and Vicente, all surnamed Juhuri to recover the
possession of lot No. 871 of the Siasi Cadastre, in the first case, and in the second, of lots Nos.
892, 893, 894 and 1121 of the same cadastre. The defendants in case No. 155 are Asaad
Usman, Akmadul and Hada, whereas those in case No. 156 are Asaad Usman, Fatima
Angeles, Hadjaratul Julkanain, Inkiran and Sitti Haridja, who were subsequently joined by
Dominga Usman and Jose Angeles, as defendants-intervenors.

After a joint trial of the two (2) cases, the Court of First Instance of Sulu rendered a decision, the
dispositive part of which reads as follows:

WHEREFORE, judgment is hereby rendered declaring plaintiffs to have a better right to

the possession of Lots Nos. 892, 893, 894, 1121 and 871, Siasi and Lapak Cadastral
Survey, located at Lapak, Siasi, Sulu and described in Transfer Certificates of Title Nos.
T-419, T-422, T-420 and T-421 and Original Certificate of Title No. 8023. The
defendants are ordered to vacate said lots in favor of the plaintiffs if they have not
already done so.

On the other hand, the plaintiffs are ordered to reimburse to the defendant-intervenor,
JOSE ANGELES, the sum of P4,500.00 representing the value of the 3,000 coconut
trees introduced by him and his predecessors in interest on Lots 892, 893 and 894.
Should plaintiffs fail to do so within ninety (90) days from the date this decision becomes
final, the three lots shall be ordered sold at public auction, the proceeds of which shall be
applied to the P4,500.00 herein adjudged to Jose Angeles, and the balance to be
delivered to the plaintiffs.

Both parties appealed from this decision to the Court of Appeals, but, later, the defendants
withdrew their appeal, which, accordingly, was dismissed. Thus the only question left for
determination by the Court of Appeals was plaintiffs' appeal from the trial court's decision,
insofar as it sentenced them to pay P4,500.00 to intervenor Jose Angeles. After appropriate
proceedings, the Court of Appeals reduced this amount to P2,500.00 and affirmed the decision
of the Court of First Instance in all other respects, with costs against defendants-intervenors.
The case is now before us upon petition for review on certiorari filed by the plaintiffs.

The pertinent facts are set forth in the decision of the trial court, which were adopted in that of
the Court of Appeals, from which we quote:

It ... appears that, having allegedly collaborated with the enemy during the Japanese
Occupation of Sulu, Datu Idiris Amilhussin was arrested and detained when the
American Liberation Forces came to Sulu in the year 1945. On March 1, 1946, Datu
Idiris was prosecuted for Treason before the People's Court, docketed as Criminal Case
No. 1334 in said Court. Justice of the Peace Asaad Usman of Siasi and his wife
Dominga Usman, became interested in Lots Nos. 892, 893, 894, 1121 and 871.
Jamasali Usman, brother of Atty. Asaad Usman, also became interested in Lot No.
1226(?). Datu Idiris was desperately in need of money to pay his attorney's fees and the
 premium on his bailbond. He sent his wife to Jamasali for money. Jamasali proposed to
buy Lot No. 1227(?). Upon the execution of a Pacto de Retro sale (Exhibit "DDD"),
Jamasali gave Datu Idiris partial payments of the P3,000.00 mentioned in the document.
Sometime in the year 1946, Atty. Usman visited Datu Idiris in the Provincial jail and
promised to help him in his case and to secure his bailbond for his temporary liberty. But
Atty. Usman asked Datu Idiris to sell to his wife, Dominga Miranda Usman, the five lots
in question. Datu Idiris agreed.

Through the help of Atty. Usman, the bailbond of Datu Idiris was perfected.
Consequently, on January 11, 1947, he was released from the Provincial Jail. True to his
word, on March 14, 1947, Datu Idiris executed an agreement with Dominga Usman
(Exhibit "33"). He also caused Datu Amirul Amilhussin, brother of Datu Idiris, to sign a
similar document, being one of the co-owners of said lots (Exh. "34"). Upon execution of
the agreement, Dominga Usman paid Datu Idiris P300.00; subsequently, Atty. Usman
paid him P500.00 and P10.00. Thus, Datu Idiris received all in all from the spouses,
P810.00 in consideration of the tenor stated in the document, Exhibit "33". In the
meantime, Atty. Usman took possession of the five lots in question and cultivated the
same.

As the whole amount of P3,000.00 mentioned in the sale of Pacto de Retro executed by
Datu Idiris in favor of Jamasali Usman was not fully paid, Datu Idiris upon his being
released from confinement, demanded from Jamasali to complete payment. He also
demanded from Atty. Usman the payment of the balance of the purchase price of the
lots described in Exhibit "33". After Datu Idiris had been repeatedly refused said
payments by both Jamasali and Atty. Usman, he became exasperated. He wrote two
complaints, one to the Secretary of Justice, dated June 15, 1946, and the other, to the
President of the Philippines, dated March 8, 1948, complaining against Justice of the
Peace Asaad Usman and Jamasali Usman. After filing these complaints, Justice of the
Peace Usman immediately caused the revocation of the bailbond of Datu Idiris before
the People's Court. On March 31, 1948, he was rearrested and committed to the
Provincial Jail again. A serious misunderstanding developed between Datu Idiris on one
hand and Atty. Usman and Jamasali Usman on the other. Several complaints for murder
were caused to be filed before the Court of Justice of the Peace Usman against Datu
Idiris. In the meantime, Atty. Usman wrote letters of demand upon Datu Idiris asking him
to produce the titles to the above five lots to enable him to have a sufficient deed of sale
conveying the said five lots in favor of his wife. Datu Idiris on the other hand, had been
demanding from Atty. Usman to pay the balance of the purchase price of the land.
Despite those mutual demands, no one complied therewith. On December 10, 1951,
Datu Idiris proposed, thru Atty. Flor, to call off the deal, stated in documents, Exhibits
"33" and "34", promising to return the P810.00 which he received from the spouses.
Dominga Usman and Atty. Usman agreed to call off the deal. Datu Idiris however, never
paid the P810.00. Despite this. Dominga Usman and Atty. Usman never went to Court to
file an action to compel Datu Idiris either to comply with his obligation to execute and
deliver a good and sufficient deed conveying titles to the five lots in question, or to pay
back the P810.00. What Dominga Usman did when Datu Idiris failed to pay her the
P810.00 was to sell lots 892, 893 and 894 to Jose Angeles for P1,000.00. Jose Angeles,
upon taking possession of the land, planted same with coconuts, which, together with
those already planted by Dominga Usman, numbered about 3,000, most of which are
now fruit-bearing.

On Feb. 2, 1962, Datu Idiris filed a civil complaint against Atty. Asaad Usman for recovery of
possession of the five lots in question which was docketed as Civil Case No. 87 of this Court.
Atty. Usman, instead of informing the Court that he and his wife had the legal right to possess
those lots by virtue of the agreement had between Datu Idiris and his wife embodied in Exhibit
"33", manifested in open Court on September 26, 1952, that he was not interested in the
posession or ownership of the land, and that he did not buy the land from Datu Idiris. So, on
said date, this Court dictated an order as follows:

"In Open Court, when this case was called for hearing, the defendant Attorney Asaad
Usman manifested that he does not claim ownership nor possession to the two parcels
of land described in paragraph 2 of the complaint of the plaintiff. Thereupon, the plaintiff
(moved) the Court to enter judgment, to which motion the defendant interposed no
 objection. Such being the case, the Court has no alternative but to enter judgment as it
is hereby entered in favor of the plaintiff Datu Idiris Amilhussin, and against the
defendant — declaring the plaintiff the owner and possessor of the two parcels of land
above mentioned, and inasmuch as the defendant is not in possession of the land, the
Court finds it unnecessary to enter an order ejecting the said defendant from the two
parcels of land, without prejudice to any claim of any other third party, without
pronouncement as to costs.

On the other hand, the defendant moved for the dismissal of his counterclaim. The Court
orders the dismissal of the same, also without pronouncement as to cost."1awphîl.nèt

Upon the promulgation of the above-quoted judgment, Datu Idiris, who was badly in need of
money, went around, offering to sell the land to another. Spouses Juhuri Dawa and Arada
Lumungo being interested in acquiring those lots, asked Atty. Dominador Sobreviñas to verify if
they could buy the same. Atty. Sobreviñas went to the Office of the Register of Deeds and found
no annotation of encumbrances on the Original Certificates of Title of the five lots.
Besides, since the Court had already adjudged in the above-quoted order that Atty. Usman did
not have any claim of possession or ownership over the land, and that he did not buy the land
from Datu Idiris, Atty. Sobreviñas advised his clients that they may buy the lots. Accordingly, a
deed of sale, Exhibits "L" to "L-2", was executed. Upon presentation of this deed of sale to the
Register of Deeds, Original Certificates of Title Nos. 8986, 8123, 8087 and 8122 were cancelled
and in lieu thereof, Transfer Certificates of Title Nos. T-419, T-420, T-422, and T-421 were
issued in the names of the plaintiffs. Plaintiffs took possession of the property, but they were
allegedly driven from the land. About three years ago, the defendants left Lots Nos. 892, 893,
894 and 1121. Plaintiffs took possession thereof. The defendants are still in possession of Lot
No. 871.1

Defendants maintained in the Court of Appeals that the sale made by Datu Idiris Amilhussin to
plaintiffs Arada Lumungo and Juhuri Dawa, on September 30, 1952, is null and void because
the lots thus sold had previously been conveyed by Datu Idiris and Datu Amirul Amilhussin to
intervenor Dominga Usman, wife of defendant Asaad Usman, and because the sale to said
plaintiffs was not approved by the provincial governor of Sulu, as required by the Administrative
Code of Mindanao and Sulu. The Court of Appeals overruled these objections upon the ground
that the sale to Dominga Usman "did not materialize" and was "called off" by mutual agreement
of the vendors and the vendee, and that said lack of approval by the provincial governor is a
defense available to the contracting parties only, not to the defendants herein who are not
parties to said transaction. Then the Court of Appeals went on to say:

Upon the other hand, it is to be noted that when intervenor Dominga Usman who
claimed to have purchased the lots in question from one of the original owners, sold and
transferred her alleged ownership over the same to her co-intervenor Jose Angeles, the
latter made the purchase with the knowledge that the property subject matter of the sale
was already in dispute by and between herein defendants, one of whom is the husband
of intervener Dominga Usman, on the one hand, and herein plaintiffs on the other.
Nevertheless, as well stated by the court a quo, equity should come in to protect the
rights of intervenor Jose Angeles who introduced some improvements on three of the
lots subject-matter of the litigation, namely, lots Nos. 892, 893 and 894.

The Court found for a fact that around 3,000 coconut trees were planted on those lots
aforementioned, some of them already fruit-bearing. It appears from the records that not
all, but a portion, of the 3,000 were planted by intervenor Jose Angeles. The value
placed by the lower court of P1.50 per fruit-bearing coconut tree is reasonable enough,
inasmuch as the lower court was in a better position to make the assessment, it being
more closely in contact with the conditions and circumstances of the locality. We are not
prepared to disturb such finding for lack of evidence to warrant such an action on our
part.

IN VIEW OF THE FOREGOING CONSIDERATIONS, with the only modification that the
amount of indemnity should be reduced from P4,500.00 to P2,500.00, the rest of the
judgment appealed from is hereby affirmed with costs against defendants-intervenors.2
The only issue posed by plaintiffs' petition for review is whether or not Jose Angeles is entitled
to reimbursement for the coconut trees planted by him on the property in litigation. In this
connection, it should be noted that said trees are improvements, not "necessary expenses of
preservation," which a builder, planter or sower in bad faith may recover under Arts. 452 and
546, first paragraph, of the Civil Code.

Upon the other hand, the Court of Appeals found as a fact that when Dominga Usman sold and
transferred her rights in and to the property in question to Jose Angeles "the latter made the
purchase with the knowledge that the property subject matter of the sale was already in dispute
by and between herein defendants, one of whom is the husband of intervenor Dominga Usman,
on the one hand, and herein plaintiffs on the other." Angeles was, therefore, aware of sufficient
facts to induce a reasonably prudent man to inquire into the status of the title to the property in
question, which was an easy matter for him to ascertain, said property being registered under
the Torrens System. 3

Indeed, Jose Angeles is a nephew of defendant Asaad Usman, and the controversy between
the latter and Datu Idiris was a matter of public knowledge, for Usman was a justice of the
peace, and Datu Idiris had filed charges against him, as such, with the Department of Justice
and the Office of the President, to which Usman countered by causing the bail bond of Datu
Idiris to be cancelled and his corresponding reincarceration, as well as the filing of complaints
for murder against him. Besides, on February 2, 1952, or several months prior to the sale to
Angeles on September 30, 1952, Datu Idiris had filed Civil Case No. 87 of the Court of First
Instance of Sulu against Asaad Usman to recover the lots in question, and the latter stated in
that case, on September 26, 1952, or four (4) days before the aforementioned sale, that he was
not interested in either the possession or the ownership of said lots and that he had not bought
the same from the former. It may not be amiss to note, also, that at the time of the alleged sale
in his favor, Jose Angeles was a law student; that, in fact, on August 9, 1957, he entered his
appearance as counsel for the defendants, in collaboration with Asaad Usman; and that the
consideration for said sale, involving a land of 46 hectares, was only P1,000.

In short, the foregoing facts, and the above-quoted findings of both the trial court and the Court
of Appeals, leave no room for doubt that Jose Angeles was a purchaser and a builder in bad
faith. 4 The provision applicable to this case is, accordingly, Article 449 of the Civil Code, which
provides that, "(h)e who builds, plants or sows in bad faith on the land of another, loses what is
built, planted or sown without right to indemnity."

Obviously, the alleged equity in favor of Jose Angeles, on which the lower courts have relied,
cannot prevail over the aforementioned express statutory provision to the contrary, 5 apart from
the fact that he who seeks equity must come with clean hands. 6

WHEREFORE, the decision of the Court of Appeals should be as it is hereby modified by

eliminating therefrom the contested award of P2,500.00 in favor of Jose Angeles, and, thus
modified, said decision is hereby affirmed in all other respects, with the costs. It is so ordered.
G.R. No. L-2017 November 24, 1906

THE MUNICIPALITY OF OAS, plaintiff-appellee,

vs.
BARTOLOME ROA, defendant-appellant.

Del-Pan, Ortigas and Fisher, for appellant.

Enrique Llopiz for appellee.

WILLARD, J.:

The plaintiff brought this action for the recovery of a tract of land in the pueblo of Oas, claiming
that it was a part of the public square of said town. The defendant in his answer alleged that he
was the owner of the property. Judgment was rendered in favor of the plaintiff and the
defendant has brought the case here by bill of exceptions.

As we look at the case, the only question involved is one of fact. Was the property in question a
part of the public square of the town of Oas? The testimony upon this point in favor of the
plaintiff consisted of statements made by witnesses to the effect that this land had always been
a part of the public square, and of certain resolutions adopted by the principalia of the pueblo
reciting the same fact, the most important of these being the minutes of the meeting of the 27th
of February, 1892. In that document it is expressly stated that this land was bought in 1832 by
the then parish priest for the benefit of the pueblo. It recites various proceedings taken
thereafter in connection with this ownership, including among them an order of the corregidor of
Nueva Caceres prohibiting the erection of houses upon the land by reason of the fact above
recited — namely, that the land belonged to the pueblo. This resolution terminated with an order
to the occupant of the building then standing upon the property that he should not repair it. The
defendant signed this resolution.

It further appears that the same building was almost entirely destroyed by a baguio on the 13th
and 14th of May, 1893, and that the authorities of the puebo ordered the complete demolition
thereof. The resolution of the 31st of May, 1893, declared that the then owner of the building,
Jose Castillo, had no right to reconstruct it because it was situated upon land which did not
belong to him. This resolution was also signed by the defendant.

The evidence on the part of the defendant tends to show that in 1876 Juana Ricarte and Juana
Riquiza sold the land in question to Juan Roco, and that on the 17th day of December, 1894,
Jose Castillo sold it to the defendant. No deed of conveyance from Juan Roco to Jose Castillo
was presented in evidence, but Castillo, testifying as a witness, said that he had bought the
property by verbal contract from Roco, his father-in-law. The defendant, after his purchase in
1894, procured a possessory of information which was allowed by an order of the justice of the
peace of Oas on the 19th day of January, 1895, and recorded in the Registry of Property on the
28th of March of the same year.

In this state of the evidence, we can not say that the proof is plainly and manifestly against the
decision of the court below. Unless it is so, the finding of fact made by that court can not be
reversed. (De la Rama vs. De la Rama, 201 U. S., 303.)

The two statements signed by Roa, one in 1892 and the other in 1893, are competent evidence
against him. They are admissions by him to the effect that at that time the pueblo was the owner
of the property in question. They are, of course, not conclusive against him. He was entitled to,
and did present evidence to overcome the effect of these admissions. The evidence does not
make out a case of estoppel against him. (sec. 333, par. 1, Code of Civil Procedure.)

The admissibility of these statements made by Roa do not rest upon section 278 of the Code of
Civil Procedure, which relates to declarations or admissions made by persons not a party to the
suit, but it rests upon the principle that when the defendant in a suit has himself made an
admission of any fact pertinent to issue involved, it can be received against him.
This action was commenced on the 17th of December, 1902. There is no evidence of any
adverse occupation of this land for thirty years, consequently the extraordinary period of
prescription does not apply. The defendant can not rely upon the ordinary period of prescription
of ten years because he was not a holder in good faith. He knew at that time of his purchase in
1894, and had so stated in writing, that the pueblo was the owner of the property. So that, even
if the statute of limitations ran against a municipality in reference to a public square, it could not
avail the defendant in this case.

It appears that Roa has constructed upon the property, and that there now stands thereon, a
substantial building. As early as 1852 this land had been used by the municipality constructed
thereon buildings for the storage of property of the State, quarters for the cuadrilleros, and
others of a like character. It therefore had ceased to be property used by the public and had
become a part of the bienes patrimoniales of the pueblo. (Civil Code, arts. 341, 344.) To the
case are applicable those provisions of the Civil Code which relate to the construction by one
person of a building upon land belonging to another. Article 364 of the Civil Code is as follows:

Where there has been bad faith, not only on the part of the person who built, sowed, or
planted on another's land, but also on the part of the owner of the latter, the rights of
both shall be the same as if they had acted in good faith.

Bad faith on the part of the owner is understood whenever the act has been executed in
his presence with his knowledge and tolerance and without objection.

The defendant constructed the building in bad faith for, as we have said, he had knowledge of
the fact that his grantor was not the owner thereof. There was a bad faith also on the part of the
plaintiff in accordance with the express provisions of article 364 since it allowed Roa to
construct the building without any opposition on its part and to so occupy it for eight years. The
rights of the parties must, therefore, be determined as if they both had acted in good faith. Their
rights in such cases are governed by article 361 of the Civil Code, which is as follows:

The owner of the land on which the building, sowing, or planting is done in good faith
shall have a right to appropriate as his own the work, sowing, or planting after the
indemnity mentioned in articles 453 and 454, or, to oblige the person who has built or
planted, to pay him the value of the land and to force the person who sowed to pay the
proper rent.

The judgment of the court below is so modified as to declare that the plaintiff is the owner of the
land and that it has the option of buying the building thereon, which is the property of the
defendant, or of selling to him the land on which it stands. The plaintiff is entitled to recover the
costs of both instances.1âwphil.net

After the expiration of twenty days let judgment be entered in accordance herewith and at the
proper time thereafter let the record be remanded to the court below for proper action. So
ordered.
G.R. No. L-54526 August 25, 1986

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner,

vs.
THE COURT OF APPEALS and THE CITY OF DAGUPAN, respondents.

Miguel T. Caguioa, Ireneo B. Orlino and Manuel D. Victorio for respondent City of Dagupan.

FERIA, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed
the decision of the then Court of First Instance of Pangasinan. The lower court had declared
respondent City of Dagupan the lawful owner of the Dagupan Waterworks System and held that
the National Waterworks and Sewerage Authority, now petitioner Metropolitan Waterworks and
Sewerage System, was a possessor in bad faith and hence not entitled to indemnity for the
useful improvements it had introduced.

Before proceeding further, it may be necessary to invite attention to the common error of joining
the court (be it a Regional Trial Court, the Intermediate Appellate Court, or the Sandiganbayan)
as a party respondent in an appeal by certiorari to this Court under Rule 45 of the Rules of
Court. The only parties in an appeal by certiorari are the appellant as petitioner and the appellee
as respondent. (Cf. Elks Club vs. Rovira, 80 Phil. 272) The court which rendered the judgment
appealed from is not a party in said appeal. It is in the special civil action of certiorari under
Section 5 of Rule 65 of the Rules of Court where the court or judge is required to be joined as
party defendant or respondent. The joinder of the Intermediate Appellate Court or the
Sandiganbayan as party respondent in an appeal by certiorari is necessary in cases where the
petitioner-appellant claims that said court acted without or in excess of its jurisdiction or with
grave abuse of discretion. An example of this is a case where the petitioner-appellant claims
that the Intermediate Appellate Court or the Sandiganbayan acted with grave abuse of
discretion in making its findings of fact, thus justifying the review by this court of said findings of
fact. (See the exceptions to the rule of conclusiveness of the findings of fact of the Intermediate
Appellate Court or the Sandiganbayan in the case of Sacay vs. Sandiganbayan, G.R. Nos.
66497-98, July 10, 1986.) In such a case, the petition for review on certiorari under Rule 45 of
the Rules of Court is at the same time a petition for certiorari under Rule 65, and the joinder of
the Intermediate Appellate Court or the Sandiganbayan becomes necessary. (Cf. Lianga
Lumber Company vs. Lianga Timber Co., Inc., March 31, 1977, 76 SCRA 197).

The City of Dagupan (hereinafter referred to as the CITY) filed a complaint against the former
National Waterworks and Sewerage Authority (hereinafter referred to as the NAWASA), now the
Metropolitan Waterworks and Sewerage System (hereinafter referred to as MWSS), for
recovery of the ownership and possession of the Dagupan Waterworks System. NAWASA
interposed as one of its special defenses R.A. 1383 which vested upon it the ownership,
possession and control of all waterworks systems throughout the Philippines and as one of its
counterclaims the reimbursement of the expenses it had incurred for necessary and useful
improvements amounting to P255,000.00. Judgment was rendered by the trial court in favor of
the CITY on the basis of a stipulation of facts. The trial court found NAWASA to be a possessor
in bad faith and hence not entitled to the reimbursement claimed by it. NAWASA appealed to
the then Court of Appeals and argued in its lone assignment of error that the CITY should have
been held liable for the amortization of the balance of the loan secured by NAWASA for the
improvement of the Dagupan Waterworks System. The appellate court affirmed the judgment of
the trial court and ruled as follows:

However, as already found above, these useful expenses were made in utter bad
faith for they were instituted after the complaint was filed and after numerous
Supreme Court decisions were promulgated declaring unconstitutional the taking
by NAWASA of the patrimonial waterworks systems of cities, municipalities and
provinces without just compensation.
 Under Article 546 of the New Civil Code cited by the appellant, it is clear that a
builder or a possessor in bad faith is not entitled to indemnity for any useful
improvement on the premises. (Santos vs. Mojica, L-25450, Jan. 31, 1969). In
fact, he is not entitled to any right regarding the useful expenses (II Paras (1971)
387). He shall not have any right whatsoever. Consequently, the owner shall be
entitled to all of the useful improvements without any obligation on his part
(Jurado, Civil Law Reviewer (1974) 223).

Petitioner-Appellant MWSS, successor-in-interest of the NAWASA, appealed to this Court

raising the sole issue of whether or not it has the right to remove all the useful improvements
introduced by NAWASA to the Dagupan Waterworks System, notwithstanding the fact that
NAWASA was found to be a possessor in bad faith. In support of its claim for removal of said
useful improvements, MWSS argues that the pertinent laws on the subject, particularly Articles
546, 547 and 549 of the Civil Code of the Philippines, do not definitely settle the question of
whether a possessor in bad faith has the right to remove useful improvements. To bolster its
claim MWSS further cites the decisions in the cases of Mindanao Academy, Inc. vs. Yap (13
SCRA 190) and Carbonell vs. Court of Appeals (69 SCRA 99).

The CITY in its brief questions the raising of the issue of the removal of useful improvements for
the first time in this Court, inasmuch as it was not raised in the trial court, much less assigned as
an error before the then Court of Appeals. The CITY further argues that petitioner, as a
possessor in bad faith, has absolutely no right to the useful improvements; that the rulings in the
cases cited by petitioner are not applicable to the case at bar; that even assuming that petitioner
has the right to remove the useful improvements, such improvements were not actually
identified, and hence a rehearing would be required which is improper at this stage of the
proceedings; and finally, that such improvements, even if they could be identified, could not be
separated without causing substantial injury or damage to the Dagupan Waterworks System.

The procedural objection of the CITY is technically correct. NAWASA should have alleged its
additional counterclaim in the alternative-for the reimbursement of the expenses it had incurred
for necessary and useful improvements or for the removal of all the useful improvements it had
introduced.

Petitioner, however, argues that although such issue of removal was never pleaded as a
counterclaim nevertheless it was joined with the implied consent of the CITY, because the latter
never filed a counter-manifestation or objection to petitioner's manifestation wherein it stated
that the improvements were separable from the system, and quotes the first part of Sec. 5 of
Rule 10 of the Rules of Court to support its contention. Said provision reads as follows:

SEC. 5. Amendment to conform to or authorize presentation of evidence.-When

issues not raised by the pleadings are tried by express or implied consent of the
parties, they shall be treated in all respects, as if they had been raised in the
pleadings. Such amendment of the pleadings as may be necessary to cause
them to conform to the evidence and to raise these issues may be made upon
motion of any party at any time, even after judgment; but failure so to amend
does not affect the result of the trial of these issues. ...

This argument is untenable because the above-quoted provision is premised on the fact that
evidence had been introduced on an issue not raised by the pleadings without any objection
thereto being raised by the adverse party. In the case at bar, no evidence whatsoever had been
introduced by petitioner on the issue of removability of the improvements and the case was
decided on a stipulation of facts. Consequently, the pleadings could not be deemed amended to
conform to the evidence.

However, We shall overlook this procedural defect and rule on the main issue raised in this
appeal, to wit: Does a possessor in bad faith have the right to remove useful improvements?
The answer is clearly in the negative. Recognized authorities on the subject are agreed on this
point. *

Article 449 of the Civil Code of the Philippines provides that "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."
As a builder in bad faith, NAWASA lost whatever useful improvements it had made without right
to indemnity (Santos vs. Mojica, Jan. 31, 1969, 26 SCRA 703).

Moreover, under Article 546 of said code, only a possessor in good faith shall be refunded for
useful expenses with the right of retention until reimbursed; and under Article 547 thereof, only a
possessor in good faith may remove useful improvements if this can be done without damage to
the principal thing and if the person who recovers the possession does not exercise the option
of reimbursing the useful expenses. The right given a possessor in bad faith is to remove
improvements applies only to improvements for pure luxury or mere pleasure, provided the thing
suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the
value they have at the time he enters into possession (Article 549, Id.).

The decision in the case of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) cited by petitioner
does not support its stand. On the contrary, this Court ruled in said case that "if the defendant
constructed a new building, as he alleges, he cannot recover its value because the construction
was done after the filing of the action for annulment, thus rendering him a builder in bad faith
who is denied by law any right of reimbursement." What this Court allowed appellant Yap to
remove were the equipment, books, furniture and fixtures brought in by him, because they were
outside of the scope of the judgment and may be retained by him.

Neither may the decision in the case of Carbonell vs. Court of Appeals (69 SCRA 99), also cited
by petitioner, be invoked to modify the clear provisions of the Civil Code of the Philippines that a
possessor in bad faith is not entitled to reimbursement of useful expenses or to removal of
useful improvements.

In said case, both the trial court and the Court of Appeals found that respondents Infantes were
possessors in good faith. On appeal, the First Division of this Court reversed the decision of the
Court of Appeals and declared petitioner Carbonell to have the superior right to the land in
question. On the question of whether or not respondents Infantes were possessors in good faith
four Members ruled that they were not, but as a matter of equity allowed them to remove the
useful improvements they had introduced on the land. Justice Teehankee (now Chief Justice)
concurred on the same premise as the dissenting opinion of Justice Munoz Palma that both the
conflicting buyers of the real property in question, namely petitioner Carbonell as the first buyer
and respondents Infantes as the second buyer, may be deemed purchasers in good faith at the
respective dates of their purchase. Justice Munoz Palma dissented on the ground that since
both purchasers were undoubtedly in good faith, respondents Infantes' prior registration of the
sale in good faith entitled them to the ownership of the land. Inasmuch as only four Members
concurred in ruling that respondents Infantes were possessors in bad faith and two Members
ruled that they were possessors in good faith said decision does not establish a precedent.
Moreover, the equitable consideration present in said case are not present in the case at bar.

WHEREFORE, the decision of the appellate court is affirmed with costs against petitioner.

SO ORDERED.
G.R. No. L-12812 September 29, 1959

FILIPINAS COLLEGES, INC., plaintiff-appellee,

vs.
MARIA GARCIA TIMBANG, ET AL., defendants.

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

G.R. No. L-12813 September 29, 1959

MARIA GARCIA TIMBANG, ET AL., plaintiffs.

MARIA GARICA TIMBANG, plaintiff-appellant,
vs.
MARIA GERVACIO BLAS, defendant-appellee.

De Guzman and Fernandez for appellee Filipinas Colleges, Inc.

San Huan, Africa and Benedicto for appellant Maria Garcia Timbang.
Nicanor S. Sison for appellee Maria Gervacio Blas.

BARRERA, J.:

This is an appeal taken from an order of the Court of First Instance of Manila dated May 10,
1957 (a) declaring the Sheriff's certificate of sale covering a school building sold at public
auction null and void unless within 15 days from notice of said order the successful bidders,
defendants-appellants spouses Maria Garcia Timbang and Marcelino Timbang, shall pay to,
appellee Maria Gervacio Blas directly or through the Sheriff of Manila the sum of P5,750.00 that
the spouses Timbang had bid for the building at the Sheriff's sale; (b) declaring the other
appellee Filipinas Colleges, Inc. owner of 24,500/3,285,934 undivided interest in Lot No. 2-a
covered by certificate of tile No 45970, on which the building sold in the auction sale is situated;
and (c) ordering the sale in public auction of the said undivided interest of the Filipinas Colleges,
Inc., in lot No. 2-a aforementioned to satisfy the unpaid portion of the judgment in favor of
appellee Blas and against Filipinas Colleges, Inc. in the amount of P8,200.00 minus the sum of
P5,750.00 mentioned in (a) above.

The order appealed from is the result of three motions filed in the court a quo in the course of
the execution of a final judgment of the Court of Appeals rendered in 2 cases appealed to it in
which the spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas were the
parties. IN that judgment of the Court of Appeals, the respective rights of the litigants have been
adjudicated as follows:1âwphïl.nêt

(1) Filipinas Colleges, Inc. was declared to have acquired the rights of the spouses
Timbang in and to lot No. 2-a mentioned above and in consideration thereof, Filipinas
Colleges, Inc., was ordered to pay the spouses Timbang the amount of P15,807.90 plus
such other amounts which said spouses might have paid or had to pay after February,
1953, to Hoskins and Co. Inc., agent of the Urban Estates, Inc., original vendor of the lot.
Filipinas Colleges, Inc. original vendor of the total amount with the court within 90 days
after the decision shall have become final.

(2) Maria Gervacio Blas was declared to be a builder in good faith of the school building
constructed on the lot in question and entitled to be paid the amount of P19,000.00 for
the same. Filipinas Colleges, Inc., purchaser of the said building was ordered to deliver
to Blas stock certificate (Exh. C) for 108 shares of Filipinas Colleges, Inc. with a par
value of P10,800.00 and to pay Blas the sum of P8,200.00 of the house.

(3) In case Filipinas Colleges, Inc. failed to deposit the value of the land, which after
liquidation was fixed at P32,859.34, within the 90-day period set by the court, Filipinas
Colleges would lose all its rights to the land and the spouses Timbang would then
become the owners thereof. In that eventuality, the Timbangs would make known to the
court their option under Art. 448 of the Civil Code whether they would appropriate the
building in question, in which even they would have to pay Filipinas Colleges, Inc. the
 sum of P19,000.00, or would compel the latter to acquire the land and pay the price
thereof.

Filipinas Colleges, Inc. having failed to pay or deposit the sum of P32,859.34 within the time
prescribed, the spouses Timbang, in compliance with the judgment of the Court of Appeals, on
September 28, 1956, made known to the court their decision that they had chosen not of
appropriate the building but to compel Filipinas Colleges, Inc., for the payment of the sum of
P32,859,34. The motion having been granted, a writ of execution was issued on January 8,
1957.

On January 16, 1957, appellee Blas in turn filed a motion for execution of her judgment of
P8,200.00 representing the unpaid portion of the price of the house sold to Filipinas Colleges,
Inc. Over the object of the Timbangs, the court grated the motion and the corresponding writ of
execution was issued on January 30, 1957, date of the granting of the motion for execution,
Blas through counsel, sent a letter to the Sheriff of Manila advising him of her preferential claim
or lien on the house to satisfy the unpaid balance of the purchase price thereof under Article
2242 of the Civil Code, and to withhold from the proceed of the auction sale the sum of
P8,200.00. Levy having been made on the house in virtue of the writs of execution, the Sheriff
of Manila on March 5, 1957, sold the building in public auction in favor of the spouses Timbang,
as the highest bidders, in the amount of P5,750.00. Personal properties of Filipinas Colleges,
Inc. were also auctioned for P245.00 in favor of the spouses Timbang.

As a result of these actuation, three motion were subsequently filed before the lower court:

(1) By appellee Blas, praying that the Sheriff of Manila and/or the Timbang spouses be
ordered to pay and deliver to her the sum of P5,750.00 representing the proceeds of the
auction sale of the building of Filipinas Colleges, Inc. over which she has a lien of
P8,200.00 for the unpaid balance of the purchase price thereof;.

(2) Also by the appellee Bals, praying that there being still two unsatisfied executions,
one for the sum of P32,859.34 in favor the land involved, Lot No. 2-a, be sold at public
auction; and (3) By Filipinas Colleges, Inc. praying that because its properties, the house
and some personal properties, have been auctioned for P5,750.00 and P245.00
respectively in favor of the Timbang spouses who applied the proceeds to the partial
payment of the sum of P32,859.34 value of the land, Lot No. 2-a, it (Filipinas Colleges,
Inc.) be declared part owner of said lot to the extent of the total amount realized from the
execution sale of its properties.1âwphïl.nêt

The Timbang spouses presented their opposition to each and all of these motion. After due
hearing the lower court rendered its resolution in the manner indicated at the beginning of this
decision, from which the Timbangs alone have appealed.

In assailing the order of the court a quo directing the appellants to pay appellee Blas the amount
of their bid (P5,750.00) made at the public auction, appellants' counsel has presented a novel,
albeit ingenious, argument. It is contended that because the builder in good faith has failed to
pay the price of the land after the owners thereof exercised their option under Article 448 of the
Civil Code, the builder lost his right of retention provided in Article 546 and by operation of
Article 445, the appellants as owners of the land automatically became the owners ipso facto,
the execution sale of the house in their favor was superfluous. Consequently, they are not
bound to make good their bid of P5,750.00 as that would be to make goods to pay for their own
property. By the same token, Blas claim for preference on account of the unpaid balance of the
purchase price of the house does not apply because preference applies only with respect to the
property of the debtor, and the Timbangs, owners of the house, are not the debtors of Blas.

This Court cannot accept this oversimplification of appellants' position. Article 448 and 546 of
the Civil Code defining the right of the parties in case a person in good faith builds, sows or
plants on the land of another, respectively provides:

ART. 448. The owner of the land on which anything has been built, sown or plated in
good faith shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnify provided for in article 546 and 548, or to obligate the one
 who built or planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.

ART. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same
right of retention the person who has defeated him in the possession having to option of
refunding the amount of expenses or of paying the case in value which thing may have
acquired by reason thereof.

Under the terms of these article, it is true that the owner of the land has the right to choose
between appropriating the building by reimbursing the builder of the value thereof or compelling
the builder in good faith to pay for his land. Even this second right cannot be exercised if the
value of the land is considerably more than that of the building. In addition to the right of the
builder to be paid the value of his improvement, Article 546 gives him the corollary right of
retention of the property until he is indemnified by the owner of the land. There is nothing in the
language of these two article, 448 and 546, which would justify the conclusion of appellants that,
upon the failure of the builder to pay the value of the land, when such is demanded by the land-
owner, the latter becomes automatically the owner of the improvement under Article 445. The
case of Bernardo vs. Bataclan, 66 Phil., 590 cited by appellants is no authority for this
conclusion. Although it is true it was declared therein that in the event of the failure of the builder
to pay the land after the owner thereof has chosen this alternative, the builder's right of retention
provided in Article 546 is lost, nevertheless there was nothing said that as a consequence
thereof, the builder loses entirely all rights over his own building. The question is; what is the
recourse or remedy left to the parties in such eventuality where the builder fails to pay the value
of the land? While the Code is silent on this Court in the cases of Miranda vs. Fadullon, et al.,
97 Phil., 801; 51 Off. Gaz., [12] 6226; Ignacio vs. Hilario, 76 Phil., 605 and the cited case
of Bernardo vs. Bataclan, supra.

In the first case, this Court has said:

A builder in good faith not be required to pay rentals. he has right to retain the land on
which he has built in good faith until he is reimbursed the expenses incurred by
him. Possibly he might be made to pay rental only when the owner of the land chooses
not to appropriate the improvement and requires the builder in good faith to pay for the
land but that the builder is unwilling or unable to pay the land, and then they decide to
leave things as they are and assume the relation of lessor and lessee, and should they
disagree as to the amount of rental then they can go to the court to fix that amount.
(Emphasis supplied)

Should the parties not agree to leave things as they are and to assume the relation of lessor
and lessee, another remedy is suggested in the case of Ignacio vs. Hilario, supra, wherein the
court has ruled that the owner of the land in entitled to have the improvement removed when
after having chosen to sell his land to the other party, i.e., the builder in good faith fails to pay for
the same.

A further remedy is indicated in the case of Bernardo vs. Bataclan, supra, where this Court
approved the sale of the land and the improvement in a public auction applying the proceeds
thereof first to the payment of the value of the land and the excess, if any, to be delivered to the
owner of the house in payment thereof.

The appellants herein, owners o the land, instead of electing any of the alternative above
indicated chose to seek recovery of the value of their land by asking for a writ of execution;
levying on the house of the builder; and selling the same in public auction. Sand because they
are the highest bidder in their own auction sale, they now claim they acquired title to the building
without necessity of paying in cash on account of their bid. In other words, they in effect pretend
to retain their land and acquire the house without paying a cent therefor.

This contention is without merit. This Court has already held in Matias vs. The Provincial Sheriff
of Nueva Ecija (74 Phil., 326) that while it is the inveriable practice, dictated by common sense,
that where the successful bidder is the execution creditor himself, he need not pay down the
amount of the bid if it does not exceed the amount of his judgement, nevertheless, when their is
a claim by a third-party, to the proceeds of the sale superior to his judgment credit, the
execution creditor, as successful bidder, must pay in cash the amount of his bid as a condition
precedent to the issuance to him of the certificate of sale. In the instant case, the Court of
Appeals has already adjudged that appellee Blas is entitled to the payment of the unpaid
balance of the purchase price of the school building. Blas is actually a lien on the school
building are concerned. The order of the lower court directing the Timbang spouses, as
successful bidders, to pay in cash the amount of their bid in the sum of P5,750.00 is therefore
correct.

With respect to the order of the court declaring appellee Filipinas Colleges, Inc. part owner of
the land to the extent of the value of its personal properties sold at public auction in favor of the
Timbang, this Court Likewise finds the same as justified, for such amount represents, in effect, a
partial payment of the value of the land. If this resulted in the continuation of the so-called
involuntary partnership questioned by the difference between P8,200.00 — the unpaid balance
of the purchase price of the building and the sum of P5,750.00 — amount to be paid by the
Timbangs, the order of the court directing the sale of such undivided interest of the Filipinas
Colleges, Inc. is likewise justified to satisfy the claim of the appellee Blas.

Considering that the appellant spouses Marcelino Timbang and Maria Garcia Timbang may not
voluntarily pay the sum of P5,750.00 as ordered, thereby further delaying the final termination of
this case, the first part of the dispositive portion of the order appealed from is modified in the
sense that upon failure of the Timbang spouses to pay to the Sheriff or to Manila Gervacio Blas
said sum of P5,750.00 within fifteen (15) days from notice of the final judgment, an order of
execution shall issue in favor of Maria Gervasio Blas to be levied upon all properties of the
Timbang spouses not exempt from execution for the satisfaction of the said amount.

In all other respects, the appealed order of the court a quo is hereby affirmed, with costs against
the appellants.

It is so ordered.
 G.R. No. L-44606 November 28, 1938

VICENTE STO. DOMINGO BERNARDO,Plaintiff-Appellant, vs. CATALINO

BATACLAN,Defendant-Appellant.
TORIBIO TEODORO, purchaser-appellee.

Pedro de Leon for plaintiff-appellant.

Angel H. Mojica and Francisco Lavides for defendant appellant.
Jose Y. Garde for appellee.

chanrobles virtual law library

LAUREL, J.: chanrobles virtual law library

This is an appeal taken by both the plaintiff and the defendant from the order of September 26,
1935, hereinabove referred to, of the Court of First Instance of Cavite in Civil Case No.
2428.chanroblesvirtualawlibrarychanrobles virtual law library

There is no controversy as to the facts. By a contract of sale executed from Pastor Samonte
and others ownership of a parcel of land of about 90 hectares situated in sitio Balayunan,
Silang, Cavite. To secure possession of the land from the vendors the said plaintiff, on July 20,
1929, instituted Civil Case No. 1935 in the Court of First Instance of Cavite. The trial court found
for the plaintiff in a decision which was affirmed by this Supreme Court on appeal (G.R. No.
33017). 1When plaintiff entered upon the premises, however, he found the defendant herein,
Catalino Bataclan, who appears to have been authorized by former owners, as far back as
1922, to clear the land and make improvements thereon. As Bataclan was not a party in Case
No. 1935, plaintiff, on June 11, 1931, instituted against him, in the Court of First Instance of
Cavite, Civil Case No. 2428. In this case, plaintiff was declared owner but the defendant was
held to be a possessor in good faith, entitled to reimbursement in the total sum of P1,642, for
work done and improvements made. The dispositive part of the decision reads:

Por las consideraciones expuestas, se declara al demandante Vicente Santo Domingo

Bernardo dueño con derecho a la posesion del terreno que se describe en la demanda, y al
demandado Catalino Bataclan con derecho a que del demandante le pague la suma de P1,642
por gastos utiles hechos de buena fe en el terreno, y por el cerco y ponos de coco y abaca
existentes en el mismo, y con derecho, ademas a retener la posesion del terreno hasta que se
le pague dicha cantidad. Al demandante puede optar, en el plazo de treinta dias, a partir de la
fecha en que fuere notificado de la presente, por pagar esa suma al demandado, haciendo asi
suyos el cerco y todas las plantaciones existentes en el terreno, u obligar al demandado a
pagarle el precio terreno, a razon de trescientos pesos la hectarea. En el caso de que el
demandante optara por que el demandado le pagara el precio del terreno, el demandado
efectuara el pago en el plazo convenientes por las partes o que sera fijado por el Juzgado. Sin
costas.

Both parties appealed to this court (G. R. No. 37319). 2 The decision appealed from was
modified by allowing the defendant to recover compensation amounting to P2,212 and by
reducing the price at which the plaintiff could require the defendant to purchase the land in
question from P300 to P200 per hectare. Plaintiff was given by this court 30 days from the date
when the decision became final within which to exercise his option, either to sell the land to the
defendant or to buy the improvements from him. On January 9, 1934, the plaintiff manifested to
the lower court his desire "to require the defendant to pay him the value of the land at the rate of
P200 per hectare or a total price of P18,000 for the whole tract of land." The defendant informed
the lower court that he was unable to pay the land and, on January 24, 1934, an order was
issued giving the plaintiff 30 days within which to pay the defendant the sum of P2,212 stating
that, in the event of failure to make such payment, the land would be ordered sold at public
auction " Para hacer pago al demandante de la suma de P2,212 y el remanente despues de
deducidos los gastos legales de la venta en publica subasta sera entregado al demandante."
On February 21, 1934, plaintiff moved to reconsider the foregoing order so that he would have
preference over the defendant in the order of payment. The motion was denied on March 1,
1934 but on March 16 following the court below, motu proprio modified its order of January 24,
" en el sentido de que el demandante tiene derecho preferente al importe del terreno no se
vendiere en publica subasta, a razon de P200 por hectares y el remanente, si acaso lo hubiere
se entregara al demandado en pago de la cantidad de P2,212 por la limpieza del terreno y las
mejoras introducidas en el mismo por el citado demandado." On April 24, 1934, the court below,
at the instance of the plaintiff and without objection on the part of the defendant, ordered the
sale of the land in question at public auction. The land was sold on April 5, 1935 to Toribio
Teodoro, the highest bidder, for P8,000. In the certificate of sale issued to said purchaser on the
very day of sale, it was stated that the period of redemption of the land sold was to expire on
April 5, 1936. Upon petition of Toribio Teodoro the court below ordered the provincial sheriff to
issue another certificate not qualified by any equity of redemption. This was complied with by
the sheriff on July 30, 1935. On September 18, 1935, Teodoro moved that he be placed in
possession of the land purchased by him. The motion was granted by order of September 26,
1935, the dispositive part of which is as follows:

Por tanto, se ordena al Sheriff Provincial de Cavite ponga a Toribio Teodoro en posesion del
terreno comprado por el en subasta publica y por el cual se le expidio certificado de venta
definitiva, reservando al demandado su derecho de ejercitar una accion ordinaria para reclamar
del demandante la cantidad de P2,212 a que tiene derecho por la limpieza y mejoras del
terreno y cuya suma, en justicia y equidad, debe ser descontada y deducida de la suma de
P8,000 que ya ha recibido el demandante.

The Civil Code confirms certain time-honored principles of the law of property. One of these is
the principle of accession whereby the owner of property acquires not only that which it
produces but that which is united to it either naturally or artificially. (Art. 353.) Whatever is built,
planted or sown on the land of another, and the improvements or repairs made thereon, belong
to the owner of the land (art. 358). Where, however, the planter, builder, or sower has acted in
good faith, a conflict of rights arises between the owners and it becomes necessary to protect
the owner of the improvements without causing injustice to the owner of the land. In view of the
impracticability of creating what Manresa calls a state of "forced coownership" (vol. 3, 4th ed., p.
213), the law has provided a just and equitable solution by giving the owner of the land the
option to acquire the improvements after payment of the proper indemnity or to oblige the
builder or planter to pay for the land and the sower to pay the proper rent (art. 361). It is the
owner of the land who is allowed to exercise the option because his right is older and because,
by the principle of accession, he is entitled to the ownership of the accessory thing (3 Manresa,
4th ed., p. 213). In the case before us, the plaintiff, as owner of the land, chose to require the
defendant, as owner of the improvements, to pay for the
land.chanroblesvirtualawlibrary chanrobles virtual law library

The defendant states that he is a possessor in good faith and that the amount of P2,212 to
which he is entitled has not yet been paid to him. Therefore, he says, he has a right to retain the
land in accordance with the provisions of article 453 of the Civil Code. We do not doubt the
validity of the premises stated. " Considera la ley tan saarada y legitima la deuda, que, hasta
que sea pagada, no consiente que la cosa se restituya all vencedor." (4 Manresa, 4th ed, p.,
304.) We find, however, that the defendant has lost his right of retention. In obedience to the
decision of this court in G.R. No. 37319, the plaintiff expressed his desire to require the
defendant to pay for the value of the land. The said defendant could have become owner of
both land and improvements and continued in possession thereof. But he said he could not pay
and the land was sold at public auction to Toribio Teodoro. The law, as we have already said,
requires no more than that the owner of the land should choose between indemnifying the
owner of the improvements or requiring the latter to pay for the land. When he failed to pay for
the land, the defendant herein lost his right of retention.chanroblesvirtualawlibrary chanrobles
virtual law library

The sale at public auction having been asked by the plaintiff himself (p. 22, bill of exceptions)
and the purchase price of P8,000 received by him from Toribio Teodoro, we find no reason to
justify a rapture of the situation thus created between them, the defendant-appellant not being
entitled, after all, to recover from the plaintiff the sum of
P2,212.chanroblesvirtualawlibrary chanrobles virtual law library

The judgment of the lower court is accordingly modified by eliminating therefrom the reservation
made in favor of the defendant-appellant to recover from the plaintiff the sum of P2,212. In all
the respects, the same is affirmed, without pronouncement regarding costs. So
ordered.chanroblesvirtual
G.R. No. L-8220 October 29, 1955

SALVACION MIRANDA, plaintiff-appellants,

vs.
ESTEBAN FADULLON and spouses DIONISIO SEGARRA and CLEMENCIA N. DE
SEGARRA, defendants-appellees.

Lopez, Duterte, Guillamac, Rubillos, Montecillo and Bernardo for appellees.

Gaudencio R. Juezan for appellant.

MONTEMAYOR, J.:

The present appeal was first taken to the Court of Appeals. Later by resolution of the said court
it was certified to us under section 17, paragraph 6 of the Judiciary Act of 1948, as amended,
the said Tribunal being of the opinion that the case involved only questions of law. The facts as
may be gathered from the pleadings filed by the parties may be briefly stated as follows. In the
year 1939 one Lucio Tio was the owner of a parcel of land, lot 1589-J of the Banilad Estate,
Cebu, under Transfer Certificate of Title No. 10548. On December 29, 1939, a power of attorney
in favor of one Esteban Fadullon executed by Lucio Tio was registered in the land records of
Cebu City and annotated on the same certificate of title. In the year 1946, on the strength of the
said power of attorney Fadullon to make the repurchase within this period, the Segarras about
ten days after the expiration of the period filed a sword petition for the consolidation of their
ownership and registered said petition in the office of the Register of Deeds on May 15, 1946.
Apprised of the sale of his property, Lucio Tio on June 4, 1946, filed a complaint in the Court of
First Instance of Cebu, Civil Case No. 181 to annul the sale. Service of summons was made
upon the Segarras on June 10, 1946. After hearing the trial court rendered judgment annulling
the sale. The Segarras appealed to the Court of Appeals under CA—G. R. No.6550-R and the
said Tribunal affirmed the appealed decision and further required the Segarras to pay plaintiff
the reasonable rentals on the property from the filing of the action until said property shall have
been returned to plaintiff. Upon the decision becoming final the corresponding writ of execution
was issued directing the Sheriff to put plaintiff Tio in possession of the lot. It turned out however
that during the possession of the property by the Segarras they had introduced improvements
thereon consisting of a building of three rooms and a storage room, and one artesian well, with
tower and water tank and a cement flooring covering about one-third of the lot which according
to the Segarras cost them P5,300. They then filed a motion with the trial court claiming that they
were possessors in good faith of the lot in question, and that they had introduced the
improvements aforementioned in good faith and asked the court to order the plaintiff to pay for
the said improvements valued at P5,300 or to allow them to buy the land should the plaintiff
decide not to pay for the improvements. On August 28, 1952, the trial court issued the following
order:

The attorney for the plaintiff has been accordingly served with copy of defendant's
motion of July 31, 1952, filed through counsel.

As prayed for, without opposition, the plaintiff is hereby ordered to either pay the
defendant spouses, Dionisio Segarra and Clemencia N. Segarra (possessors in good
faith) the sum of P5,300, value of the building erected on the land in question, or
otherwise allow said defendants to purchase the aforementioned lot.

The plaintiff filed a motion for reconsideration claiming that the Segarras were possessors and
builders in bad faith and so were not entitled to reimbursement for the value of the
improvements; that the reason he (plaintiff) did not file an opposition to the motion of the
defendants asking for reimbursement was that he thought that the trial court was sufficiently
informed and impressed with the bad faith with which defendants bought the land and
introduced improvements thereon and that it would consequently deny their motion; and in
support of his motion for reconsideration plaintiff quoted portions of the decision of the trial court
and the Court of Appeals. Upon the denial of his motion for reconsideration, he took the present
appeal.
After a careful review of the record we agree with the plaintiff-appellant. The trial court in its
decision declaring the sale of the land to the defendants null and void and commenting on the
alleged good faith of defendants in buying the property said the following:

There are two circumstances which seem to stubbornly belie the professed good faith on
the part of the Segarras in buying this property; namely. the circumstances of the power-
of-attorney appearing on the back of the title as of five or six years previous and the
other circumstances of the comparatively limited period of one month granted vendor
Fadullon to redeem the property. Above all these, is the further circumstance that the
said property had already been mortgaged in favor of the Cebu Mutual Building and
Loan Association by virtue of that power-of-attorney.

While the evidence did not disclose a collusion or conspiracy between Fadullon and the
Segarras, yet, considering the short period of one month within which to redeem and the
surrounding circumstances, the possibility of such collusion lingers.

Obviously there was in this transaction a prevailing intention of railroading the property
into a new ownership as may be proven by the fact that said purchasers filed a sworn
petition for consolidating their ownership barely ten days after the expiration of thirty
days, that is, on April 13, 1946, and registered with the office of Register of Deeds for
Cebu twelve days thereafter, or on May 15, 1946.

The Court of Appeals in its decision affirming that of the trial court said:

The Segarra spouses maintain that they are purchasers in good faith. We will now
examine the record on this point. The alleged power of attorney executed by the late
Lucio Tio in favor of appellant Fadullon was registered in the land record of the Register
of Deeds of Cebu Citly and annotated at the back of Transfer Certificate of Title No.
10548 on December 29, 1939. On the same date, the deed of mortgage in favor of the
Cebu Mutual Building and Loan Association was annotated in the said Torrens title
(Exhibits 1 and 1-B). This encumbrance alone should have been sufficient to put the
Segarra spouses upon an inquiry as to the authority of Fadullon to sell to them the same
property six years later. For instance, the Segarras could have asked themselves this
question: Did not the mortgage of P400 serve the purpose for which the power of
attorney was executed?

The Segarras did not require Fadullon to produce his power of attorney. While it is true
that said power of attorney is annotated at the back of the Torrens title of Tio, it was still
incumbent upon the Segarras to ascertain the scope and authority of Fadullon under
said power of attorney. Fadullon executed the sale with the right to repurchase within the
extraordinary short period of 30 days. This circumstance, again, should have placed the
Segarras on their guards, knowing, as they did, that they were dealing with an agent
under a power of attorney executed before the war. These unusual circumstances would
seem to engender in our minds the possibility of collusion between the appellants, to
hasten the registration of the title of the Segarras to the land in dispute . . .

. . . the transfer of dominion on the property in question to the Segarras was null and
void and of no effect. The new Certificate of Torrens Title No. 392 on the property now in
the name of the Segarras is hereby ordered cancelled and that a new one issued in the
name of Lucio Tio and his wife Salvacion Miranda; ordering the Segarras to return the
possession of said property to plaintiff;

The defendants Segarras are furthermore required to pay plaintiff the reasonable rentals
on the property from the filing of this action until such time as the said property shall
have been returned to plaintiff . . ."

Although neither the trial court nor the Court of Appeals did expressly say and in so many words
that the defendants-appellees were possessors in bad faith, from a reading of their decisions
particularly those we have just quoted, one can logically infer that that was the conclusion of the
two courts, or to say it more mildly, that the defendants were not possessors in good faith.
Moreover, the very fact that the Court of Appeals sentenced the defendants to pay rentals is an
indication, even proof that defendants were considered possessors and builders in bad faith, or
at least that they were not possessors and builders in good faith. A builder in good faith may not
be required to pay rentals. He has a right to retain the land on which he has built in good faith
until he is reimbursed the expenses incurred by him. Possibly he might be required to pay rental
only when the owner of the land chooses not to appropriate the improvement and requires the
builder in good faith to pay for the land, but that the builder is unwilling or unable to buy the land,
and then they decide to leave things as they are and assume the relation of lessor and lessee,
and should they disagree as to the amount of the rental then they can go to the court to fix that
amount. Furthermore, plaintiff-appellant in her brief (page 7) says without denial or refutation on
the part of defendants-appellees that they (defendants) applied for a building permit to construct
the improvements in question on December 4, 1946, and the permit was granted on January 11,
1947, all this about seven months after they received the summons on June 10, 1946, meaning
to say that the improvements were introduced long after their alleged good faith as possessors
had ended.

In view of the foregoing, the appealed order of August 28, 1952 and the order of October 15,
1952, denying plaintiff's motion for reconsideration are set aside. With costs against appellees.
G.R. No. L-175 April 30, 1946

DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS IGNACIO, petitioners,

vs.
ELIAS HILARIO and his wife DIONISIA DRES, and FELIPE NATIVIDAD, Judge of First
Instance of Pangasinan, respondents.

Leoncio R. Esliza for petitioners.

Mauricio M. Monta for respondents.

MORAN, C.J.:

This is a petition for certiorari arising from a case in the Court of First Instance of Pangasinan
between the herein respondents Elias Hilario and his wife Dionisia Dres as plaintiffs, and the
herein petitioners Damian, Francisco and Luis, surnamed Ignacio, as defendants, concerning
the ownership of a parcel of land, partly rice-land and partly residential. After the trial of the
case, the lower court, presided over by Hon. Alfonso Felix, rendered judgment holding plaintiffs
as the legal owners of the whole property but conceding to defendants the ownership of the
houses and granaries built by them on the residential portion with the rights of a possessor in
good faith, in accordance with article 361 of the Civil Code. The dispositive part of the decision,
hub of this controversy, follows:

Wherefore, judgment is hereby rendered declaring:

(1) That the plaintiffs are the owners of the whole property described in transfer
certificate of title No. 12872 (Exhibit A) issued in their name, and entitled to the
possession of the same;

(2) That the defendants are entitled to hold the position of the residential lot until after
they are paid the actual market value of their houses and granaries erected thereon,
unless the plaintiffs prefer to sell them said residential lot, in which case defendants shall
pay the plaintiffs the proportionate value of said residential lot taking as a basis the price
paid for the whole land according to Exhibit B; and

(3) That upon defendant's failure to purchase the residential lot in question, said
defendants shall remove their houses and granaries after this decision becomes final
and within the period of sixty (60) days from the date that the court is informed in writing
of the attitude of the parties in this respect.

No pronouncement is made as to damages and costs.

Once this decision becomes final, the plaintiffs and defendants may appear again before
this court for the purpose of determining their respective rights under article 361 of the
Civil Code, if they cannot come to an extra-judicial settlement with regard to said rights.

Subsequently, in a motion filed in the same Court of First Instance but now presided over by the
herein respondent Judge Hon. Felipe Natividad, the plaintiffs prayed for an order of execution
alleging that since they chose neither to pay defendants for the buildings nor to sell to them the
residential lot, said defendants should be ordered to remove the structure at their own expense
and to restore plaintiffs in the possession of said lot. Defendants objected to this motion which,
after hearing, was granted by Judge Natividad. Hence, this petition by defendants praying for (a)
a restraint and annulment of the order of execution issued by Judge Natividad; (b) an order to
compel plaintiffs to pay them the sum of P2,000 for the buildings, or sell to them the residential
lot for P45; or (c), a rehearing of the case for a determination of the rights of the parties upon
failure of extra-judicial settlement.

The judgment rendered by Judge Felix is founded on articles 361 and 453 of the Civil Code
which are as follows:

ART. 361. The owner of land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the work, sowing or planting, after the
 payment of the indemnity stated in articles 453 and 454, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed, the proper rent.

ART. 453. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until such expenses are made good to him.

Useful expenses shall be refunded to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of
refunding the amount of the expenses or paying the increase in value which the thing
may have acquired in consequence thereof.

The owner of the building erected in good faith on a land owned by another, is entitled to retain
the possession of the land until he is paid the value of his building, under article 453. The owner
of the land, upon the other hand, has the option, under article 361, either to pay for the building
or to sell his land to the owner of the building. But he cannot, as respondents here did, refuse
both to pay for the building and to sell the land and compel the owner of the building to remove
it from the land where it is erected. He is entitled to such remotion only when, after having
chosen to sell his land, the other party fails to pay for the same. But this is not the case before
us.

We hold, therefore, that the order of Judge Natividad compelling defendants-petitioners to

remove their buildings from the land belonging to plaintiffs-respondents only because the latter
chose neither to pay for such buildings not to sell the land, is null and void, for it amends
substantially the judgment sought to be executed and is, furthermore, offensive to articles 361
and 453 of the Civil Code.

There is, however, in the decision of Judge Felix a question of procedure which calls for the
clarification, to avoid uncertainty and delay in the disposition of cases. In that decision, the rights
of both parties are well defined under articles 361 and 453 of the Civil Code, but it fails to
determine the value of the buildings and of the lot where they are erected as well as the periods
of time within which the option may be exercised and payment should be made, these
particulars having been left for determination apparently after the judgment has become final.
This procedure is erroneous, for after the judgment has become final, no additions can be made
thereto and nothing can be done therewith except its execution. And execution cannot be had,
the sheriff being ignorant as to how, for how much, and within what time may the option be
exercised, and certainly no authority is vested in him to settle these matters which involve
exercise of judicial discretion. Thus the judgment rendered by Judge Felix has never become
final, it having left matters to be settled for its completion in a subsequent proceeding, matters
which remained unsettled up to the time the petition is filed in the instant case.

For all the foregoing, the writ of execution issued by Judge Natividad is hereby set aside and the
lower court ordered to hold a hearing in the principal case wherein it must determine the prices
of the buildings and of the residential lot where they are erected, as well as the period of time
within which the plaintiffs-respondents may exercise their option either to pay for the buildings or
to sell their land, and, in the last instance, the period of time within which the defendants-
petitioners may pay for the land, all these periods to be counted from the date the judgment
becomes executory or unappealable. After such hearing, the court shall render a final judgment
according to the evidence presented by the parties.

The costs shall be paid by plaintiffs-respondents.

 [G.R. No. 68166. February 12, 1997]

HEIRS OF EMILIANO NAVARRO, Petitioner, v. INTERMEDIATE APPELLATE COURT AND

HEIRS OF SINFOROSO PASCUAL, Respondents.

DECISION

HERMOSISIMA, JR., J.:

Unique is the legal question visited upon the claim of an applicant in a Land Registration case
by oppositors thereto, the Government and a Government lessee, involving as it does
ownership of land formed by alluvium.

The applicant owns the property immediately adjoining the land sought to be registered. His
registered property is bounded on the east by the Talisay River, on the west by the Bulacan
River, and on the north by the Manila Bay. The Talisay River and the Bulacan River flow down
towards the Manila Bay and act as boundaries of the applicant's registered land on the east and
on the west.

The land sought to be registered was formed at the northern tip of the applicant's land.
Applicant's registered property is bounded on the north by the Manila Bay.

The issue: May the land sought to be registered be deemed an accretion in the sense that it
naturally accrues in favor of the riparian owner or should the land be considered as foreshore
land?

Before us is a petition for review of: (1) the decision1 and (2) two subsequent resolutions2 of the
Intermediate Appellate Court3 (now the Court of Appeals) in Land Registration Case No. N-
84,4the application over which was filed by private respondents' predecessor-in-interest,
Sinforoso Pascual, now deceased, before the Court of First Instance5 (now the Regional Trial
Court) of Balanga, Bataan.

There is no dispute as to the following facts:

On October 3, 1946, Sinforoso Pascual, now deceased, filed an application for foreshore lease
covering a tract of foreshore land in Sibocon, Balanga, Bataan, having an area of approximately
seventeen (17) hectares. This application was denied on January 15, 1953. So was his motion
for reconsideration.

Subsequently, petitioners' predecessor-in-interest, also now deceased, Emiliano Navarro, filed a

fishpond application with the Bureau of Fisheries covering twenty five (25) hectares of foreshore
land also in Sibocon, Balanga, Bataan. Initially, such application was denied by the Director of
Fisheries on the ground that the property formed part of the public domain. Upon motion for
reconsideration, the Director of Fisheries, on May 27, 1988, gave due course to his application
but only to the extent of seven (7) hectares of the property as may be certified by the Bureau of
Forestry as suitable for fishpond purposes.

The Municipal Council of Balanga, Bataan, had opposed Emiliano Navarro's application.
Aggrieved by the decision of the Director of Fisheries, it appealed to the Secretary of Natural
Resources who, however, affirmed the grant. The then Executive Secretary, acting in behalf of
the President of the Philippines, similarly affirmed the grant.

On the other hand, sometime in the early part of 1960, Sinforoso Pascual filed an application to
register and confirm his title to a parcel of land, situated in Sibocon, Balanga, Bataan, described
in Plan Psu-175181 and said to have an area of 146,611 square meters. Pascual claimed that
this land is an accretion to his property, situated in Barrio Puerto Rivas, Balanga, Bataan, and
covered by Original Certificate of Title No. 6830. It is bounded on the eastern side by the Talisay
River, on the western side by the Bulacan River, and on the northern side by the Manila Bay.
The Talisay River as well as the Bulacan River flow downstream and meet at the Manila Bay
thereby depositing sand and silt on Pascual's property resulting in an accretion thereon.
Sinforoso Pascual claimed the accretion as the riparian owner.
On March 25, 1960, the Director of Lands, represented by the Assistant Solicitor General, filed
an opposition thereto stating that neither Pascual nor his predecessors-in-interest possessed
sufficient title to the subject property, the same being a portion of the public domain and,
therefore, it belongs to the Republic of the Philippines. The Director of Forestry, through the
Provincial Fiscal, similarly opposed Pascual's application for the same reason as that advanced
by the Director of Lands. Later on, however, the Director of Lands withdrew his opposition. The
Director of Forestry become the sole oppositor.

On June 2, 1960, the court a quo issued an order of general default excepting the Director of
Lands and the Director of Forestry.

Upon motion of Emiliano Navarro, however, the order of general default was lifted and, on
February 13, 1961, Navarro thereupon filed an opposition to Pascual's application. Navarro
claimed that the land sought to be registered has always been part of the public domain, it being
a part of the foreshore of Manila Bay; that he was a lessee and in possession of a part of the
subject property by virtue of a fishpond permit issued by the Bureau of Fisheries and confirmed
by the Office of the President; and that he had already converted the area covered by the lease
into a fishpond.

During the pendency of the land registration case, that is, on November 6, 1960, Sinforoso
Pascual filed a complaint for ejectment against Emiliano Navarro, one Marcelo Lopez and their
privies, alleged by Pascual to have unlawfully claimed and possessed, through stealth, force
and strategy, a portion of the subject property covered by Plan Psu-175181. The defendants in
the case were alleged to have built a provisional dike thereon: thus they have thereby deprived
Pascual of the premises sought to be registered. This, notwithstanding repeated demands for
defendants to vacate the property.

The case was decided adversely against Pascual. Thus, Pascual appealed to the Court of First
Instance (now Regional Trial Court) of Balanga, Bataan, the appeal having been docketed as
Civil Case No. 2873. Because of the similarity of the parties and the subject matter, the
appealed case for ejectment was consolidated with the land registration case and was jointly
tried by the court a quo.

During the pendency of the trial of the consolidated cases, Emiliano Navarro died on November
1, 1961 and was substituted by his heirs, the herein petitioners.

Subsequently, on August 26, 1962, Pascual died and was substituted by his heirs, the herein
private respondents.

On November 10, 1975, the court a quo rendered judgment finding the subject property to be
foreshore land and, being a part of the public domain, it cannot be the subject of land
registration proceedings.

The decision's dispositive portion reads:

"WHEREFORE, judgment is rendered:

(1) Dismissing plaintiff [private respondent] Sinforoso Pascual's complaint for ejectment in Civil
Case No. 2873;

(2) Denying the application of Sinforoso Pascual for land registration over the land in question;
and

(3) Directing said Sinforoso Pascual, through his heirs, as plaintiff in Civil Case No. 2873 and as
applicant in Land Registration Case No. N-84 to pay costs in both
instances."6chanroblesvirtuallawlibrary

The heirs of Pascual appealed and, before the respondent appellate court, assigned the
following errors:
"1. The lower court erred in not finding the land in question as an accretion by the action of the
Talisay and Bulacan Rivers to the land admittedly owned by applicants-appellants [private
respondents].

2. The lower court erred in holding that the land in question is foreshore land.

3. The lower court erred in not ordering the registration of the and is controversy in favor of
applicants-appellants [private respondents].

4. The lower court erred in not finding that the applicants-appellants [private respondents] are
entitled to eject the oppositor-appellee [petitioners]."7chanroblesvirtuallawlibrary

On appeal, the respondent court reversed the findings of the court a quo and granted the
petition for registration of the subject property but excluding therefrom fifty (50) meters from
corner 2 towards corner 1; and fifty meters (50) meters from corner 5 towards corner 6 of the
Psu-175181.

The respondent appellate court explained the reversal in this wise:

"The paramount issue to be resolved in this appeal as set forth by the parties in their respective
briefs is whether or not the land sought to be registered is accretion or foreshore land, or,
whether or not said land was formed by the action of the two rivers of Talisay and Bulacan or by
the action of the Manila Bay. If formed by the action of the Talisay and Bulacan rivers, the
subject land is accretion but if formed by the action of the Manila Bay then it is foreshore land.

xxx

It is undisputed that applicants-appellants [private respondents] owned the land immediately

adjoining the land sought to be registered. Their property which is covered by OCT No. 6830 is
bounded on the east by the Talisay River, on the west by the Bulacan River, and on the north by
the Manila Bay. The Talisay and Bulacan rivers come from inland flowing downstream towards
the Manila Bay. In other words, between the Talisay River and the Bulacan River is the property
of applicants with both rivers acting as the boundary to said land and the flow of both rivers
meeting and emptying into the Manila Bay. The subject land was formed at the tip or apex of
appellants' [private respondents'] land adding thereto the land now sought to be registered.

This makes this case quite unique because while it is undisputed that the subject land is
immediately attached to appellants' [private respondents'] land and forms the tip thereof, at the
same time, said land immediately faces the Manila Bay which is part of the sea. We can
understand therefore the confusion this case might have caused the lower court, faced as it was
with the uneasy problem of deciding whether or not the subject land was formed by the action of
the two rivers or by the action of the sea. Since the subject land is found at the shore of the
Manila Bay facing appellants' [private respondents'] land, it would be quite easy to conclude that
it is foreshore and therefore part of the patrimonial property of the State as the lower court did in
fact rule x x x.

xxx

It is however undisputed that appellants' [private respondents'] land lies between these two
rivers and it is precisely appellants' [private respondents'] land which acts as a barricade
preventing these two rivers to meet. Thus, since the flow of the two rivers is downwards to the
Manila Bay the sediments of sand and silt are deposited at their mouths.

It is, therefore, difficult to see how the Manila Bay could have been the cause of the deposit
thereat for in the natural course of things, the waves of the sea eat the land on the shore, as
they suge [sic] inland. It would not therefore add anything to the land but instead subtract from it
due to the action of the waves and the wind. It is then more logical to believe that the two rivers
flowing towards the bay emptied their cargo of sand, silt and clay at their mouths, thus causing
appellants' [private respondents'] land to accumulate therein.
However, our distinguished colleage [sic], Mr. Justice Serrano, do [sic] not seem to accept this
theory and stated that the subject land arose only when x x x Pascual planted 'palapat' and
'bakawan' trees thereat to serve as a boundary or strainer. But we do not see how this act of
planting trees by Pascual would explain how the land mass came into being. Much less will it
prove that the same came from the sea. Following Mr. Justice Serrano's argument that it were
the few trees that acted as strainers or blocks, then the land that grew would have stopped at
the place where the said trees were planted. But this is not so because the land mass went far
beyond the boundary, or where the trees were planted.

On the other hand, the picture-exhibits of appellants' [private respondents'] clearly show that the
land that accumulated beyond the so-called boundary, as well as the entire area being applied
for is dry land, above sea level, and bearing innumerable trees x x x. The existence of
vegetation on the land could only confirm that the soil thereat came from inland rather than from
the sea, for what could the sea bring to the shore but sand, pebbles, stones, rocks and corrals?
On the other hand, the two rivers would be bringing soil on their downward flow which they
brought along from the eroded mountains, the lands along their path, and dumped them all on
the northern portion of appellants' [private respondents'] land.

In view of the foregoing, we have to deviate from the lower court's finding. While it is true that
the subject land is found at the shore of the Manila Bay fronting appellants' [private
respondents'] land, said land is not foreshore but an accretion from the action of the Talisay and
Bulacan rivers. In fact, this is exactly what the Bureau of Lands found out, as shown in the
following report of the Acting Provincial Officer, Jesus M. Orozco, to wit:

'Upon ocular inspection of the land subject of this registration made on June 11, 1960, it was
found out that the said land is x x x sandwitched [sic] by two big rivers x x x These two rivers
bring down considerable amount of soil and sediments during floods every year thus raising the
soil of the land adjoining the private property of the applicant [private respondents]. About four-
fifth [sic] of the area applied for is now dry land whereon are planted palapat trees thickly
growing thereon. It is the natural action of these two rivers that has caused the formation of said
land x x x subject of this registration case. It has been formed, therefore, by accretion. And
having been formed by accretion, the said land may be considered the private property of the
riparian owner who is the applicant herein [private respondents'] x x x.

In view of the above, the opposition hereto filed by the government should be withdrawn, except
for the portion recommended by the land investigator in his report dated May 2, 1960, to be
excluded and considered foreshore. x x x'

Because of this report, no less than the Solicitor General representing the Bureau of Lands
withdrew his opposition dated March 25, 1960, and limited 'the same to the northern portion of
the land applied for, compromising a strip 50 meters wide along the Manila Bay, which should
be declared public land as part of the foreshore' x x x.8

Pursuant to the aforecited decision, the respondent appellate court ordered the issuance of the
corresponding decree of registration in the name of private respondents and the reversion to
private respondents of the possession of the portion of the subject property included in
Navarro's fishpond permit.

On December 20, 1978, petitioners filed a motion for reconsideration of the aforecited decision.
The Director of Forestry also moved for the reconsideration of the same decision. Both motions
were opposed by private respondents on January 27, 1979.

On November 21, 1980, respondent appellate court promulgated a resolution denying the
motion for reconsideration filed by the Director of Forestry. It, however, modified its decision, to
read, viz:

"(3). Ordering private oppositors Heirs of Emiliano Navarro to vacate that portion included in
their fishpond permit covered by Plan Psu-175181 and hand over possession of said portion to
applicants-appellants, if the said portion is not within the strip of land fifty (50) meters wide along
Manila Bay on the northern portion of the land subject of the registration proceedings and which
area is more particularly referred to as fifty (50) meters from corner 2 towards corner 1; and fifty
(50) meters from corner 5 towards corner 6 of Plan Psu-175181. x x
x9chanroblesvirtuallawlibrary

On December 15, 1980, we granted the Solicitor General, acting as counsel for the Director of
Forestry, an extension of time within which to file in this court, a petition for review of the
decision dated November 29, 1978 of the respondent appellate court and of the aforecited
resolution dated November 21, 1980.

Thereafter, the Solicitor General, in behalf of the Director of Forestry, filed a petition for review
entitled, "The Director of Forestry vs. the Court of Appeals."10 We, however, denied the same in
a minute resolution dated July 20, 1981, such petition having been prematurely filed at a time
when the Court of Appeals was yet to resolve petitioners' pending motion to set aside the
resolution dated November 21, 1980.

On October 9, 1981, respondent appellate court denied petitioners' motion for reconsideration of
the decision dated November 29, 1978.

On October 17, 1981, respondent appellate court made an entry of judgment stating that the
decision dated November 29, 1978 had become final and executory as against herein
petitioners as oppositors in L.R.C. Case No. N-84 and Civil Case No. 2873 of the Court of First
Instance (now the Regional Trial Court) of Balanga, Bataan.

On October 26, 1981, a second motion for reconsideration of the decision dated November 29,
1978 was filed by petitioners' new counsel.

On March 26, 1982, respondent appellate court issued a resolution granting petitioners' request
for leave to file a second motion for reconsideration.

On July 13, 1984, after hearing, respondent appellate court denied petitioners' second motion
for reconsideration on the ground that the same was filed out of time, citing Rule 52, Section 1
of the Rules of Court which provides that a motion for reconsideration shall be made ex-
parte and filed within fifteen (15) days from the notice of the final order or judgment.

Hence this petition where the respondent appellate court is imputed to have palpably erred in
appreciating the facts of the case and to have gravely misapplied statutory and case law relating
to accretion, specifically, Article 457 of the Civil Code.

We find merit in the petition.

The disputed property was brought forth by both the withdrawal of the waters of Manila Bay and
the accretion formed on the exposed foreshore land by the action of the sea which brought soil
and sand sediments in turn trapped by the palapat and bakawan trees planted thereon by
petitioner Sulpicio Pascual in 1948.

Anchoring their claim of ownership on Article 457 of the Civil Code, private respondents
vigorously argue that the disputed 14-hectare land is an accretion caused by the joint action of
the Talisay and Bulacan Rivers which run their course on the eastern and western boundaries,
respectively, of private respondents' own tract of land.

Accretion as a mode of acquiring property under said Article 457, requires the concurrence of
the following requisites: (1) that the accumulation of soil or sediment be gradual and
imperceptible; (2) that it be the result of the action of the waters of the river; and (3) that the land
where the accretion takes place is adjacent to the bank of the river.11 Accretion is the process
whereby the soil is deposited, while alluvium is the soil deposited on the estate fronting the river
bank;12the owner of such estate is called the riparian owner. Riparian owners are, strictly
speaking, distinct from littoral owners, the latter being owners of lands bordering the shore of
the sea or lake or other tidal waters.13 The alluvium, by mandate of Article 457 of the Civil Code,
is automatically owned by the riparian owner from the moment the soil deposit can be
seen14 but is not automatically registered property, hence, subject to acquisition through
prescription by third persons.15chanroblesvirtuallawlibrary
Private respondents' claim of ownership over the disputed property under the principle of
accretion, is misplaced.

First, the title of private respondents' own tract of land reveals its northeastern boundary to be
Manila Bay. Private respondents' land, therefore, used to adjoin, border or front the Manila Bay
and not any of the two rivers whose torrential action, private respondents insist, is to account for
the accretion on their land. In fact, one of the private respondents, Sulpicio Pascual, testified in
open court that the waves of Manila Bay used to hit the disputed land being part of the bay's
foreshore but, after he had planted palapat and bakawan trees thereon in 1948, the land began
to rise.16

Moreover, there is no dispute as to the location of: (a) the disputed land; (b) private
respondents' own tract of land; (c) the Manila Bay; and, (d) the Talisay and Bulacan Rivers.
Private respondents' own land lies between the Talisay and Bulacan Rivers; in front of their land
on the northern side lies now the disputed land where before 1948, there lay the Manila Bay. If
the accretion were to be attributed to the action of either or both of the Talisay and Bulacan
Rivers, the alluvium should have been deposited on either or both of the eastern and western
boundaries of private respondents' own tract of land, not on the northern portion thereof which is
adjacent to the Manila Bay. Clearly lacking, thus, is the third requisite of accretion, which is, that
the alluvium is deposited on the portion of claimant's land which is adjacent to the river bank.

Second, there is no dispute as to the fact that private respondents' own tract of land adjoins the
Manila Bay. Manila Bay is obviously not a river, and jurisprudence is already settled as to what
kind of body of water the Manila Bay is. It is to be remembered that we held that:

"Appellant next contends that x x x Manila Bay cannot be considered as a sea. We find said
contention untenable. A bay is part of the sea, being a mere indentation of the same:

'Bay. An opening into the land where the water is shut in on all sides except at the entrance; an
inlet of the sea; an arm of the sea, distinct from a river, a bending or curbing of the shore of the
sea or of a lake.' 7 C.J. 1013-1014."17chanroblesvirtuallawlibrary

The disputed land, thus, is an accretion not on a river bank but on a sea bank, or on what used
to be the foreshore of Manila Bay which adjoined private respindents' own tract of land on the
northern side. As such, the applicable law is not Article 457 of the Civil Code but Article 4 of the
Spanish Law of Waters of 1866.

The process by which the disputed land was formed, is not difficult to discern from the facts of
the case. As the trial court correctly observed:

"A perusal of the survey plan x x x of the land subject matter of these cases shows that on the
eastern side, the property is bounded by Talisay River, on the western side by Bulacan River,
on the southern side by Lot 1436 and on the northern side by Manila Bay. It is not correct to
state that the Talisay and Bulacan Rivers meet a certain portion because the two rivers both
flow towards Manila Bay. The Talisay River is straight while the Bulacan River is a little bit
meandering and there is no portion where the two rivers meet before they end up at Manila Bay.
The land which is adjacent to the property belonging to Pascual cannot be considered an
accretion [caused by the action of the two rivers].

Applicant Pascual x x x has not presented proofs to convince the Court that the land he has
applied for registration is the result of the settling down on his registered land of soil, earth or
other deposits so as to be rightfully be considered as an accretion [caused by the action of the
two rivers]. Said Art. 457 finds no applicability where the accretion must have been caused by
action of the bay."18chanroblesvirtuallawlibrary

The conclusion formed by the trial court on the basis of the foregoing observation is that the
disputed land is part of the foreshore of Manila Bay and therefore, part of the public domain.
The respondent appellate court, however, perceived the fact that petitioners' own land lies
between the Talisay and Bulacan Rivers, to be basis to conclude that the disputed land must be
an accretion formed by the action of the two rivers because private respondents' own land acted
as a barricade preventing the two rivers to meet and that the current of the two rivers carried
sediments of sand and silt downwards to the Manila Bay which accumulated somehow to a 14-
hectare land. These conclusions, however, are fatally incongruous in the light of the one
undisputed critical fact: the accretion was deposited, not on either the eastern or western portion
of private respondents' land where a river each runs, but on the northern portion of petitioners'
land which adjoins the Manila Bay. Worse, such conclusions are further eroded of their practical
logic and consonance with natural experience in the light of Sulpicio Pascual's admission as to
having planted palapat and bakawan trees on the northern boundary of their own land. In
amplification of this, plainly more reasonable and valid are Justice Mariano Serrano's
observations in his dissenting opinion when he stated that:

"As appellants' (titled) land x x x acts as a barricade that prevents the two rivers to meet, and
considering the wide expanse of the boundary between said land and the Manila Bay,
measuring some 593.00 meters x x x it is believed rather farfetched for the land in question to
have been formed through 'sediments of sand and salt [sic]... deposited at their [rivers'] mouths.'
Moreover, if 'since the flow of the two rivers is downwards to the Manila Bay the sediments of
sand and silt are deposited at their mouths,' why then would the alleged cargo of sand, silt and
clay accumulate at the northern portion of appellants' titled land facing Manila Bay instead of
merely at the mouths and banks of these two rivers? That being the case, the accretion formed
at said portion of appellants' titled [land] was not caused by the current of the two rivers but by
the action of the sea (Manila Bay) into which the rivers empty.

The conclusion x x x is not supported by any reference to the evidence which, on the contrary,
shows that the disputed land was formed by the action of the sea. Thus, no less than Sulpicio
Pascual, one of the heirs of the original applicant, testified on cross-examination that the land in
dispute was part of the shore and it was only in 1948 that he noticed that the land was
beginning to get higher after he had planted trees thereon in 1948. x x x

x x x it is established that before 1948 sea water from the Manila Bay at high tide could reach as
far as the dike of appellants' fishpond within their titled property, which dike now separates this
titled property from the land in question. Even in 1948 when appellants had already
planted palapat and bakawan trees in the land involved, inasmuch as these trees were yet
small, the waves of the sea could still reach the dike. This must be so because in x x x the
survey plan of the titled property approved in 1918, said titled land was bounded on the north by
Manila Bay. So Manila Bay was adjacent to it on the north. It was only after the planting of the
aforesaid trees in 1948 that the land in question began to rise or to get higher in elevation.

The trees planted by appellants in 1948 became a sort of strainer of the sea water and at the
same time a kind of block to the strained sediments from being carried back to the sea by the
very waves that brought them to the former shore at the end of the dike, which must have
caused the shoreline to recede and dry up eventually raising the former shore leading to the
formation of the land in question."19chanroblesvirtuallawlibrary

In other words, the combined and interactive effect of the planting of palapat and bakawan
trees, the withdrawal of the waters of Manila Bay eventually resulting in the drying up of its
former foreshore, and the regular torrential action of the waters of Manila Bay, is the formation
of the disputed land on the northern boundary of private respondents' own tract of land.

The disputed property is an accretion on a sea bank, Manila Bay being an inlet or an arm of the
sea; as such, the disputed property is, under Article 4 of the Spanish Law of Waters of 1866,
part of the public domain.

At the outset, there is a need to distinguish between Manila Bay and Laguna de Bay.

While we held in the case of Ignacio v. Director of Lands and Valeriano20 that Manila Bay is
considered a sea for purposes of determining which law on accretion is to be applied in
multifarious situations, we have ruled differently insofar as accretions on lands adjoining the
Laguna de Bay are concerned.

In the cases of Government of the P.I v. Colegio de San Jose,21 Republic v. Court of
Appeals,22Republic v. Alagad23, and Meneses v. Court of Appeals,24 we categorically ruled that
Laguna de Bay is a lake the accretion on which, by the mandate of Article 84 of the Spanish
Law of Waters of 1866, belongs to the owner of the land contiguous thereto.

The instant controversy, however, brings a situation calling for the application of Article 4 of the
Spanish Law of Waters of 1866, the disputed land being an accretion on the foreshore of Manila
Bay which is, for all legal purposes, considered a sea.

Article 4 of the Spanish Law of Waters of August 3, 1866 provides as follows:

"Lands added to the shores by accretions and alluvial deposits caused by the action of the sea,
form part of the public domain. When they are no longer washed by the waters of the sea and
are not necessary for purposes of public utility, or for the establishment of special industries, or
for the coast-guard service, the Government shall declare them to be the property of the owners
of the estates adjacent thereto and as increment thereof."

In the light of the aforecited vintage but still valid law, unequivocal is the public nature of the
disputed land in this controversy, the same being an accretion on a sea bank which, for all legal
purposes, the foreshore of Manila Bay is. As part of the public domain, the herein disputed land
is intended for public uses, and "so long as the land in litigation belongs to the national domain
and is reserved for public uses, it is not capable of being appropriated by any private person,
except through express authorization granted in due form by a competent authority."25 Only the
executive and possibly the legislative departments have the right and the power to make the
declaration that the lands so gained by action of the sea is no longer necessary for purposes of
public utility or for the cause of establishment of special industries or for coast guard
services.26 Petitioners utterly fail to show that either the executive or legislative department has
already declared the disputed land as qualified, under Article 4 of the Spanish Law of Waters of
1866, to be the property of private respondents as owners of the estates adjacent thereto.

WHEREFORE, the instant Petition for Review is hereby GRANTED.

The decision of the Intermediate Appellate Court (now Court of Appeals) in CA G.R. No. 59044-
R dated November 29, 1978 is hereby REVERSED and SET ASIDE. The resolution dated
November 21, 1980 and March 28, 1982, respectively, promulgated by the Intermediate
Appellate Court are likewise REVERSED and SET ASIDE.

The decision of the Court of First Instance (now the Regional Trial Court), Branch 1, Balanga,
Bataan, is hereby ORDERED REINSTATED.

Costs against private respondents.

SO ORDERED.
G.R. No. 82220 July 14, 1995

PABLITO MENESES and LORENZO MENESES, petitioners,

vs.
THE HONORABLE COURT OF APPEALS, EDUARDO QUISUMBING, NORBERTO
QUISUMBING, HEIRS OF EMILIO QUISUMBING (Carlos, Manuel and Paz, all surnamed
Quisumbing), HEIRS OF FERNANDO QUISUMBING (Perla, Josefina, Napoleon, Honorato,
Remedios and Alfonso, all surnamed Quisumbing), HEIRS OF MANUEL QUISUMBING,
SR. (Petrona, Natividad, Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing) and
HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Luisa, Norberto, Jimmy, Ma.
Victoria, Elsa and Oscar, all surnamed Quisumbing), all represented by Atty. Galileo
Brion, respondents.

G.R. No. 82251 July 14, 1995

CESAR ALMENDRAL, petitioner,

vs.
EDUARDO QUISUMBING, respondent.

G.R. No. 83059 July 14, 1995

EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING

(Carlos, Manuel and Paz, all surnamed Quisumbing), HEIRS OF FERNANDO
QUISUMBING, (Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all
surnamed Quisumbing), HEIRS OF MANUEL QUISUMBING, SR. (Petrona, Natividad,
Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing) and HEIRS OF FRANCISCO
QUISUMBING (Fe, Johnny, Ma. Victoria, Elsa and Oscar, all surnamed
Quisumbing), petitioners,
vs.
HON. COURT OF APPEALS, PABLITO MENESES, LORENZO MENESES and BRAULIO C.
DARUM, respondents.

QUIASON, J.:

For review in these consolidated petitions is the Decision dated August 31, 1987 of the Court of
Appeals in CA-G.R. CV No. 07049 affirming the Decision dated March 26, 1984 of the Regional
Trial Court, Branch 37, Calamba, Laguna, in Civil Case No. 474-83-C which declared as null
and void the original certificates of title and free patents issued to Pablito Meneses over lots
found by the court to be accretion lands forming parts of the bigger accretion land owned by
Ciriaca Arguelles Vda. de Quisumbing.

On March 1, 1977, Braulio C. Darum, then the District Land Officer of Los Baños, Laguna,
issued to Pablito Meneses Free Patent No. (IV-5) P-12807 and Original Certificate of Title No.
P-1268 covering Lot 1585 with an area of 417 square meters, and Free Patent No (IV-5) 12808
and Original Certificate of Title No P-1269 for Lot 190 with an area of 515 square meters. Both
lots are located in Los Baños, Laguna.

Pablito Meneses acquired said property from Silverio Bautista through a Deed of Waiver and
Transfer of Rights executed on May 5, 1975 in consideration of Bautista's "love and affection"
for and "some monetary obligations" in favor of Pablito Meneses (Rollo, p. 45). After the
execution of said document, Pablito Meneses took possession of the land, introduced
improvements thereon, declared the land as his own for tax purposes and paid the
corresponding realty taxes. In turn, Bautista acquired the 900-square-meter land from his aunt,
Sergia (Gliceria) M. Almeda. He had been occupying the land since 1956.

On the other hand, the Quisumbing family traces ownership of the land as far back as
September 6, 1919 when their matriarch, Ciriaca Arguelles Vda. de Quisumbing was issued
Original Certificate of Title No. 989 covering a lot with an area of 859 square meters located in
Los Baños, Laguna with the Laguna de Bay as its northwestern boundary. The same parcel of
land was registered on August 14, 1973 under Transfer Certificate of Title No. T-33393 in the
names of Ciriaca's heirs: Emilio, Manuel, Eduardo, Norberto, Perla, Josefina, Napoleon,
Honorato, Remedios and Alfonso, all surnamed Quisumbing.

In 1962, the Quisumbing instituted and accion publiciana in the then Court of First Instance of
Biñan, Laguna to recover possession over a portion of the property from Dominga Villamor and
Lorenzo Lanuzo docketed as Civil Case No. B-350. On January 3, 1966, the case was decided
in favor of the Quisumbings. On appeal, the Court of Appeals sustained the Quisumbings' right
over the property.

In LRC Case No. B-327, the Quisumbings applied for registration and confirmation of title over
an additional area of 2,387 square meters which had gradually accrued to their property by the
natural action of the waters of Laguna de Bay. In its Decision of September 28, 1978, the Court
of First Instance of Biñan confirmed the Quisumbings' title thereto which, after it was duly
surveyed, was identified as Psu-208327. The additional area was divided into two lots in the
survey plan approved by the Director of Lands on November 16, 1964. In ordering the
confirmation and registration of title on favor of the Quisumbings, the land registration court
said:

. . . There is no doubt that the applicants' right to the property was bolstered by
the unappealed decision of the Court of Appeals in Civil Case No. B-350 of this
Court when the properties applied for were classified as accretions made by the
waters of the Laguna Lake. . . . (G.R. No. 82229, Rollo, p. 20).

On April 17, 1979, the Quisumbings filed Civil Case No. 07049 before the Court of First Instance
of Laguna, Branch VI, Calamba against Lorenzo and Pablito Meneses, Braulio C. Darum and
Cesar B. Almendral for nullification of the free patents and titles issued to Pablito Meneses.
They alleged that Lorenzo Menesis, then the Mayor of Los Baños, using his brother Pablito as a
"tool and dummy," illegally occupied their "private accretion land" an August 6, 1976, and,
confederating with District Land Officer Darum and Land Inspector Cesar Almendral, obtained
free patents and original certificates of title to the land.

On March 26, 1984, the trial court rendered the decision finding that the lands registered by the
Meneses brothers are accretion lands to which the Quisumbings have a valid right as owners of
the riparian land to which nature had gradually deposited the disputed lots. In so holding, the
trial court relied heavily on the decision of the Court of Appeals in Civil Case No. B-350, and
quoted the following portions of the appellate court's decision:

Plaintiffs-appellees are titled owners of a (sic) 859 square meters of land under
TCT No. 25978 of the Laguna Land Registry, the northwest boundary of which is
the Laguna de Bay.

It is ascertained that the northwest portion of Quisumbing's lot is bounded by the

Laguna de Bay. The nature of the Laguna de Bay has long been settled in the
case of Government of the Philippines v. Colegio de San Jose (55 Phil. 423)
when it held that:

Laguna de Bay is a body of water formed in depression of the

earth; it contains fresh water coming from rivers and brooks and
springs, and is connected with Manila Bay by the Pasig River.
According to the definition first quoted, Laguna de Bay is a lake.

Consequently, since Laguna de Bay is a lake, the authorities cited by the

appellants referring to seashore would not apply. The provision of the law on
waters will govern in determining the natural bed or basin of the lake. And
accordingly, to Art. 84 of the Law of Waters of August 3, 1866:
 Accretions deposited gradually upon land contiguous to creeks,
streams, rivers and lakesby accessions or sediments from the
waters thereof, belong to the owners of such lands.

Since the title indicate(s) that the northwest portion of the property is bounded by
Laguna de Bay, which is a lake, even if the area where Lanuza's house and
Villamor's house for that matter is located is not included within the title, it must
necessarily be an accretion upon appellees' land by accessions or sediments
from the waters thereof which should belong to the owner of the adjacent land.
The authorities cited by the appellants treat of the ownership of accretions by
water of the sea under Title I. Lakewaters being terrestrial waters, their
ownership is governed by Title II of the Law of Waters. As held in the Colegio de
San Jose case, the provisions of the Law of Waters regulating the ownership and
use of sea water are not applicable to the ownership and use of lakes which are
governed by different provisions. As pointed out by the lower court, no act of
appropriation is necessary in order to acquire ownership of the alluvial formation
as the law does not require the same (Ignacio Grande, et al. vs. Hon. Court of
Appeals, et al., G.R. No. L-17652, June 30, 1962 citing Roxas vs. Tuazon, 9 Phil.
408; Cortez vs. City of Manila, 10 Phil. 567 and 3 Manresa, C.C. pp. 321-326, pp.
4-5) (Records, pp. 80-84).

The trial court also found that the free patents issued to Pablito Meneses had been procured
through fraud, deceit and bad faith, citing the following facts as bases for its conclusion: (1) The
Deed of Waiver and Transfer of Rights allegedly executed by Silverio Bautista in favor of Pablito
Meneses was a simulated contract for lack of consideration; (2) The said instrument was sworn
to before Mayor Lorenzo Meneses who had no authority to notarize deeds of conveyances; (3)
Although the lots subject of the deed of conveyance were placed in his brother's name, Mayor
Meneses actually exercised rights of ownership thereto; (4) Land Inspector Cesar Almendral
admitted having anomalously prepared the documents to support the free patent applications of
Pablito Meneses and, having personally filled up the blank forms, signed them in the absence of
the persons concerned; (5) Almendral kept the documents in his possession from 1979 to 1980
despite orders from the Director of Lands to produce and surrender the same; (6) District Land
Officer Braulio Darum approved the free patent applications and issued the questioned titles
without the required cadastral survey duly approved by the Director of Lands and despite the
pendency of LRC Case No. B-327 involving the contested lots; (7) Darum represented the
Bureau of Lands in LRC Case No. B-327 without authority from the Director of Lands and after
he had withdrawn his appearance in said case, persisted in filing a motion to set aside the order
for the issuance of a decree in favor of the Quisumbings; (8) Darum and Almendral in bad faith,
refused to produce the missing original records of the free patent applications and their
supporting documents; and (9) When Darum was not yet an oppositor in LRC Case No. B-327,
he admitted in his letter to the Land Registration Commission that the contested lots are
portions of the land being claimed by the Quisumbings contrary to his later representation in the
joint answer to the petition that the subject lots are not portions of Lots 1 and 2, Psu-208327
owned by the Quisumbings. Accordingly, the trial court disposed of the case as follows:

WHEREFORE, judgment is hereby rendered:

1. Declaring that the lands covered by Pablito Meneses' Original Certificate of

Title No. P-1268/Free Patent No. 12807 (Exh. "J"), covering Lot No. 1585,
consisting of 417 square meters and Original Certificate of Title No. P-1269/Free
Patent No. 12808 (Exh. "H"), covering Lot No. 190, consisting of 515 square
meters, both located at Los Baños, Laguna, as accretion lands forming parts of a
bigger accretion land owned by plaintiffs as declared in a final judgment (Exh.
"A"), rendered by the Court of First Instance of Biñan, Laguna, in LRC Case No.
B-327, which bigger accretion land is directly adjacent to or at the back of
plaintiffs' riparian land, and consequently, declaring as null and void and
cancelled Original Certificate of Title No. P-1268/Free Patent No. 12807 and
Original Certificate of Title No. P-1269/Free Patent No. 12808;

2. Directing that the Register of Deeds of Laguna or his Deputy at Calamba,

Laguna, to make the corresponding entries of cancellation in his Registry of the
above mentioned Original Certificate of Titles/Free Patents;
 3. Directing defendants Lorenzo Meneses and Pablito Meneses and all persons
acting in their behalves to vacate the subject lands and surrender the possession
thereof to the plaintiffs immediately; and

4. Directing the defendants to pay jointly and severally, the plaintiffs the sums of:

a) P20,000.00, plus P500.00 per month from January, 1977, until

the subject property is completely vacated, as actual and
compensatory damages;

b) P350,000.00, as moral damages;

c) P70,000.00 as exemplary damages;

d) P40,000.00, as attorney's fees; and

e) the costs (Rollo, pp. 41-42).

Thereafter, the Quisumbings filed a motion for execution pending appeal which the trial court
granted in its Order of September 7, 1984 subject to the posting by the Quisumbings of a bond
in the amount of P500,000.00. The defendants unsuccessfully moved for the reconsideration of
said order.

The Quisumbings also filed before the Sandiganbayan a complaint against Pablito Meneses,
Silverio Bautista, Pablo Silva, Virgilio Cruz and Cesar Almendral for violation of paragraphs (e)
and (j), Section 3 of Republic Act No. 3019, for conspiring in the approval and grant of the free
patents over portions of Lots 1 & 2 of Psu-208327 owned by the heirs of Ciriaca Arguelles Vda.
de Quisumbing. In due course, the Sandiganbayan rendered a decision finding the defendants
guilty as charged. The case was elevated to this Court but on August 27, 1987, the judgment of
conviction was affirmed (Meneses v. People, 153 SCRA 303 [1987]).

Meanwhile, the Meneses brothers and Darum appealed the decision in Civil Case No. 07049 to
the Court of Appeals. On August 31, 1987, the Court of Appeals found the appeal to be without
merit and affirmed in toto the lower court's decision.

The defendants-appellants filed two motions for the reconsideration of the appellate court's
decision but it was denied in the Resolution of February 23, 1988 which in pertinent part stated:

However, for humanitarian considerations, and considering the appeal of the

defendants-appellants for a reduction of the moral and exemplary damages, We
favor the reduction of the moral damages from P350,000.00 to P50,000.00 and
the exemplary damages from P70,000.00 to P5,000.00. In all other respects, We
find no justification for modifying the dispositive portion of the decision of the
lower court (G.R. No. 82220, Rollo, p. 67).

Pablito and Lorenzo Meneses filed the instant petition for review on certiorari, which was
docketed as G.R. No. 82220. Cesar Almendral filed a motion in G.R. No. 82251 for a 45-day
extension within which to file a petition for review on certiorari. After this Court had granted them
a 30-day extension, Almendral still failed to file any petition. The Quisumbings also filed a
petition for review on certiorari, docketed as G.R. No. 83059, solely on the issue of the propriety
of the reduction of the amount of damages in the Court of Appeals' Resolution of February 23,
1988. Upon motion of petitioners in G.R. No. 83059, the three petitions were consolidated in the
Resolution of August 1, 1988.

Petitioners in G.R. No. 82220 retell the same errors they had raised before the Court of
Appeals, contending in the main: (1) that the lands in question were not accretion lands but
lands of the public domain; (2) that no conspiracy to commit fraud, deceit and bad faith attended
the issuance of the free patent and titles to Pablito Meneses; and (3) that the Deed of Waiver
and Transfer of Rights was founded on a valid consideration.
As regards the issue of whether the lands in question are accretion lands, petitioners relied on
the Decision of the Court of Appeals in Republic of the Philippines v. Braga, CA-G.R. No.
55390-R, October 23, 1980, holding that the property involved therein was part of the natural
bed of the Laguna de Bay and therefore what had to be determined was whether said property
was covered by water when the lake was at its highest depth.

Petitioners' assigned errors in G.R. No. 82220 are evidently factual issues which have been
thoroughly passed upon and settled both by the trial court and the appellate court. Factual
findings of the Court of Appeals are conclusive on the parties and not reviewable by this Court
(Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals, 229 SCRA 533 [1994]) and they carry
even more weight when the Court of Appeals affirms the factual findings of the trial court
(Binalay v. Manalo, 195 SCRA 374 [1991]). The jurisdiction of this Court is thus limited to
reviewing errors of law unless there is a showing that the findings complained of are totally
devoid of support in the record or that they are so glaringly erroneous as to constitute serious
abuse of discretion (BA Finance Corporation v. Court of Appeals, 229 SCRA 566 [1941]). We
find no such showing in this case.

Petitioners' protestations notwithstanding the final decision of the Court of Appeals in Civil Case
No. B-350 has a bearing in the resolution of this case for while the lots occupied by Villamor and
Lanuzo may not be the very same lots petitioners are claiming here, the two cases refer to the
same accretion lands northwest of the original land owned by the Quisumbings.

In the same vein, the decision of the land registration court in LRC Case No. B-327 ordering the
confirmation and registration of title in favor of the Quisumbings over 2,387 square meters of
accretion land is binding on petitioners in G.R. No. 82220. As correctly pointed out by the Court
of Appeals, said decision, being the result of a proceeding in rem, binds the whole world, more
so because it became final and executory upon the Bureau of Lands' failure to interpose an
appeal.

Since petitioners in G.R. No. 82220 claim that "the foreshore land known as Lots 190 and 1585
are part of Laguna de Bay" and therefore the Quisumbings "have no legal right to claim the
same as accretion land," we quote the following pertinent portions of the decision in Republic v.
Court of Appeals, 131 SCRA 532 (1984) which, although the case deals with the registration of
a reclaimed land along the Laguna de Bay, is nonetheless enlightening:

Laguna de Bay is a lake. While the waters of a lake are also subject to the same
gravitational forces that cause the formation of tides in seas and oceans, this
phenomenon is not a regular daily occurrence in the case of lakes. Thus, the
alternation of high tides and low tides, which is an ordinary occurrence, could
hardly account for the rise in the water level of the Laguna de Bay as observed
four to five months a year during the rainy season. Rather, it is the rains which
bring about the inundation of a portion of the land in question. Since the rise in
the water level which causes the submersion of the land occurs during a shorter
period (four to five months a year) than the level of the water at which the land is
completely dry, the latter should be considered as the "highest ordinary depth" of
Laguna de Bay. Therefore, the land sought to be registered is not part of the bed
or basin of Laguna de Bay. Neither can it be considered as foreshore land. The
Brief for the Petitioner Director of Lands cites an accurate definition of a
foreshore land, to wit:

. . . . that part of (the land) which is between high and low water
and left dry by the flux and reflux of the tides.

The strip of land that lies between the high and low water marks
and that is alternately wet and dry according to the flow of the tide.

As aptly found by the Court a quo, the submersion in water of a portion of the
land in question is due to the rains "falling directly on or flowing into Laguna de
Bay from different sources." Since the inundation of a portion of the land is not
due to "flux and reflux of tides" it cannot be considered a foreshore land within
the meaning of the authorities cited by petitioner Director of Lands. The land
 sought to be registered not being part of the bed or basin of Laguna de Bay, nor
a foreshore land as claimed by the Director of Lands, it is not a public land and
therefore capable of registration as private property provided that the applicant
proves that he has a registerable title (at pp. 538-539).

Accretion as a mode of acquiring property under Article 457 of the Civil Code requires the
concurrence of these requisites: (1) that the deposition of soil or sediment be gradual and
imperceptible; (2) that it be the result of the action of the waters of the river (or sea); and (3) that
the land where accretion takes place is adjacent to the banks of rivers (or the sea coast). While
the trial court mainly relied on the findings in Civil Case No. B-350 that the lands in controversy
are accretion lands and it has not determined on its own the presence of said requisites, it is too
late now for petitioners in G.R. No. 82220 to claim otherwise. Consequently, the lands held to
be accretion lands could only benefit the Quisumbings, who own the property adjacent to the
lands in controversy (Cruz v. Court of Appeals, 216 SCRA 350 [1992]).

Petitioners in G.R. No. 82220 also assert that the principle of indefeasibility of title should favor
them as the one-year period provided for by law to impugn their title had elapsed. They also
urged that, having been granted by the state, their title is superior to that of the Quisumbings.
We hold, however, that in the light of the fraud attending the issuance of the free patents and
titles of Pablito Meneses, said assertions crumble. Such fraud was confirmed by this Court
in Meneses v. People, 153 SCRA 303 (1987) which held the petitioners therein liable for
violation of the Anti-Graft and Corrupt Practices Act in the issuance of the same free patents
and titles.

Unlike the petition in G.R. No. 82220, the petition in G.R. No. 83059 (questioning the reduction
of the damages awarded to the Quisumbings by the Court of Appeals in the Resolution of
February 23, 1988) is meritorious. The task of fixing the amount of damages is primarily with the
trial court (Air France v. Carrascoso, 18 SCRA 155 [1966]). While it is the appellate court's duty
to review the same, a reduction of the award of damages must pass the test of reasonableness.
The Court of Appeals can only modify or change the amount awarded as damages when they
are palpably or scandalously and reasonably excessive (Philippine Airlines, Inc. v. Court of
Appeals, 226 SCRA 423 [1993]; Prudenciano v. Alliance Transport System, Inc., 148 SCRA 440
[1987]).

There is no justification for the radical reduction by the Court of Appeals of the damages
awarded by the trial court. Its action was premise merely on "humanitarian considerations" and
the plea of the defendants-appellants. We may agree with the Court of Appeals in reducing the
award after scrutinizing its factual findings only if such findings are diametrically opposed to that
of the trial court (Prudenciado v. Alliance Transport System, Inc., supra). But as it is, the Court
of Appeals affirmed point by point the factual findings if the lower court upon which the award of
damages had been based.

We, therefore, see no reason to modify the award of damages made by the trial court.
Respondent Braulio C. Darum in G.R. No. 83059 must also be solidarily liable for said damages
in his capacity as a public officer. A public official is by law not immune from damages in his
personal capacity for acts done in bad faith which, being outside the scope of his authority, are
no longer protected by the mantle of immunity for official actions (Vidad v. RTC of Negros, Br.
42, 227 SCRA 271 [1993]).

WHEREFORE, the petition in G.R. No. 82220 is DENIED while the petition in G.R. No. 83059 is
GRANTED. The Decision dated August 31, 1987 of the Court of Appeals is AFFIRMED while its
Resolution of February 23, 1988 insofar as it reduces the amount of damages awarded to the
Quisumbing family is SET ASIDE. Costs against petitioners in G.R. No. 82220 and respondent
Braulio Darum in G.R. No. 83059.

SO ORDERED.
G.R. No. L-17652 June 30, 1962

IGNACIO GRANDE, ET AL., petitioners,

vs.
HON. COURT OF APPEALS, DOMINGO CALALUNG, and ESTEBAN
CALALUNG, respondents.

Bartolome Guirao and Antonio M. Orara for petitioners.

Gonzales and Fernandez for respondents.

BARRERA, J.:

This is an appeal taken by petitioners Ignacio, Eulogia, Alfonso, Eulalia, and Sofia Grande, from
the decision of the Court of Appeals (CA-G.R. No. 25169-R) reversing that of the Court of First
Instance of Isabela (Civil Case No. 1171), and dismissing petitioners' action against
respondents Domingo and Esteban Calalung, to quiet title to and recover possession of a parcel
of land allegedly occupied by the latter without petitioners' consent.

The facts of the case, which are undisputed, briefly are: Petitioners are the owners of a parcel of
land, with an area of 3.5032 hectares, located at barrio Ragan, municipality of Magsaysay
(formerly Tumauini), province of Isabela, by inheritance from their deceased mother Patricia
Angui (who inherited it from her parents Isidro Angui and Ana Lopez, in whose name said land
appears registered, as shown by Original Certificate of Title No. 2982, issued on June 9, 1934).
Said property is identified as Lot No. 1, Plan PSU-83342. When it was surveyed for purposes of
registration sometime in 1930, its northeastern boundary was the Cagayan River (the same
boundary stated in the title). Since then, and for many years thereafter, a gradual accretion on
the northeastern side took place, by action of the current of the Cagayan River, so much so, that
by 1958, the bank thereof had receded to a distance of about 105 meters from its original site,
and an alluvial deposit of 19,964 square meters (1.9964 hectares), more or less, had been
added to the registered area (Exh. C-1).

On January 25, 1958, petitioners instituted the present action in the Court of First Instance of
Isabela against respondents, to quiet title to said portion (19,964 square meters) formed by
accretion, alleging in their complaint (docketed as Civil Case No. 1171) that they and their
predecessors-in-interest, were formerly in peaceful and continuous possession thereof, until
September, 1948, when respondents entered upon the land under claim of ownership.
Petitioners also asked for damages corresponding to the value of the fruits of the land as well as
attorney's fees and costs. In their answer (dated February 18, 1958), respondents claim
ownership in themselves, asserting that they have been in continuous, open, and undisturbed
possession of said portion, since prior to the year 1933 to the present.

After trial, the Court of First Instance of Isabela, on May 4, 1959, rendered a decision adjudging
the ownership of the portion in question to petitioners, and ordering respondents to vacate the
premises and deliver possession thereof to petitioners, and to pay to the latter P250.00 as
damages and costs. Said decision, in part, reads:

It is admitted by the parties that the land involved in this action was formed by the
gradual deposit of alluvium brought about by the action of the Cagayan River, a
navigable river. We are inclined to believe that the accretion was formed on the
northeastern side of the land covered by Original Certificate of Title No. 2982 after the
survey of the registered land in 1931, because the surveyors found out that the
northeastern boundary of the land surveyed by them was the Cagayan River, and not
the land in question. Which is indicative of the fact that the accretion has not yet started
or begun in 1931. And, as declared by Pedro Laman, defendant witness and the
boundary owner on the northwest of the registered land of the plaintiffs, the accretion
was a little more than one hectare, including the stony portion, in 1940 or 1941.
Therefore, the declarations of the defendant Domingo Calalung and his witness, Vicente
C. Bacani, to the effect that the land in question was formed by accretion since 1933 do
not only contradict the testimony of defendants' witness Pedro Laman, but could not
overthrow the incontestable fact that the accretion with an area of 4 hectare more or
less, was formed in 1948, reason for which, it was only declared in that same year for
 taxation purposes by the defendants under Tax Dec. No. 257 (Exh. "2") when they
entered upon the land. We could not give credence to defendants' assertion that Tax
Dec. No. 257 (Exh. "2") cancelled Tax Dee. No. 28226 (Exh. "1"), because Exh. "2" says
that "tax under this declaration begins with the year 1948. But, the fact that defendants
declared the land for taxation purposes since 1948, does not mean that they become the
owner of the land by mere occupancy, for it is a new provision of the New Civil Code that
ownership of a piece of land cannot be acquired by occupation (Art. 714, New Civil
Code). The land in question being an accretion to the mother or registered land of the
plaintiffs, the accretion belongs to the plaintiffs (Art. 457, New Civil Code; Art. 366, Old
Civil Code). Assuming arguendo, that the accretion has been occupied by the
defendants since 1948, or earlier, is of no moment, because the law does not require
any act of possession on the part of the owner of the riparian owner, from the moment
the deposit becomes manifest (Roxas v. Tuason, 9 Phil. 408; Cortez v. City of Manila, 10
Phil. 567). Further, no act of appropriation on the part of the reparian owner is
necessary, in order to acquire ownership of the alluvial formation, as the law does not
require the same (3 Manresa, C.C., pp. 321-326).

This brings us now to the determination of whether the defendants, granting that they
have been in possession of the alluvium since 1948, could have acquired the property
by prescription. Assuming that they occupied the land in September, 1948, but
considering that the action was commenced on January 25, 1958, they have not been in
possession of the land for ten (10) years; hence, they could not have acquired the land
by ordinary prescription (Arts. 1134 and 1138, New Civil Code). Moreover, as the
alluvium is, by law, part and parcel of the registered property, the same may be
considered as registered property, within the meaning of Section 46 of Act No. 496: and,
therefore, it could not be acquired by prescription or adverse possession by another
person.

Unsatisfied, respondents appealed to the Court of Appeals, which rendered, on September 14,
1960, the decision adverted to at the beginning of this opinion, partly stating:

That the area in controversy has been formed through a gradual process of alluvium,
which started in the early thirties, is a fact conclusively established by the evidence for
both parties. By law, therefore, unless some superior title has supervened, it should
properly belong to the riparian owners, specifically in accordance with the rule of natural
accession in Article 366 of the old Civil Code (now Article 457), which provides that "to
the owner of lands adjoining the banks of rivers, belongs the accretion which they
gradually receive from the effects of the current of the waters." The defendants,
however, contend that they have acquired ownership through prescription. This
contention poses the real issue in this case. The Court a quo, has resolved it in favor of
the plaintiffs, on two grounds: First, since by accession, the land in question pertains to
the original estate, and since in this instance the original estate is registered, the
accretion, consequently, falls within the purview of Section 46 of Act No. 496, which
states that "no title to registered land in derogation to that of the registered owner shall
be acquired by prescription or adverse possession"; and, second, the adverse
possession of the defendant began only in the month of September, 1948, or less than
the 10-year period required for prescription before the present action was instituted.

As a legal proposition, the first ground relied upon by the trial court, is not quite correct.
An accretion to registered land, while declared by specific provision of the Civil Code to
belong to the owner of the land as a natural accession thereof, does not ipso
jure become entitled to the protection of the rule of imprescriptibility of title established
by the Land Registration Act. Such protection does not extend beyond the area given
and described in the certificate. To hold otherwise, would be productive of confusion. It
would virtually deprive the title, and the technical description of the land given therein, of
their character of conclusiveness as to the identity and area of the land that is registered.
Just as the Supreme Court, albeit in a negative manner, has stated that registration does
not protect the riparian owner against the erosion of the area of his land through gradual
changes in the course of the adjoining stream (Payatas Estate Development Co. v.
Tuason, 53 Phil. 55), so registration does not entitle him to all the rights conferred by
Land Registration Act, in so far as the area added by accretion is concerned. What rights
he has, are declared not by said Act, but by the provisions of the Civil Code on
 accession: and these provisions do not preclude acquisition of the addition area by
another person through prescription. This Court has held as much in the case
of Galindez, et al. v. Baguisa, et al., CA-G.R. No. 19249-R, July 17, 1959.

We now proposed to review the second ground relied upon by the trial court, regarding
the length of time that the defendants have been in possession. Domingo Calalung
testified that he occupied the land in question for the first time in 1934, not in 1948 as
claimed by the plaintiffs. The area under occupancy gradually increased as the years
went by. In 1946, he declared the land for purposes of taxation (Exhibit 1). This tax
declaration was superseded in 1948 by another (Exhibit 2), after the name of the
municipality wherein it is located was changed from Tumauini to Magsaysay. Calalung's
testimony is corroborated by two witnesses, both owners of properties nearby. Pedro
Laman, 72 years of age, who was Municipal president of Tumauini for three terms, said
that the land in question adjoins his own on the south, and that since 1940 or 1951, he
has always known it to be in the peaceful possession of the defendants. Vicente C.
Bacani testified to the same effect, although, he said that the defendants' possession
started sometime in 1933 or 1934. The area thereof, he said, was then less than one
hectare.

We find the testimony of the said witnesses entitled to much greater weight and
credence than that of the plaintiff Pedro Grande and his lone witness, Laureana
Rodriguez. The first stated that the defendants occupied the land in question only in
1948; that he called the latter's attention to the fact that the land was his, but the
defendants, in turn, claimed that they were the owners, that the plaintiffs did not file an
action until 1958, because it was only then that they were able to obtain the certificate of
title from the surveyor, Domingo Parlan; and that they never declared the land in
question for taxation purposes or paid the taxes thereon. Pedro Grande admitted that
the defendants had the said land surveyed in April, 1958, and that he tried to stop it, not
because he claimed the accretion for himself and his co-plaintiffs, but because the
survey included a portion of the property covered by their title. This last fact is conceded
by the defendants who, accordingly, relinquished their possession to the part thus
included, containing an area of some 458 square meters.1äwphï1.ñët

The oral evidence for the defendants concerning the period of their possession — from
1933 to 1958 — is not only preponderant in itself, but is, moreover, supported by the fact
that it is they and not the plaintiffs who declared the disputed property for taxation, and
by the additional circumstance that if the plaintiff had really been in prior possession and
were deprived thereof in 1948, they would have immediately taken steps to recover the
same. The excuse they gave for not doing so, namely, that they did not receive their
copy of the certificate of title to their property until 1958 for lack of funds to pay the fees
of the surveyor Domingo Parlan, is too flimsy to merit any serious consideration. The
payment of the surveyor's fees had nothing to do with their right to obtain a copy of the
certificate. Besides, it was not necessary for them to have it in their hands, in order to file
an action to recover the land which was legally theirs by accession and of which, as they
allege, they had been illegally deprived by the defendants. We are convinced, upon
consideration of the evidence, that the latter, were really in possession since 1934,
immediately after the process of alluvion started, and that the plaintiffs woke up to their
rights only when they received their copy of the title in 1958. By then, however,
prescription had already supervened in favor of the defendants.

It is this decision of the Court of Appeals which petitioners seek to be reviewed by us.

The sole issue for resolution in this case is whether respondents have acquired the alluvial
property in question through prescription.

There can be no dispute that both under Article 457 of the New Civil Code and Article 366 of the
old, petitioners are the lawful owners of said alluvial property, as they are the registered owners
of the land which it adjoins. The question is whether the accretion becomes automatically
registered land just because the lot which receives it is covered by a Torrens title thereby
making the alluvial property imprescriptible. We agree with the Court of Appeals that it does not,
just as an unregistered land purchased by the registered owner of the adjoining land does not,
by extension, become ipso facto registered land. Ownership of a piece of land is one thing, and
registration under the Torrens system of that ownership is quite another. Ownership over the
accretion received by the land adjoining a river is governed by the Civil Code. Imprescriptibility
of registered land is provided in the registration law. Registration under the Land Registration
and Cadastral Acts does not vest or give title to the land, but merely confirms and thereafter
protects the title already possessed by the owner, making it imprescriptible by occupation of
third parties. But to obtain this protection, the land must be placed under the operation of the
registration laws wherein certain judicial procedures have been provided. The fact remain,
however, that petitioners never sought registration of said alluvial property (which was formed
sometime after petitioners' property covered by Original Certificate of Title No. 2982 was
registered on June 9, 1934) up to the time they instituted the present action in the Court of First
Instance of Isabela in 1958. The increment, therefore, never became registered property, and
hence is not entitled or subject to the protection of imprescriptibility enjoyed by registered
property under the Torrens system. Consequently, it was subject to acquisition through
prescription by third persons.

The next issue is, did respondents acquire said alluvial property through acquisitive
prescription? This is a question which requires determination of facts: physical possession and
dates or duration of such possession. The Court of Appeals, after analyzing the evidence, found
that respondents-appellees were in possession of the alluvial lot since 1933 or 1934, openly,
continuously and adversely, under a claim of ownership up to the filing of the action in 1958.
This finding of the existence of these facts, arrived at by the Court of Appeals after an
examination of the evidence presented by the parties, is conclusive as to them and can not be
reviewed by us.

The law on prescription applicable to the case is that provided in Act 190 and not the provisions
of the Civil Code, since the possession started in 1933 or 1934 when the pertinent articles of the
old Civil Code were not in force and before the effectivity of the new Civil Code in 1950. Hence,
the conclusion of the Court of Appeals that the respondents acquired alluvial lot in question by
acquisitive prescription is in accordance with law.

The decision of the Court of Appeals under review is hereby affirmed, with costs against the
petitioners. So ordered.
G.R. No. 94283 March 4, 1991

MAXIMO JAGUALING, ANUNCITA JAGUALING and MISAMIS ORIENTAL CONCRETE

PRODUCTS, INC.,petitioners,
vs.
COURT OF APPEALS (FIFTEENTH DIVISION), JANITA F. EDUAVE and RUDYGONDO
EDUAVE, respondents.

Cabanlas, Resma & Cabanlas Law Offices for petitioners.

Jaime Y Sindiong for private respondents.

GANCAYCO, J.:

Between the one who has actual possession of an island that forms in a non-navigable and non-
flotable river and the owner of the land along the margin nearest the island, who has the better
right thereto? This is the issue to be resolved in this petition.

The parties to this case dispute the ownership of a certain parcel of land located in Sta. Cruz,
Tagoloan, Misamis Oriental with an area of 16,452 square meters, more or less, forming part of
an island in a non-navigable river, and more particularly described by its boundaries as follows:

North — by the Tagoloan River,

South — by the Tagoloan River,
East — by the Tagoloan River and
West — by the portion belonging to Vicente Neri.

Private respondents filed with the Regional Trial Court of Misamis Oriental1 an action to quiet
title and/or remove a cloud over the property in question against petitioners.

Respondent Court of Appeals2 summarized the evidence for the parties as follows:

The appellant [private respondent Janita Eduave] claims that she inherited the land from
his [sic] father, Felomino Factura, together with his co-heirs, Reneiro Factura and
Aldenora Factura, and acquired sole ownership of the property by virtue of a Deed of
Extra Judicial Partition with sale (Exh. D). The land is declared for tax purposes under
Tax Decl. No. 26137 (Exh. E) with an area of 16,452 square meters more or less (Exh.
D). Since the death of her father on May 5, 1949, the appellant had been in possession
of the property although the tax declaration remains in the name of the deceased father.

The appellants further state that the entire land had an area of 16,452 square meters
appearing in the deed of extrajudicial partition, while in [the] tax declaration (Exh. E) the
area is only 4,937 square meters, and she reasoned out that she included the land that
was under water. The land was eroded sometime in November 1964 due to typhoon
Ineng, destroying the bigger portion and the improvements leaving only a coconut tree.
In 1966 due to the movement of the river deposits on the land that was not eroded
increased the area to almost half a hectare and in 1970 the appellant started to plant
bananas [sic].

In 1973 the defendants-appellees [petitioners herein] asked her permission to plant corn
and bananas provided that they prevent squatters to come to the area.

The appellant engaged the services of a surveyor who conducted a survey and placed
concrete monuments over the land. The appellant also paid taxes on the land in
litigation, and mortgaged the land to the Luzon Surety and Co., for a consideration of
P6,000.00.

The land was the subject of a reconveyance case, in the Court of First Instance of
Misamis Oriental, Branch V, at Cagayan de Oro City, Civil Case No. 5892, between the
appellant Janita Eduave vs. Heirs of Antonio Factura which was the subject of judgment
by compromise in view of the amicable settlement of the parties, dated May 31, 1979.
(Exh. R);
 That the heirs of Antonio Factura, who are presently the defendants-appellees in this
case had ceded a portion of the land with an area of 1,289 square meters more or less,
to the appellant, Janita Eduave, in a notarial document of conveyance, pursuant to the
decision of the Court of First Instance, after a subdivision of the lot No. 62 Pls-799, and
containing 1,289 square meters more or less was designated as Lot No. 62-A [sic], and
the subdivision plan was approved as Pls-799-Psd-10-001782. (Exh. R; R-1 and R-2);

The portion Lot No. 62-A, is described as follows:

A parcel of land (Lot No. 62-A, Psd-10-001782 being a portion of Lot 62, Pls-799,
Tagoloan Public Land Subdivision) situated in Bo. Sta. Cruz, Municipality of
Tagoloan, Province of Misamis Oriental. Bounded on the W, and on the N along
lines 4-5-1 by Lot 62-B of the subdivision plan 10-001782; on the E by line 1-2 by
Lot 64; Pls-799; on the S, along line 2-3-4 by Saluksok Creek, containing an area
of one thousand two hundred eighty nine (1,289) square meters more or less.

Appellant also applied for concession with the Bureau of Mines to extract 200 cubic
meters of gravel (Exh. G & G-1); and after an ocular inspection the permit was granted
(Exh. K, and K-1 and K-2). That the appellant after permit was granted entered into an
agreement with Tagoloan Aggregates to extract sand and gravel (Exh. L; L-1; and L-2),
which agreement was registered in the office of the Register of Deeds (Exh. M; M-1; and
M-2);

The defendants-appellees [petitioners herein] denied the claim of ownership of the

appellant, and asserted that they are the real owners of the land in litigation containing
an area of 18,000 square meters more or less. During the typhoon Ineng in 1964 the
river control was washed away causing the formation of an island, which is now the land
in litigation. The defendants started occupying the land in 1969, paid land taxes as
evidenced by tax declaration No. 26380 (Exh. 4) and tax receipts (Exhs. 7 to 7-G), and
tax clearances (Exhs. 8 & 9). Photographs showing the actual occupation of the land by
the defendants including improvements and the house were presented as evidence
(Exh. 11 to 11-E). The report of the Commissioner who conducted the ocular inspection
was offered as evidence of the defendants (Exh. G).

The sketch plan prepared by Eng. Romeo Escalderon (Exh. 12) shows that the plaintiffs'
[private respondents'] land was across the land in litigation (Exh. 12-A), and in going to
the land of the plaintiff, one has to cross a distance of about 68 meters of the Tagoloan
river to reach the land in litigation.3

On 17 July 1987 the trial court dismissed the complaint for failure of private respondents as
plaintiffs therein to establish by preponderance of evidence their claim of ownership over the
land in litigation. The court found that the island is a delta forming part of the river bed which the
government may use to reroute, redirect or control the course of the Tagoloan River.
Accordingly, it held that it was outside the commerce of man and part of the public
domain, citing Article 420 of the Civil Code.4

As such it cannot be registered under the land registration law or be acquired by prescription.
The trial court, however, recognized the validity of petitioners' possession and gave them
preferential rights to use and enjoy the property. The trial court added that should the State
allow the island to be the subject of private ownership, the petitioners have rights better than
that of private respondents.5

On appeal to the Court of Appeals, respondent court found that the island was formed by the
branching off of the Tagoloan River and subsequent thereto the accumulation of alluvial
deposits. Basing its ruling on Articles 463 and 465 of the Civil Code6 the Court of Appeals
reversed the decision of the trial court, declared private respondents as the lawful and true
owners of the land subject of this case and ordered petitioners to vacate the premises and
deliver possession of the land to private respondents.7

In the present petition, petitioners raise the following as errors of respondent court, to wit:
 1. Whether [or not] respondent court correctly applied the provisions of Articles 463 and
465 of the new Civil Code to the facts of the case at bar; and

2. Whether [or not] respondent court gravely abused its discretion in the exercise of its
judicial authority in reversing the decision appealed from.8

Petitioners point out as merely speculative the finding of respondent court that the property of
private respondents was split by the branching off or division of the river. They argue that
because, as held by the trial court, private respondents failed to prove by preponderance of
evidence the identity of their property before the same was divided by the action of the river,
respondent court erred in applying Article 463 of the Civil Code to the facts of this case.

It must be kept in mind that the sole issue decided by respondent court is whether or not the trial
court erred in dismissing the complaint for failure of private respondents (plaintiffs below] to
establish by preponderance of evidence their claim of ownership over the island in question.
Respondent court reversed the decision of the trial court because it did not take into account the
other pieces of evidence in favor of the private respondents. The complaint was dismissed by
the trial court because it did not accept the explanation of private respondents regarding the
initial discrepancy as to the area they claimed: i.e., the prior tax declarations of private
respondents refer to an area with 4,937 square meters, white the Extra-judicial Partition with
Sale, by virtue of which private respondents acquired ownership of the property, pertains to land
of about 16,452 square meters.

The trial court favored the theory of petitioners that private respondents became interested in
the land only in 1979 not for agricultural purposes but in order to extract gravel and sand. This,
however, is belied by other circumstances tantamount to acts of ownership exercised by private
respondents over the property prior to said year as borne out by the evidence, which apparently
the trial court did not consider at all in favor of private respondents. These include, among
others, the payment of land taxes thereon, the monuments placed by the surveyor whose
services were engaged by the private respondent, as evidenced by the pictures submitted as
exhibits, and the agreement entered into by private respondents and Tagoloan Aggregates to
extract gravel and sand, which agreement was duly registered with the Register of Deeds.

Private respondents also presented in evidence the testimony of two disinterested witnesses:
Gregorio Neri who confirmed the metes and bounds of the property of private respondents and
the effects of the typhoon on the same, and Candida Ehem who related on the agreement
between private respondents and petitioners for the latter to act as caretakers of the
former.9 The trial court disregarded their testimony without explaining why it doubted their
credibility and instead merely relied on the self-serving denial of petitioners.10

From the evidence thus submitted, respondent court had sufficient basis for the finding that the
property of private respondents actually existed and was Identified prior to the branching off or
division of the river. The Court of Appeals, therefore, properly applied Article 463 of the Civil
Code which allows the ownership over a portion of land separated or isolated by river
movement to be retained by the owner thereof prior to such separation or isolation.11

Notwithstanding the foregoing and assuming arguendo as claimed by petitioners that private
respondents were not able to establish the existence and identity of the property prior to the
branching off or division of the Tagoloan River, and hence, their right over the same, private
respondents are nevertheless entitled under the law to their respective portion of the island.

It is clear petitioners do not dispute that the land in litigation is an island that appears in a non-
flotable and non-navigable river; they instead anchor their claim on adverse possession for
about fifteen years. It is not even controverted that private respondents are the owners of a
parcel of land along the margin of the river and opposite the island. On the other hand, private
respondents do not dispute that the island in question has been in the actual physical
possession of petitioners; private respondents insist only that such possession by petitioners is
in the concept of caretakers thereof with the permission of private respondents.

This brings Us, as phrased earlier in this opinion, to the underlying nature of the controversy in
this case: between the one who has actual possession of an island that forms in a non-
navigable and non-flotable river and the owner of the land along the margin nearest the island,
who has the better light thereto?

The parcel of land in question is part of an island that formed in a non-navigable and non-
flotable river; from a small mass of eroded or segregated outcrop of land, it increased to its
present size due to the gradual and successive accumulation of alluvial deposits. In this regard
the Court of Appeals also did not err in applying Article 465 of the Civil Code.12 Under this
provision, the island belongs to the owner of the land along the nearer margin as sole owner
thereof; or more accurately, because the island is longer than the property of private
respondents, they are deemed ipso jure to be the owners of that portion which corresponds to
the length of their property along the margin of the river.

What then, about the adverse possession established by petitioners? Are their rights as such
not going to be recognized? It is well-settled that lands formed by accretion belong to the
riparian owner.13 This preferential right is, under Article 465, also granted the owners of the land
located in the margin nearest the formed island for the reason that they are in the best position
to cultivate and attend to the exploitation of the same.14 In fact, no specific act of possession
over the accretion is required.15 If, however, the riparian owner fails to assert his claim thereof,
the same may yield to the adverse possession of third parties, as indeed even accretion to land
titled under the torrens system must itself still be registered.16

Petitioners may therefore, acquire said property by adverse possession for the required plumber
of years under the doctrine of acquisitive prescription. Their possession cannot be considered in
good faith, however, because they are presumed to have notice of the status of private
respondents as riparian owners who have the preferential right to the island as recognized and
accorded by law; they may claim ignorance of the law, specifically Article 465 of the Civil Code,
but such is not, under Articles 3 and 526 of the same code, an adequate and valid defense to
support their claim of good faith.17 Hence, not qualifying as possessors in good faith, they may
acquire ownership over the island only through uninterrupted adverse possession for a period of
thirty years.18 By their own admission, petitioners have been in possession of the property for
only about fifteen years. Thus, by this token and under the theory adopted by petitioners, the
island cannot be adjudicated in their favor.

This case is not between parties as opposing riparian owners contesting ownership over an
accession but rather between a riparian owner and the one in possession of the island. Hence,
there is no need to make a final determination regarding the origins of the island, i.e., whether
the island was initially formed by the branching off or division of the river and covered by Article
463 of the Civil Code, in which case there is strictly no accession because the original owner
retains ownership, or whether it was due to the action of the river under Article 465, or, as
claimed by petitioners, whether it was caused by the abrupt segregation and washing away of
the stockpile of the river control, which makes it a case of avulsion under Article 459.19

We are not prepared, unlike the trial court, to concede that the island is a delta which should be
outside the commerce of man and that it belongs to the State as property of the public domain
in the absence of any showing that the legal requirements to establish such a status have been
satisfied, which duty properly pertains to the State.20 However, We are also well aware that this
petition is an upshot of the action to quiet title brought by the private respondents against
petitioners. As such it is not technically an action in rem or an action in personam, but
characterized as quasi in rem which is an action in personam concerning real property.22 Thus,
the judgment in proceedings of this nature is conclusive only between the parties23 and does not
bind the State or the other riparian owners who may have an interest over the island involved
herein.

WHEREFORE, We find no error committed by respondent court and DENY the petition for lack
of sufficient merit. The decision of respondent Court of Appeals is hereby AFFIRMED, without
pronouncement as to costs.

SO ORDERED.
G.R. No. 168386 March 29, 2010

LUCITA A. CANTOJA, Petitioner,

vs.
HARRY S. LIM, Respondent.

RESOLUTION

CARPIO, Acting C.J.:

The Case

This is a petition for review1 of the Decision2 dated 24 January 2005 and the Resolution dated
12 May 2005 of the Court of Appeals in CA-G.R. SP No. 76661.

The Facts

Petitioner in this case is the widow of the late Roberto Cantoja, Sr. (Cantoja), whom the DENR
awarded a Foreshore Lease Agreement over the foreshore area situated in Makar, General
Santos City. Under the Lease Contract3executed on 23 November 1990, the foreshore lease
would expire on 21 October 2015.

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

On 16 November 1989, the late Roberto Cantoja Sr. filed with the Office of the DENR, General
Santos City, an application for a Foreshore Lease Contract over an area situated in Makar,
General Santos City, per Survey Plan No. (XI-5B) 000002-D. Cantoja was awarded the
Foreshore Lease Agreement (FLA) on 23 November 1990.

On 4 March 1994, herein petitioner [Harry S. Lim] filed his protest docketed as DENR Case No.
5231, questioning the grant of the FLA to Cantoja. The protest was based on petitioner’s
allegation that Cantoja committed fraud and misrepresentation in declaring in his application
that the subject foreshore area adjoined his (Cantoja’s) property. To prove this allegation,
petitioner presented his Transfer Certificate of Title (TCT) No. 8423, over Lot 2-B, (LRC) Psd-
210799, which adjoins the foreshore area subject of the lease.

On 23 May 1995, Regional Executive Director Augustus L. Momongan of DENR XI, Davao City,
issued "Memorandum/Order assigning the above entitled case to Special Investigator Romulo
Marohomsalic of the DENR Office No. XI-5D, General Santos City, for further investigation and
appropriate action" Upon ocular inspection, during which petitioner failed to appear despite
notice, Special Investigator Marohomsalic found that Cantoja was in actual possession of the
foreshore area which was utilized as "dock-board of the Cantoja’s Fishing Business. It was
further ascertained, that no portion thereof, has been occupied or possessed by any other
person or persons, nor was there any adverse claimant thereof."

On 12 December 1995, Geodetic Engineer Bernardo L. Soria, in compliance with the 27

October 1995 Order of the City Environment and Natural Resources Office (CENRO) XI-5B,
submitted his report stating, inter alia, that "there was no overlapping of xxx Lot 2-B, (LRC) Psd-
210799; and Fli-XI-5b-000002-D xxx all shown in the prepared sketch xxx of (the) report."

On 1 February 1996, Director Momongan issued [an] Order dismissing petitioner’s protest on
the ground that "(i)n view of all the xxx circumstances and facts gathered during the
investigative proceedings, this Office finds that the foreshore area under survey plan Fli-XI-5B-
000002-D, covered by FLA No. (XI-5B) 000002 is separate and distinct from that parcel of land,
identified as Lot 2-B, Psd-210799, registered in the name of Claimant-Protestant Harry G. Lim."
The petitioner, concluded the Director, "has no legal personality to question the veracity of the
possession and occupation of herein Applicant-Respondent over the foreshore area in question,
as the same has been legally and regularly acquired by Applicant-Respondent Roberto Cantoja,
through public bidding and Applicant-Respondent’s occupation and possession thereof is by
virtue of a valid award granted by the Department of Environment and Natural Resources
(DENR)."
On 5 May 1997, petitioner filed Motion for Reconsideration of the said Order.

Meanwhile, on 6 October 1997, the DENR through the Office of the Solicitor General instituted
Civil Case No. 6438 for annulment/cancellation of Patent No. 188030 and OCT No. P-14720
both issued in the name of Jacinto Acharon, as well as petitioner’s TCT No. 8423. The suit was
anchored on the findings and recommendations of Special Investigator Romulo J. Marohomsalic
that "the area in question is xxx partly foreshore and partly river bed of the Makar and therefore
inalienable."

On 2 May 2000, then DENR Secretary Antonio H. Cerilles, rendered a Decision reconsidering
the 1 February 1996 Order issued by Executive Director Momongan, and thereby cancelled the
FLA previously granted to Cantoja. Secretary Cerilles ratiocinated that:

Clearly, the foreshore area leased to Cantoja is bounded on the West by Lot 2, Psu-164268, of
which Lot 2-B (LRC) Psd-210799 of herein protestant is a portion. In other words, the said Lot 2-
B immediately adjoins the foreshore area leased to Cantoja, contrary to Roberto Cantoja’s
statement and declaration in his Application for Foreshore Lease that his properties adjoin the
foreshore area leased to him. Obviously, Mr. Cantoja could not be expected to state otherwise
for this will result in his outright disqualification as Cantoja could not have legal access to said
foreshore area without passing thru Lot-2-B of herein protestant.

(Rollo, p. 79)

A motion for reconsideration with supplemental grounds was subsequently filed by Cantoja.
Petitioner in turn filed his opposition.

On 16 August 2000, Secretary Cerilles issued Special Order No. 2000-820 for the "Creation of a
Team to Conduct Investigation and Ocular Inspection of the Land Located in General Santos
City subject of DENR Case No. 5231." Said order was issued "(i)n view of the request of the
Office of the Solicitor General for comment on the proposal of Mr. Harry Lim for amicable
settlement of the case xxx."

Without waiting, however, for the result of the investigation of said team, Secretary Cerilles, in
an Order dated 17 October 2000, set aside its 2 May 2000 Order and reinstated the FLA in
favor of Cantoja. The DENR Secretary also denied petitioner’s motion for reconsideration.

On appeal, the Office of the President rendered the herein assailed Decision affirming the 17
October 2000 Order of the DENR Secretary. Like the DENR Secretary, the Office of the
President also relied on the findings of Special Investigator Marohomsalic that the petitioner’s
titled land is an inalienable foreshore area which could not be subject of a valid patent or title. 4

Aggrieved, respondent Harry Lim (respondent) appealed to the Court of Appeals. On 24

January 2005, the Court of Appeals rendered a decision, setting aside the 27 March 2003
decision of the Office of the President and reinstating the 2 May 2000 decision of the Secretary
of the Department of Environment and Natural Resources (DENR).1avvphi1

Hence, this petition for review.

The Ruling of the Court of Appeals

The Court of Appeals reinstated the 2 May 2000 decision of the DENR Secretary, which
cancelled and rescinded the Foreshore Lease Contract covering the foreshore area under
survey plan Fli-XI-5B- 000002-D in favor of Cantoja.

The Court of Appeals held that Cantoja committed misrepresentation amounting to fraud in his
application for lease when he declared in his application that his lot adjoins that of the foreshore
area sought to be leased.

The Issue
The primary issue in this case is whether the Court of Appeals erred in cancelling the Foreshore
Lease Contract granted to Cantoja covering the foreshore area under survey plan Fli-XI-5B-
000002-D.

The Ruling of the Court

The petition has no merit.

It is undisputed that respondent is the registered owner of the land adjacent to the foreshore
area leased to Cantoja, which is covered by TCT No. 84235 issued on 20 January 1975.
Respondent’s predecessor-in-interest, Jacinto Acharon, was issued OCT No. P-14720 on 17
August 1961 by virtue of a free patent grant. Thus, prior to Cantoja’s foreshore lease application
on 16 November 1989 and the grant of the foreshore lease contract on 23 November 1990,
respondent already owned the land adjacent to the foreshore land. The sketch plan6 dated 12
December 1995 submitted by the Geodetic Engineer clearly shows that respondent’s property is
in between the foreshore land and Cantoja’s property. As stated by the DENR Secretary in his
Decision7 dated 2 May 2000:

Clearly, the foreshore area leased to Cantoja is bounded on the West by Lot 2, Psu-164268, of
which Lot 2-B (LRC) Psd-210799 of herein protestant is a portion. In other words, the said Lot 2-
B immediately adjoins the foreshore area leased to Cantoja, contrary to Roberto Cantoja’s
statement and declaration in his Application for Foreclosure Lease that his properties adjoin the
foreshore area leased to him. Obviously, Mr. Cantoja could not be expected to state otherwise
for this will result in his outright disqualification as Cantoja would not have legal access to said
foreshore area without passing thru Lot 2-B of herein protestant.8

Being the owner of the land adjoining the foreshore area, respondent is the riparian or littoral
owner9 who has preferential right to lease the foreshore area10 as provided under paragraph 32
of the Lands Administrative Order No. 7-1, dated 30 April 1936, which reads:

32. Preference of Riparian Owner. – The owner of the property adjoining foreshore lands,
marshy lands or lands covered with water bordering upon shores or banks of navigable lakes or
rivers, shall be given preference to apply for such lands adjoining his property as may not be
needed for the public service, subject to the laws and regulations governing lands of this nature,
provided that he applies therefor within sixty (60) days from the date he receives a
communication from the Director of Lands advising him of his preferential right.

The Court explained in Santulan v. The Executive Secretary11 the reason for such grant of
preferential right to the riparian or littoral owner, thus:

Now, then, is there any justification for giving to the littoral owner the preferential right to lease
the foreshore land abutting on his land?

That rule in paragraph 32 is in consonance with Article 4 of the Spanish Law of Waters of 1866
which provides that, while lands added to the shore by accretions and alluvial deposits caused
by the action of the sea form part of the public domain, such lands, "when they are no longer
washed by the waters of the sea and are not necessary for purposes of public utility, or for the
established [sic] of special industries, or for the coast guard service," shall be declared by the
Government "to be the property of the owners of the estates adjacent thereto and as increment
thereof."

In other words, article 4 recognizes the preferential right of the littoral owner (riparian according
to paragraph 32) to the foreshore land formed by accretions or alluvial deposits due to the
action of the sea.

The reason for that preferential right is the same as the justification for giving accretions to the
riparian owner, which is that accretion compensates the riparian owner for the diminutions which
his land suffers by reason of the destructive force of the waters. So, in the case of littoral lands,
he who loses by the encroachments of the sea should gain by its recession.12 (Citations
omitted)
In this case, Cantoja committed fraud when he misrepresented himself as the riparian or littoral
owner in his application for the foreshore lease. Under stipulation no. 15 of the Foreshore Lease
Agreement, any fraud or misrepresentation committed by the applicant is a ground for
cancellation or rescission of the Foreshore Lease Agreement.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 24 January 2005 and
the Resolution dated 12 May 2005 of the Court of Appeals in CA-G.R. SP No. 76661.

SO ORDERED.
G.R. No. L-28021 December 15, 1977

JULIAN SANTULAN substituted by his children named PATROCINIO, ADORACION,

ARTURO, CONSTANCIA, and PEPITA, all surnamed SANTULAN and minor
grandchildren, JOCELYN, ROSAURO and ROBERTO, all surnamed SANTULAN assisted
by their guardian ad litem, PATROCINIO SANTULAN petitioners-appellants,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF AGRICULTURE AND NATURAL
RESOURCES, THE DIRECTOR OF LANDS, and ANTONIO LUSIN, substituted by his Heirs
named TEODOSIA BALANZA (widow) and Children LEOPOLDO, ARMANDO. ALFONSO,
EMILIANO, MAGDALENA, ERLINDA and ESTRELLA (ESTER), all surnamed LUSIN, and
Heirs of CAROLINA LUSIN-LUCERO named MANOLITO LUCERO and MARIO
LUCERO, respondents-appellees.

Isidoro Crisostomo for appellants Heirs of Julian Santulan.

Romulo C. Felizmeña for appellees Heirs of Antonio Lusin.

Solicitor General Arturo A. Alafriz Assistant Solicitor General Esmeraldo Umali and Solicitor
Conrado T. Limcaoco for The Executive Secretary, etc.

AQUINO, J.

This case is about the lease of a parcel of foreshore land of the public domain with an area of
about four and one-half hectares located at Barrio Kaingin, Kawit, Cavite abutting on Bacoor
Bay and the Ankaw Creek.

It is protracted controversy that has been pending for more than thirty years between the rival
claimants Julian Santulan plan and Antonio Lusin, who have been succeeded by their heirs.

Santulan claimed that foreshore land was an extension of his land, Lot No. 986 of the Kawit
cadastre, with an area of 17,301 square meters, registered in his name in 1937 under Original
Certificate of Title No. 6 which was issued by virtue of a free patent. The northern boundary of
Lot No. 986 is Bacoor (Manila) Bay (Exh. A). The said foreshore land was allegedly formed by
soil deposits accumulated by the alluvial action of the sea.

On December 5, 1942 Santulan caused the said land to be surveyed. The survey plan was
approved by the Director of Lands in 1944 (Exh. B). On December 29, 1942 Santulan, pursuant
to Lands Administrative Order No. 7-1, filed an application, F.L.A. No. V 562, to lease for five
years for agricultural purposes an area of 36,120 square meters of the said foreshore land (Exh.
F).

On that same date, December 29, 1942, Santulan, pursuant to Act No. 3077 and Lands
Administrative Order No. 8-3, filed with the Bureau of Lands an application for a revocable
permit to occupy the said land. He indicated therein that he would use the land for 11 capiz
beds and oyster beds, the planting of bakawan and pagatpat and later to be developed into a
fishpond" (Exh. G).

Seven years later, or on December 22, 1949, Santulan filed with the Bureau of Fisheries an
application for an ordinary fishpond permit or lease of the said foreshore land (Special Use
Permit, pp. A. No. 5114, Exh. H).

At the instance of the Director of Fisheries, the Director of Forestry investigated the condition of
the said foreshore land. The latter in his first indorsement dated June 19, 1950 found that it was
swampy "and not an improved fishpond as alleged by Antonio Lusin" and that it is within the
disposable areas for agricultural purposes under the jurisdiction of the Bureau of Lands (Exh. L-
1).
The chief of the division of commercial fisheries sent a letter to Lusin dated April 28, 1950
apprising him that he was reported to have illegally entered the area covered by Santulan's
fishpond permit application and directing him to refrain from introducing improvements, with the
warning that court proceedings would be taken against him (Exh. J).

On January 12, 1951 an attorney, acting for the Director of Lands wrote the following letter to
Lusin advising him to vacate the disputed land and maintain the status quo:

Mr. Antonio Lusin

Caiñgin, Kawit, Cavite

S i r:

We have been informed that the area which is presently controverted by and
between you and Julian Santulan, under the applications noted above, was
recently entered by you and some companion and that you are destroying the
dikes and other improvements previously constructed thereon by said Julian
Santulan.

If this information is true, and inasmuch as you are aware that the controversy is
still pending final adjudgment in this Office, is desired that you take proper advice
and leave the area and its existing improvements in status quo in order to avoid
possible confusion of rights which ma delay the final disposition of the area in
question.

You are advised further that the acts imputed to you may make you liable to
prosecution and punishment under the law; and that whatever improvements you
may make for yourself in the premises will not legally accrue to your benefit, nor
will they serve as basis for a claim to preferential rights. (Paragraphing supplied,
Exh, J-1).

Santulan declared the said foreshore land in his name for tax purposes. Tax Declaration No.
2923, which took effect in 1948 and which cancelled Tax Declaration No. 13816 also in
Santulan's name, shows that the land was assessed at P460. He paid the realty taxes due on
the said land for the years 1945-46, 1948-55 and 195760 (Exh. C, D and E, el seq.).

On the other hand, Antonio Lusin in 1942 and 1945 (he died in 1962) filed with the Bureau of
Lands applications for a revocable-permit and lease of a foreshore land, respectively, for the
purpose of producing salt on the said land. He claimed that he had been in the continuous and
exclusive possession of the land since 1920, when it was still under water, and that he had used
it as a site of his fish corrals.

He allegedly converted two hectares of the said land into a fishpond. The entire area was
enclosed with mud dikes and provided with a concrete sluice gate and another sluice gate made
of wood On the northern part of the land bordering the bay were bamboo stakes placed at close
intervals to serve as water breakers to protect the mud dikes from being washed away by the
action of the sea. Lusin introduced the alleged improvements from 1951 to 1953.

The 1942 foreshore lease applications of Santulan and Lusin gave rise to Bureau of Lands
Conflict No. 8 (N). The Director of Lands in his decision in that case dated February 1, 1951
found that the disputed land is foreshore land covered and uncovered by the flow and ebb of the
ordinary tides that it is an extension of Santulan's Lot No. 986 and it was formerly a part of the
sea; that Santulan was the first to enter the land and to make dikes thereon, and that Lusin
entered the land later and made dikes also (Exh. K made a part hereof for reference as Annex
A).

The Director ruled that the disputed foreshore land was subject "to reparian rights which may he
invoked by Santulan as owner of the upland in accordance with section 32 of Lands
Administrative Order No. 7-1" (Exh. K). Hence the Director rejected Lusin's application for a
foreshore lease and for a revocable permit and gave due course to Santulan's foreshore lease
application.
Lusin filed a motion for reconsideration. The Director in his order of October 19, 1951 denied
that motion. lie found that Lusin was a possessor in bad faith: that it is not true that Lusin had
improved and possessed the said foreshore land for twenty years, that the disputed area is
covered by water, two to three feet deep during ordinary tides and is exposed land after the ebb
of the tides, and that Lusin's alleged possession and improvements could not nullify Santulan's
preferential right to lease the land by reason of his riparian rights. The Director ordered Lusin to
vacate the land within sixty days from notice (Exh. L made a part hereof for reference as Annex
B).

Lusin appealed to the Acting Secretary of Agriculture and Natural Resources who in his decision
of October 13, 1952 dismissed the appeal and affirmed the Director's 1951 decision (Exh. M
made a part hereof for reference as Annex C). Lusin's motion for reconsideration was denied in
the Secretary's order of February 28, 1953 (Exh. N made a part hereof for reference as Annex
D).

Lusin asked for a reinvestigation of the case. His request was granted. The Department ordered
a reinvestigation on May 12, 1953.

After receipt of the report of reinvestigation, the Undersecretary of Agriculture and Natural
Resources, by authority of the Secretary, in his order of December 14, 1954, reaffirmed the
rejection of Lusin's revocable permit and foreshore lease applications but ordered Santulan to
reimburse to Lusin the appraised value of his improvements (Exh. O made a part hereof for
reference as Annex E).

Lusin appealed to the President of the Philippines after his motion for reconsideration was
denied in the Undersecretary's order of May 19, 1955 (Exh. OO made a part hereof for
reference as Annex F).

Executive Secretary Juan C. Pajo, by authority of the President, held in his decision of April 10,
1958 that section 32 of Lands Administrative Order No. 7-1 (promulgated by the Secretary of
Agriculture and Natural Resources on April 30, 1936 pursuant to Acts Nos. 2874 and 3038) was
"rendered obsolete" by section 67 of the Public Land Law which took effect on December 1,
1936 (Exh. P made a part hereof for reference as Annex G).

On the basis of the foregoing ruling and since the record is silent as to whether or not the land in
question has been declared by the President as not necessary for the public service and as
open to disposition (Sec. 61, Public Land Law), the Executive Secretary sustained Lusin's
appeal and reversed the orders of the Director of Lands and the Secretary of Agriculture and
Natural Resources in favor of Santulan. Secretary Pajo decided the case in the alternative as
follows:

On the assumption that the land in question has been declared open for
disposition and is not necessary for the public service, this Office directs that an
oral bidding for the leasing thereof to interested parties pursuant to the provisions
of Section 67 of Commonwealth Act .No. 141 be conducted and the contract of
lease awarded to the highest bidder whoever shall be the highest bidder, if other
than the appellant, shall be required to pay to the appellant the appraised value
of the improvements introduced by him on the land to be determined by that
Department.

If the land in question has not been so declared, this Office directs that a
revocable permit under Section 68 of Commonwealth Act No. 141 be Id to the
appellant requiring him to pay permit fees since the year 1951.

Accordingly, the orders and decisions of that Department and the Bureau of
Lands are hereby revoked.

Santulan's case was distinguished from that of Gonzalo Monzon whose Lot No. 987 adjoins
Santulan's Lot No. 986. Executive Secretary Fred Ruiz Castro (now Chief Justice) in his
decision of May 10, 1954 upheld the preferential right of Monzon to lease the foreshore land
north of his lot, which foreshore land is adjacent to the foreshore land now in dispute in this case
(Exh. Q made a part hereof for reference as Annex H).

Santulan's motion for reconsideration was denied in the letter of the Acting Executive Secretary
dated August 20, 1959 (Exh. W).

On October 22, 1959 Santulan filed in the Court of First Instance of Cavite a petition for
certiorari wherein he alleged that the Executive Secretary committed a grave abuse of discretion
in misinterpreting certain provisions of Act No. 2874, Commonwealth Act No. 141, and Lands
Administrative Order No. 7-1.

In the lower court the parties agreed that the case Involves only a question of law. On August
18. 1961 the lower court dismissed the petition and affirmed the Executive Secretary's decision.
Santulan appealed to the Court of Appeals which in its resolution of July 21, 1967 elevated the
record to this Court on the ground that Santulan in his brief raised only the legal questions of
whether the Public Land Law repealed section 32 of Lands Administrative Order No. 7 1 and
whether the Executive Secretary's decision is "legally sound and correct" (CA-G. R. No. 30708-
R).

It should be emphasized that. as found by tile investigators of the Bureau of Lands, Santulan
was the prior possessor of the foreshore land in question. lie had it surveyed in 1942. The
survey plan Psu-115357) was approved by the Director of Lands in 1944. Santulan paid the
realty taxes on that land .

It should further be underscored that the regulations pie him a preferential right to lease the land
as a riparian owner. Lands Administrative Order No. 7-1 dated April 30. 1936. which was issued
by the Secretary of Agriculture and Natural Resources upon the recommendation of the Director
of Lands for the disposition of alienable lands of the public domain, provides:

32. Preference of the Reparian Owner — The owner of the property adjoining
foreshore lands, marshy lands or lands covered with water bordering upon
shores or banks of navigable lakes or rivers, shall be given preference to apply
for such lands adjoining his property as may not be needed for the public service,
subject to the laws and regulations governing lands of this nature, provided that
he applies therefor within sixty (60) days from the date he receives a
communication from the Director of Lands advising him of his preferential right.

Paragraph 32 quoted above is a substantial copy of paragraph 4 of Lands Administrative Order

No. 8-3 dated April 20, 1936, which was promulgated by the Secretary of Agriculture and
Natural Resources upon the recommendation of the Director of Lands for issuance of temporary
permits of occupation and use of agricultural lands of the public domain.

The word "riparian" in paragraphs 32 and 4 of the departmental regulations is used in a broad
sense as referring to any property having a water frontage (Shepard's Point Land Co. vs.
Atlantic Hotel, 44 S. E. 39, 45, 132 N. C. 517, 65 C. J. S. 143, note 84). Strictly speaking,
"riparian" refers to rivers. A riparian owner is a person who owns land situated on the bank of a
river.

But in paragraphs 32 and 4, the term "riparian owner" embraces not only the owners of lands on
the banks of rivers but also the littoral owners, meaning the owners of lands bordering the shore
of the sea or lake or other tidal waters. The littoral is the coastal region including both the land
along the coast and the water near the coast or the shore zone between the high and low
watermarks.

Therefore, on the basis of paragraphs 32 and 4 of the said administrative regulations, Santulan
or his heirs Should be allowed to leased or occupy the said foreshore land.

But the Executive Secretary ruled that paragraph 32 was rendered obsolete by Commonwealth
Act No. 141 or, as held by the trial court, Lands Administrative Order No. 7-1 was repealed by
the Public Land Law. Is that conclusion correct? We hold that it is wrong.
It is true that Lands Administrative Orders Nos. 7-1 and 8-3 were issued when the 1919 Public
Land Act was in force or before the present Public Land Law took effect on December 1, 1936.
But that circumstance would not necessarily mean that the said departmental regulations are
not good under the 1936 Public Land Law.

In rationalizing the alleged repeal of paragraph 32, the Executive Secretary cited the following
provisions of Act No. 2874, the 1919 Public Land Act (15 Public Land laws 24):

SEC. 64. The lease or sale shall be adjudicated to the highest bidder; and if there
is no bidder besides the applicant, it shall be adjudicated to him. The provisions
of section twenty-seven of this Act shall be applied wherever applicable. If all or
part of the lots remain unleased or unsold the Director of Lands Shall from time
to time announce in the Offcial Gazette or otherwise the lease or sale of those
lots if necessary . (Section 27 refers to sealed bidding).

The Executive Secretary held that the above-quoted section 64 was by the for provisions of on
wealth Act No. 141 which took effect on December 1, 1936:

SEC. 67. The lease or sale shall be made through oral bidding-, and ajudication
shall be made to the highest bidder. However, where m applicant has made
improvements on the land by virtue of a permit issued to him by competent
authority, the sale or lease shall be made by sealed bidding as prescribed in
section twenty-six of this Act, the provisions of which shall be applied wherever
applicable. If all or Dart of the lots remain unleased or unsold. the Director of
Lands shall from time to time announce in the Official Gazzate, or in any other
newspapers of general circulation, the lease or sale of those lots, if necessary.
(Section 26, like section 27 of Act No. 2874, refers to sealed bidding).

The Executive Secretary noted that under section 64 of Act No. 2874 sealed bidding was the
general rule of procedure in an award of a lease of foreshore land and that the t is entitled to
equal the bid of the highest bidder. On the other hand, under 67, oral bidding is the general rule.

Hence, the Executive Secretary assumed that, while under section 64 of the 1919 old Public
Land Act, the fact that the applicant has a preferential right to lease foreshore land was a crucial
factor it is thus under section 67 of the 1936 Public Land Law because in oral bidding the
appellant is not entitled to equal the bid of the highest bidder.

The Executive Secretary concluded that, because the preferential right of the applicant to lease
foreshore land was immaterial under 67 of the present Public Land Law, paragraph 32 of Lands
Administrative Order No. 7-1, which gives such preference. had become "idle and useless".

That conclusion is wrong because it is based on the erroneous hypothesis that section 64 of the
1919 Public Land Act is different from section 67 of the 1936 Public Land Law. They are not
different. The truth is that section 64 was amended by Act No. 3517 which took effect on
February 4, 1919 (24 Public Laws 416). Section 64, as thus amended, is substantially the same
as section 67 of the 1936 Public Land Law.

That fact was overlooked by the Executive Secretary. Hence, his conclusion, that paragraph 32
of Lands Administrative Order No. 71 was repealed or rendered obsolete by section 67 of the
present Public Land Law, is wrong because its premise is wrong.

In other words, paragraph 32 of Lands Administrative Order No. 7-1, issued on April 30, 1936,
was promulgated under section 64 of the old Public Land Law, as amended. And since the
amended section 64 was substantially reproduced in section 67 of the 1936 Public Land Law, it
is glaringly incorrect to say that section 67 rendered obsolete the said paragraph 32. Paragraph
32 is still in force and is good under the existing Public Land Law.

The foregoing discussion reveals that the Executive Summary's rationalization of the alleged
repeal of paragraph 32 of Lands Administrative Order No. 7-1 (identical to paragraph 4 of Lands
Administrative Order No. 8-3) is not only deficient in clarity and cogency but is predicated on the
false assumption that section 64 of the 1919 Public Land Act is different from section 67 of the
present Public Land Law. Consequently, the aforementioned decision of Executive Secretary
Juan C. Pajo under review bas to be set aside.

This case is governed by the precedent established in the case of Gonzalo Monzon, which, as
already noted, is similar to this cm since the foreshore land involved in the Monzon case is
adjacent to the foreshore land involved in this case.

In the Monzon case, the Office of the President, applying the oft-cited paragraph 32 of Lands
Administrative Order No. 7-1 held that Monzon, the littoral owner of the registered land abutting
upon the foreshore land, has the preferential right to lease the foreshore land,

The location of the lots of Santulan and Monzon and the foreshore lands abutting thereon is
shown in the following sketch bawd on the plan, Psu-115357 (Exh. B):

Manila Bay or Bacoor Bay

Disputed Area

Psu-1 15357 Psu- 1 15358

Foreshore land Forshore land

claimed by leased to

Julian Santulan Gonzalo Monzon

and

Antonio Lusin

Lot No. 986 Lot no. 987

Belonging to Belonging to

Julian Santulan Gonzalo Monzon

Considering that the foreshore land abutting upon Santolan's lot is in the same situation as the
foreshore land abutting upon Monzon's lot, there is no reason why Santulan should not enjoy,
with respect to the disputed foreshore land, the rights given to Monzon over the foreshore land
adjacent to his lot.

Now, then, is there any justification for giving to the littoral owner the preferential right to lease
the foreshore land abutting on his land?

That rule in paragraph 32 is in consonance with article 4 of the Spanish Law of Waters of 1866
which provides that, while lands added to the shores by accretions and alluvial deposits caused
by the action of the sea form part of the public domain, such lands, "when they are no longer
washed by the waters of the sea and are not necessary for purposes of public utility, or for the
establishment of special industries, or for the coast guard service", shall be declared by the
Government "to be the property of the owner of the estates adjacent thereto and as increment
thereof" (cited in Ignacio vs. Director of Lands, 108 Phil. 335, 338).

In other words, article 4 recognizes the preferential right of the littoral owner (riparian according
to paragraph 32) to the foreshore land formed by accretions or alluvial deposits due to the
action of the sea (Ker & Co. vs. Cauden 6 Phil. 732, 736, 223 U.S. 268, 56 L. Ed. 432, 435;
Jover vs. Insular Government, 10 Phil. 522, 40 Phil. 1094, 1100, 221 U.S. 623, 55 L. Ed. 884).

The reason for that preferential right is the same as the justification for giving accretions to the
riparian owner, which is that accretion compensates the riparian owner for the diminutions which
his land suffers by reason of the destructive force of the waters (Cortes vs. City of Manila, 10
Phil. 567). So, in the case of littoral lands, he who loses by the encroachments of the sea should
gain by its recession (Banks vs. Ogden 2 Wall. 57, 67, 17 L. Ed. 818, 821).
That preferential right is recognized in American jurisprudence where the rule is that the owner
of the land adjacent to navigable waters has certain riparian or littoral rights of a proprietary
nature not possessed by the general public which rights are incident to the ownership of the
banks or the uplands: riparian as respects the waters of a river and littoral as to sea waters or
the waters of a lake (65 C.J. S. 143-145).

It may be mentioned that the Director of Lands stated in his manifestation of October 26, 1977
that Lands Administrative Orders Nos. 7-1 and 8-3 are still in force and have not been
superseded by any later regulations and that the directive of the President of the Philippines to
the Director of Lands dated May 24, 1966, stopping the grant of foreshore leases all along
Manila Bay, towards Cavite and Bataan, has not rendered the instant case moot and academic
"because the foreshore lease application involved is pending award."

In view of the foregoing considerations, the trial court's decision and the decision of the
Executive Secretary dated April 10, 1958 are reversed and set aside and the order of the
Undersecretary of Agriculture and Natural Resources dated December 14, 1954 and the orders
of the Director of Lands dated February I and October 19, 1951 are affirmed.

The lease application of Julian Santulan mentioned in the order of February 1, 1951 should be
recorded in the names of his heirs and the obligation to make reimbursement mentioned in the
dispositive part of the Undersecretary's order should now devolve upon the heirs of Santolan.
The reimbursement should be made to the heirs of the late Antonio Lusin The obligation to
vacate the disputed land, as required in the Director's order of October 19, 1951 devolves upon
the heirs of Lusin Costs in both instances against respondent heirs of Lusin (As amended by
Resolution of February 17, 1977.

SO ORDERED.

Barredo (Actg. Chairman), Antonio, Concepcion Jr. and Guerrero, JJ., concur.

Guerrero, J., was designated to sit in the Second Division.

Fernando and Santos, JJ., are on leave.

Annexes to Opinion in L-28021, Julian Santolan

vs. Executive , et al.

F. L. A. No. V-562, R. P. A. (New). Julian Santolan, Applicant & Contestant vs. F. L. A. (New),
R. P. A. (New), B. L. Conflict No. 8 (N) Psu- 1 15357, Kawit, Cavite.

Julian Santolan, Applicant-Appellant vs. Antonio Lusin, Applicant-Appellant,

D.A.N.R. Case No. 625, Psu- 1 15357, Kawit, Cavite.

Annex A — Order of Director of Lands dated February 1, 1951.

Annex B — Order of Director of Lands dated October 19, 1951.

Annex C — Decision of Acting Secretary of Agriculture and Natural Resources dated October
13, 1952.

Annex D — Order of Secretary of Agriculture and Natural Resources dated February 28,1953.

Annex E — Order of Undersecretary of Agriculture and Natural Resource dated December 14,
1954.

Annex F — Order of Undersecretary of Agriculture and Natural Resources dated May 19, 1955.

Annex G — Decision of Executive Secretary Juan C. Pajo dated April 10, 1958.
Annex H — Decision of Executive Secretary Fred Ruiz Castro dated -May 10, 1954 in Emiliano
del Rosario vs. Gonzalo Monzon.

ANNEX A

ORDER

Julian Santolan, who owns Lot No. 986 of the Kawit Cadastre, under a free patent grant with
Original Certificate of Title No. 6 issued to him on June 9, 1937, claims preferential rights to all
the areas extending seaward from the said lot. He caused the said areas to be surveyed for him
in 1942, and the survey plan thereof was approved in 1944, as may be seen in the Survey Plan
Psu-115357 of this Office which is reproduced in the sketch drawn. on the back of the last page
hereof. Except the portion marked "A" in the sketch, he made a foreshore lease application and
a revocable permit application for these areas in 1942 to devote the areas applied for to
fishpond purposes. Presently, he now includes the portion "A" in his applications herein
mentioned to be devoted to the same purposes — in fact, he now intends to utilize the entire
area comprised in his Survey Psu-115357 for fishery purposes and has filed therefor with the
Bureau of Fisheries fishpond permit application No. 5114. Upon this claim he contests the
revocable permit (new) application and the foreshore lease (new) application for the portion O
these mm marked "X" in the sketch which were filed by Antonio Lusin in 1942 and 1945,
respectively, for salt-producing purposes.

Lot No. 986 of the Kawit Cadastre, mentioned above as owned by Julian Santolan, a to be
bounded on the north by the Bacoor Bay. It is evident therefore that the areas now in Santolan's
Survey Psu-115357, were formerly parts of the bay, and that presently they exist as a result of
the of the waters of the sea. Investigation disclosed that these areas are now foreshore lands,
— covered and uncovered by the flow and ebb of the tides. Santolan was found to have entered
the areas first and made dikes Lusin was found to have entered lately and made does also.
None of them, however, has obtained from this Office any permit of occupancy and use, and
their applications are not yet approved.

On the basis alone of actual occupancy or introduction of improvements neither of the parties
here may claim preferential rights, for under the law and regulations, it is only such occupancy
and introduction of improvements as are made upon the authority of an official permit issued by
this Office which could serve as a reason for holding a sealed bidding in a public auction of the
right to low at which the permittee is given the preferred right to equal the highest bid that might
be put by any other party. This is the rule prescribed by Section 67 of Commonwealth Act No.
141 (the Public land Act)' It appears, however, that the areas — portions "A", "X" and the parts
extending up to the Bar Bay now, as may be seen in the sketch, — which are comprised by
Santolan's Survey Plan -Psu-115357, are immediately adjoining Lot No. 986, which is his
private property, and are extensions of the said lot to the sea. The areas, being foreshore lands,
are therefore subject to riparian fights which may be invoked by Santolan as owner of the
upland in accordance With Section 32 of lands Administrative Order No. 7-1 which provides the
following:

Sec. 32. The owner of the property adjoining foreshore lands, marshy lands, or
lands covered with water bordering upon the shores or banks of navigable lakes
or rivers, shall be given preference to apply for such lands adjoining his property
as may not be needed for the public service, subject to the laws and regulations
governing lands of this nature, provided that he applies therefor within 60 days
from the date he receives a communication from the Director of Lands advising
him of his preferential right

As Julian Santolan is interested in utilizing the entire area covered by his Survey Psu- 1 15357
over which he is fully entitled to exercise his riparian rights, the above-noted foreshore lease
(new) application and revocable (new) application of Antonio Lusin, both covering the portion
marked "X" in the sketch, are hereby rejected. The lease application of Santolan, shall be
recorded as Foreshore Urn Application No. 562 and given due course for the whole area
(including portion "A) shown in the said sketch.

SO ORDERED.
Manila, Philippines, February 1, 1951.

JOSE P. DANS
Director of Lands

ANNEX B

ORDER

Counsel for respondent Antonio Lusin has filed in due time a motion for the
reconsideration of our Order of February 1, 1951, which resolved this case in favor of
contestant Julian Santolan, praying that the said order be set aside and the case,
reopened for purposes of a formal hearing for the submission of evidence. Substantially
stated, respondent Lusin claims that he is entitled to preference because he has been in
possession of the premises for a period of over twenty years, placing stakes and
planting aquatic trees for the raising and cultivation of shell fish and sea shells, besides
constructing dikes for pending fish and making salt beds, — all these works undertaken
by him being the cause for the gradual filling of the area and its conversion into a
productive state. He contends that the areas under question had been formed thru
"artificial accretion" caused by his own labor and, consequently, he has the right of pre-
emption.

There is no question, however, that the areas under question are parts of the foreshore.
Under Section 61 of Commonwealth Act No. 141 (Public Land Act), they are disposable
to private parties by k only and not otherwise; and under Section 67 of the same Act, the
lease shall be made thru oral bidding, the adjudication to be made to the highest bidder.

There is no question also that the areas under question extend to the sea from lot No.
986 of the Kawit Cadastre, which is actually owned by respondent Santolan under
Original Certificate of Title No. 6 of the land records of Cavite. Undoubtedly, respondent
has riparian rights to the foreshore in question which he can invoke against contestant
Lusin under the provisions of Section 32 of Lands Administrative Order No. 7-1, quoted
in toto in the order sought to be reconsidered.

Records show that the areas under question are also involved in the Fishpond
Application No. 5114 of Julian Santolan with the Bureau of Fisheries which is also
contested by Antonio. lt appears that upon request of the Director of Fisheries to the
Bureau of Forestry for certification as to the availability of the areas for fishery purposes,
the latter made investigation, inquiring at the same time into the claim of Antonio Lusin,
made formally in writing, that he has improved the areas into a fishpond and has been in
occupation thereof for more than 20 years. The Bureau of Forestry made the findings
that those areas are within the disposable areas for agricultural purposes under the
jurisdiction of the Bureau of Lands; and that they are swampy lands, formerly under sea
water of the Bacoor Bay, "and not an improved fishpond as alleged by Antonio Lusin".
These findings were transmitted to the Director of Fisheries under first indorsement
dated June 19, 1950.

Our own investigating officer, reporting on this case on January 25, 1951, stated the
following: "On December 15, 1950, when I conducted the first ocular inspection of the
premises in the presence of both parties, the only visible improvements found thereon
are the newly-constructed dikes made thereon by Julian Santolan, a few bacauan and
ape-ape trees of about two to three years old, bamboo stakes placed thereon at
intervals, and a small old hut located at almost the middle of the land in question. All
these improvements were claimed to have been introduced by Julian Santolan. Antonio
Lusin, however, claimed that those bamboo stakes found therein were his."

It is evident from the findings of both the inspecting officer of the Bureau of Forestry and
our own investigating officer that the areas under question are foreshore lands, and that
they have not been really improved and possessed by respondent Lusin for over twenty
 years as he alleged. The improvements found therein have been recently made, and
they are not of such nature and extent as would have changed the character of the
areas as foreshore. In fact, according to the investigating officer, the areas have been
seen by him on different occasions, and he found that the same, as well as the
neighboring areas in the same belt, were covered by tidal waters of from 2 to 3 feet deep
during ordinary rise of the tides, and uncovered by the tides at ebb.

There is, therefore, no reason for changing our disposition in our order of February 1,
1951. It is not necessary to re-open the case to receive evidence on respondent's
allegation that he has been in possession of the premises for over 20 years and has
gradually improved them because, aside from the fact that the allegation is belied by the
physical condition of the premises, whatever evidence may be gathered on that
allegation could not change the nature of the areas as foreshore, nor would it avoid the
rights of contestant as riparian owner. The presence of the respondent in the premises
has not been authorize by competent authorities, and his introduction of improvements
thereon was not done with proper permit of temporary occupancy and -use such as is
prescribed in our administrative practice. The circumstances under which he made
improvements cannot justify his claim for a preferred right under Section 67 of the Public
Land Act; on the contrary, he stands to forfeit the improvements to the Government for,
as reported by our investigating officer, he entered the Premises and commenced
making the improvements after contestant Santolan himself has already made
improvements, and after he has been warned on December 15, 1950 by the
investigating officer not to continue working, which warning was confirmed by us in our
letter to him of January 12, 1951. His bad faith is quite evident, and he cannot avail of
his presence in the premises now to demand the issuance to him of a provisional or
revocable permit of temporary occupancy and use under our rules and regulations in
order to legal his entry and give validity to his improvements. The right to demand
issuance of such a permit is concomittant to the right of contestant Santolan to be a
preferred applicant by virtue of his riparian right recognized in Section 32 of Lands
Administrative Order No. 7-1 cited hereinabove.

IN VIEW HEREOF, the instant motion for reconsideration and reinvestigation of

respondent Antonio Lusin is hereby denied, and he shall vacate the premises within 60
days from receipt of notice hereof.

SO ORDERED.

Manila, Philippines, October 19, 1951.

JOSE P. DANS
Director of Lands

ANNEX C

DECISION

The order of the Director of Lands dated February 1, 1951, rejected Foreshore Lease
Application (New) and Revocable Permit Application (New) of Antonio Lusin and gave due
course to the Foreshore Lease Application No. 562 of Julian Santolan. Antonio Lusin claims that
the order is against the fact and the law. He presented three (3) motions for reconsideration:
one on October 19, 1951; the other on December 12, 1951; and the last on April 9, 1952. Said
motions were all denied. Hence, the present appeal. The subject of contention is the strip of
land having an area of 41/2 hectares from Lot No. 986 of the Kawit Cadastre No. 203 to the
waters of Bacoor Bay. Lot No. 986 is covered by I Certificate of Title No. 6 issued to Julian
Santolan on June 9, 1937. Santolan's titled property is bounded on the north by Bacoor Bay.

On December 5, 1942, Santolan filed his foreclosure km application for the entire tract
entervening between his property and Bacoor Bay. So he caused Psu- 115357 to be executed
and same was approved in 1944 by the Director of Lands.
On November 26, 1945, Antonio Lusin applied for permit for an area of 4.5 for salt bed
purposes. The area for which permit was asked is by his F.L.A. (New) filed on November 17,
1945, the boundaries of which are as follows:

NE — V. del Rosario and E. del Rosario

SE — Julian Santolan

SW — Ankaw River

NW — Bacoor Bay

The two applications of Santolan and Lusin cover the same area. Julian Santolan duly protested
in 1946 against Lusin's application. The question to be decided in this appeal is: Which of the
two applicants, Julian Santolan or Antonio Lusin, has right of preference to the land in
controversy?

By virtue of the fact that he is a riparian owner, Julian Santolan has the right of preference
pursuant to the provisions of Section 32 Of Administrative Order No. 7-1, which reads as
follows:

Sec. 32. The owner of the property adjoining foreshore lands, marshy lands, or
hinds covered with water bordering upon the shores or banks of navigable lakes
or rivers, shall be given preference to apply for such lands adjoining his property
as may not be needed for the public service, subject in the laws and regulations
governing lands of this nature, provided that he applies therefor within sixty (60)
days from the date he receives communication from the Director of Lands
advising him of his preferential right.

It is true that appellant Lusin introduced improvements on the in question, but that fact does not
give him preferential right , not only because he had not acquired any permit from the Bureau of
Lands before doing so, but also because his entry on the was duly protested by Santolan.

IN VIEW OF ALL THE FOREGOING, and finding that the order of the Director of lands on Feb.
1, 1951, is in accordance with the facts of record and the provisions of the law on the matter, the
herein appeal from said order should be, as hereby it is, dismissed.

SO ORDERED.

Manila, Philippines, October 13, 1952.

JOSE S. CAMUS
Acting Secretary of Agriculture
and Natural Resources

ANNEX D

ORDER

This is a motion filed by Antonio Lusin, thru counsel, for the reconsideration of the decision of
this Office dated October 13, 1952, dismissing his appeal from the decision of the Director of
Lands under date of February 1, 1951.

In support of the said motion for reconsideration, Lusin substantially alleges that he has been
improving the land in question since 1920, spending for such improvements no more than
P20,000.00, and for that reason, he should be given the preferential right to acquire the said
land. To reinforce his allegation, movant cites the case of Rosalia Vida Vda. de Tirona vs.
Magdaleno Tragico, CA G.R. No. 9050, decided by the Court of Appeals on June 30, 1943,
wherein it was held that because Tragico has constructed fishpond on a portion of the land in
question by means of the improvements he has introduced thereon and has possessed the land
for sufficient time to acquire the land by right of prescription, he was awarded the land in
dispute.

We have found this allegation of movant to be far from the truth. lt is the finding of the
investigating officer who made an investigation of this case that it is Julian Santolan and not
movant Lusin who has been actually occupying the land in question and introducing
improvements thereon. The pertinent portion of his M reads as follows:

On December 16, 1950,, when I conducted the first ocular inspection of the
premises in the presence of both parties, the only visible improvements found
thereon were the newly constructed dikes made thereon by Julius Santolan, a
few bacauan and ape-ape trees of about two to three years old, bamboo stakes
placed thereon at intervals and a small old hut located at almost the middle of the
land in question. All these improvements were claimed to have been introduced
thereon by Julian Santolan. Antonio Lusin, however, claimed that the bamboo
stakes found thereon were his.

Moreover, according to the further finding of the said investigating officer, the WW in question
fails under the category of foreshore land. That portion of his report referring to this finding is
hereby quoted as follows:

It may not be amiss to state in this connection that I have. or different

occassions, the opportunity to inspect the land subject hereof on both high and
low tides. During ordinary low tide, the whole area. and further seaward, is
entirely ex to the surface while during ordinary high tide, it is wholly covered with
tidal water with an approximate depth of two to three feet. The land in question in
its entirety is marshy covered and uncovered by the ebb and flow of tidal water.

As the land is a foreshore land, the same is susceptible to the riparian right of the owner of the
adjoining land. According to Section 32 of Lands Administrative Order No. 7-1, the owner of the
property adjoining foreshore land, shall be given preference to apply for such land adjoining his
property as may not be needed for the public service. Inasmuch as the land in question adjoins
Lot No. 980, Kawit Cadastre, which is a private property of Julian Santolan, said Julian Santolan
shall have the preference right to apply therefor over and above any other applicant. It may be
mentioned, in this connection, that the said case of Rosalia Vida Vda. de Tirona vs. Magdaleno
Tragicowho had and improved the land claimed by him, it is Santolan and riot movant Lusin who
has been actually occupying and improving the land subject of the present controversy.

WHEREFORE, the instant motion for reconsideration filed by Antonio Lusin, as well as his
request for reinvestigation of this case, should be, as hereby it is, denied.

SO ORDERED.

Manila, Philippines, February 28,1953.

FERNANDO LOPEZ
Secretary of Agriculture and
Natural Resources

ANNEX E

ORDER

On October 13, 1952, the Office a in connection with the above-case can, the dispositive portion
of which reads as follows:
 In view of all the foregoing and that the order of the Director of Lands on
February 1, 1961, is in with the facts of record and the provisions of law on the
matter the herein appeal from the said order should be, as hereby it is dismissed.

From the said decision Antonio Lusin filed a motion for reconsideration which was denied as per
order of this Office dated February 28, 1953. Still not satisfied with the aforementioned order,
Lusin again filed a second notion for reconsideration predicating his motion on the following
grounds:

1. That he (Lusin) is in actual ion of the land in question since 1920;

2. That said area is an agricultural land actually devoted to fishpond and, therefore, is not a
foreshore land;

3. That even granting without admitting that Santolan is a riparian owner, Santolan had lost his
riparian right thereto in view of the continuous ion by Lusin of the area since 1920; and

4. That in the investigation relied upon by the Director of Lands in his decision and confirmed by
this Office, the movant herein was not given opportunity to be heard because the said
investigation was never completed, and as a result, the conclusions of the investigator thereat
were one sided

Adhering to its Policy of giving party litigants the outmost opportunity to present their respective
sides of the case, this Office ordered a reinvestigation of the case to determine whether or not
the allegations of Antonio Lusin are true.

From the said reinvestigation, the facts of this case may be stated as follows:

The disputed area is a strip of land containing an approximate area of 4-1/2 hectares located at
the Barrio of Kaingin, Municipality of Kawit, Province of Cavite- lt is bounded on the North by
Bacoor Bay, on the East by the property occupied by Vicente del Rosario and E. del Rosario, on
the South by Lot No. 896 of Kawit Cadastre No. 203; and on the West by Ankaw River. Lot 986,
mentioned above as the boundary of the area in question on the South, is owned and
possessed by Julian Santolan, his ownership thereof being evidenced by a free patent grant
with Original Certificate of Title No. 6 issued on June 9, 1937. The only issue to be resolved in
this case is whether or not Julian Santolan, as riparian owner, is entitled to the preference
provided for in Section 32, Lands Administrative Order No. 7-1, which reads as follows:

32. Preference of Riparian Owner.— The owner of the property adjoining

foreshore lands, marshy lands, or lands covered with water bordering upon the
shores or banks of navigable lakes or rivers, shall be given preference to apply or
such lands adjoining his property as may not be needed for the public service,
subject to the laws and regulations governing Ian of this nature, provided that he
applies therefor within sixty (60) days from the date he receives a communication
from the Director of Lands advising him of his preferential right.

During the reinvestigation of this case by a representative of this Office, it was disclosed that
Antonio Lusin is the actual occupant of the area in question - his present possession thereof
dating back as of 1951. During his occupation, Lusin has introduced considerable improvements
in the area investing his fife sa therein. Today, a portion of approximately two hectares of the
said area is a complete fishpond surrounded with dikes. A concrete gate was constructed on the
western side of the fishpond in 1951. Water breakers were constructed around the dikes to
protect them from the action of the waves. The remaining portion of the area in question is
fenced with bamboo stakes.

On the other hand, it is apparent that the area in question is an extension of Lot 986 to the sea
and that its present existence is the result of the continuous recession of the water of the sea.
There is no doubt that the area in question is a foreshore, it being situated along the shore lying
between medium high and low water marks and is covered and uncovered by the flow and ebb
of ordinary tide.
Both Parties claim prior ion of the disputed area, Santolan's claim dating way back in 1907, the
year he claims said area was donated to him by his father-in-law while Lusin alleges that he was
already in possession of the same since 1920. The evidence presented by both parties during
the reinvestigation were so diametrically opposed with each other that they only create doubts
as to the veracity of the respective claims of said parties. From the testimonies of witnesses for
both sides, there could be gathered sufficient grounds to believe that prior to 1942, neither Party
Possessed the area to the exclusion of the other. Rather, there are good reasons to believe that
both parties fished in the premises jointly and/or simultaneously without claiming the property
exclusively for themselves because then the area was covered with water which at that time
was still deep. It was only in 1942 that Julian Santolan took positive step to claim the property
by filing a foreshore lease and a revocable permit application for said area with the intention of
converting the same into a fishpond. Santolan caused said area to be surveyed in 1942, the
survey plan was approved in 1944 as may be seen in survey Plan Psu- 115357 of the Bureau of
Lands. Since 1942, Santolan exercised dominion over the property although Lusin occasionally
entered the premises with a similar intention of claiming the area for himself. In January of 1951
Lusin entered the area in question and wrested the n thereof from Santolan. Since then up to
the present, Lusin is in continuous possession of the same notwithstanding the vigorous
opposition of Santolan.

Lusin alleges that the area in question does not fall within the purview of the above quoted
Section 32 of Lands Administrative Order No. 7-1 on the theory that the lands enumerated in
said provision, whether foreshore lands, marshy lands, or lands covered with water, must be
bordering upon the shores or banks of navigable lakes or rivers. And it is argued that the area in
question is bordering the shores of Manila Bay, which is neither a lake nor a river, the owner of
the adjoining property is not en to the preferential right accorded by said Lands Administrative
Order.

We cannot agree with this contention. This Office is of the opinion and so holds that the said
provision of Lands Administrative Order No. 7-1, Section 32 speaks of the following kinds of
lands, distinct and separate from one another:

(1) Foreshore lands

(2) Marshy lands, or

(3) Land covered with water bordering upon the shores of navigable lakes or rivers.

The phrase "bordering upon the shores of navigable lakes or river" in said provision modifies
only the third classification, that is, "lands covered with water", for if the law that said phrase
should modify the three types of land enumerated are then the punctuation mark, comma,
should not have been placed before the alternative "or" but instead between the words "water"
and "bordering" making said provision to appear as follows:

The owner of the property adjoining foreshore ands marshy lands or lands
covered with water, bordering upon the shores or banks of navigable lakes or
rivers ... .

The use of the alternative "or" instead of the conjunction "and" shows the intention of the law in
segregating foreshore lands from marshy lands and those two from lands covered with water
bordering upon shores of navigable lakes or rivers.

It is also alleged that even granting that Santolan was the preferential rights accorded to a
riparian owner, said right has prescribed on the ground that Lusin has been in continuous ion of
the said area since 1920. This allegation was not duly proven during the reinvestigation. While
Lusin claims ion of the disputed area since 1920, on the other hand. Santolan claims that he
possessed the same since 1907 when it was donated to him by his father-in-law. As we have-
already stated, it is the - finding of this Office that prior to 1942, neither party the premises
exclusively. It was only in 1942 when Santolan took positive steps to claim the area for himself.
There are even evidence on record that Santolan paid the land taxes for the area in 1936. In
1951, Lusin effected his entry to the area up to the present. It may be recalled, however, that
these actuations of Lusin had been the subject of a criminal complaint filed by Santolan before
the Justice of the Peace Court of Kawit, Cavite, wherein Lusin was acquitted on the ground that
his guilt was not proven beyond reasonable doubt.

Needless to say, proof beyond reasonable doubt is absolutely necessary before conviction in
criminal cases could be had. On the other hand, preponderance of evidence is sufficient to
prove a matter of fact in civil and/or administrative cases. The preponderance of evidence
adduced at the reinvestigation of this case conducted by a representative of this Office, shows
that the present occupation of Lusin of the area in question was effected by force, although
there are good reasons to believe that such force was employed by Lusin to assert what he
believed was his right over the property in question.

From the foregoing facts and circumstances, it is therefore, apparent that the area in question is
a foreshore land, and Santolan, being the riparian owner, is entitled to the preferential rights
accorded by the provision of Section 32 of Lands Administrative Order No. 7-1. Considering,
however, the fact that during the reinvestigation of this case, it was disclosed that Antonio Lusin
had introduced considerable improvements in the premises and had invested his life savings
therefor, and considering further that if Santolan were the one who converted the area into a
fishpond, as he intends to do, he would have incurred the same expenses as was incurred by
Lusin in the premises in question, it is the belief of this Office that justice would be fully served if
Santolan be required to reimburse Lusin of the value of the improvements now existing in the
area as may be appraised by the Committee on Appraisal of the Bureau of Lands.

WHEREFORE, the above-noted foreshore lease (New) application and revocable permit (New)
application of Antonio Lusin should remain, as hereby it is, REJECTED; and Foreshore Lease
Application No. V-65 of Julian Santolan given due course, PROVIDED, he reimburses Antonio
Lusin of the appraised value of the improvements now existing in the area within sixty (60) days
after notification of said appraisal.

The Director of Lands is hereby directed to instruct the Committee on Appraisal concerned to
make the necessary appraisal of the value of the improvements now existing in the area in
question within thirty (30) days from receipt of this order and to notify Julian Santolan of the
result of said appraisal.

In the event that Julian Santolan fails to reimburse Antonio Lusin of the appraisal value of the
said improvements within the period specified in this order, he shall lose his preferential rights
over the area and Antonio Lusin will be allowed to file an appropriate public land application
therefor.

SO ORDERED.

Manila, Philippines, December 14, 1954.

By Authority of the Secretary:

JAIME M. FERRER
Undersecretary of Agriculture
and Natural Resources

ANNEX F

ORDER

On December 14, 1954, this Office issued an order in connection with the above-entitled case
wherein the rejection of the foreshore lease application and revocable permit (both new) of
Antonio Lusin was upheld and Foreshore Lease Action No. V-62 of Julian Santolan given due
course provided he reimburses Antonio Lusin of the appraised value of the improvements now
existing in the area within sixty (60) days after notification of said appraisal.
From said order, both parties to this conflict filed separate motions seeking reconsideration of
the same.

Santolan premised his motion on the theory that as fat as that po of the order which requires
him to reimburse Lusin of the appraised value of the improvements within sixty (60) days after
notification of said appraisal is concerned, same is contrary to the provisions of Commonwealth
Act No. 141 and of the New Civil Code.

Santolan argues that the best procedure that should have been followed in the disposition of
this case was for the Government to forfeit all the improvements introduced by Lusin in the area
in question in its (Government's) favor and then let Santolan pay to the Government the
appraised value of said improvements within ten (10) years after notification of said appraisal.
He further argues that the "law does not authorize the Secretary of Agriculture and Natural
Resources to dispose of the proceeds of the sale of the improvement to any person
whomsoever", and "certainly the Secretary does not claim the prerogative of disbursing
government funds without authority of law."

In the first place, the order sought to be reconsidered does not contemplate any ale from which
proceeds could be disposed of by the Secretary "to any person whomsoever". In the second
Place, in the issuance of the order sought to be reconsidered this Office has taken into
consideration the Provisions of Wealth Act No. 141 and those of the Civil Code cited by movant
Santolan with in go me respect to the forfeiture ' favor of the government of the improvements
found in the areas covered by rejected applications. However, this Office is also fully aware of
that cardinal principle that 'no man shall enrich himself at the expense of another.

During the reinvestigation of this case by a representative of this Office, it was found that Lusin
was the, actual occupant of the disputed area since 1951. During his occupation, Lusin was
introduced considerable improvements in the area, investing his life savings therein. At the time
of inspection, approximately two (2) hectares of the said area was a veritable and complete with
dikes and water breakers, and the remaining portion was surrounded with bamboo stakes.
While this Office of Lusin's occupation as having effected by force, this Office also believes that
such force was employed by Lusin only to enforce what he believed was his right over the
property in question. This being the case, justice and equity demands that Lusin should be
compensated of the improvements introduced by him in the area in question by whomsoever
shall enjoy the fruits of his (Lusin's) toil. Julian Santolan, being the person who shall benefit from
said improvements, it is only fair and just that he should reimburse Lusin of the value of said
improvements, especially considering that the said area adjudicated to Santolan is already a
producing fishpond.

Antonio Lusin, on the other hand, contends that the order sought to be reconsidered is contrary
to the facts of the case and to the law applicable thereto.

Lusin assigns the following errors as having been allegedly committed by this Office:

(1) In holding that the possession of Lusin dated only as Of 195 1;

(2) In holding that the ion of Lusin was effected through force;

(3) In holding that Section 32 of Lands Administrative Order No. 7-1 is applicable in the instant
case;

(4) In not holding that the preferential rights of Julian Santolan, granting that he has any, has
already prescribed; and

(5) In giving due course to the foreshore lease application of Santolan for the entire area in
question.

With respect to the first two assignments of errors, a review of the records of this case shows
that the findings of this Office are in accordance with the facts of the case as deduced from the
reinvestigation Of this conflict, and as supported by previous records of this case. This Office,
therefore, finds no sufficient ground to disturb its findings of facts.
Anent the next two assignments of errors, which are mere reiteration of movant's allegation in
his previous memorandum, and which were thoroughly passed upon by this Office, it is believed
that discussing them further is no longer necessary since after another close examination of the
case, this Office finds its disposition in this particular respect well justified and in accordance
with the law and regulations applicable thereto.

Now coming to the last allegation, Lusin contends that the foreshore lease application of Julian
Santolan, if given the course, should not cover the entire area in question. Movant Lusin
advances the theory that since the reason behind the law in granting preferential rights to
reparian owners is to compensate for whatever loss said riparian owner may suffer from the
actions of the water, said riparian owner cannot stand to lose more than what he owns, and
therefore, since Santolan's property, which adjoins the area in question, is only two (2) hectares,
Santolan can never lose more than two hectares.

Section 32 of Lands Administrative Order No. 7-1, the particular Point of law involved provides
as follows:

32. Preference of Riparian Owner.— The owner of the property adjoining

foreshore lands, marshy lands, or lands covered with water bordering upon the
shores or banks of navigable lakes or rivers, shall be given preference to apply
for such lands, adjoining his property as may not be needed for the public
service, subject to the laws and regulations governing lands of this nature,
provided that he applied therefor within sixty (60) days from the date he receives
a communication from the Director of Lands advising him of his preferential right.

The above-quoted provision of the Lands Administrative Order does not impose any restriction
or limitation with respect to the extent of the area to which a riparian owner is preferred as long
as said area is not needed for public service. The said order, being clear on this point, this
Office has no other alternative but to interpret said regulation in the meaning it clearly conveys.

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the instant motion for reconsideration
filed respectively by the conflicting parties herein, should be, as hereby they are, denied.

SO ORDERED.

Manila, Philippines, May 19, 1955.

By authority of the Secretary:

JAIME N. FERRER
Undersecretary of Agriculture
and Natural Resources

ANNEX G

4th Indorsemen

Manila, April 10, 1958

Respectfully returned to the Secretary of Agriculture and Natural Resources, Manila.

This is with reference to the appeal by Antonio Lusin from the order of that Department in DANR
Case No. 625 (Julian Santolan vs. Antonio Lusin) dated May 19. 1955, whereby his motion for
reconsideration of the order of that office of December 14, 1954, rejecting his foreshore lease
application for the disputed land but awarding to him the right of reimbursement for the
improvements he had introduced thereon and giving due course to appellee's application
therefor, was denied.
The land in question is a foreshore land of about 4-1/2 hectares located along Bacoor Bay in
barrio Kaingin, Kawit, Cavite. A preferential right to lease it is claimed by the appellant on the
ground that he has been in the continuous and exclusive possession thereof since 1920. when
said land was still under water and used as a site of his fish corals. On the other hand, it is
alleged by the appellee that the disputed lot is an extension of his property into the sea, as he is
the owner of Lot No. 986 which, according to its technical description, borders Bacoor Bay on
the North; that the present foreshore land was formed by soil deposits brought by the action of
the sea; and that he has the right of preference to apply for the land in question in accordance
with Section 32 of Lands Administrative Order No. 7-1.

Upon the foregoing facts, the Director of Lands in an order dated February 1, 1951, rejected the
appellant's foreshore lease application and forfeited the improvements he had introduced
thereon in favor of the appellee. From this order, Lusin appealed to the Secretary of Agriculture
and Natural Resources after his three motions for reconsideration had been denied. On October
13, 1952, the Secretary dismiss his appeal. Thereafter, the appellant moved for a
reconsideration of the Secretary's decision but his motion was denied on February 28, 1953. He
then filed another motion requesting a formal reinvestigation of the case. The motion was
granted and that Department ordered a reinvestigation of the case on May 12, 1953.

In the reinvestigation of the case, the following facts were established: That Lusin had converted
two (2) hectares of the area in dispute into a veritable fishpond; and that the entire area in
question was enclosed with dikes and provided with two (2) sluice gates, one of which was
made of concrete and the other of lumber; that on the northern part of the disputed land
bordering Bacoor Bay were bamboo poles placed at close intervals serving as water breakers to
protect the mud dikes from being washed away by the action of the sea; that all of these
improvements were introduced by Lusin in 1951 up to the time of the reinvestigation; that the
disputed land was, as it still is. bounded on the South by Lot No. 986 of Julian Santolan; that
said land was formed by soil deposits brought by the action of the sea; that in December 1942,
Santulan caused the survey of the land, and the survey plan was approved by the Director of
Lands in 1944; that on December 29, 1942, Santulan filed a foreshore lease application
covering an area of 36,120 square meters of the land in dispute; that the filing of Santolan's
foreshore lease application resulted in the investigation of the case in March 1943, involving the
parties herein. and that said investigation was not finally terminated for unknown reasons.

After receiving and considering the report of the reinvestigation, that office on December 14,
1954, issued an order modifying its previous stand by giving the appellant the right to
reimbursement for the improvements he had introduced on the disputed lot, the dispositive part
of which reads:

Wherefore, the above noted foreshore lease (New) application and revocable
permit (New) application of Antonio Lusin should remain, as hereby it is,
REJECTED; and Foreshore Lease application No. V-62 of Julian Santulan given
due course, PROVIDED, he reimburse Antonio Lusin of the appraised value of
the improvements now existing in the area within sixty (60) days after notification
of said appraisal.

xxx xxx xxx

In the event that Julian Santulan fails to reimburse Antonio Lusin of the appraised
value of the said improvements within the period specified in this order, he shall
lose his preferential rights over the area and Antonio Lusin will be allowed to file
an appropriate public land application therefor.

The appellant moved for a reconsideration of the foregoing order but his motion was denied on
May 19, 1955. Dissatisfied, he appealed to this Office, averring that the Department erred in
finding the following: That the possession of Antonio Lusin of the land in question began only in
195 1; that since 1942, Julian Santulan had been exercising dominion over the property in
question; that the area in question is apparently an extension of lot No. 986 into the sea and that
its present existence was the result of the continuous recession of the sea; that the possession
of Antonio Lusin over the property in question was effected through force; that Section 32,
Lands Administrative Order No. 7-1, is applicable to the instant case; and that the preferential
rights of Julian Santolan, granting he has any, has not prescribed. He contends further that the
Department erred in rejecting his foreshore lease application and in giving due course to that of
the appellee.

The main issue presented by the parties to be resolved in this controversy is, which of them has
a better right to lease the foreshore land under consideration? For a clear resolution of the
question, it is necessary to look into the legal provisions governing the administration and
disposition of foreshore lands. As correctly held by that Department and the Bureau of Lands,
the administration and disposition of foreshore lands are governed by Chapter IX, Title III of
Commonwealth Act No. 141, (Secs. 58 and 59), otherwise known as the Public Land Act.

Section 61 of said law provides that foreshore lands shall be disposed of to private parties by
lease only and not otherwise, as soon as the President, upon recommendation by the Secretary
of Agriculture and Natural Resources, shall declare that the same are not necessary for the
public service and are open to disposition, The procedure for the award of a lease of foreshore
land is found in Section 67 of the same law which provides, as a general rule, that the award of
the right to lease a foreshore land shall be determined by oral bidding, except where
improvements were introduced thereon by reason of a permit issued by competent authority, in
which case the award thereof shall be determined by sealed bidding pursuant to the provisions
of section 26, whereby the permittee is granted the right to equal the highest bidder.

Noteworthy is the fact that both parties herein claim to have been in prior possession of the land
in controversy than the other. Not one of them, however, was granted a permit by competent
authority to occupy and use the land and introduce improvements thereon. Since not one of
them was granted such a permit, the fact that one or the other had been in prior possession of
the premises in question is immaterial, as will be seen hereafter, in the determination of the
instant controversy. Neither is the alleged finding that one of the parties herein entered the
premises and introduced improvements thereon in bad faith material to the resolution of the
case.

It is likewise significant to note that while the Bureau held that none of the parties herein was
entitled to a preferential right to lease the land in question "on the basis alone of Actual
occupancy or introduction of improvements," it ruled that the appellee, Julian Santolan, by
reason of the fact that he was, as he still is, a riparian owner of the disputed area, had a
preferential right to apply for a lease therefor, citing Section 32 of Lands Administrative Order
No. 7-1, which reads:

Sec. 32. The owner of the property adjoining foreshore lands, marshy lands, or
lands covered with water bordering upon the shores or banks of navigable lakes
or rivers, shall be given preference to apply for such lands adjoining his property
as may not be needed for the public service, subject to the laws and regulations
governing lands of this nature, provided that he applies therefor within 60 days
from the date he receives a communication from the Director of Lands advising
him of his preferential right.

In this appeal, the appellant reiterates his contention before that Department that the foregoing
is not applicable to the instant case "because the property in question borders upon the shores
or banks of the Manila Bay and not upon navigable lakes or rivers." The fallacy of the argument
is too obvious to require any discussion since the provision expressly speaks of foreshore lands.
At any rate, this Office finds that Section 32 of Lands Administrative Order No. 7-1 has been
rendered obsolete by Commonwealth Act No. 141.

Lands Administrative Order No. 7-1, dated April 30, 1936, but made effective on January 1,
1936, was promulgated before. the passage of Commonwealth Act No. 141. Its provisions
which have not been altered, modified or amended, particularly Section 32 thereof, were
promulgated pursuant to the existing public land law at the time of its promulgation, namely, Act
No. 2874. A perusal of Section 32 of Lands Administrative Order No. 7-1 will show that while it
speaks of a preferential right to apply for a foreshore land, it does not specify the mode of
application, i.e., whether by sale, lease, homestead, permit, etc., contemplated by it.
Nevertheless it is clear under Act No. 2874 that a foreshore land may be the subject only of a
lease (Sec. 58), or of a revocable permit to occupy and use it (Sec. 65). Seemingly therefore
Section 32 of Lands Administrative Order No. 7-1 contemplates an application for a lease of
foreshore land or a revocable permit to use or occupy it. However, Section I of said order
provides, among other things, the following:

... Those rules and regulations shall not apply to applications for temporary
occupation or provisional use of Said lands and property which shall be governed
by the provisions of Section 1844 of the Administrative Code, as amended, by
Acts Nos. 3077 and 3852, Lands Administrative Order No. 8 and other
regulations promulgated thereunder.

Since Lands Administrative Order No. 7-1 expressly exempts from its operation temporary
permits for the use and occupation of public lands, the conclusion is inescapable that Section 32
thereof contemplates an application for a lease under Section 58 of Act No. 2874 only and does
not include a revocable permit application under Section 65 of said Act.

The procedure for the award of the right to lease a foreshore land under Act No. 2874 is found
in Section 64 thereof, which reads:

Sec. 64. The lease or sale shall be adjudicated to the highest bidder; and if there
is no bidder besides the applicant, it shall be adjudicated to him. The provisions
of Section twenty-seven of this Act shall be applied wherever applicable.

Section 67 of Commonwealth Act No. 141, repealing the foregoing provisions, provides:

Sec. 67. The lease or sale shall be made through oral bidding; and adjudication
shall be made to the highest bidder. However, where an has made improvements
on the land by virtue of a permit issued to him by competent authority, the sale or
lease shall be made by sealed bidding as prescribed in section twenty-six of this
Act, "the provisions of which shall he applied wherever applicable. x x" (Italics
supplied).

While Section 64 of Act No. 2874 makes a reference to Section 27 of the same Act, Section 67
of Commonwealth Act No. 141 also Makes a reference to Section 26 of the latter law, Section
26 of Commonwealth Act No. 141 is practically a reproduction of Section 27 of Act No. 2874
and prescribes the manner or procedure of determining an award through sealed bidding in the
sale of a public land. Under its provision, an applicant is given the option or right to equal the
highest bidder.

Section 67 of Commonwealth Act No. 141 differs, however, from Section 64 of Act No. 2874 in
that while the latter provides that "section twenty- seven of this Act shall be applied wherever
applicable," making sealed bidding the general rule of procedure in determining an award of a
lease of foreshore land, the former Provides the contrary, as under its provisions sealed bidding
is not the general rule of procedure in the determination of lease awards of foreshore lands but
may be resorted to only when the conditions specified therein are present.

Since Section 64 of Act No. 2874 provides that Section 27 thereof should be applied wherever
applicable in determining an award of a lease of foreshore land, the mere fact that the land is
covered by a lease application therefor warrants the holding of a sealed bidding for its
disposition, whereby the applicant therefor should be granted the option or right to equal the
highest bid. In such a legal set-up, the question of preference in the right to apply for a lease of
foreshore land became a necessary consequence, as one need only apply to be entitled to the
right to equal the highest bid hence, the applicability of Section 32 of Lands Administrative
Order No. 7-1.

On the other hand, under Section 67 of Commonwealth Act No. 141, a foreshore land may be
leased, as a general rule, by oral bidding only. In such a case, the award of the foreshore lease
shall always be made to the highest bidder, notwithstanding the fact that one among the bidders
is an applicant, as no one in an oral bidding is entitled to equal the highest bid, unlike in the
case of a sealed bidding either under Section 27 of Act No. 2874 or under Section 26 of
Commonwealth Act No. 141. Since the award of a foreshore lease shall be given to the highest
bidder in an oral bidding, the necessity of determining who among several interested parties has
a preferential right to apply for the land has been obviated under the present law, because the
mere fact that one is an applicant does not entitle him to equal the highest bid, rendering the
provisions of Section 32 of Lands Administrative Order No. 7-1 Idle and useless.

Parenthetically, it may be stated that the appellee brought to the attention of this Office its
previous decision in DANR Case No. 694 (Del Rosario vs. Monzon), where the facts involved
therein are more or less similar to those in the present controversy. While this Office in that case
relied on Section 32 of Lands Administrative Order No. 7-1 in resolving the appeal therein, it did
not touch on the question of whether or not said provision is still enforceable, as the same was
not squarely placed in issue. For this reason, the ruling in that case can not be availed of as a
precedent in the adjudication of the one under consideration.

In the instant case the parties are vying for the preferential right to apply for a lease of the
disputed land, as if by the mere fact of application the land should be disposed of by scaled
bidding, whereby the recognized applicant therefor should be given the right accorded to
applicants under Section 26 of Commonwealth Act No. 141. The only instance under Section 67
of Commonwealth Act No. 141 when a foreshore land may be leased through sealed bidding is
when the conditions specified therein — namely, a that improvements had been introduced on
the land and (b) that said improvements were introduced thereon by reason of a permit issued
by competent authority — are present, in which case the permittee shall be granted the right to
equal the highest bid. In the absence of these conditions, the land should be leased through oral
bidding only and, as stated earlier. the question of preference in the right to apply therefor is
immaterial.

As the conditions specified in Section 67 of Commonwealth Act No. 141 are not present in the
instant case, the land in question can be leased only through oral bidding, if it can be disposed
of under the provisions of Section 61 of said Act, which requires as a condition sine qua non in
the lease of foreshore lands that the same have been declared by the President not necessary
for the public service and are open for disposition. Without such a declaration, a foreshore land
may only be occupied and used by private persons for lawful purposes upon the issuance of a
revocable permit therefor under Section 68 of Commonwealth Act No. 141. Since the record is
silent as to whether or not the land under consideration has been so declared, this Office is
constrained to render two alternative resolutions of the instant case.

On the assumption that the land in question has been declared open for disposition and is not
necessary for the public service, this Office directs that an oral bidding for the leasing thereof to
interested parties pursuant to the provisions of Section 67 of Commonwealth Act No. 141 be
conducted and the contract of lease awarded to the highest bidder. Whoever shall be the
highest bidder, if other than the appellant, shall be required to pay to the appellant the appraised
value of the improvements introduced by him on the land to be determined by that Department.

If the land in question has not been so declared, this Office directs that a revocable permit under
Section 68 of Commonwealth Act No. 141 be issued to the appellant requiring him to pay permit
fees since the year 1951.

Accordingly, the orders and decisions of that Department and the Bureau of Lands are hereby
revoked. The record of the case is returned herewith.

By authority of the President:

(SGD) JUAN C. PAJO

Executive Secretary

ANNEX H

5th Indorsement

Manila, May 10, 1954

Respectfully returned to the Honorable, the Secretary of Agriculture and Natuaral Resources,
Manila.
In his decision of February 4, 1952, the Director ofLands amended the miscellaneous sales
application of Emiliano del Rosario by excluding therefrom portion "B" and adjudicating the
same to Gonzalo Monzon under his foreshore lease application. On appeal by Del Rosario, the
decision of the Director of Lands was affirmed by the Secretarty of Agriculture and Natural
Resources on February 6, 1953. Del Rosario now appeals to this office.

The question presented for determination is, whichof theparties has a better right to the area in
question?

It appears that the area in dispute, portion "B", is a foreshore land, an extension od portion "a",
which lies immediately adjacent to lot No. 987, private property ofMonzon. The record shows
that Monzon and his predecessor in interest have been in possession od said area since before
the war, using it as a site for their oyster and "kapis" beds and for the fish coral. It was only in
1951 that Del Rosario through stealth occupied a portion of area in question, building earthen
dikes preparatory to converting the land into a fishpond. His entry upon the area was duly
protested by Monzon with the Bureau of Lands and the Bureau of Fisheries, both of wich is
advised Del Rosario to vacate the premises and to refrain from introducing further
improvements thereon.

Upon the facts and the circumstances narrated above, and the pursuant to Section 32 of Lands
Administrative Order No. 7-1, which gives tot he owner of the property adjoining foreshores
lands and the prefrential right to apply therefor under the provisions of the Public Act, it is
evident that Monzon has a better right than Del Rosario tot he area in dispute which, as stated
above, is aforeshore land.

In view of foregoing, the decision appealed from is hereby affirmed.

The record of the case is returned herewith.

G.R. No. 146616 August 31, 2006

SIAIN ENTERPRISES, INC., Petitioner,

vs.
F.F. CRUZ & CO., INC., Respondent.

DECISION

CARPIO MORALES, J.:

Western Visayas Industrial Corporation (WESVICO) filed on September 18, 1973 a foreshore
lease application over the foreshore land adjacent to certain lots registered in its name, located
in Loboc, Lapuz, La Paz, Iloilo City, including Lot 3309. It eventually withdrew the application
and filed on March 1976 a petition for registration over the same foreshore land with the then
Court of First Instance of Iloilo. The case was, however, archived as WESVICO’s representative
could no longer be contacted.

It appears that WESVICO ceased to hold operations and its properties including Lot 3309 were
foreclosed by the Development Bank of the Philippines (DBP) which later consolidated its
ownership thereon. 1

On July 7, 1983, F.F. Cruz & Co. (F.F. Cruz) filed with the Bureau of Lands, Iloilo City, District
Land Office VI-1 a foreshore lease application 2 over a foreshore land, a portion of which is
adjacent to Lot 3309. The application was docketed as FLA (VI-1) 176.

In the preliminary investigation report 3 on F.F. Cruz’ FLA (VI-1) 176, Senior Special Investigator
Ramon Torre who personally visited and examined the land applied for recommended that the
application be given due course.

District Land Officer Norberto Bernas thereafter submitted to the Director of Lands a
report, 4 together with relevant documents including the preliminary investigation report. The
pertinent portion of Bernas’ report reads:

. . . I personally visited the area applied for by the herein applicant and found that the same is
actually occupied and used by them as a sanctuary of their marine equipment which they are
using in their construction work of the Iloilo Port. The applicant has also introduced some
facilities on the area applied for in the repair and maintenance of said equipment. A portion of
the land applied for has already been filled up by the applicant as they are in need of a land
area for the repair and maintenance of their equipment and in the loading and unloading of
materials that they use in the construction of the Iloilo City Port.

x x x x 5 (Emphasis and underscoring supplied)

Petitioner Siain Enterprises Inc. (SIAIN), who purchased from the DBP the properties previously
owned by WESVICO including Lot 3309, 6 filed on September 29, 1986 a foreshore lease
application 7 over the foreshore land adjacent to the properties it bought from DBP.

Upon learning that 130 linear meters of the foreshore land subject of F.F. Cruz’s foreshore lease
application overlapped that covered by its foreshore lease application, SIAIN filed on January 9,
1987 a protest 8 alleging that it being the owner of the property adjoining the overlapping area, it
should be given preference in its lease.

On March 6, 1987, the Sangguniang Panglungsod of Iloilo City, by Resolution No.

174, 9 approved the recommendation of its Committee on Finance that "for the mutual interest"
of F.F. Cruz and SIAIN, SIAIN would get 70 linear meters and F.F. Cruz would get 60 linear
meters of the disputed area, in light of its finding that, among other things, both SIAIN and F.F.
Cruz would "contribute substantially to the economic growth of the City of Iloilo."

Concurring with the Sangguniang Panglungsod, the Land Management Bureau (LMB) through
its Director, by Order10 of July 15, 1989, dismissed SIAIN’s protest in this wise:
. . . While it cannot be denied that protestant is now the registered owner of the property
adjoining the foreshore in question, the disputed foreshore cannot be considered to have been
built or formed by means of accretion but is areclaimed land made by respondent F.F. Cruz
and Company for the purpose of utilizing the same in the loading and unloading of their
equipment and materials and for the repair and maintenance of said equipment which
respondents use in the reclamation of the Iloilo City Port. This is supported by the findings of the
District Land Officer Norberto Bernas who, in his letter dated February 18, 1984 to this Office,
reported that he personally visited the foreshore in question and found that the same is now
actually occupied and used by the respondent company as a sanctuary of its marine
equipment which it is using in its construction work of the Iloilo City Port and that a portion of
the land applied for has already been filled up by the applicant to be utilized in the repair
and maintenance of its equipment and in the loading and unloading of materials it uses in the
construction of the Iloilo City Port. It is therefore clear that the foreshore in question is neither an
accretion nor an accessory to protestants’ property. While protestant SEI appears to be owner
of the property adjacent to the disputed foreshore, it cannot be considered as a riparian owner
within the contemplation of the aforementioned law. 11 (Emphasis and underscoring supplied)

Accordingly, the LMB disposed:

WHEREFORE, it is ordered that the protest of SIAIN Enterprises, Inc. be, as it hereby it is,
dismissed and this case, dropped from the records. Both Foreshore Lease Application Nos. (VI-
5) 220 and (VI-1) 176 of SIAIN Enterprises, Inc. and F.F. Cruz and Co., Inc. respectively, shall
be amended in such a way that SIAIN’s application shall cover SEVENTY (70) linear meters of
the disputed foreshore adjoining Lot 3309 while F.F. Cruz’s application shall cover SIXTY (60)
linear meters thereof. Accordingly, both applications shall be give due course in accordance
with the provisions of the Public Land Law, otherwise known as Commonwealth Act No. 141, as
amended. 12 (Underscoring supplied)

SIAIN appealed to the Secretary of the Department of Environment and Natural Resources
(DENR), arguing that the LMB:

1. . . . made [a] false assumption of fact when it considered the foreshore area under . . .
controversy as reclaimed land;

2. . . . committed a grave error in not considering the preferential right of the riparian
owner/littoral owner, . . . to apply for a lease over the foreshore under controversy; [and]

3. . . . erred in awarding sixty (60) linear meters of the foreshore under controversy to [F.F.
Cruz]. 13

By Decision 14 of May 6, 1997, then DENR Acting Secretary Antonio G.M. La Viña set aside the
LMB Order, the pertinent portions of which decision read:

It is blatant error to consider the contested area as reclaimed land as it has no basis in fact, in
law and jurisprudence.

The area in question is unquestionably a natural foreshore for which various applicants
prior to the herein parties have applied. CRUZ’s F.L.A. No. (VI-1) 176 itself which was filed
on July 7, 1983, long after it had allegedly filled up the area undeniably shows CRUZ’s
admission that it is a foreshore and not something else.

The assumption that the contested area is a reclaimed land runs smack against the provision of
Article 5 of the Spanish Law on Waters of August 3, 1866 stating that:

"Lands reclaimed from the sea in consequence of works constructed by the State, or by
provinces, pueblos or private persons, with proper permission, shall become the property of the
party constructing such works, unless otherwise provided by the terms of the grant of authority."

We cannot find in the records anything to show that a "permission" was ever sought by or
granted to, CRUZ for the alleged reclamation of the land in question.
xxxx

It is by reason of the Director of Lands’ erroneous classification of the contested area as

"reclaimed" that he awarded 60 linear meters thereof to CRUZ. However, as heretofore
discussed, the said area in question is clearly a natural foreshore and SIAIN is correct in
claiming it to be so. Hence, the law that applies in this case is Section 32 of Lands
Administrative Order No. 7-1 which was issued by the Secretary of the then Department of
Agriculture and Natural Resources . . .

xxxx

It is an undisputed fact that SIAIN is the registered owner of the land adjoining the foreshore
area in controversy. Hence SIAIN is the riparian/littoral owner insofar as the contested foreshore
area is concerned and should enjoy the preferential right to lease the entire one hundred thirty
(130) linear meters of said area adjoining its property, which includes the sixty (60) linear meters
thereof awarded to CRUZ in the questioned Order.

x x x x 15 (Emphasis supplied; underscoring partly in the original and partly supplied)

The DENR Acting Secretary thus ordered that the application of F.F. Cruz be amended to
exclude the disputed foreshore area adjacent to Lot 3309 and that SIAN’s application be given
due course.

F.F. Cruz appealed to the Office of the President, contending that the DENR Acting Secretary
acted with grave abuse of discretion:

I. IN DISREGARDING THE FINDINGS OF THE DIRECTOR OF LANDS MANAGEMENT

BUREAU THAT THE CONTROVERTED AREA IS A RECLAIMED LAND UNDERTAKEN BY
APPELLANT F.F. CRUZ . . .

II. IN RULING THAT [SIAIN] HAS A PREFERENTIAL RIGHT OVER THE PROPERTY IN
DISPUTE; [and]

III. IN ISSUING THE SUBJECT DECISION CONSIDERING THAT HE IS NOT EMPOWERED

BY LAW OR RULE TO ISSUE THE SAME. 16

By Decision 17 of March 12, 1999, the Office of the President, through then Executive Secretary
Ronaldo B. Zamora, reversed the decision of the DENR Acting Secretary and reinstated that of
the LMB in this wise:

Records reveal that WESVICO, who may be considered as the real riparian owner, had
previously availed itself of the preferential right to apply for the foreshore area adjacent
to its property. However, it withdrew its application, and instead sought the titling of said
property via a petition for registration filed with the court, which eventually archived the
case for petitioner’s lack of interest. In net effect, WESVICO’s preferential right adverted
to, albeit initially pursued, was thereafter abandoned due to its voluntary withdrawal of
the corresponding application and its erroneous resort to some other mode of
acquisition, i.e., the filing of a petition for registration. Consequent to such
abandonment, it may be said that WESVICO had already waived its preferential right over
the controverted area at the time SIAIN purchased the adjacent property. As vendee,
SIAIN was subrogated not only to the rights and actions of its predecessor-in-interest,
WESVICO, but also to the absence/lack of those.

Also decidedly going for CRUZ is the fact that it applied for the disputed area, occupied
the same and introduced improvements thereon long before SIAIN filed its own lease
application. Subject to certain exceptions, it is axiomatic in public land grant that he who
is first in time is preferred or stronger in law – Priore in tempore, potior jure.

It may be, as stated by the DENR, that the contested area abuts upon the titled property of
SIAIN, a circumstance which ordinarily would accord that firm a preferential right to lease the
property in question, the rule being that a riparian/littoral owner enjoys preference over the
abutting foreshore lands formed by accretion or alluvial deposits.

xxxx

. . . The principle thus enunciated in Santulan properly applies where the adjoining lot is a
natural foreshore, meaning that the foreshore was formed by what may rightfully be considered
as accretion, or the settling down, by natural causes, of soil, earth and other deposits. But such
is not what it obtains in this case, contrary to the bare assertion of the DENR Acting Secretary
that the "area in question is unquestionably a natural foreshore." . . .

xxxx

Not being the product of accretion, the disputed strip of foreshore land cannot be the proper
subject of a riparian or littoral claim.

xxxx

The actuality of the DENR not formally granting CRUZ a permit to undertake reclamation works
on the disputed area can be conceded. But in the light of the Bernas report, . . . there can be no
quibbling that CRUZ occupied and raised, thru filling, the area to its present level, with the
implicit consent, if not approval, of lands authorities. That consent and/or approval have been
given may be deduced from the fact that the Bureau of Lands required the payment of, and
received from appellant, the amount of P40,032.00 as occupation fee. Any suggestion that
CRUZ, after paying the occupational fee, merely planted itself on the disputed area without as
much as dredging and filling the same is unacceptable. In a very real sense, therefore, the
reclamation work undertaken by CRUZ was with the proper permission, or at least the
acquiescence of the Bureau of Lands, the agency which, following Insular Government v.
Aldecoa (19 Phil. 505), is empowered to grant such permit in behalf of the DENR
Secretary. 18(Emphasis and underscoring supplied)

In its petition for review before the Court of Appeals, SIAIN raised the issues of 1) whether the
disputed area is reclaimed land or foreshore land and if found to be foreshore land, 2) whether
SIAIN has preferential right to lease the same. 19

By Decision of July 3, 2000, 20 the appellate court dismissed SIAIN’s petition, ruling that there is
no justification to digress from the findings and conclusions of the Office of the President and
the LMB and that administrative matters within the executive jurisdiction can only be set aside
on proof of gross abuse of discretion, fraud or error of law.

Hence, the present petition for review filed by SIAIN.

SIAIN contends that the evidence overwhelmingly proves that the disputed area is foreshore
land and not reclaimed land as found by the Office of the President. It invites attention to F.F.
Cruz’s own declaration in its foreshore lease application that the disputed area is a "parcel of
foreshore land." To SIAIN, this declaration is equivalent to a judicial admission which does not
require proof and is conclusive as to it.

Further, SIAIN argues that the records reveal that the only evidence relied upon by the Office of
the President is the Bernas report which speaks of a portion allegedly filled-up by F.F. Cruz, the
identity, location and size of which were never established; and that there is no evidence to
prove that the filled-up portion is one and the same as the disputed area, but that even
assuming that it is, F.F. Cruz cannot have a better right over it as the reclamation was made
without the necessary permit, hence, it cannot be allowed to benefit from its own wrongdoing.

Furthermore, SIAIN contends that there can be no waiver of preferential right over the disputed
property, no advice from the Director of Lands having been communicated to WESVICO, DBP
or SIAIN of their preferential right to lease the adjacent foreshore land, and therefore, the 60
days within which they are supposed to apply 21 has not begun to run.

The key to the present controversy lies in the classification of the disputed area.
The DENR Secretary found that the disputed area is a "natural foreshore," hence, it concluded
that SIAIN, being a littoral owner (owner of land bordering the sea or lake or other tidal
waters 22), has preferential right to lease it as provided in paragraph 32 of Lands Administrative
Order No. 7-1 dated April 30, 1936 which reads:

32. Preference of Riparian Owner. – The owner of the property adjoining foreshore lands or
lands covered with water bordering upon shores or banks of navigable lakes or rivers,
shall be given preference to apply for such lands adjoining his property as may not be
needed for the public service, subject to the laws and regulations governing lands of this nature,
provided that he applies therefore within sixty (60) days from the date he receives a
communication from the Director of Lands advising him of his preferential right. 23 (Emphasis
supplied)

The DENR Secretary found the LMB’s classification of the disputed area as "reclaimed"
erroneous for lack of basis in fact, law and jurisprudence.

On the other hand, while the Office of the President recognized the preferential right of littoral
owner WESVICO, it held that it had waived its preferential right and SIAIN, as successor-in-
interest, was subrogated to WESVICO’s right or lack of it.

The Office of the President went on to hold that since the disputed area is already reclaimed
land, it cannot be subject to littoral claim, SIAIN, not being the littoral owner within the
contemplation of the law, citing Santulan v. The Executive Secretary 24 which elucidated on the
principal reason for giving a riparian or littoral owner preferential right, thus:

Now, then, is there any justification for giving to the littoral owner the preferential right to lease
the foreshore land abutting on his land?

That rule in paragraph 32 is in consonance with article 4 of the Spanish Law of Waters of 1866
which provides that, while lands added to the shores by accretions and alluvial deposits caused
by the action of the sea form part of the public domain, such lands, when they are no longer
washed by the waters of the sea are not necessary for purposes of public utility, or for the
establishment of special industries, or for the coast guard service," shall be declared by the
Government "to be the property of the owners of the estates adjacent thereto and as increment
thereof."

In other words, article 4 recognizes the preferential right of the littoral (riparian according
to paragraph 32) to the foreshore land formed by accretions or alluvial deposits due to
the action of the sea.

The reason for the preferential right is the same as the justification for giving accretions to the
riparian owner for the diminutions which his land suffers by reason of the destructive force of the
waters. So, in the case of littoral lands, he who loses by the encroachments of the sea should
gain by its recession. 25 (Emphasis and underscoring supplied)

Furthermore, as reflected above, the Office of the President, finding that F.F. Cruz’s occupation
and introduction of improvements on the contested area long before SIAIN filed its lease
application, held that "it is axiomatic in public land grant that he who is first in time is preferred or
stronger in law."

The petition is impressed with merit.

That the foreshore area had been reclaimed does not remove it from its classification of
foreshore area subject to the preferential right to lease of the littoral owner.

It bears noting that it was not the reclamation that brought the disputed foreshore area into
existence. Such foreshore area existed even before F.F. Cruz undertook its reclamation. It was
"formed by accretions or alluvial deposits due to the action of the sea." Following Santulan, the
littoral owner has preferential right to lease the same.
Contrary to the ruling of the Office of the President, as affirmed by the appellate court, littoral
owner WESVICO cannot be considered to have waived or abandoned its preferential right to
lease the disputed area when it subsequently filed an application for registration thereover. For
being a part of the public domain, ownership of the area could not be acquired by WESVICO. Its
preferential right remained, however. Its move to have the contested land titled in its name,
albeit a faux pas, in fact more than proves its interest to utilize it.

As correctly argued by SIAIN, were WESVICO’s petition for registration which, as stated earlier,
was archived by the trial court, pursued but eventually denied, WESVICO would not have been
barred from filing anew a foreshore lease application. Parenthetically, the petition for registration
of WESVICO was archived not on account of lack of interest but because it ceased operations
due to financial reasons.

WHEREFORE, the Court of Appeals Decision dated July 3, 2000 is REVERSED and SET
ASIDE.

The May 6, 1997 Decision of then Acting Secretary Antonio G.M. La Viña of the Department of
Environment and Natural Resources is REINSTATED.

SO ORDERED.
G.R. No. L-22763 March 18, 1983

BRUNA ARANAS DE BUYSER, plaintiff-appellant,

vs.
DIRECTOR OF LANDS, IGNACIO TANDAYAG and CANDIDA DE TANDAYAG, defendants-
appellees.

Floripinas C. Bruper for plaintiff-appellant.

The Solicitor General for defendants-appellees.

ESCOLIN, J.:

This is an appeal, perfected before the effectivity of Republic Act 5440, from the decision of the
Court of First Instance of Surigao, declaring a parcel of land formed along the shore by the
action of the sea as part of the public domain.

Plaintiff-appellant is the registered owner of Lot No. 4217 of the Surigao Cadastre, which
borders the Surigao Strait. Contiguous to said lot is a parcel of land which was formed by
accretion from the sea, the subject- matter of this controversy. Defendants Ignacio Tandayag
and his wife Candida Tandayag have been occupying this foreshore land under a Revocable
Permit issued by the Director of Lands. For the use and occupation thereof, said spouses paid
the Bureau of Lands the amount of P6.50 annually. They have a house on said lot, which
plaintiff alleged had been purchased by the Tandayags from one Francisco Macalinao, a former
lessee of the plaintiff.

Claiming ownership of the said land, plaintiff filed an action against the spouses Tandayag in
the Court of First Instance of Surigao to recover possession of this land as well as rents in
arrears for a period of six years. The complaint was subsequently amended to implead the
Director of Land as defendant, allegedly for having illegally issued a revocable permit to the
Tandayags.

After due trial, the court a quo rendered a decision dismissing the complaint, as follows:

WHEREFORE, the court hereby renders judgment in favor of the defendants and
against the plaintiff, dismissing the complaint of the plaintiff for lack of cause of
action; declaring the defendants Ignacio Tandayag and his wife, Candida de
Tandayag as the lawful occupants of the land in question, which is part of the
public domain; condemning the plaintiff to pay to the defendant in concept of
damages in the amount of P250.00; plus the costs. (p. 67, Decision, Original
Records.)

From this judgment, plaintiff appealed directly to this Court on a pure question of law.

The plaintiff's claim of ownership over the land in question is bereft of legal basis. Such alluvial
formation along the seashore is part of the public domain and, therefore, not open to acquisition
by adverse possession by private persons. It is outside the commerce of man, unless otherwise
declared by either the executive or legislative branch of the government.1

In asserting the right of ownership over the land, plaintiff invokes Article 4 of the Spanish Law of
Waters of August 3, 1866 which provides:

Art. 4. Lands added to the shore by accretion and alluvial deposits caused by the
action of the sea, form part of the public domain, when they are no longer
washed by the waters of the sea, and are not necessary for purposes of public
utility, or for the establishment of special industries, or for the coastguard service,
the Government shall declare them to be the property of the owners of the estate
adjacent thereto and as an increment thereof.
Plaintiff's reliance on the above article is quite misplaced. The true construction of the cited
provision is that the State shall grant these lands to the adjoining owners only when they are no
longer needed for the purposes mentioned therein. In the case at bar, the trial court found that
plaintiff's evidence failed to prove that the land in question is no longer needed by the
government, or that the essential conditions for such grant under Article 4 of the Spanish Law of
Waters, exists.

Plaintiff, however, argues that the approval by the Director of Lands of the defendants'
Revocable Permit Application is tantamount to an implied declaration on the part of the Director
of Lands of the fact that the disputed lot is no longer needed for public use. We fail to see such
implication.

In his letter, dated June 16, 1955, approving the defendants' Revocable Permit Application, the
Director of Lands did not declare the land as no longer needed for public use. Pertinent portions
of said letter reads: 2

With reference to your revocable permit application no. v-8040, I wish to inform
you that as the District Engineer of that province has in his 1st indorsement dated
July 7, 1954 certified that the land applied for by you is/may be needed by the
Government for future public improvements (Boulevard and seawall protection
purposes) you may be allowed to continue with your temporary occupation and
provisional use of the premises under a revocable permit renewable every year
in the meantime that the land is not actually needed by the Government for the
purposes aforestated, subject however to the following conditions:

That no further structures shall be constructed on the land and

that any structure constructed thereon shall be removed and/or by
you at your expense upon thirty (30) days notice if and when the
Government is ready to actually use the land for Boulevard and
seawall protection purposes. (p. 113, Exhibit 4.)

From the foregoing, it is clear that the State never relinquished ownership over the land.

Since the land is admittedly property of public dominion, its disposition falls under the exclusive
supervision and control of the Bureau of Lands.3 Under the Public Land Act, an application for
the sale or lease of lands enumerated under Section 59 thereof, should be filed with the Bureau
of Lands. 4 In compliance therewith, the spouses Tandayag filed the appropriate application,
while plaintiff did not. As pointed out by the Solicitor General, "like any other private party, she
(plaintiff) must apply for a permit to use the land, like what appellee spouses did. Not having
submitted to the jurisdiction of the Bureau of Lands which has administration and control over
the area in question, by filing the corresponding application for permit, appellant has no right
whatsoever in the foreshore land as to be entitled to protection in the courts of justice." 5

In Aldecoa vs. Insular Government, 6 a case involving two parcels of land formed along the
shore by the action of the sea, this Court has this to say.

The record does not disclose that Aldecoa & Co. had obtained from the Spanish
Government of the Philippines the requisite authorization legally to occupy the
said two parcels of land of which they now claim to be the owners; wherefore, the
occupation or possession which they allege they hold is a mere detainer that can
merit from the law no protection such as is afforded only to the person legally in
possession.

The rationale behind the grant of revocable permit was propounded by the Attorney General in
his opinion of July 24, 1920, in this wise:

The lease of reclaimed lands and of the foreshore was formerly provided by Act
No. 1654. Under said Act, said lands could only be leased in the manner and
under the conditions provided by the said law. No revocable permits were
allowed. Then Act No. 2570 was passed amending Sec. 5 of Act No. 1654 so as
to authorize the temporary use of the foreshore under a revocable permit. This
 measure was apparently deemed necessary as well as expedient in order to
legalize the habitual use of the coast and shores of these islands by the people,
who had erected thereon light material houses and dwellings, temporary
structures used in connection with fishing and other maritime industries, as well
as to authorize the provisional occupation and use contemplated by the law
providing for its format lease. The countless houses and provisional
constructions that fringed the shores of the archipelago especially in Mindanao,
and the constant and every day use and occupation of the foreshore by the
people in fishing, salt and other industries common to the sea, as above stated,
evidently prompted the legislature to all the temporary use of the foreshore in this
manner by means of revocable permit.

In fine, the grant of a Revocable Permit to the defendants Tandayag for the temporary use and
occupation of the disputed land is valid, having been legally issued by the Bureau of Lands,
acting for and in behalf of the Secretary (now Minister) of Agriculture and Natural Resources
who is empowered to grant revocable permits under Section 68 of the Public land Act which we
quote:

The Secretary of Agriculture and Natural Resources may grant to qualified

persons temporary permission upon the payment of a reasonable charge, for the
use of any portion of the lands covered by this chapter for any lawful private
purpose, subject Lo revocation, at any time when, in his judgment the public
interest shall require.

WHEREFORE, the decision appealed from is hereby affirmed with costs against the plaintiff-
appellant.

SO ORDERED.
G.R. No. L-40399 February 6, 1990

MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS, HILARIO ESCORPIZO,

ISABELO MAURICIO, HEIRS OF ROMAN DAMASO, NAMELY: JORGE DAMASO and
ALEJANDRO DAMASO, HEIRS OF FRANCISCO RAMOS, NAMELY: ENCARNACION R.
LEANO and DOMINGA R. MEDRANO, HEIRS OF SABINA GELACIO AGAPITO, NAMELY:
SERAPIO AGAPITO, and NICOLASA AGAPITO, FELISA DICCION AGNE, ESTANISLAO
GOROSPE, LIBRADO BADUA, NICOLAS VILLANUEVA, HEIRS OF CARLOS PALADO,
NAMELY: FORTUNATA PALADO and ISABELITA PALADO, PRIMITIVO TAGANAS,
PANFILO SOINGCO, BERNARDO PALATTAO, MARCELINO S. SANTOS and PAULINO D.
AGNE JR. (Minor), represented by his mother FELISA DICCION AGNE, petitioners,
vs.
THE DIRECTOR OF LANDS, PRESENTACION AGPOON GASCON, JOAQUIN GASCON
and HON. ROSALIO C. SEGUNDO, Presiding Judge, Court of First Instance of
Pangasinan, Branch V, respondents.

G.R. No. L-72255 February 6,1990

MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS (deceased), represented by

FLORENTINO C. TAGANAS, FELISA DICCION AGNE, HILARIO ESCORPIZO, NICOLAS
VILLANUEVA, ISABELO MAURICIO, ESTANISLAO GOROSPE (deceased), represented by
ELIZABETH G. BADUA and SILVINA G. VALERIO, LIBRADO BADUA, JOSE ALSISTO,
SERAPIO AGAPITO, NICOLASA AGAPITO, JORGE DAMASO, ALEJANDRO DAMASO,
ENCARNACION RAMOS, DOMINGA RAMOS and CARLOS PALADO, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT, PRESENTACION AGPOON GASCON and
JOAQUIN GASCON, respondents.

Espiritu Taganas for petitioners.

Adriatico T. Bruno for private respondents.

REGALADO, J.:

Before us are two separate petitions for review on certiorari of the order of the defunct Court of
First Instance of Pangasinan, Branch V, in Civil Case No. 2649, entitled "Marcelino Agne et al.
vs. The Director of Lands, et al.," dismissing the complaint filed by herein petitioners in said
case; 1 and the decision of the then Intermediate Appellate Court in AC-G.R. CV No. 60388-R,
entitled "Presentacion Agpoon Gascon vs. Marcelino C. Agne et al.," promulgated on January
30, 1985, affirming in toto the decision of the trial court in favor of herein private
respondents 2 which cases are docketed herein as G.R. No. L-40399 and G.R. No. 72255,
respectively.

These two petitions, arising from the same facts and involving the same parties and common
questions of law, were ordered consolidated in our resolution of August 9, 1989.

As found by respondent court and disclosed by the records, the land subject matter of this case
was originally covered by Free Patent No. 23263 issued on April 17, 1937 in the name of
Herminigildo Agpoon. On May 21, 1937, pursuant to the said patent, the Register of Deeds of
Pangasinan issued to said Herminigildo Agpoon Original Certificate of Title No.
2370. 3 Presentacion Agpoon Gascon inherited the said parcel of land upon the death of her
father, Herminigildo, and was issued Transfer Certificate of Title No. 32209 on April 6,1960.
Respondent Presentacion declared the said land for taxation purposes in her name under Tax
Declaration No. 11506 and taxes were paid thereon in her name. 4

On April 13, 1971, private respondent spouses filed Civil Case No. U-2286 in the then Court of
First Instance of Pangasinan for recovery of possession and damages against petitioners. Their
complaint states that they are the registered owners under the aforesaid Transfer Certificate of
Title No. 32209 of the parcel of land situated in Barrio Bantog, Asingan, Pangasinan which is
now in the possession of petitioners; that during the Japanese occupation, petitioners, taking
advantage of the abnormal conditions then obtaining, took possession of said land by means of
fraud, stealth, strategy and intimidation; that private respondents repeatedly demanded the
surrender of the physical possession of said property but the latter refused. 5

Petitioners, in answer to said complaint, alleged that the land in question was formerly a part of
the river bed of the Agno-Chico River; that in the year 1920, a big flood occurred which caused
the said river to change its course and abandon its original bed; that by virtue of the provisions
of Article 370 of the Spanish Civil Code which was then the law in force, petitioners, by
operation of law, became the owners by accession or accretion of the respective aliquot parts of
said river bed bordering their properties; that since 1920, they and their predecessors in interest
occupied and exercised dominion openly and adversely over said portion of the abandoned river
bed in question abutting their respective riparian lands continuously up to the present to the
exclusion of all other persons, particularly Herminigildo Agpoon; that they have introduced
improvements thereon by constructing irrigation canals and planting trees and agricultural crops
thereon 6 and converted the land into a productive area.

In their joint stipulation of facts, the parties agreed as follows:

1. That the parties admit the identity and area of the land in question, which
forms part of the river bed of the Agno-Chico River, and further admit that the
said river bed was abandoned as a result of a flood in 1920 and opened a new
bed. The location and course of the aforesaid abandoned river bed as well as the
relative position of the lands bordering the same can be gleaned from Cadastral
Survey Plan of Asingan, Pangasinan, Street No. 49 thereof, as approved by the
Director of Lands on October 12, 1912, a photostat copy of which is hereto
attached and made an integral part hereof a Annex "A".

2. That the parties admit that the defendants are the riparian owners of the area
in question and further admit that the defendants are in possession thereof but
that each of them is in possession only of an aliquot part of the said area
proportionate to the length of their respective lands. (As amended).

3. That the parties likewise admit that a Free Patent No. 23263 in the name of
Herminigildo Agpoon covering the area in question was issued on April 17, 1937
and that they admit O.C.T. No. 2370 of the Register of Deeds of Pangasinan
covering the same parcel of land was issued to the same Herminigildo Agpoon
on May 21, 1937, a photostat copy of said O.C.T. is hereto attached as Annex
"B".

4. That the parties admit that the property in controversy is now covered by
T.C.T. No. 32209 in the name of Presentacion Agpoon Gascon and by Tax
Declaration No. 11506 in the name of said Presentacion Agpoon Gascon, a
photostat reproduction of said T.C.T. No. and Tax Declaration are hereto
attached and marked as Annexes "C" and "F", respectively. 7

On March 6, 1974, while the above-mentioned case was still pending, petitioners filed a
complaint against the respondents Director of Lands and spouses Agpoon with the former Court
of First Instance of Pangasinan for annulment of title, reconveyance of and/or action to clear title
to a parcel of land, which action was docketed as Civil Case No. U-2649. Petitioners alleged in
their said complaint that the land in question, which was formerly a portion of the bed of Agno-
Chico river which was abandoned as a result of the big flood in 1920, belongs to them pursuant
to the provision of Article 370 of the old Civil Code; that it was only on April 13, 1971, when
respondent spouses filed a complaint against them, that they found out that the said land was
granted by the Government to Herminigildo Agpoon under Free Patent No. 23263, pursuant to
which Original Certificate of Title No. 2370 was issued in the latter's name; and that the said
patent and subsequent titles issued pursuant thereto are null and void since the said land, an
abandoned river bed, is of private ownership and, therefore, cannot be the subject of a public
land grant. 8
On June 21, 1974, the trial court rendered a decision in Civil Case No. U-2286, the dispositive
part of which reads as follows:

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court renders

judgment:

1. Ordering the defendants to surrender to the plaintiffs the physical possession

of the land in question described in paragraph 3 of the amended complaint;

2. Ordering the defendants to pay jointly and severally to the plaintiff the produce
of the land in question in the total sum of P5,000.00 per year from the date of the
filing of the present action at the rate of 6% interest per annum until fully paid;

3. Ordering the defendants to pay jointly and severally the amount of P800.00
representing attorney's fees;

4. And to pay the costs.

SO ORDERED. 9

Not satisfied with said decision, petitioners appealed to respondent court. As earlier stated, on
January 30, 1985 the former Intermediate Appellate Court affirmed in toto in AC-G.R. CV No.
60388-R the said decision of the court a quo, 10 and with the denial of petitioner's motion for
reconsideration, 11 the case came up to us as G.R. No. 72255.

On June 24, 1974, the aforesaid Court of First Instance of Pangasinan, acting on the motion to
dismiss filed by respondents Director of Lands and spouses Agpoon, issued an order dismissing
Civil Case No. U-2649 for annulment of title by merely citing the statement in the case
of Antonio, et al. vs. Barroga, et al. 12 that an action to annul a free patent many years after it
had become final and indefeasible states no cause of action . 13 Petitioners' motion for the
reconsideration of said order was denied on September 11, 1974, 14 hence the recourse to us in
G.R. No. L-40399.

In these petitions, petitioners raise the following issues:

1. Whether or not the lower court is justified in dismissing the complaint by simply invoking the
ruling in the aforestated case of Antonio although the facts and circumstances set forth in the
complaint show that the land in question was private land under Article 370 of the old Civil Code
and that the subsequent derivative certificates of title in question were null and void ab
initio because the said land was not within the authority of the government to dispose of in favor
of any party and must be ordered annulled, cancelled or rescinded; 15

2. Whether or not the trial court and the former Intermediate Appellate Court were justified in not
basing their judgments on the judicial admissions of private respondents in the stipulation of
facts of the parties, since such admissions have the legal force and effect of precluding private
respondents from disputing such admission;

3. Whether or not respondent court can presume that private respondents or their predecessor
had prior possession of the land in dispute in the light of provisions of law which oblige them to
prove such possession, as well as the stipulated facts and other facts and circumstances on
record showing that private respondents or their predecessor were not in actual occupancy of
the said land, and without appreciating the evidence put up by petitioners to prove their prior
possession thereof;

4. Whether or not respondent court was justified in its application of Section 41 of the Code of
Civil Procedure in favor of private respondents, although the private respondents did not invoke
said law in this case and did not adduce any evidence or proof that all the essential requisites of
acquisitive prescription under the said law were present in their favor;

5. Whether or not the Government had the right to convey by way of free patent to any party the
land in dispute which belonged to the riparian owners as decreed by Article 370 of the old Civil
Code, the law then in force, and despite the fact that the patentee herein never occupied the
said land during the period prescribed by Act No. 2874; and

6. Whether or not private respondents are guilty of laches for not having attempted to file suit to
recover the land in dispute during an interval of 50 or 30 years. 16

The issues and arguments raised by the proponents in these petitions are well taken.

We agree with petitioners that the lower court erred in ordering the dismissal of Civil Case No.
U-2649. The aforesaid case of Antonio relied upon by the lower court in its dismissal order is not
controlling. In that case, the complaint was dismissed for failure to state a cause of action, not
only because of the delay in the filing of the complaint but specifically since the ground relied
upon by the plaintiff therein, that is, that the land was previously covered by a titulo real, even if
true, would not warrant the annulment of the free patent and the subsequent original certificate
of title issued to defendant. Thus:

It is true that by filing the application for a free patent Barroga impliedly admitted
either the invalidity or insufficiency of Titulo Real No. 12479 issued in the name
of his predecessor in interest on July 22, 1894, but neither the allegation made in
his answer that his aforesaid predecessor in interest was the absolute owner of
the property covered by said Titulo Real nor his implied admission of the latter's
invalidity or insufficiency are grounds for the annulment of the free patent and
original certificate of title in question. Evidently, it was Barroga's privilege to rely
or not to rely upon his claim of private ownership in favor of his predecessor in
interest and of whatever the latter's Titulo Real was worth. He decided not to rely
upon them and to consider that the property covered by the Titulo Real was still
part of the public domain. Acting accordingly he applied for a free patent and was
successful. It must be borne in mind that the Titulo Real was not an indefeasible
title and that its holder still had to prove that he had possessed the land covered
by it without interruption during a period of ten years by virtue of a good title and
in good faith (Royal Decree of June 25,1880). We may well presume that
Barroga felt that he had no sufficient evidence to prove this, for which reason he
decided to acquire the land as part of the public domain.

In the case at bar, the facts alleged in the complaint, which are deemed hypothetically admitted
upon the filing of the motion to dismiss, constitute a sufficient cause of action against private
respondents. Petitioners in their complaint in Civil Case No. U-2649 alleged, among others, that
the disputed area was formerly an abandoned river bed formed due to natural causes in 1920;
that the riparian owners of the lands abutting said abandoned river bed were the plaintiffs and/or
their predecessors in interest; that since then and up to the present, they have been occupying
and cultivating aliquot portions of the said land proportionate to the respective lengths of their
riparian lands; that they are the real and lawful owners of the said land as decreed by Article
370 of the old Civil Code, the law then in force; that since the said area was a private land, the
same could not have been the subject matter of an application for free patent; and that all these
facts were known to the private respondents and their predecessor in interest.

If the said averments are true, and the factual recitals thereon have been admitted in the
stipulation of facts hereinbefore quoted, then the land in question was and is of private
ownership and, therefore, beyond the jurisdiction of the Director of Lands. The free patent and
subsequent title issued pursuant thereto are null and void. The indefeasibility and
imprescriptibility of a Torrens title issued pursuant to a patent may be invoked only when the
land involved originally formed part of the public domain. If it was a private land, the patent and
certificate of title issued upon the patent are a nullity. 17

The rule on the incontrovertibility of a certificate of title upon the expiration of one year, after the
entry of the decree, pursuant to the provisions of the Land Registration Act, does not apply
where an action for the cancellation of a patent and a certificate of title issued pursuant thereto
is instituted on the ground that they are null and void because the Bureau of Lands had no
jurisdiction to issue them at all, the land in question having been withdrawn from the public
domain prior to the subsequent award of the patent and the grant of a certificate of title to
another person. Such an action is different from a review of the decree of title on the ground of
fraud. 18

Although a period of one year has already expired from the time a certificate of title was issued
pursuant to a public grant, said title does not become incontrovertible but is null and void if the
property covered thereby is originally of private ownership, and an action to annul the same
does not prescribe. 19 Moreover, since herein petitioners are in possession of the land in
dispute, an action to quiet title is imprescriptible. 20 Their action for reconveyance which, in
effect, seeks to quiet title to property in one's possession is imprescriptible. Their undisturbed
possession for a number of years gave them a continuing right to seek the aid of a court of
equity to determine the nature of the adverse claims of a third party and the effect on her
title. 21 As held in Caragay-Layno vs. Court of Appeals, et al., 22an adverse claimant of a
registered land, undisturbed in his possession thereof for a period of more than fifty years and
not knowing that the land he actually occupied had been registered in the name of another, is
not precluded from filing an action for reconveyance which, in effect, seeks to quiet title to
property as against the registered owner who was relying upon a Torrens title which could have
been fraudulently acquired. To such adverse claimant, the remedy of an action to quiet title is
imprescriptible. In actions for reconveyance of property predicated on the fact that the
conveyance complained of was void ab initio, a claim of prescription of the action would be
unavailing. 23

The resolution of the other assigned errors hinges on the issue of who, as between the riparian
owner presently in possession and the registered owner by virtue of a free patent, has a better
right over the abandoned river bed in dispute.

We rule in favor of petitioners.

The claim of ownership of herein petitioners is based on the old Civil Code, the law then in
force, which provides:

The beds of rivers which remain abandoned because the course of the water has
naturally changed belong to the owners of the riparian lands throughout their
respective lengths. If the abandoned bed divided estates belonging to different
owners, the new dividing line shall run at equal distance therefrom. 24

It is thus clear under this provision that once the river bed has been abandoned, the riparian
owners become the owners of the abandoned bed to the extent provided by this article. The
acquisition of ownership is automatic. 25There need be no act on the part of the riparian owners
to subject the accession to their ownership, as it is subject thereto ipso jure from the moment
the mode of acquisition becomes evident, without the need of any formal act of
acquisition. 26 Such abandoned river bed had fallen to the private ownership of the owner of the
riparian land even without any formal act of his will and any unauthorized occupant thereof will
be considered as a trespasser. The right in re to the principal is likewise a right in re to the
accessory, as it is a mode of acquisition provided by law, as the result of the right of accretion.
Since the accessory follows the nature of the principal, there need not be any tendency to the
thing or manifestation of the purpose to subject it to our ownership, as it is subject thereto ipso
jurefrom the moment the mode of acquisition becomes evident. 27

The right of the owner of land to additions thereto by accretion has been said to rest in the law
of nature, and to be analogous to the right of the owner of a tree to its fruits, and the owner of
flocks and herds to their natural increase. 28 Petitioners herein became owners of aliquot
portions of said abandoned river bed as early as 1920, when the Agno River changed its
course, without the necessity of any action or exercise of possession on their part, it being an
admitted fact that the land in dispute, prior to its registration, was an abandoned bed of the
Agno River and that petitioners are the riparian owners of the lands adjoining the said bed.

The failure of herein petitioners to register the accretion in their names and declare it for
purposes of taxation did not divest it of its character as a private property. Although we take
cognizance of the rule that an accretion to registered land is not automatically registered and
therefore not entitled or subject to the protection of imprescriptibility enjoyed by registered
property under the Torrens system. 29 The said rule is not applicable to this case since the title
claimed by private respondents is not based on acquisitive prescription but is anchored on a
public grant from the Government, which presupposes that it was inceptively a public land.
Ownership over the accession is governed by the Civil Code. Imprescriptibility of registered land
is a concern of the Land Registration Act.

Under the provisions of Act No. 2874 pursuant to which the title of private respondents'
predecessor in interest was issued, the President of the Philippines or his alter ego, the Director
of Lands, has no authority to grant a free patent for land that has ceased to be a public land and
has passed to private ownership, and a title so issued is null and void. 30 The nullity arises, not
from the fraud or deceit, but from the fact that the land is not under the jurisdiction of the Bureau
of Lands. 31 The jurisdiction of the Director of Lands is limited only to public lands and does not
cover lands privately owned. 32 The purpose of the Legislature in adopting the former Public
Land Act, Act No. 2874, was and is to limit its application to lands of the public domain, and
lands held in private ownership are not included therein and are not affected in any manner
whatsoever thereby. Land held in freehold or fee title, or of private ownership, constitute no part
of the public domain and cannot possibly come within the purview of said Act No. 2874,
inasmuch as the "subject" of such freehold or private land is not embraced in any manner in the
title of the Act 33 and the same are excluded from the provisions or text thereof.

We reiterate that private ownership of land is not affected by the issuance of a free patent over
the same land because the Public Land Act applies only to lands of the public domain. 34 Only
public land may be disposed of by the Director of Lands. 35 Since as early as 1920, the land in
dispute was already under the private ownership of herein petitioners and no longer a part of the
lands of the public domain, the same could not have been the subject matter of a free patent.
The patentee and his successors in interest acquired no right or title to the said land.
Necessarily, Free Patent No. 23263 issued to Herminigildo Agpoon is null and void and the
subsequent titles issued pursuant thereto cannot become final and indefeasible. Hence, we
ruled in Director of Lands vs. Sisican, et al. 36that if at the time the free patents were issued in
1953 the land covered therein were already private property of another and, therefore, not part
of the disposable land of the public domain, then applicants patentees acquired no right or title
to the land.

Now, a certificate of title fraudulently secured is null and void ab initio if the fraud consisted in
misrepresenting that the land is part of the public domain, although it is not. As earlier stated,
the nullity arises, not from the fraud or deceit but, from the fact that the land is not under the
jurisdiction of the Bureau of Lands. 37 Being null and void, the free patent granted and the
subsequent titles produce no legal effects whatsoever. Quod nullum est, nullum producit
effectum. 38

A free patent which purports to convey land to which the Government did not have any title at
the time of its issuance does not vest any title in the patentee as against the true owner. 39 The
Court has previously held that the Land Registration Act and the Cadastral Act do not give
anybody who resorts to the provisions thereof a better title than what he really and lawfully has.

. . . The Land Registration Act as well as the Cadastral Act protects only the
holders of a title in good faith and does not permit its provisions to be used as a
shield for the commission of fraud, or that one should enrich himself at the
expense of another (Gustilo vs. Maravilla, 48 Phil. 838). The above-stated Acts
do not give anybody, who resorts to the provisions thereof, a better title than he
really and lawfully has. If he happened to obtain it by mistake or to secure, to the
prejudice of his neighbor, more land than he really owns, with or without bad faith
on his part, the certificate of title, which may have been issued to him under the
circumstances, may and should be cancelled or corrected (Legarda and Prieto
vs. Saleeby, 31 Phil., 590). . . . 40

We have, therefore, to arrive at the unavoidable conclusion that the title of herein petitioners
over the land in dispute is superior to the title of the registered owner which is a total nullity. The
long and continued possession of petitioners under a valid claim of title cannot be defeated by
the claim of a registered owner whose title is defective from the beginning.
The quality of conclusiveness of a Torrens title is not available for use to perpetrate fraud and
chicanery. To paraphrase from Angeles vs. Samia, supra, the Land Registration Act does not
create or vest title. It only confirms and records title already existing and vested. It does not
protect a usurper from the true owner. It cannot be a shield for the commission of fraud. It does
not permit one to enrich himself at the expense of another. Stated elsewise, the Torrens system
was not established as a means for the acquisition of title to private land. It is intended merely to
confirm and register the title which one may already have on the land. Where the applicant
possesses no title or ownership over the parcel of land, he cannot acquire one under the
Torrens system of registration. 41 Resort to the provisions of the Land Registration Act does not
give one a better title than he really and lawfully has. 42 Registration does not vest title. It is not a
mode of acquiring property. It is merely evidence of such title over a particular property. It does
not give the holder any better title than what he actually has, especially if the registration was
done in bad faith. The effect is that it is as if no registration was made at all. 43

Moreover, the failure of herein private respondents to assert their claim over the disputed
property for almost thirty 30 years constitute laches 44 and bars an action to recover the
same. 45 The registered owners' right to recover possession of the property and title thereto from
petitioners has, by long inaction or inexcusable neglect, been converted into a stale demand. 46

Considering that petitioners were well within their rights in taking possession of the lot in
question, the findings of respondent court that herein petitioners took advantage of the
infirmities and weakness of the preceding claimant, Herminigildo Agpoon, in taking possession
of said land during the Japanese occupation is neither tenable in law nor sustained by
preponderant evidence in fact.

Where the evidence show that the plaintiff is the true owner of the land subject of the free patent
and title granted to another and that the defendant and his predecessor in interest were never in
possession thereof, the Court, in the exercise of its equity jurisdiction and without ordering the
cancellation of said title issued upon the patent, may direct the defendant registered owner to
reconvey the property to the plaintiff. 47 Further, if the determinative facts are before the Court
and it is in a position to finally resolve the dispute, the expeditious administration of justice will
be subserved by such a resolution and thereby obviate the needless protracted proceedings
consequent to the remand of the case of the trial court. 48 On these considerations, as well as
the fact that these cases have been pending for a long period of time, we see no need for
remanding Civil Case No. 2649 for further proceedings, and we hold that the facts and the ends
of justice in this case require the reconveyance by private respondents to petitioners of the
disputed lot.

WHEREFORE, the assailed decision of respondent court in its AC-G.R. CV No. 60388-R and
the questioned order of dismissal of the trial court in its Civil Case No. 2649 are hereby
REVERSED and SET ASIDE and judgment is hereby rendered ORDERING private
respondents to reconvey the aforesaid parcel of land to petitioners.

SO ORDERED.
G.R. Nos. L-66075-76 July 5, 1990

EULOGIO AGUSTIN, HEIRS OF BALDOMERO LANGCAY, ARTURO BALISI & JUAN

LANGCAY, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, MARIA MELAD, TIMOTEO MELAD, PABLO
BINAYUG & GERONIMA UBINA, respondents.

Antonio N. Laggui for petitioners.

Pedro R. Perez, Jr. for private respondents.

GRIÑO-AQUINO, J.:

The Cagayan River separates the towns of Solana on the west and Tuguegarao on the east in
the province of Cagayan. According to the unrebutted testimony of Romeo Rigor, Geodetic
Engineer of the Bureau of Lands, in 1919 the lands east of the river were covered by the
Tuguegarao Cadastre. In 1925, Original Certificate of Title No. 5472 was issued for land east of
the Cagayan River owned by defendant-petitioner Eulogio Agustin (Exh. 2-Agustin).

As the years went by, the Cagayan River moved gradually eastward, depositing silt on the
western bank. The shifting of the river and the siltation continued until 1968.

In 1950, all lands west of the river were included in the Solana Cadastre. Among these
occupying lands covered by the Solana Cadastre were plaintiffs-private respondents, namely,
Pablo Binayug, who has been in possession of Lots 3349, 7876, 7877, 7878, 7879, 7875, 7881,
7882, 7883, 7884, 7885, 7891 and 7892, and Maria Melad, who owns Lot 3351 (Exh. 3-
Binayug; Exh. B-Melad). Pablo Binayug began his possession in 1947. An area of eight (8)
hectares was planted to tobacco and corn while 12 hectares were overgrown with talahib (Exh.
C-1 Binayug.) Binayug's Homestead Application No. W-79055 over this land was approved in
1959 (Exh. B-Binayug). Binayug's possession was recognized in the decision in Civil Case No.
101 (Exh. F-Binayug). On the other hand, as a result of Civil Case No. 343-T, Macario Melad,
the predecessor-in-interest of Maria Melad and Timoteo Melad, was issued Original Certificate
of Title No. P-5026 for Lot 3351 of Cad. 293 on June 1, 1956.

Through the years, the Cagayan River eroded lands of the Tuguegarao Cadastre on its eastern
bank among which was defendant-petitioner Eulogio Agustin's Lot 8457 (Exh. E-Melad),
depositing the alluvium as accretion on the land possessed by Pablo Binayug on the western
bank.

However, in 1968, after a big flood, the Cagayan River changed its course, returned to its 1919
bed, and, in the process, cut across the lands of Maria Melad, Timoteo Melad, and the spouses
Pablo Binayug and Geronima Ubina whose lands were transferred on the eastern, or
Tuguegarao, side of the river. To cultivate those lots they had to cross the river.

In April, 1969, while the private respondents and their tenants were planting corn on their lots
located on the eastern side of the Cagayan River, the petitioners, accompanied by the mayor
and some policemen of Tuguegarao, claimed the same lands as their own and drove away the
private respondents from the premises.

On April 21, 1970, private respondents Maria Melad and Timoteo Melad filed a complaint (Civil
Case No. 343-T) to recover Lot No. 3351 with an area of 5 hectares and its 6.6-hectare
accretion. On April 24, 1970, private respondent Pablo Binayug filed a separate complaint (Civil
Case No. 344-T) to recover his lots and their accretions.

On June 16, 1975, the trial court rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby made:

 In Civil Case No. 343-T, commanding Eulogio Agustin, Gregorio Tuliao, Jacinto
Buquel and Octavio Bancud, or anybody acting as their representative[s] or
agents to vacate Lot No. 3351 of Solana Cadastre together with its accretion
consisting of portions of Lots 9463, 9462 and 9461 of Tuguegarao Cadastre and
for these defendants to restore ownership in favor of Maria Melad and Timoteo
Melad who are the only interested heirs of Macario Melad.

In Civil Case No. 344-T, commanding defendants Justo Adduru, Andres Pastor,
Teofilo Tagacay, Vicente Camilan, Nicanor Mora, Baldomero Cagurangan,
Domingo Quilang, Cesar Cabalza, Elias Macababbad, Titong Macababbad,
Arturo Balisi, Jose Allabun, Eulogio Agustin, Banong Aquino, Junior Cambri and
Juan Langoay, or any of their agents or representatives to vacate the Lots 3349,
7876, 7877, 7878, 7879, 7875, 7881, 7882, 7883, 7884, 7885, 7891 and 7892,
together with its accretion and to restore possession to plaintiffs Pablo Binayug
and Geronima Ubina. Without pronouncement as to damages which were not
properly proven and to costs.

SO ORDERED. (As amended by the order dated August 15, 1975.) (pp. 24-
25, Rollo.)

Only defendant-petitioner Eulogio Agustin appealed in Civil Case No. 343-T, while in Civil Case
No. 344-T, only defendants-petitioners Eulogio Agustin, Baldomero Cagurangan (substituted by
his heir), Arturo Balisi and Juan Langcay appealed. But upon motion of plaintiffs-private
respondents, the trial court ordered the execution pending appeal of the judgment in Civil Case
No. 344-T against Cagurangan, Balisi and Langcay on the ground that their appeal was dilatory
as they had not presented evidence at the trial (Order dated August 15, 1975).

On November 29, 1983, the Intermediate Appellate Court rendered a decision affirming in
toto the judgment of the trial court, with costs against the defendants-appellants.

In their petition for review of that decision, the petitioners allege that the Court of Appeals erred:

1. in declaring that the land in question had become part of private respondents'
estate as a result of accretion;

2. in declaring that the accretion to private respondents' estate which used to

pertain to petitioners' estate cannot preclude the private respondents from being
the owners thereof; and

3. in declaring that the ownership of private respondents over the accretion is not
affected by the sudden and abrupt change in the course of the Cagayan River
when it reverted to its old bed

The petition is unmeritorious and must be denied.

The finding of the Court of Appeals that there had been accretions to the lots of the private
respondents who did not lose the ownership of such accretions even after they were separated
from the principal lots by the sudden change of course of the river, is a finding of fact which is
conclusive on this Court. That finding is supported by Art. 457 of the New Civil Code which
provides:

Art. 457. To the owners of lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current of the
waters. (366)

Accretion benefits a riparian owner when the following requisites are present: (1) that the
deposit be gradual and imperceptible; (2) that it resulted from the effects of the current of the
water; and (3) that the land where accretion takes place is adjacent to the bank of a river
(Republic vs. CA, 132 SCRA 514).

All these requisites of accretion are present in this case for, as the trial court found:
 . . . Cagayan River did move year by year from 1919 to 1968 or for a period of 49
years. Within this period, the alluvium (sic) deposited on the other side has
become greater in area than the original lands of the plaintiffs in both cases. Still
the addition in every year is imperceptible in nature, one could not discern it but
can be measured after the lapse of a certain time. The testimonial evidence in
these cases that said Cagayan River moved eastward year by year is
overwhelming as against the denial of defendant Eulogio Agustin alone. Cesar
Caronan, one time mayor of Solana, Cagayan, said so. Arturo Taguian said so.
Timoteo Melad said so. Francisco Ubina said so. Geodetic Engineer Rigor
impliedly said so when he testified that when Solana Cadastre was executed in
1950 it overlapped portions of Tuguegarao Cadastre executed in 1919. This
could not have happened if that part of Tuguegarao Cadastre was not eroded by
the overflow of the Cagayan River. These testimonies cannot be destroyed by
the denials of Vicente Cauilan, Marcelo Agustin and Eulogio Agustin alone . . . .
(p. 27, Rollo.)

The appellate court confirmed that the accretion on the western bank of the Cagayan River had
been going on from 1919 up to 1968 or for a period of 49 years. It was gradual and
imperceptible. Only when Lot No. 3351, with an original area of 5 hectares described in the free
patent that was issued to Macario Melad in June 1956, was resurveyed in 1968 did it become
known that 6.6 hectares had been added to it. Lot No. 3351, covered by a homestead patent
issued in June, 1950 to Pablo Binayug, grew from its original area of 18 hectares, by an
additional 50 hectares through alluvium as the Cagayan River gradually moved to the east.
These accretions belong to riparian owners upon whose lands the alluvial deposits were made
(Roxas vs. Tuason, 9 Phil. 408; Director of Lands vs. Rizal, 87 Phil. 806). The reason for this
principle is because, if lands bordering on streams are exposed to floods and other damage due
to the destructive force of the waters, and if by virtue of law they are subject to encumbrances
and various kinds of easements, it is only just that such risks or dangers as may prejudice the
owners thereof should in some way be compensated by the right of accretion (Cortes vs. City of
Manila, 10 Phil. 567).i•t•c-aüsl

The private respondents' ownership of the accretion to their lands was not lost upon the sudden
and abrupt change of the course of the Cagayan River in 1968 or 1969 when it reverted to its
old 1919 bed, and separated or transferred said accretions to the other side (or eastern bank) of
the river. Articles 459 and 463 of the New Civil Code apply to this situation.

Art. 459. Whenever the current of a river, creek or torrent segregates from an
estate on its bank a known portion of land and transfers it to another estate, the
owner of the land to which the segregated portion belonged retains the
ownership of it, provided that he removes the same within two years.

Art. 463. Whenever the current of a river divides itself into branches, leaving a
piece of land or part thereof isolated, the owner of the land retains his
ownership. He also retains it if a portion of land is separated from the estate by
the current. (Emphasis supplied).

In the case at bar, the sudden change of course of the Cagayan River as a result of a
strong typhoon in 1968 caused a portion of the lands of the private respondents to be
"separated from the estate by the current." The private respondents have retained the
ownership of the portion that was transferred by avulsion to the other side of the river.

WHEREFORE, the petition is denied for lack of merit. The decision of the Intermediate
Appellate Court, now Court of Appeals, is hereby affirmed. Costs against the petitioners.

SO ORDERED.
G.R. No. L-43346 March 20, 1991

MARIO C. RONQUILLO, petitioner

vs.
THE COURT OF APPEALS, DIRECTOR OF LANDS, DEVELOPMENT BANK OF THE
PHILIPPINES, ROSENDO DEL ROSARIO, AMPARO DEL ROSARIO and FLORENCIA DEL
ROSARIO, respondents.*

Angara, Abello, Concepcion, Regala & Cruz for petitioner.

REGALADO, J.:

This petition seeks the review of the decision1 rendered by respondent Court of Appeals on
September 25, 1975 in CA-G.R. No. 32479-R, entitled "Rosendo del Rosario, et al., Plaintiffs-
Appellees, versus Mario Ronquillo, Defendant-Appellant," affirming in toto the judgment of the
trial court, and its amendatory resolution2 dated January 28, 1976 the dispositive portion of
which reads:

IN VIEW OF THE FOREGOING, the decision of this Court dated September 25, 1975 is
hereby amended in the sense that the first part of the appealed decision is set aside,
except the last portion "declaring the plaintiffs to be the rightful owners of the dried-up
portion of Estero Calubcub which is abutting plaintiffs' property," which we affirm, without
pronouncement as to costs.

SO ORDERED.

The following facts are culled from the decision of the Court of Appeals:

It appears that plaintiff Rosendo del Rosario was a registered owner of a parcel of land
known as Lot 34, Block 9, Sulucan Subdivision, situated at Sampaloc, Manila and
covered by Transfer Certificate of Title No. 34797 of the Registry of Deeds of Manila
(Exhibit "A"). The other plaintiffs Florencia and Amparo del Rosario were daughters of
said Rosendo del Rosario. Adjoining said lot is a dried-up portion of the old Estero
Calubcub occupied by the defendant since 1945 which is the subject matter of the
present action.

Plaintiffs claim that long before the year 1930, when T.C.T. No. 34797 over Lot No. 34
was issued in the name of Rosendo del Rosario, the latter had been in possession of
said lot including the adjoining dried-up portion of the old Estero Calubcub having bought
the same from Arsenio Arzaga. Sometime in 1935, said titled lot was occupied by Isabel
Roldan with the tolerance and consent of the plaintiff on condition that the former will
make improvements on the adjoining dried-up portion of the Estero Calubcub. In the
early part of 1945 defendant occupied the eastern portion of said titled lot as well as the
dried-up portion of the old Estero Calubcub which abuts plaintiffs' titled lot. After a
relocation survey of the land in question sometime in 1960, plaintiffs learned that
defendant was occupying a portion of their land and thus demanded defendant to vacate
said land when the latter refused to pay the reasonable rent for its occupancy. However,
despite said demand defendant refused to vacate.

Defendant on the other hand claims that sometime before 1945 he was living with his
sister who was then residing or renting plaintiffs' titled lot. In 1945 he built his house on
the disputed dried-up portion of the Estero Calubcub with a small portion thereof on the
titled lot of plaintiffs. Later in 1961, said house was destroyed by a fire which prompted
him to rebuild the same. However, this time it was built only on the called up portion of
the old Estero Calubcub without touching any part of plaintiffs titled land. He further
claims that said dried-up portion is a land of public domain.3

Private respondents Rosendo, Amparo and Florencia, all surnamed del Rosario (Del Rosarios),
lodged a complaint with the Court of First Instance of Manila praying, among others, that they
be declared the rightful owners of the dried-up portion of Estero Calubcub. Petitioner Mario
Ronquillo (Ronquillo) filed a motion to dismiss the complaint on the ground that the trial court
had no jurisdiction over the case since the dried-up portion of Estero Calubcub is public land
and, thus, subject to the disposition of the Director of Lands. The Del Rosarios opposed the
motion arguing that since they are claiming title to the dried-up portion of Estero Calubcub as
riparian owners, the trial court has jurisdiction. The resolution of the motion to dismiss was
deferred until after trial on the merits.

Before trial, the parties submitted the following stipulation of facts:

1. That the plaintiffs are the registered owners of Lot 34, Block 9, Sulucan Subdivision
covered by Transfer Certificate of Title No. 34797;

2. That said property of the plaintiffs abuts and is adjacent to the dried-up river bed of
Estero Calubcub Sampaloc, Manila;

3. That defendant Mario Ronquillo has no property around the premises in question and
is only claiming the dried-up portion of the old Estero Calubcub, whereon before October
23, 1961, the larger portion of his house was constructed;

4. That before October 23, 1961, a portion of defendant's house stands (sic) on the
above-mentioned lot belonging to the plaintiffs;

5. That the plaintiffs and defendant have both filed with the Bureau of Lands
miscellaneous sales application for the purchase of the abandoned river bed known as
Estero Calubcub and their sales applications, dated August 5, 1958 and October 13,
1959, respectively, are still pending action before the Bureau of Lands;

6. That the parties hereby reserve their right to prove such facts as are necessary to
support their case but not covered by this stipulation of facts.4

On December 26, 1962, the trial court rendered judgment the decretal portion of which provides:

WHEREFORE, judgment is hereby rendered ordering the defendant to deliver to the

plaintiffs the portion of the land covered by Transfer Certificate of title No. 34797 which is
occupied by him and to pay for the use and occupation of said portion of land at the rate
of P 5.00 a month from the date of the filing of the complaint until such time as he
surrenders the same to the plaintiffs and declaring plaintiffs to be the owners of the
dried-up portion of estero Calubcub which is abutting plaintiffs' property.

With costs to the defendant.

SO ORDERED.5

On appeal, respondent court, in affirming the aforequoted decision of the trial court, declared
that since Estero Calubcub had already dried-up way back in 1930 due to the natural change in
the course of the waters, under Article 370 of the old Civil Code which it considers applicable to
the present case, the abandoned river bed belongs to the Del Rosarios as riparian owners.
Consequently, respondent court opines, the dried-up river bed is private land and does not form
part of the land of the public domain. It stated further that "(e)ven assuming for the sake of
argument that said estero did not change its course but merely dried up or disappeared, said
dried-up estero would still belong to the riparian owner," citing its ruling in the case of Pinzon vs.
Rama.6

Upon motion of Ronquillo, respondent court modified its decision by setting aside the first
portion of the trial court's decision ordering Ronquillo to surrender to the Del Rosarios that
portion of land covered by Transfer Certificate of Title No. 34797 occupied by the former, based
on the former's representation that he had already vacated the same prior to the
commencement of this case. However, respondent court upheld its declaration that the Del
Rosarios are the rightful owners of the dried-up river bed. Hence, this petition.

On May 17, 1976, this Court issued a resolution7 requiring the Solicitor General to comment on
the petition in behalf of the Director of Lands as an indispensable party in representation of the
Republic of the Philippines, and who, not having been impleaded, was subsequently considered
impleaded as such in our resolution of September 10, 1976.8In his Motion to Admit
Comment,9 the Solicitor General manifested that pursuant to a request made by this office with
the Bureau of Lands to conduct an investigation, the Chief of the Legal Division of the Bureau
sent a communication informing him that the records of his office "do not show that Mario
Ronquillo, Rosendo del Rosario, Amparo del Rosario or Florencia del Rosario has filed any
public land application covering parcels of land situated at Estero Calubcub Manila as verified
by our Records Division.

The position taken by the Director of Lands in his Comment10 filed on September 3, 1978, which
was reiterated in the Reply dated May 4, 1989 and again in the Comment dated August 17,
1989, explicates:

5. We do not see our way clear to subscribe to the ruling of the Honorable Court of
Appeals on this point for Article 370 of the Old Civil Code, insofar as ownership of
abandoned river beds by the owners of riparian lands are concerned, speaks only of a
situation where such river beds were abandoned because of a natural change in the
course of the waters. Conversely, we submit that if the abandonment was for some
cause other than the natural change in the course of the waters, Article 370 is not
applicable and the abandoned bed does not lose its character as a property of public
dominion not susceptible to private ownership in accordance with Article 502 (No. 1) of
the New Civil Code. In the present case, the drying up of the bed, as contended by the
petitioner, is clearly caused by human activity and undeniably not because of the natural
change of the course of the waters (Emphasis in the original text).

In his Comment11 dated August 17, 1989, the Director of Lands further adds:

8. Petitioner herein and the private respondents, the del Rosarios, claim to have pending
sales application(s) over the portion of the dried up Estero Calubcub, as stated in pages
4-5, of the Amended Petition.

9. However, as stated in the Reply dated May 4, 1989 of the Director of Lands, all sales
application(s) have been rejected by that office because of the objection interposed by
the Manila City Engineer's Office that they need the dried portion of the estero for
drainage purposes.

10. Furthermore, petitioner and private respondents, the del Rosarios having filed said
sales application(s) are now estopped from claiming title to the Estero Calubcub (by
possession for petitioner and by accretion for respondents del Rosarios) because for
(sic) they have acknowledged that they do not own the land and that the same is a
public land under the administration of the Bureau of Lands (Director of Lands vs.
Santiago, 160 SCRA 186, 194).

In a letter dated June 29, 197912 Florencia del Rosario manifested to this Court that Rosendo,
Amparo and Casiano del Rosario have all died, and that she is the only one still alive among the
private respondents in this case.

In a resolution dated January 20, 1988,13 the Court required petitioner Ronquillo to implead one
Benjamin Diaz pursuant to the former's manifestation14 that the land adjacent to the dried up
river bed has already been sold to the latter, and the Solicitor General was also required to
inquire into the status of the investigation being conducted by the Bureau of Lands. In
compliance therewith, the Solicitor General presented a letter from the Director of Lands to the
effect that neither of the parties involved in the present case has filed any public land
application.15

On April 3, 1989, petitioner filed an Amended Petition for Certiorari,16 this time impleading the
Development Bank of the Philippines (DBP) which subsequently bought the property adjacent to
the dried-up river bed from Benjamin Diaz. In its resolution dated January 10, 1990,17 the Court
ordered that DBP be impleaded as a party respondent.
In a Comment18 filed on May 9, 1990, DBP averred that "[c]onsidering the fact that the petitioner
in this case claims/asserts no right over the property sold to Diaz/DBP by the del Rosarios; and
considering, on the contrary, that Diaz and DBP claims/asserts (sic) no right (direct or indirect)
over the property being claimed by Ronquillo (the dried-up portion of Estero Calubcub), it
follows, therefore, that the petitioner Ronquillo has no cause of action against Diaz or DBP.
A fortiori from the viewpoint of the classical definition of a cause of action, there is no legal
justification to implead DBP as one of the respondents in this petition." DBP thereafter prayed
that it be dropped in the case as party respondent.

On September 13, 1990, respondent DBP filed a Manifestation/Compliance19 stating that DBP's
interest over Transfer Certificate of Title No. 139215 issued in its name (formerly Transfer
Certificate of Title No. 34797 of the Del Rosarios and Transfer Certificate of Title No. 135170 of
Benjamin Diaz) has been transferred to Spouses Victoriano and Pacita A. Tolentino pursuant to
a Deed of Sale dated September 11, 1990.

Petitioner Ronquillo avers that respondent Court of Appeals committed an error of law and
gross abuse of discretion, acted arbitrarily and denied petitioner due process of law (a) when it
declared private respondents Del Rosarios the rightful owners of the dried-up portion of Estero
Calubcub by unduly relying upon decisional law in the case of Pinzon vs. Rama, ante, which
case was decided entirely on a set of facts different from that obtaining in this case; and (b)
when it ignored the undisputed facts in the present case and declared the dried-up portion of
Estero Calubcub as a private property.

The main issue posed for resolution in this petition is whether the dried-up portion of Estero
Calubcub being claimed by herein petitioner was caused by a natural change in the course of
the waters; and, corollary thereto, is the issue of the applicability of Article 370 of the old Civil
Code.

Respondent court, in affirming the findings of the trial court that there was a natural change in
the course of Estero Calubcub declared that:

The defendant claims that Article 370 of the old Civil Code is not applicable to the instant
case because said Estero Calubcub did not actually change its course but simply dried
up, hence, the land in dispute is a land of public domain and subject to the disposition of
the Director of Land(s). The contention of defendant is without merit. As mentioned
earlier, said estero as shown by the relocation plan (Exhibit "D") did not disappear but
merely changed its course by a more southeasternly (sic) direction. As such, "the
abandoned river bed belongs to the plaintiffs-appellees and said land is private and not
public in nature. Hence, further, it is not subject to a Homestead Application by the
appellant." (Fabian vs. Paculan CA-G.R. Nos. 21062-63-64-R, Jan. 25 1962). Even
assuming for the sake of argument that said estero did not change its course but merely
dried up or disappeared, said dried-up estero would still belong to the riparian owner as
held by this Court in the case of Pinzon vs. Rama (CA-G.R. No. 8389, Jan. 8, 1943; 2
O.G. 307).20

Elementary is the rule that the jurisdiction of the Supreme Court in cases brought to it from the
Court of Appeals in a petition for certiorari under Rule 45 of the Rules of Court is limited to the
review of errors of law, and that said appellate court's finding of fact is conclusive upon this
Court. However, there are certain exceptions, such as (1) when the conclusion is a finding
grounded entirely on speculation, surmises or conjectures; (2) when the inference made is
manifestly absurd, mistaken or impossible; (3) when there is grave abuse of discretion in the
appreciation of facts; (4) when the judgment is premised on a misapprehension of facts; (5)
when the findings of fact are conflicting; and (6) when the Court of Appeals in making its
findings went beyond the issues of the case and the same is contrary to the admissions of both
appellant and
appellee.21

A careful perusal of the evidence presented by both parties in the case at bar will reveal that the
change in the course of Estero Calubcub was caused, not by natural forces, but due to the
dumping of garbage therein by the people of the surrounding neighborhood. Under the
circumstances, a review of the findings of fact of respondent court thus becomes imperative.
Private respondent Florencia del Rosario, in her testimony, made a categorical statement which
in effect admitted that Estero Calubcub changed its course because of the garbage dumped
therein, by the inhabitants of the locality, thus:

Q When more or less what (sic) the estero fully dried up?

A By 1960 it is (sic) already dried up except for a little rain that accumulates on the lot
when it rains.

Q How or why did the Estero Calubcub dried (sic) up?

A It has been the dumping place of the whole neighborhood. There is no street, they
dumped all the garbage there. It is the dumping place of the whole community, sir. 22

In addition, the relocation plan (Exhibit "D") which also formed the basis of respondent court's
ruling, merely reflects the change in the course of Estero Calubcub but it is not clear therefrom
as to what actually brought about such change. There is nothing in the testimony of lone witness
Florencia del Rosario nor in said relocation plan which would indicate that the change in the
course of the estero was due to the ebb and flow of the waters. On the contrary, the
aforequoted testimony of the witness belies such fact, while the relocation plan is absolutely
silent on the matter. The inescapable conclusion is that the dried-up portion of Estero Calubcub
was occasioned, not by a natural change in the course of the waters, but through the active
intervention of man.

The foregoing facts and circumstances remove the instant case from the applicability of Article
370 of the old Civil Code which provides:

Art. 370. The beds of rivers, which are abandoned because of a natural change in the
course of the waters, belong to the owners of the riparian lands throughout the
respective length of each. If the abandoned bed divided tenements belonging to different
owners the new dividing line shall be equidistant from one and the other.

The law is clear and unambiguous. It leaves no room for interpretation.1âwphi1 Article 370
applies only if there is a natural change in the course of the waters. The rules on alluvion do not
apply to man-made or artificial accretions23 nor to accretions to lands that adjoin canals or
esteros or artificial drainage systems.24 Considering our earlier finding that the dried-up portion
of Estero Calubcub was actually caused by the active intervention of man, it follows that Article
370 does not apply to the case at bar and, hence, the Del Rosarios cannot be entitled thereto
supposedly as riparian owners.

The dried-up portion of Estero Calubcub should thus be considered as forming part of the land
of the public domain which cannot be subject to acquisition by private ownership. That such is
the case is made more evident in the letter, dated April 28, 1989, of the Chief, Legal Division of
the Bureau of Lands25 as reported in the Reply of respondent Director of Lands stating that "the
alleged application filed by Ronquillo no longer exists in its records as it must have already been
disposed of as a rejected application for the reason that other applications "covering Estero
Calubcub Sampaloc, Manila for areas other than that contested in the instant case, were all
rejected by our office because of the objection interposed by the City Engineer's office that they
need the same land for drainage purposes". Consequently, since the land is to be used for
drainage purposes the same cannot be the subject of a miscellaneous sales application.

Lastly, the fact that petitioner and herein private respondents filed their sales applications with
the Bureau of Lands covering the subject dried-up portion of Estero Calubcub cannot but be
deemed as outright admissions by them that the same is public land. They are now estopped
from claiming otherwise.

WHEREFORE, the decision appealed from, the remaining effective portion of which declares
private respondents Del Rosarios as riparian owners of the dried-up portion of Estero Calubcub
is hereby REVERSED and SET ASIDE.

SO ORDERED.
G.R. No. 77294 December 12, 1988

ANGELICA VIAJAR and CELSO VIAJAR, plaintiffs-appellants,

vs.
COURT OF APPEALS, LEONOR P. LADRIDO, LOURDES LADRIDO IGNACIO, EUGENIO P.
LADRIDO and L P. LADRIDO, defendants-appellees.

Ramon A. Gonzales for petitioner.

Miraflores Law Offices for respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals dated December
29, 1986, in CA-G.R. CV No. 69942 entitled, "ANGELICA VIAJAR, et. al., Plaintiffs-Appellants,
versus LEONOR LADRIDO, et. al., Defendants-Appellees," affirming the decision of the Court of
First Instance (now Regional Trial Court) of Iloilo dated December 10, 1981.

The antecedent facts in the instant case are as follows: The spouses Ricardo Y. Ladrido and
Leonor P. Ladrido were the owners of Lot No. 7511 of the Cadastral Survey of Pototan situated
in barangay Cawayan, Pototan, Iloilo. This lot contained an area of 154,267 square meters and
was registered in the names of the spouses under Transfer Certificate of Title No. T-21940 of
the Register of Deeds of Iloilo.

Spouses Rosendo H. Te and Ana Te were also the registered owners of a parcel of land
described in their title as Lot No. 7340 of the Cadastral Survey of Pototan.

On September 6, 1973, Rosendo H. Te, with the conformity of Ana Te, sold this lot to Angelica
F. Viajar and Celso F. Viajar for P5,000. A Torrens title was later issued in the names of
Angelica F. Viajar and Celso F. Viajar.

Later, Angelica F. Viajar had Lot No. 7340 relocated and found out that the property was in the
possession of Ricardo Y. Ladrido. Consequently, she demanded its return but Ladrido refused.

On February 15, 1974, Angelica F. Viajar and Celso F. Viajar instituted a civil action for recovery
of possession and damages against Ricardo Y. Ladrido. This case was docketed as Civil Case
No. 9660 of the Court of First Instance of Iloilo. Summoned to plead, defendant Ladrido filed his
answer with a counterclaim. Plaintiffs filed their reply to the answer.

Subsequently, the complaint was amended to implead Rosendo H. Te as another defendant.

Plaintiffs sought the annulment of the deed of sale and the restitution of the purchase price with
interest in the event the possession of defendant Ladrido is sustained. Defendant Te filed his
answer to the amended complaint and he counter claimed for damages. Plaintiffs answered the
counterclaim.

During the pendency of the case, plaintiff Celso F. Viajar sold his rights over Lot No. 7340 to his
mother and co-plaintiff, Angelica F. Viajar. For this reason, plaintiff Angelica F. Viajar now
appears to be the sole registered owner of this lot.

On May 25, 1978, defendant Ladrido died. He was substituted in the civil action by his wife,
Leonor P. Ladrido, and children, namely: Lourdes Ladrido-Ignacio, Eugenio P. Ladrido and
Manuel P. Ladrido, as parties defendants.

The facts admitted by the parties during the pre-trial show that the piece of real property which
used to be Lot No. 7340 of the Cadastral Survey of Pototan was located in barangay
Guibuanogan Pototan, Iloilo; that it consisted of 20,089 square meters; that at the time of the
cadastral survey in 1926, Lot No. 7511 and Lot No. 7340 were separated by the Suague River;
that the area of 11,819 square meters of what was Lot No. 7340 has been in the possession of
the defendants; that the area of 14,036 square meters, which was formerly the river bed of the
Suague River per cadastral survey of 1926, has also been in the possession of the defendants;
and that the plaintiffs have never been in actual physical possession of Lot No. 7340.
After trial on the merits, a second amended complaint which included damages was admitted.

The plaintiffs raised the following issues to be resolved:

1. Whether the change in the course of the Suague River was

sudden as claimed by the plaintiffs or gradual as contended by the
defendants;

2. Assuming arguendo it was gradual, whether or not the plaintiffs

are still entitled to Lot "B' appearing in Exhibit "4" and to one-half
(½) of Lot "A," also indicated in Exhibit "4;" and

3. Damages (pp. 12-13, Rollo).

On December 10, 1981, the trial court rendered its decision, the dispositive portion of which
reads:

WHEREFORE, judgment is hereby rendered in favor of the defendants and

against the plaintiffs:

1. Dismissing the complaint of plaintiffs Angelica F. Viajar and

Celso F. Viajar with costs against them;

2. Declaring defendants Leonor P. Ladrido, Lourdes Ladrido-

Ignacio, Eugenio P. Ladrido and Manuel P. Ladrido as owner of
the parcel of land indicated as Lots A and B in the sketch plan
(Exhs. 'C' as well as '4,' '4-B' and '4-C') situated in barangays
Cawayan and Guibuanogan Pototan, Iloilo, and containing an
area of 25,855 square meters, more or less; and

3. Pronouncing that as owners of the land described in the

preceding paragraph, the defendants are entitled to the
possession thereof.

Defendants' claim for moral damages and attorney's fees are dismissed.

SO ORDERED (p. 36, Rollo).

Not satisfied with the decision, the plaintiffs appealed to the Court of Appeals and assigned the
following errors:

I.

THE LOWER COURT ERRED IN NOT HOLDING THAT PLAINTIFFS ARE

ENTITLED TO LOT B APPEARING IN EXHIBIT "4" AND TO ONE-HALF (½) OF
LOT A IN THE SAID EXHIBIT "4."

II

THE LOWER COURT ERRED IN NOT AWARDING DAMAGES TO PLAINTIFFS

(p. 42, Rollo).

As earlier stated, the Court of Appeals affirmed the decision of the court a quo. Plaintiffs (the
petitioners herein) now come to Us claiming that the Court of Appeals palpably erred in affirming
the decision of the trial court on the ground that the change in the course of the Suague River
was gradual and not sudden.

In the decision appealed from, the Court of Appeals held:

This appeal is not impressed with merit.

 Article 457 of the New Civil Code provides that:

Art. 457. To the owners of lands adjoining the banks of rivers

belong the accretion which they gradually receive from the effects
of the current of the waters.

The presumption is that the change in the course of the river was gradual and
caused by accretion and erosion (Martinez Canas vs. Tuason, 5 Phil. 668;
Payatas Estate Improvement Co. vs. Tuason, 53 Phil. 55; C.H. Hodges vs.
Garcia, 109 Phil. 133). In the case at bar, the lower court correctly found that the
evidence introduced by the plaintiff to show that the change in the course of the
Suague River was sudden or that it occurred through avulsion is not clear and
convincing.

Contrariwise, the lower court found that:

... the defendants have sufficiently established that for many years after 1926 a
gradual accretion on the eastern side of Lot No. 7511 took place by action of the
current of the Suague River so that in 1979 an alluvial deposit of 29,912 square
meters (2.9912 hectares), more or less, had been added to Lot No. 7511. (Exhs.
'1' as well as Exhs. 'C' and '4'). Apropos it should be observed that the accretion
consisted of Lot A with an area of 14,036 square meters; Lot B, 11,819 square
meters; and Lot C, 4,057 square meters. (Exhs. '4-B,' '4-C' and '4-D'). Only Lot C
is not involved in this litigation. (See Pre-trial Order, supra)

The established facts indicate that the eastern boundary of Lot No. 7511 was the
Suague River based on the cadastral plan. For a period of more than 40 years
(before 1940 to 1980) the Suague River overflowed its banks yearly and the
property of the defendant gradually received deposits of soil from the effects of
the current of the river. The consequent increase in the area of Lot No. 7511 due
to alluvion or accretion was possessed by the defendants whose tenants plowed
and planted the same with coin and tobacco.

The quondam river bed had been filled by accretion through the years. The land
is already plain and there is no indication on the ground of any abandoned river
bed. The river bed is definitely no longer discernible now.

What used to be the old river bed (Lot A) is in level with Lot No. 7511. So are the
two other areas to the East. (Lots B and C) Lots A, B and C are still being
cultivated.

Under the law, accretion which the banks or rivers may gradually receive from
the effects of the current of the waters becomes the property of the owners of the
lands adjoining the banks. (Art. 366, Old Civil Code; Art. 457, New Civil Code
which took effect on August 30, 1950 [Lara v. Del Rosario, 94 Phil. 778].
Therefore, the accretion to Lot No. 7511 which consists of Lots A and B (see
Exhs. 'C' and '4') belongs to the defendants (pp. 34-35, Record on Appeal).

We find no cogent reason to disturb the foregoing finding and conclusion of the
lower court.

The second assignment of error is a mere offshoot of the first assignment of error
and does not warrant further discussion (pp. 4244, Rollo).

The petition is without merit.

The petitioners contend that the first issue raised during the trial of the case on the merits in the
Court of First Instance, that is, "whether the change in the course of the Suague River was
sudden as claimed by the plaintiffs or gradual as contended by the defendants," was
abandoned and never raised by them in their appeal to the Court of Appeals. Hence, the Court
of Appeals, in holding that the appeal is without merit, because of the change of the Suague
River was gradual and not sudden, disposed of the appeal on an issue that was never raised
and, accordingly, its decision is void. In support of its contention, petitioners cite the following
authorities:

It is a well-known principle in procedure that courts of justice have no jurisdiction

or power to decide a question not in issue (Lim Toco vs. Go Fay, 80 Phil. 166).

A judgment going outside the issues and purporting to adjudicate something

upon which the parties were not heard, is not merely irregular, but extra-judicial
and invalid ( Salvante vs. Cruz, 88 Phil. 236-244; Lazo vs. Republic Surety &
Insurance Co., Inc., 31 SCRA 329, 334).

The pivotal issue in the petitioners' appeal was whether the change in the course of the Suague
River was gradual or sudden because the trial court below resolved the same in its decision
thus subjecting the same to review by respondent appellate court. By simply abandoning this
issue, the petitioners cannot hope that the affirmance of the decision wherein this issue was
resolved makes the decision of the Court of Appeals void. In effect, the petitioners are
expounding a new procedural theory that to render a questioned decision void, all that has to be
done is to simply abandon on appeal the pivotal issue as resolved by the lower court and when
its decision is affirmed on appeal, attack the decision of the appellate court as void on the
principle that a court of justice has no jurisdiction or power to decide the question not in issue.
This is not correct. Even the authorities cited by the petitioners, more specifically the Salvante
and Lazo cases, supra, do not support their contention. They were heard in the trial court and
they cannot complain that the proceeding below was irregular and hence, invalid.

The trial court found that the change in the course of the Suague River was gradual and this
finding was affirmed by the respondent Court of Appeals. We do not find any valid reason to
disturb this finding of fact.

Article 457 of the New Civil Code (reproduced from Article 366 of the Old), the law applied by
the courts a quoprovides:

Art. 457. To the owners of the lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current of the
waters.

Petitioners contend that this article must be read together with Sections 45 an 46 of Act No. 496
which provides:

SEC. 45. 1 The obtaining of a decree of registration and the entry of a certificate
of title shall be regarded as an agreement running with the land, and binding
upon the applicant and all successors in title that the land shall be and always
remain registered land, and subject to the provisions of this Act and all Acts
amendatory thereof.

SEC. 46. 2 No title to registered land in derogation to that of the registered owner
shall be acquired by prescription or adverse possession.

As a result, petitioners contend, Article 457 of the New Civil Code must be construed to limit the
accretion mentioned therein as accretion of unregistered land to the riparian owner, and should
not extend to registered land. Thus, the lot in question having remained the registered land of
the petitioners, then the private respondents cannot acquire title there in derogation to that of
the petitioners, by accretion, for that will defeat the indefeasibility of a Torrens Title.

The rule that registration under the Torrens System does not protect the riparian owner against
the diminution of the area of his registered land through gradual changes in the course of an
adjoining stream is well settled. In Payatas Estate Improvement Co. vs. Tuason, 53 Phil. 55, We
ruled:

The controversy in the present cases seems to be due to the erroneous

conception that Art. 366 of the Civil Code does not apply to Torrens registered
 land. That article provides that "any accretions which the banks of rivers may
gradually receive from the effects of the current belong to the owners of the
estates bordering thereon." Accretions of that character are natural incidents to
land bordering on running streams and are not affected by the registration laws.
It follows that registration does not protect the riparian owner against diminution
of the area of his land through gradual changes in the course of the adjoining
stream.

In C.N. Hodges vs. Garcia, 109 Phil. 133, We also ruled:

It clearly appearing that the land in question has become part of defendant's
estate as a result of accretion, it follows that said land now belongs to him. The
fact that the accretion to his land used to pertain to plaintiffs estate, which is
covered by a Torrens Certificate of Title, cannot preclude him (defendant) from
being the owner thereof. Registration does not protect the riparian owner against
the diminution of the area of his land through gradual changes in the course of
the adjoining stream. Accretions which the banks of rivers may gradually receive
from the effect of the current become the property of the owners of the banks
(Art. 366 of the Old Civil Code; Art. 457 of the New). Such accretions are natural
incidents to land bordering on running streams and the provisions of the Civil
Code in that respect are not affected by the Registration Act.

We find no valid reason to review and abandon the aforecited rulings.

As the private respondents are the owners of the premises in question, no damages are
recoverable from them.

ACCORDINGLY, the petition is DISMISSED for lack of merit without pronouncement as to

costs.

SO ORDERED.
G.R. No. 92161 March 18, 1991

SIMPLICIO BINALAY, PONCIANO GANNABAN, NICANOR MACUTAY, DOMINGO

ROSALES, GREGORIO ARGONZA, EUSTAQUIO BAUA, FLORENTINO ROSALES,
TEODORO MABBORANG, PATRICIO MABBORANG and FULGENCIO MORA, petitioners
vs.
GUILLERMO MANALO and COURT OF APPEALS, respondents.

Josefin De Alban Law Office for Petitioners.

FELICIANO, J.:

The late Judge Taccad originally owned a parcel of land situated in Tumauini, Isabela having an
estimated area of twenty (20) hectares. The western portion of this land bordering on the
Cagayan River has an elevation lower than that of the eastern portion which borders on the
national road. Through the years, the western portion would periodically go under the waters of
the Cagayan River as those waters swelled with the coming of the rains. The submerged
portion, however, would re-appear during the dry season from January to August. It would
remain under water for the rest of the year, that is, from September to December during the
rainy season.

The ownership of the landholding eventually moved from one person to another. On 9 May
1959, respondent Guillermo Manalo acquired 8.65 hectares thereof from Faustina Taccad,
daughter of Judge Juan Taccad. The land sold was described in the Deed of Absolute Sale1 as
follows:

. . . a parcel of agricultural land in Balug, Tumauini, Isabela, containing an area of 8.6500

hectares, more or less; bounded on the North by Francisco Forto on the East by
National Road; on South by Julian Tumolva and on the West by Cagayan River;
declared for taxation under Tax Declaration No. 12681 in the name of Faustina Taccad,
and assessed at P 750.00. . . .

Later in 1964, respondent Manalo purchased another 1.80 hectares from Gregorio Taguba who
had earlier acquired the same from Judge Juan Taccad. The second purchase brought the total
acquisition of respondent Manalo to 10.45 hectares. The second piece of property was more
particularly described as follows:

. . . a piece of agricultural land consisting of tobacco land, and containing an area of

18,000 square meters, more or less, bounded on the North by Balug Creek; on the
South, by Faustina Taccad (now Guillermo R. Manalo); on the East, by a Provincial
Road; and on the West, by Cagayan River assessed at P 440.00, as tax Declaration No.
3152. . . .2

During the cadastral survey conducted at Balug, Tumauini, Isabela on 21 October 1969, the two
(2) parcels of land belonging to respondent Manalo were surveyed and consolidated into one
lot, designated as Lot No. 307, Pls-964. Lot 307 which contains 4.6489 hectares includes: (a)
the whole of the 1.80 hectares acquired from Gregorio Taguba; and (b) 2.8489 hectares out of
the 8.65 hectares purchased from Faustina Taccad. As the survey was conducted on a rainy
month, a portion of the land bought from Faustina Taccad then under water was left unsurveyed
and was not included in Lot 307.

The Sketch Plan3 submitted during the trial of this case and which was identified by respondent
Manalo shows that the Cagayan River running from south to north, forks at a certain point to
form two (2) branches—the western and the eastern branches—and then unites at the other
end, further north, to form a narrow strip of land. The eastern branch of the river cuts through
the land of respondent Manalo and is inundated with water only during the rainy season. The
bed of the eastern branch is the submerged or the unsurveyed portion of the land belonging to
respondent Manalo. For about eight (8) months of the year when the level of water at the point
where the Cagayan River forks is at its ordinary depth, river water does not flow into the eastern
branch. While this condition persists, the eastern bed is dry and is susceptible to cultivation.
Considering that water flowed through the eastern branch of the Cagayan River when the
cadastral survey was conducted, the elongated strip of land formed by the western and the
eastern branches of the Cagayan River looked very much like an island. This strip of land was
surveyed on 12 December 1969.4

It was found to have a total area of 22.7209 hectares and was designated as Lot 821 and Lot
822. The area of Lot 822 is 10.8122 hectares while Lot 821 has an area of 11.9087 hectares.
Lot 821 is located directly opposite Lot 307 and is separated from the latter only by the eastern
branch of the Cagayan River during the rainy season and, during the dry season, by the
exposed, dry river bed, being a portion of the land bought from Faustina Taccad. Respondent
Manalo claims that Lot 821 also belongs to him by way of accretion to the submerged portion of
the property to which it is adjacent.

Petitioners who are in possession of Lot 821, upon the other hand, insist that they own Lot 821.
They occupy the outer edges of Lot 821 along the river banks, i.e., the fertile portions on which
they plant tobacco and other agricultural products. They also cultivate the western strip of the
unsurveyed portion during summer.5 This situation compelled respondent Manalo to file a case
for forcible entry against petitioners on 20 May 1969. The case was dismissed by the Municipal
Court of Tumauini, Isabela for failure of both parties to appear. On 15 December 1972,
respondent Manalo again filed a case for forcible entry against petitioners. The latter case was
similarly dismissed for lack of jurisdiction by the Municipal Court of Tumauini, Isabela.

On 24 July 1974, respondent Manalo filed a complaints6 before the then Court of First Instance
of Isabela, Branch 3 for quieting of title, possession and damages against petitioners. He
alleged ownership of the two (2) parcels of land he bought separately from Faustina Taccad and
Gregorio Taguba for which reason he prayed that judgment be entered ordering petitioners to
vacate the western strip of the unsurveyed portion. Respondent Manalo likewise prayed that
judgment be entered declaring him as owner of Lot 821 on which he had laid his claim during
the survey.

Petitioners filed their answer denying the material allegations of the complaint. The case was
then set for trial for failure of the parties to reach an amicable agreement or to enter into a
stipulation of facts.7 On 10 November 1982, the trial court rendered a decision with the following
dispositive portion:

WHEREFORE, in the light of the foregoing premises, the Court renders judgment
against the defendants and in favor of the plaintiff and orders:

1. That plaintiff, Guillermo Manalo, is declared the lawful owner of the land in question,
Lot No. 821, Pls-964 of Tumauini Cadastre, and which is more particularly described in
paragraph 2-b of the Complaint;

2. That the defendants are hereby ordered to vacate the premises of the land in
question, Lot No. 821, Pls-964 of Tumauini Cadastre, and which is more particularly
described in paragraph 2-b of the Complaint;

3. That the defendants are being restrained from entering the premises of the land in
question, Lot No. 821, Pls-964 of Tumauini Cadastre, and which is more particularly
described in paragraph 2-b of the Complaint; and

4. That there is no pronouncement as to attorney's fees and costs.

SO ORDERED.8

Petitioners appealed to the Court of Appeals which, however, affirmed the decision of the trial
court. They filed a motion for reconsideration, without success.

While petitioners insist that Lot 821 is part of an island surrounded by the two (2) branches of
the Cagayan River, the Court of Appeals found otherwise. The Court of Appeals concurred with
the finding of the trial court that Lot 821 cannot be considered separate and distinct from Lot
307 since the eastern branch of the Cagayan River substantially dries up for the most part of the
year such that when this happens, Lot 821 becomes physically (i.e., by land) connected with the
dried up bed owned by respondent Manalo. Both courts below in effect rejected the assertion of
petitioners that the depression on the earth's surface which separates Lot 307 and Lot 821 is,
during part of the year, the bed of the eastern branch of the Cagayan River.

It is a familiar rule that the findings of facts of the trial court are entitled to great respect, and that
they carry even more weight when affirmed by the Court of Appeals.9 This is in recognition of
the peculiar advantage on the part of the trial court of being able to observe first-hand the
deportment of the witnesses while testifying. Jurisprudence is likewise settled that the Court of
Appeals is the final arbiter of questions of fact.10 But whether a conclusion drawn from such
findings of facts is correct, is a question of law cognizable by this Court. 11

In the instant case, the conclusion reached by both courts below apparently collides with their
findings that periodically at the onset of and during the rainy season, river water flows through
the eastern bed of the Cagayan River. The trial court held:

The Court believes that the land in controversy is of the nature and character of alluvion
(Accretion), for it appears that during the dry season, the body of water separating the
same land in controversy (Lot No. 821, Pls-964) and the two (2) parcels of land which
the plaintiff purchased from Gregorio Taguba and Justina Taccad Cayaba becomes a
marshy land and is only six (6) inches deep and twelve (12) meters in width at its widest
in the northern tip (Exhs. "W", "W-l", "W-2", "W-3" and "W-4"), It has been held by our
Supreme Court that "the owner of the riparian land which receives the gradual deposits
of alluvion, does not have to make an express act of possession. The law does not
require it, and the deposit created by the current of the water becomes manifest" (Roxas
vs. Tuazon, 6 Phil. 408).12

The Court of Appeals adhered substantially to the conclusion reached by the trial court, thus:

As found by the trial court, the disputed property is not an island in the strict sense of the
word since the eastern portion of the said property claimed by appellants to be part of
the Cagayan River dries up during summer. Admittedly, it is the action of the heavy rains
which comes during rainy season especially from September to November which
increases the water level of the Cagayan river. As the river becomes swollen due to
heavy rains, the lower portion of the said strip of land located at its southernmost point
would be inundated with water. This is where the water of the Cagayan river gains its
entry. Consequently, if the water level is high the whole strip of land would be under
water.

In Government of the Philippine Islands vs. Colegio de San Jose, it was held that —

According to the foregoing definition of the words "ordinary" and "extra-ordinary," the
highest depth of the waters of Laguna de Bay during the dry season is the ordinary one,
and the highest depth they attain during the extra-ordinary one (sic); inasmuch as the
former is the one which is regular, common, natural, which occurs always or most of the
time during the year, while the latter is uncommon, transcends the general rule, order
and measure, and goes beyond that which is the ordinary depth. If according to the
definition given by Article 74 of the Law of Waters quoted above, the natural bed or
basin of the lakes is the ground covered by their waters when at their highest ordinary
depth, the natural bed or basin of Laguna de Bay is the ground covered by its waters
when at their highest depth during the dry season, that is up to the northeastern
boundary of the two parcels of land in question.

We find the foregoing ruling to be analogous to the case at bar. The highest ordinary level of the
waters of the Cagayan River is that attained during the dry season which is confined only on the
west side of Lot [821] and Lot [822]. This is the natural Cagayan river itself. The small residual
of water between Lot [821] and 307 is part of the small stream already in existence when the
whole of the late Judge Juan Taccad's property was still susceptible to cultivation and
uneroded.13
The Court is unable to agree with the Court of Appeals that Government of the Philippine
Islands vs. Colegio de San Jose 14 is applicable to the present case. That case involved Laguna
de Bay; since Laguna de Bay is a lake, the Court applied the legal provisions governing the
ownership and use of lakes and their beds and shores, in order to determine the character and
ownership of the disputed property. Specifically, the Court applied the definition of the natural
bed or basin of lakes found in Article 74 of the Law of Waters of 3 August 1866. Upon the other
hand, what is involved in the instant case is the eastern bed of the Cagayan River.

We believe and so hold that Article 70 of the Law of Waters of 3 August 1866 is the law
applicable to the case at bar:

Art. 70. The natural bed or channel of a creek or river is the ground covered by its waters
during the highest floods. (Emphasis supplied)

We note that Article 70 defines the natural bed or channel of a creek or river as the ground
covered by its waters during the highest floods. The highest floods in the eastern branch of the
Cagayan River occur with the annual coming of the rains as the river waters in their onward
course cover the entire depressed portion. Though the eastern bed substantially dries up for the
most part of the year (i.e., from January to August), we cannot ignore the periodical swelling of
the waters ( i.e., from September to December) causing the eastern bed to be covered with
flowing river waters.

The conclusion of this Court that the depressed portion is a river bed rests upon evidence of
record.1âwphi1 Firstly, respondent Manalo admitted in open court that the entire area he bought
from Gregorio Taguba was included in Lot 307.15 If the 1.80 hectares purchased from Gregorio
Taguba was included in Lot 307, then the Cagayan River referred to as the western boundary in
the Deed of Sale transferring the land from Gregorio Taguba to respondent Manalo as well as
the Deed of Sale signed by Faustina Taccad, must refer to the dried up bed (during the dry
months) or the eastern branch of the river (during the rainy months). In the Sketch Plan
attached to the records of the case, Lot 307 is separated from the western branch of the
Cagayan River by a large tract of land which includes not only Lot 821 but also what this Court
characterizes as the eastern branch of the Cagayan River.

Secondly, the pictures identified by respondent Manalo during his direct examination depict the
depressed portion as a river bed. The pictures, marked as Exhibits "W" to "W-4", were taken in
July 1973 or at a time when the eastern bed becomes visible.16 Thus, Exhibit "W-2" which
according to respondent Manalo was taken facing the east and Exhibit "W-3" which was taken
facing the west both show that the visible, dried up portion has a markedly lower elevation than
Lot 307 and Lot 821. It has dike-like slopes on both sides connecting it to Lot 307 and Lot 821
that are vertical upward and very prominent. This topographic feature is compatible with the fact
that a huge volume of water passes through the eastern bed regularly during the rainy season.
In addition, petitioner Ponciano Gannaban testified that one had to go down what he called a
"cliff" from the surveyed portion of the land of respondent Manalo to the depressed portion. The
cliff, as related by petitioner Gannaban, has a height of eight (8) meters.17

The records do not show when the Cagayan River began to carve its eastern channel on the
surface of the earth. However, Exhibit "E"18 for the prosecution which was the Declaration of
Real Property standing in the name of Faustina Taccad indicates that the eastern bed already
existed even before the sale to respondent Manalo. The words "old bed" enclosed in
parentheses—perhaps written to make legitimate the claim of private ownership over the
submerged portion—is an implied admission of the existence of the river bed. In the Declaration
of Real Property made by respondent Manalo, the depressed portion assumed the name Rio
Muerte de Cagayan. Indeed, the steep dike-like slopes on either side of the eastern bed could
have been formed only after a prolonged period of time.

Now, then, pursuant to Article 420 of the Civil Code, respondent Manalo did not acquire private
ownership of the bed of the eastern branch of the river even if it was included in the deeds of
absolute sale executed by Gregorio Taguba and Faustina Taccad in his favor. These vendors
could not have validly sold land that constituted property of public dominion. Article 420 of the
Civil Code states:
 The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;

(2) Those which belong to the State, without being for public use, and are intended for
some public service or for the development of the national wealth. (Emphasis supplied)

Although Article 420 speaks only of rivers and banks, "rivers" is a composite term which
includes: (1) the running waters, (2) the bed, and (3) the banks.19 Manresa, in commenting upon
Article 339 of the Spanish Civil Code of 1889 from which Article 420 of the Philippine Civil Code
was taken, stressed the public ownership of river beds:

La naturaleza especial de los rios, en punto a su disfrute general, hace que sea
necesario considerar en su relacion de dominio algo mas que sus aguas corrientes. En
efecto en todo rio es preciso distinguir 1. esta agua corriente; 2. el alveo o cauce,
y 3. las riberas. Ahora bien: son estas dos ultimas cosas siempre de dominio publico,
como las aguas?

Realmente no puede imaginarse un rio sin alveo y sin ribera; de suerte que al decir el
Codigo civil que los rios son de dominio publico, parece que debe ir implicito el dominio
publico de aquellos tres elementos que integran el rio. Por otra parte, en cuanto a los
alveos o cauces tenemos la declaracion del art. 407, num 1, donde dice: son de
dominion publico . . . los rios y sus cauces naturales; declaracion que concuerda con lo
que dispone el art. 34 de la ley de [Aguas], segun el cual, son de dominion
publico: 1. los alveos o cauces de los arroyos que no se hallen comprendidos en el art.
33, y 2. los alveos o cauces naturales de los rios en la extension que cubran sus aguas
en las mayores crecidas ordinarias.20 (Emphasis supplied)

The claim of ownership of respondent Manalo over the submerged portion is bereft of basis
even if it were alleged and proved that the Cagayan River first began to encroach on his
property after the purchase from Gregorio Taguba and Faustina Taccad. Article 462 of the Civil
Code would then apply divesting, by operation of law, respondent Manalo of private ownership
over the new river bed. The intrusion of the eastern branch of the Cagayan River into his
landholding obviously prejudiced respondent Manalo but this is a common occurrence since
estates bordering on rivers are exposed to floods and other evils produced by the destructive
force of the waters. That loss is compensated by, inter alia, the right of accretion acknowledged
by Article 457 of the Civil Code.21 It so happened that instead of increasing the size of Lot 307,
the eastern branch of the Cagayan River had carved a channel on it.

We turn next to the issue of accretion. After examining the records of the case, the Court
considers that there was no evidence to prove that Lot 821 is an increment to Lot 307 and the
bed of the eastern branch of the river. Accretion as a mode of acquiring property under Article
457 of the Civil Code requires the concurrence of three (3) requisites: (a) that the deposition of
soil or sediment be gradual and imperceptible; (b) that it be the result of the action of the waters
of the river (or sea); and (c) that the land where accretion takes place is adjacent to the banks of
rivers (or the sea coast).22 The Court notes that the parcels of land bought by respondent
Manalo border on the eastern branch of the Cagayan River. Any accretion formed by this
eastern branch which respondent Manalo may claim must be deposited on or attached to Lot
307. As it is, the claimed accretion (Lot 821) lies on the bank of the river not adjacent to Lot 307
but directly opposite Lot 307 across the river.

Assuming (arguendo only) that the Cagayan River referred to in the Deeds of Sale transferring
ownership of the land to respondent Manalo is the western branch, the decision of the Court of
Appeals and of the trial court are bare of factual findings to the effect that the land purchased by
respondent Manalo received alluvium from the action of the aver in a slow and gradual manner.
On the contrary, the decision of the lower court made mention of several floods that caused the
land to reappear making it susceptible to cultivation. A sudden and forceful action like that of
flooding is hardly the alluvial process contemplated under Article 457 of the Civil Code. It is the
slow and hardly perceptible accumulation of soil deposits that the law grants to the riparian
owner.

Besides, it is important to note that Lot 821 has an area of 11.91 hectares. Lot 821 is the
northern portion of the strip of land having a total area of 22.72 hectares. We find it difficult to
suppose that such a sizable area as Lot 821 resulted from slow accretion to another lot of
almost equal size. The total landholding purchased by respondent Manalo is 10.45 hectares
(8.65 hectares from Faustina Taccad and 1.80 hectares from Gregorio Taguba in 1959 and
1964, respectively), in fact even smaller than Lot 821 which he claims by way of accretion. The
cadastral survey showing that Lot 821 has an area of 11.91 hectares was conducted in 1969. If
respondent Manalo's contention were accepted, it would mean that in a span of only ten (10)
years, he had more than doubled his landholding by what the Court of Appeals and the trial
court considered as accretion. As already noted, there are steep vertical dike-like slopes
separating the depressed portion or river bed and Lot 821 and Lot 307. This topography of the
land, among other things, precludes a reasonable conclusion that Lot 821 is an increment to the
depressed portion by reason of the slow and constant action of the waters of either the western
or the eastern branches of the Cagayan River.

We turn finally to the issue of ownership of Lot 821. Respondent Manalo's claim over Lot 821
rests on accretion coupled with alleged prior possession. He alleged that the parcels of land he
bought separately from Gregorio Taguba and Faustina Taccad were formerly owned by Judge
Juan Taccad who was in possession thereof through his (Judge Taccad's) tenants. When
ownership was transferred to him, respondent Manalo took over the cultivation of the property
and had it declared for taxation purposes in his name. When petitioners forcibly entered into his
property, he twice instituted the appropriate action before the Municipal Trial Court of Tumauini,
Isabela. Against respondent Manalo's allegation of prior possession, petitioners presented tax
declarations standing in their respective names. They claimed lawful, peaceful and adverse
possession of Lot 821 since 1955.

If respondent Manalo had proved prior possession, it was limited physically to Lot 307 and the
depressed portion or the eastern river bed. The testimony of Dominga Malana who was a tenant
for Justina Taccad did not indicate that she was also cultivating Lot 821. In fact, the complaints
for forcible entry lodged before the Municipal Trial Court of Tumauini, Isabela pertained only to
Lot 307 and the depressed portion or river bed and not to Lot 821. In the same manner, the tax
declarations presented by petitioners conflict with those of respondent Manalo. Under Article
477 of the Civil Code, the plaintiff in an action for quieting of title must at least have equitable
title to or interest in the real property which is the subject matter of the action. The evidence of
record on this point is less than satisfactory and the Court feels compelled to refrain from
determining the ownership and possession of Lot 821, adjudging neither petitioners nor
respondent Manalo as owner(s) thereof.

WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-GR CV No. 04892
are hereby SET ASIDE. Respondent Manalo is hereby declared the owner of Lot 307. The
regularly submerged portion or the eastern bed of the Cagayan River is hereby DECLARED to
be property of public dominion. The ownership of Lot 821 shall be determined in an appropriate
action that may be instituted by the interested parties inter se. No pronouncement as to costs.

SO ORDERED.
G.R. No. 95907 April 8, 1992

JOSE REYNANTE, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, THE HON. VALENTIN CRUZ, as Presiding
Judge, Regional Trial Court of Bulacan, Branch VIII, and the HEIRS OF LEONCIO
CARLOS and DOLORES A. CARLOS, and HEIRS OF GORGONIO CARLOS and
CONCEPCION CARLOS, respondents.

PARAS, J.:

This is a petition for review on certiorari which seeks the reversal of: a) decision 1 of the Court of
Appeals dated February 28, 1990 in CA-G.R. No. 1917 entitled "JOSE REYNANTE versus
HON. VALENTIN CRUZ, Judge, RTC of Malolos, Bulacan, and HEIRS OF LEONCIO AND
DOLORES CARLOS, et al.", affirming the decision 2 of the Regional Trial Court
of Malolos, Bulacan, Branch 8, Third Judicial Region which reversed the decision 3 of the
Municipal Trial Court of Meycauayan, Bulacan, Branch 1, Third Judicial Region in Civil Case No.
1526 entitled "HEIRS OF LEONCIO CARLOS & DOLORES A. CARLOS and HEIRS OF
GORGONIO A. CARLOS & CONCEPCION CARLOS versus JOSE REYNANTE: and b) the
resolution denying the motion for reconsideration.

The facts as culled from the records of the case are as follows:

More than 50 years ago, petitioner Jose Reynante was taken as tenant by the late Don Cosme
Carlos, owner and father-in-law of herein private respondents, over a fishpond located at Barrio
Liputan, Meycauayan, Bulacan with an area of 188.711 square meters, more or less and
covered by Transfer Certificate of Title No. 25618, Land Registry of Bulacan.

During the tenancy, petitioner Jose Reynante constructed a nipa hut where he and his family
lived and took care of the nipa palms (sasahan) he had planted on lots 1 and 2 covering an area
of 5,096 square meters and 6,011 square meters respectively. These lots are located between
the fishpond covered by TCT No. 25618 and the Liputan (formerly Meycauayan) River.
Petitioner harvested and sold said nipa palms without interference and prohibition from
anybody. Neither did the late Don Cosme Carlos question his right to plant the nipa palms near
the fishpond or to harvest and appropriate them as his own.

After the death of Don Cosme Carlos, his heirs (private respondents' predecessors-in-interest)
entered into a written agreement denominated as "SINUMPAANG SALAYSAY NG
PAGSASAULI NG KARAPATAN" dated November 29, 1984 with petitioner Jose Reynante
whereby the latter for and in consideration of the sum of P200,000.00 turned over the fishpond
he was tenanting to the heirs of Don Cosme Carlos and surrendered all his rights therein as
caretaker or "bantay-kasama at tagapamahala" (Rollo, p. 77).

Pursuant to the said written agreement, petitioner surrendered the fishpond and the two huts
located therein to private respondents. Private respondents thereafter leased the said fishpond
to one Carlos de la Cruz. Petitioner continued to live in the nipa hut constructed by him on lots 1
and 2 and to take care of the nipa palms he had planted therein.

On February 17, 1988, private respondents formally demanded that the petitioner vacate said
portion since according to them petitioner had already been indemnified for the surrender of his
rights as a tenant. Despite receipt thereof, petitioner refused and failed to relinquish possession
of lots 1 and 2.

Hence, on April 22, 1988, private respondents filed a complaint for forcible entry with preliminary
mandatory injunction against petitioner alleging that the latter by means of strategy and stealth,
took over the physical, actual and material possession of lots 1 and 2 by residing in one of
the kubos or huts bordering the Liputan River and cutting off and/or disposing of the sasa or
nipa palms adjacent thereto.
On January 10, 1989, the trial court rendered its decision dismissing the complaint and finding
that petitioner had been in prior possession of lots 1
and 2.

Private respondents appealed to the Regional Trial Court and on August 8, 1989 it rendered its
decision, the dispositive portion of which reads as follows:

WHEREFORE, this Court renders judgment in favor of the plaintiffs and against
defendant and hereby reverses the decision of the Court a quo. Accordingly, the
defendant is ordered to restore possession of that piece of land particularly
described and defined as Lots 1 & 2 of the land survey conducted by Geodetic
Engineer Restituto Buan on March 2, 1983, together with the sasa or nipa palms
planted thereon. No pronouncement as to attorney's fees. Each party shall bear
their respective costs of the suit.

SO ORDERED. (Rollo, p. 55; Decision, p. 4).

From said decision, petitioner filed with the Court of Appeals a petition for review (Rollo, p. 30;
Annex "A"). On February 28, 1990, the Court of Appeals rendered its decision, the dispositive
portion of which reads as follows:

WHEREFORE, the decision of the court a quo, being consistent with law and
jurisprudence, is hereby AFFIRMED in toto. The instant petition seeking to issue
a restraining order is hereby denied.

SO ORDERED. (Rollo, p. 30; Decision, p. 3).

On November 5, 1990, the Court of Appeals denied the motion for reconsideration filed by
petitioner (Rollo, p. 35; Annex "B").

Hence, this petition.

In its resolution dated May 6, 1991, the Second Division of this court gave due course to the
petition and required both parties to file their respective memoranda (Rollo, p. 93).

The main issues to be resolved in this case are: a) who between the petitioner and private
respondents has prior physical possession of lots 1 and 2; and b) whether or not the disputed
lots belong to private respondents as a result of accretion.

An action for forcible entry is merely a quieting process and actual title to the property is never
determined. A party who can prove prior possession can recover such possession even against
the owner himself. Whatever may be the character of his prior possession, if he has in his favor
priority in time, he has the security that entitles him to remain on the property until he is lawfully
ejected by a person having a better right by accion publiciana or accion reivindicatoria (German
Management & Services, Inc. v. Court of Appeals, G.R. No. 76216, September 14, 1989, 177
SCRA 495, 498, 499). On the other hand, if a plaintiff cannot prove prior physical possession,
he has no right of action for forcible entry and detainer even if he should be the owner of the
property (Lizo v. Carandang, 73 Phil. 469 [1942]).

Hence, the Court of Appeals could not legally restore private respondents' possession over lots
1 and 2 simply because petitioner has clearly proven that he had prior possession over lots 1
and 2.

The evidence on record shows that petitioner was in possession of the questioned lots for more
than 50 years. It is undisputed that he was the caretaker of the fishpond owned by the late Don
Cosme Carlos for more than 50 years and that he constructed a nipa hut adjacent to the
fishpond and planted nipa palms therein. This fact is bolstered by the "SINUMPAANG
SALAYSAY" executed by Epifanio Lucero (Records, p. 66), Apolonio D. Morte (Records, p. 101)
and Carling Dumalay (Records, p. 103), all of whom are disinterested parties with no motive to
falsify that can be attributed to them, except their desire to tell the truth.
Moreover, an ocular inspection was conducted by the trial court dated December 2, 1988 which
was attended by the parties and their respective counsels and the court observed the following:

The Court viewed the location and the distance of the constructed nipa hut and
the subject "sasahan" which appears exists (sic) long ago, planted and stands
(sic) adjacent to the fishpond and the dikes which serves (sic) as passage way of
water river of lot 1 and lot 2. During the course of the hearing, both counsel
observed muniment of title embedded on the ground which is located at the inner
side of the "pilapil" separating the fishpond from the subject "sasa" plant with a
height of 20 to 25 feet from water level and during the ocular inspection it was
judicially observed that the controversial premises is beyond the titled property of
the plaintiffs but situated along the Liputan, Meycauayan River it being a part of
the public domain. (Rollo, p. 51; Decision, p. 12).

On the other hand, private respondents based their claim of possession over lots 1 and 2 simply
on the written agreement signed by petitioner whereby the latter surrendered his rights over the
fishpond.

Evidently, the trial court did not err when it ruled that:

An examination of the document signed by the defendant (Exhibit "B"), shows

that what was surrendered to the plaintiffs was the fishpond and not the
"sasahan" or the land on which he constructed his hut where he now lives. That
is a completely different agreement in which a tenant would return a farm or a
fishpond to his landlord in return for the amount that the landlord would pay to
him as a disturbance compensation. There is nothing that indicates that the
tenant was giving other matters not mentioned in a document like Exhibit "B".
Moreover, when the plaintiffs leased the fishpond to Mr. Carlos de La Cruz there
was no mention that the lease included the hut constructed by the defendant and
the nipa palms planted by him (Exhibit "1"), a circumstance that gives the
impression that the nipa hut and the nipa palms were not included in the lease to
Mr. de la Cruz, which may not belong to the plaintiffs. (Rollo, p. 49; Decision, p.
9).

With regard to the second issue, it must be noted that the disputed lots involved in this case
are not included in Transfer Certificate of Title No. 25618 as per verification made by the Forest
Management Bureau, Department of Environment and Natural Resources. That tract of land
situated at Barrio Liputan, Meycauayan, Bulacan containing an area of 1.1107 hectares as
described in the plan prepared and surveyed by Geodetic Engineer Restituto Buan for Jose
Reynante falls within Alienable and Disposable Land (for fishpond development) under Project
No. 15 per B.F.L.C. Map No. 3122 dated May 8, 1987 (Rollo, p. 31; Decision, p. 2).

The respondent Court of Appeals ruled that lots 1 and 2 were created by alluvial formation and
hence the property of private respondents pursuant to Article 457 of the New Civil Code, to wit:

Art. 457. To the owners of lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current of the
waters.

Accretion benefits a riparian owner when the following requisites are present: (1) that the
deposit be gradual and imperceptible; (2) that it resulted from the effects of the current of the
water; and (c) that the land where accretion takes place is adjacent to the bank of a river
(Republic v. Court of Appeals, G.R. No. L-61647, October 12, 1984, 132 SCRA 514, cited in
Agustin v. Intermediate Appellate Court, G.R. Nos. 66075-76, July 5, 1990, 187 SCRA 218).

Granting without conceding that lots 1 and 2 were created by alluvial formation and while it is
true that accretions which the banks of rivers may gradually receive from the effect of the
current become the property of the owner of the banks, such accretion to registered land does
not preclude acquisition of the additional area by another person through prescription.
This Court ruled in the case of Ignacio Grande, et al. v. Hon. Court of Appeals, et al., G.R. No.
L-17652, June 30, 1962, 115 Phil. 521 that:

An accretion does not automatically become registered land just because the lot
which receives such accretion is covered by a Torrens Title. Ownership of a
piece of land is one thing; registration under the Torrens system of that
ownership is another. Ownership over the accretion received by the land
adjoining a river is governed by the Civil Code. Imprescriptibility of registered
land is provided in the registration law. Registration under the Land Registration
and Cadastral Act does not vest or give title to the land, but merely confirms and,
thereafter, protects the title already possessed by the owner, making it
imprescriptible by occupation of third parties. But to obtain this protection, the
land must be placed under the operation of the registration laws, wherein certain
judicial procedures have beenprovided.

Assuming private respondents had acquired the alluvial deposit (the lot in question), by
accretion, still their failure to register said accretion for a period of fifty (50) years subjected said
accretion to acquisition through prescription by third persons.

It is undisputed that petitioner has been in possession of the subject lots for more than fifty (50)
years and unless private respondents can show a better title over the subject lots, petitioner's
possession over the property must be respected.

PREMISES CONSIDERED, the decision of the respondent Court of Appeals dated February 28,
1990 is REVERSED and SET ASIDE and the decision of the Municipal Trial Court of
Meycauayan, Bulacan, Branch I, is hereby REINSTATED.

SO ORDERED.
G.R. No. L-48268 October 30, 1978

HEIRS OF SEGUNDO UBERAS, namely: Nieves Uberas, Florencia Uberas, Manuel

Uberas, Rolando Uberas, Ester Uberas, Jose Uberas, Jr., Zenaida Uberas, Yolanda
Uberas, Cecilia Uberas, Henry Uberas, Paulita Uberas, Josephine Uberas, William
Uberas, Ramon Uberas, Virgie Palomar, Alicia Palomar, Corazon Palomar Antonio
Palomar, and Roque Palomar, HEIRS OF ALBINO UBERAS, namely: Delfin Uberas,
Vivencio Uberas, Juan Uberas, Milagros Uberas, Jardenico Uberas, Lilia Uberas,
Hergondeo Uberas, Anecito Uberas, Antonio Uberas, Rodolfo Uberas, Reymundo Uberas,
Adrimedes Uberas and Nathaniel Uberas, petitioners,
vs.
COURT OF FIRST INSTANCE OF NEGROS OCCIDENTAL, BRANCH II, presided by THE
HON. OSCAR R. VICTORIANO, and ALEJANDRA UBERAS, SOLEDAD RAPIZ U ERAS,
MILAGROS UBERAS, ROLANDO UBERAS, WILFREDO UBERAS, SELMA UBERAS, and
PEDRO UBERAS, JR., all of the City of Bacolod, Negros Occidental, respondents.

Rodriguez O. Abligacion for petitioners. (i)

Alex A. Abastillas for respondents the Uberas.

Jorge A. Dolorfino for private respondents.

TEEHANKEE, J.:

The Court sets aside respondent court's order dismissing the complaint below on the ground of
prescription and remands the case for trial and determination on the merits, in the light of factual
averments in the complaint which if duly established at the trial would clearly rule out the
defense of prescription and of other material averments that have to be inquired into and
resolved on the basis of evidence adduced by the parties which in turn will determine the legal
precepts that should be applied in law and equity.

Petitioners as plaintiffs below had filed on November 3, 1977 a verified complaint against
respondents as defendants in the Negros Occidental Court of First Instance for "quieting of title,
recovery of possession and ownership, partition, (and) reconveyance with damages" of the
property subject-matter of the suit. Their complaint was summarized by respondent court in the
appealed order of February 15, 1978 dismissing the complaint on the ground of prescription, as
follows:

Defendants seek to dismiss the present complaint on the ground that the action
is barred by prescription.

Plaintiffs maintain that the action is imprescriptible because it is one for partition
and to quiet title to the property in question, declaring the declaration of heirship
and deed of sale executed by defendants to be null and void ab initio.

On the basis of the allegations of the complaint, it is averred that upon the death
of the spouses Juan Uberas and Dominga Mendoza in 1929 and 1930,
respectively, they were survived by five (5) legitimate children, namely, Segundo,
Albino, Francisca, Pedro and Alejandra, all surnamed Uberas, the first four (4)
already deceased but in turn survived or succeeded by their children and
grandchildren, leaving a parcel of land with an area of 922 square meters
situated in Bacolod City, covered by Transfer Certificate of Title No. RT-1976
(156) issued on March 16, 1917 in the name of aforesaid Juan Uberas, married
to Dominga Mendoza. The plaintiffs are the children and successors in interest
of Segundo Uberas and Albino Uberas, while the defendants are the surviving
spouse, Soledad Rapiz, and the children of Pedro Uberas, as well as Alejandra
Uberas who is impleaded as an unwilling co-plaintiff. Plaintiffs claim that they and
the defendants as well as their predecessors in interest are co-owners of the
property in question which they acquired by right of inheritance upon the death of
 the spouses Juan Uberas and Dominga Mendoza; that sometime in 1964 Pedro
Uberas, when still alive, together with his wife, defendant Soledad Rapiz, add
their children, by means of fraud and deceit, persuaded his sister, Alejandra
Uberas, to join them in signing a declaration of heirship, stating falsely that Pedro
Uberas and Alejandra Uberas were the only heirs of the deceased spouses Juan
Uberas and Dominga Mendoza and adjudicating unto themselves the whole
property in question to the prejudice and exclusion of their two
(2) brothers, Segundo Uberas and Albino Uberas as well as their sister Francisca
Uberas, the latter having died without issue (paragraph 9, complaint); that as a
result of the execution of this declaration of heirship Transfer Certificate of Title
No. RT-1976 (156) in the name of Juan Uberas, married to Dominga Mendoza,
was cancelled and Transfer Certificate of Title No. T-31151 issued on December
2, 1966 was issued in the names of the deceased defendant. Pedro Uberas and
the defendant Alejandra Uberas, one-half (½) share for each; that as part of their
continuing malicious and illegal scheme, Pedro uberas and Soledad Rapiz, as
well as their children caused Alejandra Uberas to sign a deed of absolute sale of
her undivided one-half (½) portion of the lot in question in favor of Pedro Uberas,
married to Soledad Rapiz, dated November 29, 1966 for Five Thousand Pesos
(P5,000.00), and as a consequence Transfer Certificate of Title No. T-31151 was
cancelled and Transfer Certificate of Title No. 31315 was issued solely in the
name of pedro Uberas, married to Soledad Rapiz, on January 7, 1967; that
thereafter pedro uberas and Soledad Rapiz maliciously induced their sister
Alejandra Uberas to sign a general power of attorney in favor of their son,
Wilfredo Uberas, with authority to sell or encumber the property dated December
6, 1973; that aforesaid Alejandra Uberas signed the declaration of heirship, the
deed of sale and the general power of attorney by reason of fraud, deceit,
misrepresentation and undue influence exerted upon her by Pedro Uberas and
Soledad Rapiz, and that by reason of aforesaid fraudulent acts and malicious
scheme the complusory heirs of Juan Uberas and Dominga Mendoza were
therefore deprived of their legitimate shares in the property, namely; and one-
fourth (¼) share for the heirs of Albino Uberas, claiming that Transfer Certificate
of Title No. 31151, the deed of sale and the general power of attorney are null
and void ab initio and asking that defendant be ordered to reconvey the share
corresponding to the heirs of Segundo Uberas and Albino uberas (paragraphs
11, 12, 13, 14, 15, 17, 18, and 19, complaint). Finally, it is claimed that plaintiffs
learned for the first time of the malicions and illegal acts of the defendants only in
the year 1977 after Soledad Rapiz and her children had claimed sole ownership
and possession of the entire property, and upon verification from the office of the
Register of Deeds that the declaration of heirship was annotated on the
certificate of title.

At the back of Transfer Certificate of Title No. RT-1976 (156), which is Annex "A"
of the complaint, the execution of the declaration of heirship appears annotated
as Entry No. 34845 by Pedro Uberas and Alejandra Uberas to the effect that both
declared themselves as the only heirs of the deceased spouses Juan Uberas
and Dominga Mendoza, who both died leaving no debts and oblihgations,
adjudicating unto themselves the property in question. the declaration of heirship
is dated April 7, 1964 and registered on December 2, 1966.

As already indicated, respondent court in its questioned order, dismissed the complaint on the
ground that it was barred by prescription "as more than ten (10) years had elapsed counted
from the registration of the extrajudicial declaratio of heirship on December 2, 1966 and the
issuance of Transfer Certificate of Title No. T-31151 solely in the names of Pedro Uberas and
Alejandra Uberas issued on the same date, the present complaint having been filed only on
November 3, 1977." Respondent court reasoned out the dismissal, as follows:

While it is true the complaint is entitled as one for 'Quieting of Title, Recovery of
Ownership, Partition and Reconveyance with Damages', there is no doubt that
essentially the cause of action is one for reconveyance based upon a contructive
or implied trust resulting from fraud. It cannot be considered as an action for
partition among co-heirs which does not prescribe. A true action for partition
indeed does not prescribe as long as none of the co-heirs repudiate the co-
 ownership and claim the entire property under an adverse title. (cordova vs.
cordova, L-9936; Jan. 14, 1948). In the instant case, plaintiffs aver that Pedro
Uberas and Alejandra Uberas executed the declaration of heirship with malice
and bad faith, by means of fraud and deceit to deprive the compulsory heirs,
thereby excluding the plaintiffs from the estate of the deceased and setting up
title adverse to them. Hence, the present action is primarily to annul the
declaration of heirship and the deed of sale on the ground of fraud. For this same
reason, the doctrine that an aciton of partition among-co-heirs does not prescribe
finds no application. Nor can the present action be considered really as one to
quiet title as there is nothing in the allegations of the complaint to show that the
titles of the predecessros in interest of the plaintiffs were ever under a cloud.
Even granting that the aciton is one to remove a cloud over the title, the same is
not imprescriptible because to clear up the cloud and recover the title to the
property which is the ultimate objective of the plaintiffs, it is essential that 'they
must need first travel the road of relief on the ground of fraud.' (See Mauricio vs.
villanueva, et al., G.r. No. L-11072, Sept. 24 1956). The extrajudicial declaration
as well as the deed of sale and the Certificate of Title No.
T-31315 arenot void ab initio, for they do not fall under any of the void and
inexistent contracts enumerated under Article 1409, Civil Coide, Unquestionably,
those documents are invalid insofar as they affect the legitimate shares
pertaining to the heirs of Segundo Uberas and albino Uberas in the property in
question. That they are fraudulent there can be no question Hence, it is
necessary to maintain an action to set them aside on the ground of fraud.

But the action is barred by prescription. For when land passes by succession to
any person and he causes the legal title to be put in the name of another, a trust
is established by implication of law for the benefit of the true owner. (Art. 1451,
New Civil Code). Also if properties are acquired thru 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. (Art. 1456, New Civil
Code). The acts attributed to the deceased Pedro Uberas and defendant
Alejandro Uberas in having executed the extrajudicial declaration of heirship,
falsely representing therein that they were the sole heirs of the deceased Juan
Uberas and Dominga Mendoza and adjudicating unto themselves the entire
property for which a separate certificate of title was issued in their names, which
cancelled the transfer certificate of title originally issued in the name of Juan
Uberas, thereby excluding plaintiffs from their share in the property, constituted a
breach of an implied trust resulting from fraud. The subsequent execution of the
deed of absolute sale by Alejandra Uberas in favor of Pedro Uberas conveying
her one-half (½) portion over the property with consequent issuance of Transfer
Certificate of Title No. 31315 solely in the name of Pedro Uberas, and the
general power of attorney extended by Alejandra Uberas in favor of Wilfredo
Uberas, son of Pedro Uberas and Soledad Rapiz, with authority to sell or
encumber the entire property, are parts of a continuing breach of trust allegedly
committed by defendants for they merely confirmed the fraudulent execution of
the declaration of heirship and the cancellation of Transfer Certificate of Title No.
RT 1975 (156) in the name of Juan Uberas. Therefore, plaintiffs' cause of action
for reconveyance based on breach of trust resulting from fraud must be deemed
to have accrued when the declaration of heirship dated April 7, 1964 was
annotated on Transfer Certificate of Title No. RT-1976 (156) on December 2,
1966 because the discovery of the fraud is deemed to have taken place when the
instrument is filed with the Register of Deeds and a new title issued in the name
of the trustee as where a ceed of extrajudicial settlement executed in fraud of
some heirs is duly registered which then serves as constructive notice to the
whole world. (Diaz vs. Gorricho L-11229, March 29, 1958; J. M. Tuason & Co.,
Inc. vs. Magdangal, L-15539, Jan. 30, 1962).

Reconsideration of the dismissal order having been denied by respondent court, petitioners filed
the present petition for review, and upon receipt of respondents' comment, the Court resolved to
declare the case submitted for decision in view of the clear issues raised which require the
remand of the case for trial and determination on the merits.
Respondent court manifestly failed to take into account the averments of petitioners' complaint
that they "and defendants are co-owners and possessors of the property" and that "the
malicious and illegal acts committed by defendants were known to the plaintiffs only during this
year 1977, after Soledad Rapiz and her children were already claiming full ownership and
possession of the whole of the property," as set forth specifically in paragraph 20 of their
complaint below. 1 Respondent court could not peremptorily disregard this averment without trial
and receiving the parties' proofs. It is obvious that if such averment be duly established at the
trial by petitioners-plaintiffs, the period for prescription, even under respondent court's theory of
the case in its order, would only have commenced in 1977 and prescription could not lie.

The teaching of Faja vs. Court of Appeals 2 that an action to quiet title to property in the
possession of plaintiff is imprescriptible and that where there are material facts to be inquired
into and resolved on the basis of evidence adduced by the parties which will determine the legal
precepts to be applied, as in this case, the complaining party should be given full opportunity to
prove his case is fully applicable here, mutatis mutandis although in Faja the court peremptorily
dismissed the complaint by summary judgment, while respondent court herein likewise
summarily dismissed the complaint on the alleged ground of prescription notwithstanding
contrary factual averments in the complaint which would clearly rule out prescription.

As stressed therein by the Court "(T)he demands of a fair, impartial, and wise administration of
justice call for a faithful adherence to legal precepts on procedure which ensure to litigants the
opportunity to present their evidence and secure a ruling on all the issues presented in the
respective pleadings. 'Shortcuts' in judicial processes are to be avoided where they impede
rather than promote a judicious dispensation of justice." 3

Respondent court issued its dismissal order based on prescription on the basis of its theory that
"essentially the cause of action is one for reconveyance based upon a constructive or implied
trust resulting from fraud." Without any evidence in the record, the Court cannot put
its imprimatur on such a peremptory dismissal in the light of the pleas of the petitioners-plaintiffs
to justly share in the inheritance and partition of their common predecessor's estate and
respondent court's observation in its questioned order that "Unquestionably, those documents
[the extrajudicial declaration whereby the two brothers succeeded by petitioners were deprived
by their own brother and sister (succeeded by respondents) of one-half of their just inheritance]
are invalid insofar as they affect the legitimate shares pertaining to the heirs of Segundo Uberas
and Albino Uberas in the property in question. That they are fraudulent, there can be no
question." Considering that petitioners have sought redress from the courts also in equity, it is
but fair and just that without any prejudgment of the issues, the parties be allowed to prove their
respective contentions in a full blown trial and the manner and extent of the fraud allegedly
inflicted upon petitioners be allowed to be fully proven therein, since equity does not permit that
manifest wrong and injustice be inflicted upon innocent parties. 4

ACCORDINGLY, respondent court's order of dismissal is hereby set aside and the case is
remanded to respondent court for trial and determination on the merits. With costs against
private respondents jointly and severally.
G.R. No. 167232 July 31, 2009

D.B.T. MAR-BAY CONSTRUCTION, INCORPORATED, Petitioner,

vs.
RICAREDO PANES, ANGELITO PANES, SALVADOR CEA, ABOGADO MAUTIN,
DONARDO PACLIBAR, ZOSIMO PERALTA and HILARION MANONGDO, Respondents.

DECISION

NACHURA, J.:

Before this Court is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Civil
Procedure, assailing the Court of Appeals (CA) Decision2 dated October 25, 2004 which
reversed and set aside the Order3 of the Regional Trial Court (RTC) of Quezon City, Branch
216, dated November 8, 2001.

The Facts

Subject of this controversy is a parcel of land identified as Lot Plan Psu-123169,4 containing an
area of Two Hundred Forty Thousand, One Hundred Forty-Six (240,146) square meters, and
situated at Barangay (Brgy.) Pasong Putik, Novaliches, Quezon City (subject property). The
property is included in Transfer Certificate of Title (TCT) No. 200519,5 entered on July 19, 1974
and issued in favor of B.C. Regalado & Co. (B.C. Regalado). It was conveyed by B.C. Regalado
to petitioner D.B.T. Mar-Bay Construction, Inc. (DBT) through a dacion en pago6 for services
rendered by the latter to the former.

On June 24, 1992, respondents Ricaredo P. Panes (Ricaredo), his son Angelito P. Panes
(Angelito), Salvador Cea, Abogado Mautin, Donardo Paclibar, Zosimo P. Peralta, and Hilarion
Manongdo (herein collectively referred to as respondents) filed a Complaint7 for "Quieting of
Title with Cancellation of TCT No. 200519 and all Titles derived thereat (sic), Damages, with
Petition for the Issuance of Injunction with Prayer for the Issuance of Restraining Order Ex-
Parte, Etc." against B.C. Regalado, Mar-Bay Realty, Inc., Spouses Gereno Brioso and Criselda
M. Brioso, Spouses Ciriaco and Nellie Mariano, Avelino C. Perdido and Florentina Allado,
Eufrocina A. Maborang and Fe Maborang, Spouses Jaime and Rosario Tabangcura, Spouses
Oscar Ikalina and the Register of Deeds (RD) of Quezon City. Subsequently, respondents filed
an Amended Complaint8 and a Second Amended Complaint9particularly impleading DBT as one
of the defendants.

In the Complaints, Ricaredo alleged that he is the lawful owner and claimant of the subject
property which he had declared for taxation purposes in his name, and assessed in the amount
of ₱2,602,190.00 by the City Assessor of Quezon City as of the year 1985. Respondents
alleged that per Certification10 of the Department of Environment and Natural Resources
(DENR) National Capital Region (NCR) dated May 7, 1992, Lot Plan Psu-123169 was verified to
be correct and on file in said office, and approved on July 23, 1948.

Respondents also claimed that Ricaredo, his immediate family members, and the other
respondents had been, and still are, in actual possession of the portions of the subject property,
and their possession preceded the Second World War. To perfect his title in accordance with
Act No. 496 (The Land Registration Act) as amended by Presidential Decree (P.D.) No. 1529
(The Property Registration Decree), Ricaredo filed with the RTC of Quezon City, Branch 82 a
case docketed as LRC Case No. Q-91-011, with LRC Rec. No. N-62563.11

Respondents averred that in the process of complying with the publication requirements for the
Notice of Initial Hearing with the Land Registration Authority (LRA), it was discovered by the
Mapping Services of the LRA that there existed an overlapping of portions of the land subject of
Ricaredo’s application, with the subdivision plan of B.C. Regalado. The said portion had, by
then, already been conveyed by B.C. Regalado to DBT.

Ricaredo asseverated that upon verification with the LRA, he found that the subdivision plan of
B.C. Regalado was deliberately drawn to cover portions of the subject property. Respondents
claimed that the title used by B.C. Regalado in the preparation of the subdivision plan did not
actually cover the subject property. They asserted that from the records of B.C. Regalado, they
gathered that TCT Nos. 211081,12 21109513 and 211132,14 which allegedly included portions of
the subject property, were derived from TCT No. 200519. However, TCT No. 200519 only
covered Lot 503 of the Tala Estate with an area of Twenty-Two Thousand Six Hundred Fifteen
(22,615) square meters, and was different from those mentioned in TCT Nos. 211081, 211095
and 211132. According to respondents, an examination of TCT No. 200519 would show that it
was derived from TCT Nos. 14814,15 14827,161481517 and T-28.

In essence, respondents alleged that B.C. Regalado and DBT used the derivative titles which
covered properties located far from Pasong Putik, Novaliches, Quezon City where the subject
property is located, and B.C. Regalado and DBT then offered the same for sale to the public.
Respondents thus submitted that B.C Regalado and DBT through their deliberate scheme, in
collusion with others, used (LRC) Pcs-18345 as shown in the consolidation-subdivision plan to
include the subject property covered by Lot Plan Psu-123169.

In his Answer18 dated July 24, 1992, the RD of Quezon City interposed the defense that at the
time of registration, he found all documents to be in order. Subsequently, on December 5, 1994,
in his Motion19 for Leave to Admit Amended Answer, with the Amended Answer attached, he
admitted that he committed a grave mistake when he earlier said that TCT No. 200519 covered
only one lot, i.e. Lot 503. He averred that upon careful examination, he discovered that TCT No.
200519 is composed of 17 pages, and actually covered 54 lots, namely: Lots 503, 506, 507,
508, 509, 582, 586, 655, 659, 686, 434, 495, 497, 299, 498, 499, 500, 501, 502, 493, 692, 776,
496, 785, 777, 786, 780, 783, 505, 654, 660, 661, 663, 664, 665, 668, 693, 694, 713, 716, 781,
779, 784, 782, 787, 893, 1115, 1114, 778, 669 and 788, all of the Tala Estate. Other lots
included therein are Lot 890-B of Psd 36854, Lot 2 of (LRC) Pcs 12892 and Lot 3 of (LRC) Pcs
12892. Thus, respondents' allegation that Lots 661, 664, 665, 693 and 694 of the Tala Estate
were not included in TCT No. 200519 was not true.

On December 28, 1993, then defendants Spouses Jaime and Rosario Tabangcura (Spouses
Tabangcura) filed their Answer20 with Counterclaim, claiming that they were buyers in good faith
and for value when they bought a house and lot covered by TCT No. 211095 from B.C.
Regalado, the latter being a subdivision developer and registered owner thereof, on June 30,
1986. When respondent Abogado Mautin entered and occupied the property, Spouses
Tabangcura filed a case for Recovery of Property before the RTC, Quezon City, Branch 97
which rendered a decision21 in their favor.

On its part, DBT, traversing the complaint, alleged that it is the legitimate owner and occupant of
the subject property pursuant to a dacion en pago executed by B.C. Regalado in the former’s
favor; that respondents were not real parties-in-interests because Ricaredo was a mere
claimant whose rights over the property had yet to be determined by the RTC where he filed his
application for registration; that the other respondents did not allege matters or invoke rights
which would entitle them to the relief

prayed for in their complaint; that the complaint was premature; and that the action inflicted a
chilling effect on the lot buyers of DBT.22

The RTC's Rulings

On June 15, 2000, the RTC through Judge Marciano I. Bacalla (Judge Bacalla), rendered a
Decision23 in favor of the respondents. The RTC held that the testimony of Ricaredo that he
occupied the subject property since 1936 when he was only 16 years old had not been rebutted;
that Ricaredo's occupation and cultivation of the subject property for more than thirty (30) years
in the concept of an owner vested in him equitable ownership over the same by virtue of an
approved plan, Psu 123169; that the subject property was declared under the name of Ricaredo
for taxation purposes;24 and that the subject property per survey should not have been included
in TCT No. 200519, registered in the name of B.C. Regalado and ceded to DBT. The RTC
further held that Spouses Tabangcura failed to present satisfactory evidence to prove their
claim. Thus, the RTC disposed of the case in this wise:

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered declaring

Certificate of Title No. 200519 and all titles derived thereat as null and void insofar as the same
embrace the land covered by Plan PSU-123169 with an area of 240,146 square meters in the
name of Ricaredo Panes; ordering defendant DBT Marbay Realty, Inc. to pay plaintiff Ricaredo
Panes the sum of TWENTY THOUSAND (₱20,000) pesos as attorney’s fees plus costs of suit.

SO ORDERED.

On September 12, 2000, DBT filed a Motion25 for Reconsideration, based on the grounds of
prescription and laches. DBT also disputed Ricaredo’s claim of open, adverse, and continuous
possession of the subject property for more than thirty (30) years, and asserted that the subject
property could not be acquired by prescription or adverse possession because it is covered by
TCT No. 200519.

While the said Motion for Reconsideration was pending, Judge Bacalla passed away.

Meanwhile, on January 2, 2001, a Motion26 for Intervention and a Complaint in Intervention were
filed by Atty. Andres B. Pulumbarit (Atty. Pulumbarit), representing the Don Pedro/Don Jose de
Ocampo Estate. The intervenor alleged that the subject property formed part of the vast tract of
land with an area of 117,000 hectares, covered by Original Certificate of Title (OCT) No. 779
issued by the Honorable Norberto Romualdez on March 14, 1913 under Decree No. 10139,
which belongs to the Estate of Don Pedro/Don Jose de Ocampo. Thus, the Complaint27 in
Intervention prayed that the RTC’s Decision be reconsidered; that the legitimacy and superiority
of OCT 779 be upheld; and that the subject property be declared as belonging to the Estate of
Don Pedro/Don Jose de Ocampo.

In its Order28 dated March 13, 2001, the RTC, through Acting Judge Modesto C. Juanson
(Judge Juanson), denied Atty. Pulumbarit’s Motion for Intervention because a judgment had
already been rendered pursuant to Section 2,29Rule 19 of the 1997 Rules of Civil Procedure.

On April 10, 2001, the RTC issued an Order30 stating that there appeared to be a need for a
clarificatory hearing before it could act on DBT's Motion for Reconsideration. Thus, a hearing
was held on May 17, 2001. Thereafter, supplemental memoranda were required of the
parties.31 Both parties complied.32 However, having found that the original copy of TCT No.
200519 was not submitted to it for comparison with the photocopy thereof on file, the RTC
directed DBT to present the original or certified true copy of the TCT on August 21,
2001.33 Respondents moved to reconsider the said directive34 but the same was denied.35 DBT,
on the other hand, manifested that a copy of TCT No. 200519, consisting of 17 pages, had
already been admitted in evidence; and that because of the fire in the Office of the RD in
Quezon City sometime in 1988, DBT, despite diligent effort, could not secure an original or
certified true copy of said TCT. Instead, DBT submitted a certified true copy of Consolidated
Subdivision Plan Pcs 18345.36

On November 8, 2001, the RTC, through Judge Juanson, issued an Order37 reversing the
earlier RTC Decision and dismissing the Complaint for lack of merit. The RTC held that
prescription does not run against registered land; hence, a title once registered cannot be
defeated even by adverse, open or notorious possession. Moreover, the RTC opined that even
if the subject property could be acquired by prescription, respondents' action was already barred
by prescription and/or laches because they never asserted their rights when B.C. Regalado
registered the subject property in 1974; and later developed, subdivided and sold the same to
individual lot buyers.

On December 18, 2001, respondents filed a Motion for Reconsideration38 which the RTC denied
in its Order39dated June 17, 2002. Aggrieved, respondents appealed to the CA.40

The CA's Ruling

On October 25, 2004, the CA reversed and set aside the RTC Orders dated November 8, 2001
and June 17, 2002 and reinstated the RTC Decision dated June 15, 2000. The CA held that the
properties described and included in TCT No. 200519 are located in San Francisco del Monte,
San Juan del Monte, Rizal and Cubao, Quezon City while the subject property is located in
Brgy. Pasong Putik, Novaliches, Quezon City. Furthermore, the CA held that Engr. Vertudazo's
testimony that there is a gap of around 1,250 meters between Lot 503 and Psu 123169 was not
disproved or refuted. The CA found that Judge Juanson committed a procedural infraction when
he entertained issues and admitted evidence presented by DBT in its Motion for
Reconsideration which were never raised in the pleadings and proceedings prior to the rendition
of the RTC Decision. The CA opined that DBT's claims of laches and prescription clearly
appeared to be an afterthought. Lastly, the CA held that DBT's Motion for Reconsideration was
not based on grounds enumerated in the Rules of Procedure.41

Petitioner filed a Motion for Reconsideration,42 which was, however, denied by the CA in its
Resolution43 dated February 22, 2005.

Hence, this Petition.

The Issues

Petitioner raises the following as grounds for this Petition:

I.

PETITIONER'S FAILURE TO ALLEGE PRESCRIPTION IN ITS ANSWER IS NOT A WAIVER

OF SUCH DEFENSE.

II.

IT IS NOT ERRONEOUS TO REQUIRE THE PRODUCTION OF A CERTIFIED TRUE COPY

OF TCT NO. 200519 AFTER THE DECISION ON THE MERITS HAS BEEN RENDERED BUT
BEFORE IT BECAME FINAL.

III.

A REGISTERED LAND CAN NOT BE ACQUIRED BY ACQUISITIVE PRESCRIPTION.

IV.

THE TESTIMONY OF ENGR. VERTUDAZO ON THE BASIS OF THE TECHNICAL

DESCRIPTION OF LOT 503 IN AN INCOMPLETE DOCUMENT IS UNRELIABLE.

V.

MR. PANES HAS NEVER BEEN IN OPEN, ADVERSE AND CONTINUOUS POSSESSION OF
THE SUBJECT PROPERTY FOR MORE THAN THIRTY (30) YEARS.44

Distilled from the petition and the responsive pleadings, and culled from the arguments of the
parties, the issues may be reduced to two questions, namely:

1) Did the RTC err in upholding DBT's defenses of prescription and laches as raised in
the latter's Motion for Reconsideration?

2) Which between DBT and the respondents have a better right over the subject
property?

Our Ruling

We answer the first question in the affirmative.

It is true that in Dino v. Court of Appeals45 we ruled:

(T)rial courts have authority and discretion to dismiss an action on the ground of prescription
when the parties' pleadings or other facts on record show it to be indeed time-barred; (Francisco
v. Robles, Feb. 15, 1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961;
Cordova v. Cordova, Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon
v. Sorongan, 136 SCRA 408); and it may do so on the basis of a motion to dismiss (Sec. 1, [f]
Rule 16, Rules of Court), or an answer which sets up such ground as an affirmative defense
(Sec. 5, Rule 16), or even if the ground is alleged after judgment on the merits, as in a motion
for reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not been
asserted at all, as where no statement thereof is found in the pleadings (Garcia v. Mathis, 100
SCRA 250; PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97
Phil. 821); or where a defendant has been declared in default (PNB v. Perez; 16 SCRA 270).
What is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive
period be otherwise sufficiently and satisfactorily apparent on the record; either in the averments
of the plaintiff's complaint, or otherwise established by the evidence. (Emphasis supplied)

Indeed, one of the inherent powers of courts is to amend and control its processes so as to
make them conformable to law and justice. This includes the right to reverse itself, especially
when in its opinion it has committed an error or mistake in judgment, and adherence to its
decision would cause injustice.46 Thus, the RTC in its Order dated November 8, 2001 could
validly entertain the defenses of prescription and laches in DBT's motion for reconsideration.

However, the conclusion reached by the RTC in its assailed Order was erroneous. The RTC
failed to consider that the action filed before it was not simply for reconveyance but an action for
quieting of title which is imprescriptible.

Verily, an action for reconveyance can be barred by prescription. When an action for
reconveyance is based on fraud, it must be filed within four (4) years from discovery of the
fraud, and such discovery is deemed to have taken place from the issuance of the original
certificate of title. On the other hand, an action for reconveyance based on an implied or
constructive trust prescribes in ten (10) years from the date of the issuance of the original
certificate of title or transfer certificate of title. The rule is that the registration of an instrument in
the Office of the RD constitutes constructive notice to the whole world and therefore the
discovery of the fraud is deemed to have taken place at the time of registration.47lavvphil

However, the prescriptive period applies only if there is an actual need to reconvey the property
as when the plaintiff is not in possession of the property. If the plaintiff, as the real owner of the
property also remains in possession of the property, the prescriptive period to recover title and
possession of the property does not run against him. In such a case, an action for
reconveyance, if nonetheless filed, would be in the nature of a suit for quieting of title, an action
that is imprescriptible.48 Thus, in Vda. de Gualberto v. Go,49 this Court held:

[A]n 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, but this rule applies only when
the plaintiff or the person enforcing the trust is not in possession of the property, since if a
person claiming to be the owner thereof is in actual possession of the property, as the
defendants are in the instant case, the right to seek reconveyance, which in effect seeks to quiet
title to the property, does not prescribe. The reason for this is that 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, 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.

Insofar as Ricaredo and his son, Angelito, are concerned, they established in their testimonies
that, for some time, they possessed the subject property and that Angelito bought a house
within the subject property in 1987.50 Thus, the respondents are proper parties to bring an action
for quieting of title because persons having legal, as well as equitable, title to or interest in a real
property may bring such action, and "title" here does not necessarily denote a certificate of title
issued in favor of the person filing the suit.51

Although prescription and laches are distinct concepts, we have held, nonetheless, that in some
instances, the doctrine of laches is inapplicable where the action was filed within the prescriptive
period provided by law. Therefore, laches will not apply to this case, because respondents'
possession of the subject property has rendered their right to bring an action for quieting of title
imprescriptible and, hence, not barred by laches. Moreover, since laches is a creation of equity,
acts or conduct alleged to constitute the same must be intentional and unequivocal so as to
avoid injustice. Laches will operate not really to penalize neglect or sleeping on one's rights, but
rather to avoid recognizing a right when to do so would result in a clearly inequitable situation.52

Albeit the conclusion of the RTC in its Order dated November 8, 2001, which dismissed
respondents' complaint on grounds of prescription and laches, may have been erroneous, we,
nevertheless, resolve the second question in favor of DBT.

It is a well-entrenched rule in this jurisdiction that no title to registered land in derogation of the
rights of the registered owner shall be acquired by prescription or adverse possession. 53

Article 112654 of the Civil Code in connection with Section 4655 of Act No. 496 (The Land
Registration Act), as amended by Section 4756 of P.D. No. 1529 (The Property Registration
Decree), clearly supports this rule. Prescription is unavailing not only against the registered
owner but also against his hereditary successors. Possession is a mere consequence of
ownership where land has been registered under the Torrens system, the efficacy and integrity
of which must be protected. Prescription is rightly regarded as a statute of repose whose
objective is to suppress fraudulent and stale claims from springing up at great distances of time
and surprising the parties or their representatives when the facts have become obscure from the
lapse of time or the defective memory or death or removal of witnesses.57

Thus, respondents' claim of acquisitive prescription over the subject property is baseless. Under
Article 1126 of the Civil Code, acquisitive prescription of ownership of lands registered under the
Land Registration Act shall be governed by special laws. Correlatively, Act No. 496, as
amended by PD No. 1529, provides that no title to registered land in derogation of that of the
registered owner shall be acquired by adverse possession. Consequently, in the instant case,
proof of possession by the respondents is immaterial and inconsequential.58

Moreover, it may be stressed that there was no ample proof that DBT participated in the alleged
fraud. While factual issues are admittedly not within the province of this Court, as it is not a trier
of facts and is not required to re-examine or contrast the oral and documentary evidence anew,
we have the authority to review and, in proper cases, reverse the factual findings of lower courts
when the findings of fact of the trial court are in conflict with those of the appellate court. 59 In this
regard, we reviewed the records of this case and found no clear evidence that DBT participated
in the fraudulent scheme. In Republic v. Court of Appeals,60 this Court gave due importance to
the fact that the private respondent therein did not participate in the fraud averred. We accord
the same benefit to DBT in this case. To add, DBT is an innocent purchaser for value and good
faith which, through a dacion en pago duly entered into with B.C. Regalado, acquired

ownership over the subject property, and whose rights must be protected under Section 3261 of
P.D. No. 1529.

Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the
creditor as an accepted equivalent of the performance of the obligation. It is a special mode of
payment where the debtor offers another thing to the creditor, who accepts it as an equivalent of
the payment of an outstanding debt. In its modern concept, what actually takes place in dacion
en pago is an objective novation of the obligation where the thing offered as an accepted
equivalent of the performance of an obligation is considered as the object of the contract of sale,
while the debt is considered as the purchase price.62

It must also be noted that portions of the subject property had already been sold to third persons
who, like DBT, are innocent purchasers in good faith and for value, relying on the certificates of
title shown to them, and who had no knowledge of any defect in the title of the vendor, or of
facts sufficient to induce a reasonably prudent man to inquire into the status of the subject
property.63 To disregard these circumstances simply on the basis of alleged continuous and
adverse possession of respondents would not only be inimical to the rights of the
aforementioned titleholders, but would ultimately wreak havoc on the stability of the Torrens
system of registration.

A final note.
While the Torrens system is not a mode of acquiring title, but merely a system of registration of
titles to lands, justice and equity demand that the titleholder should not be made to bear the
unfavorable effect of the mistake or negligence of the State's agents, in the absence of proof of
his complicity in a fraud or of manifest damage to third persons. The real purpose of the Torrens
system is to quiet title to land and put a stop forever to any question as to the legality of the title,
except claims that were noted in the certificate at the time of the registration or that may arise
subsequent thereto. Otherwise, the integrity of the Torrens system would forever be sullied by
the ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have
regularly performed their duties.64Thus, where innocent third persons, relying on the correctness
of the certificate of title thus issued, acquire rights over the property, the court cannot disregard
those rights and order the cancellation of the certificate. The effect of such outright cancellation
will be to impair public confidence in the certificate of title. The sanctity of the Torrens system
must be preserved; otherwise, everyone dealing with the property registered under the system
will have to inquire in every instance on whether the title had been regularly or irregularly
issued, contrary to the evident purpose of the law. Every person dealing with the registered land
may safely rely on the correctness of the certificate of title issued therefor, and the law will in no
way oblige him to go behind the certificate to determine the condition of the property. 65

WHEREFORE, the instant Petition is GRANTED and the assailed Court of Appeals Decision
dated October 25, 2004 is hereby REVERSED and SET ASIDE. A new judgment is hereby
entered DISMISSING the Complaint filed by the respondents for lack of merit.

SO ORDERED.
G.R. No. 175073 August 15, 2011

ESTATE OF MARGARITA D. CABACUNGAN, represented by LUZ LAIGO-ALI, Petitioner,

vs.
MARILOU LAIGO, PEDRO ROY LAIGO, STELLA BALAGOT and SPOUSES MARIO B.
CAMPOS AND JULIA S. CAMPOS, Respondents.

CARPIO,* J.,

BRION,**

SERENO,***JJ.

DECISION

PERALTA, J.:

This Petition for Review under Rule 45 of the Rules of Court assails the October 13, 2006
Decision1 of the Court of Appeals in CA-G.R. CV No. 72371. The assailed decision affirmed the
July 2, 2001 judgment2 rendered by the Regional Trial Court of La Union, Branch 33 in Civil
Case No. 1031-BG – a complaint for annulment of sale of real property, recovery of ownership
and possession, cancellation of tax declarations and damages filed by Margarita
Cabacungan,3 represented by her daughter, Luz Laigo-Ali against Marilou Laigo and Pedro Roy
Laigo, respondents herein, and against Estella Balagot,4 and the spouses Mario and Julia
Campos.

The facts follow.

Margarita Cabacungan (Margarita) owned three parcels of unregistered land in Paringao and in
Baccuit, Bauang, La Union, each measuring 4,512 square meters, 1,986 square meters and
3,454 square meters. The properties were individually covered by tax declaration all in her
name.5 Sometime in 1968, Margarita’s son, Roberto Laigo, Jr. (Roberto), applied for a non-
immigrant visa to the United States, and to support his application, he allegedly asked Margarita
to transfer the tax declarations of the properties in his name.6 For said purpose, Margarita,
unknown to her other children, executed an Affidavit of Transfer of Real Property whereby the
subject properties were transferred by donation to Roberto.7 Not long after, Roberto’s visa was
issued and he was able to travel to the U.S. as a tourist and returned in due time. In 1979, he
adopted respondents Pedro Laigo (Pedro) and Marilou Laigo (Marilou),8 and then he married
respondent Estella Balagot.

In July 1990, Roberto sold the 4,512 sq m property in Baccuit to the spouses Mario and Julia
Campos for ₱23,000.00.9 Then in August 1992, he sold the 1,986 sq m and 3,454 sq m lots in
Paringao, respectively, to Marilou for ₱100,000.00 and to Pedro for ₱40,000.00.10 Allegedly,
these sales were not known to Margarita and her other children.11

It was only in August 1995, at Roberto’s wake, that Margarita came to know of the sales as told
by Pedro himself.12In February 1996, Margarita, represented by her daughter, Luz, instituted the
instant complaint for the annulment of said sales and for the recovery of ownership and
possession of the subject properties as well as for the cancellation of Ricardo’s tax declarations.
Margarita admitted having accommodated Roberto’s request for the transfer of the properties to
his name, but pointed out that the arrangement was only for the specific purpose of supporting
his U.S. visa application. She emphasized that she never intended to divest herself of
ownership over the subject lands and, hence, Roberto had no right to sell them to respondents
and the Spouses Campos. She likewise alleged that the sales, which were fictitious and
simulated considering the gross inadequacy of the stipulated price, were fraudulently entered
into by Roberto. She imputed bad faith to Pedro, Marilou and the Spouses Campos as buyers of
the lots, as they supposedly knew all along that Roberto was not the rightful owner of the
properties.13 Hence, she principally prayed that the sales be annulled; that Roberto’s tax
declarations be cancelled; and that the subject properties be reconveyed to her.14
The Spouses Campos advanced that they were innocent purchasers for value and in good faith,
and had merely relied on Roberto’s representation that he had the right to sell the property; and
that, hence, they were not bound by whatever agreement entered by Margarita with her son.
They posited that the alleged gross inadequacy of the price would not invalidate the sale absent
a vitiation of consent or proof of any other agreement. Further, they noted that Margarita’s claim
was already barred by prescription and laches owing to her long inaction in recovering the
subject properties. Finally, they believed that inasmuch as Roberto had already passed away,
Margarita must have, instead, directed her claim against his estate.15

In much the same way, Marilou and Pedro,16 who likewise professed themselves to be buyers in
good faith and for value, believed that Margarita’s cause of action had already been barred by
laches, and that even assuming the contrary, the cause of action was nevertheless barred by
prescription as the same had accrued way back in 1968 upon the execution of the affidavit of
transfer by virtue of which an implied trust had been created. In this regard, they emphasized
that the law allowed only a period of ten (10) years within which an action to recover ownership
of real property or to enforce an implied trust thereon may be brought, but Margarita merely let it
pass.17

On February 3, 1999, prior to pre-trial, Margarita and the Spouses Campos amicably entered
into a settlement whereby they waived their respective claims against each other.18 Margarita
died two days later and was forthwith substituted by her estate.19 On February 8, 1999, the trial
court rendered a Partial Decision20 approving the compromise agreement and dismissing the
complaint against the Spouses Campos. Forthwith, trial on the merits ensued with respect to
Pedro and Marilou.

On July 2, 2001, the trial court rendered judgment dismissing the complaint as follows:

WHEREFORE, in view of the foregoing considerations, the complaint is DISMISSED.21

The trial court ruled that the 1968 Affidavit of Transfer operated as a simple transfer of the
subject properties from Margarita to Roberto. It found no express trust created between Roberto
and Margarita by virtue merely of the said document as there was no evidence of another
document showing Roberto’s undertaking to return the subject properties. Interestingly, it
concluded that, instead, an "implied or constructive trust" was created between the parties, as if
affirming that there was indeed an agreement – albeit unwritten – to have the properties
returned to Margarita in due time. 22

Moreover, the trial court surmised how Margarita could have failed to recover the subject
properties from Roberto at any time between 1968, following the execution of the Affidavit of
Transfer, and Roberto’s return from the United States shortly thereafter. Finding Margarita guilty
of laches by such inaction, the trial court barred recovery from respondents who were found to
have acquired the properties supposedly in good faith and for value.23 It also pointed out that
recovery could no longer be pursued in this case because Margarita had likewise exhausted the
ten-year prescriptive period for reconveyance based on an implied trust which had commenced
to run in 1968 upon the execution of the Affidavit of Transfer.24 Finally, it emphasized that mere
inadequacy of the price as alleged would not be a sufficient ground to annul the sales in favor of
Pedro and Marilou absent any defect in consent.25

Aggrieved, petitioner appealed to the Court of Appeals which, on October 13, 2006, affirmed the
trial court’s disposition. The appellate court dismissed petitioner’s claim that Roberto was merely
a trustee of the subject properties as there was no evidence on record supportive of the
allegation that Roberto merely borrowed the properties from Margarita upon his promise to
return the same on his arrival from the United States. Further, it hypothesized that granting the
existence of an implied trust, still Margarita’s action thereunder had already been circumscribed
by laches. 26

Curiously, while the appellate court had found no implied trust relation in the transaction
between Margarita and Roberto, nevertheless, it held that the ten-year prescriptive period under
Article 1144 of the Civil Code, in relation to an implied trust created under Article 1456, had
already been exhausted by Margarita because her cause of action had accrued way back in
1968; and that while laches and prescription as defenses could have availed against Roberto,
the same would be unavailing against Pedro and Marilou because the latter were supposedly
buyers in good faith and for value.27 It disposed of the appeal, thus:

WHEREFORE, the Appeal is hereby DENIED. The assailed Decision dated 2 July 2001 of the
Regional Trial Court of Bauang, La Union, Branch 33 is AFFIRMED.

SO ORDERED.28

Hence, the instant recourse imputing error to the Court of Appeals in holding: (a) that the
complaint is barred by laches and prescription; (b) that the rule on innocent purchaser for value
applies in this case of sale of unregistered land; and (c) that there is no evidence to support the
finding that there is an implied trust created between Margarita and her son Roberto.29

Petitioner posits that the Court of Appeals should not have haphazardly applied the doctrine of
laches and failed to see that the parties in this case are bound by familial ties. They assert that
laches must not be applied when an injustice would result from it. Petitioner believes that the
existence of such confidential relationship precludes a finding of unreasonable delay on
Margarita’s part in enforcing her claim, especially in the face of Luz’s testimony that she and
Margarita had placed trust and confidence in Roberto. Petitioner also refutes the Court of
Appeals’ finding that there was a donation of the properties to Roberto when the truth is that the
subject properties were all that Margarita possessed and that she could not have failed to
provide for her other children nor for means by which to support herself. It reiterates that the
transfer to Roberto was only an accommodation so that he could submit proof to support his
U.S. visa application.

On the issue of prescription, petitioner advances that it runs from the time Roberto, as trustee,
has repudiated the trust by selling the properties to respondents in August 15, 1992; that hence,
the filing of the instant complaint in 1996 was well within the prescriptive period. Finally,
petitioner states that whether a buyer is in good or bad faith is a matter that attains relevance in
sales of registered land, as corollary to the rule that a purchaser of unregistered land
uninformed of the seller’s defective title acquires no better right than such seller.

Respondents stand by the ruling of the Court of Appeals. In their Comment, they theorize that if
indeed Margarita and Roberto had agreed to have the subject properties returned following the
execution of the Affidavit of Transfer, then there should have been a written agreement evincing
such intention of the parties. They note that petitioner’s reliance on the Affidavit of Transfer as
well as on the alleged unwritten agreement for the return of the properties must fail, simply
because they are not even parties to it. Be that as it may, the said document had effectively
transferred the properties to Roberto who, in turn, had acquired the full capacity to sell them,
especially since these properties could well be considered as Roberto’s inheritance from
Margarita who, on the contrary, did have other existing properties in her name. Moreover, they
believe that the liberal application of the rule on laches between family members does not apply
in the instant case because there is no fiduciary relationship and privity between them and
Margarita.

There is merit in the petition.

To begin with, the rule is that the latitude of judicial review under Rule 45 generally excludes
factual and evidentiary reevaluation, and the Court ordinarily abides by the uniform conclusions
of the trial court and the appellate court. Yet, in the case at bar, while the courts below have
both arrived at the dismissal of petitioner’s complaint, there still remains unsettled the ostensible
incongruence in their respective factual findings. It thus behooves us to be thorough both in
reviewing the records and in appraising the evidence, especially since an opposite conclusion is
warranted and, as will be shown, justified.

A trust is the legal relationship between one person having an equitable ownership of property
and another person owning the legal title to such property, the equitable ownership of the former
entitling him to the performance of certain duties and the exercise of certain powers by the
latter.30 Trusts are either express or implied.31 Express or direct trusts are created by the direct
and positive acts of the parties, by some writing or deed, or will, or by oral declaration in words
evincing an intention to create a trust.32 Implied trusts – also called "trusts by operation of law,"
"indirect trusts" and "involuntary trusts" – arise by legal implication based on the presumed
intention of the parties or on equitable principles independent of the particular intention of the
parties.33 They are those which, without being expressed, are deducible from the nature of the
transaction as matters of intent or, independently of the particular intention of the parties, as
being inferred from the transaction by operation of law basically by reason of equity.34

Implied trusts are further classified into constructive trusts and resulting trusts. Constructive
trusts, on the one hand, come about in the main by operation of law and not by agreement or
intention. They arise not by any word or phrase, either expressly or impliedly, evincing a direct
intention to create a trust, but one which arises in order to satisfy the demands of justice. 35 Also
known as trusts ex maleficio, trusts ex delicto and trusts de son tort, they are construed against
one who by actual or constructive fraud, duress, abuse of confidence, commission of a wrong or
any form of unconscionable conduct, artifice, concealment of questionable means, or who in
any way against equity and good conscience has obtained or holds the legal right to property
which he ought not, in equity and good conscience, hold and enjoy.36 They are aptly
characterized as "fraud-rectifying trust,"37 imposed by equity to satisfy the demands of
justice38 and to defeat or prevent the wrongful act of one of the parties.39 Constructive trusts are
illustrated in Articles 1450, 1454, 1455 and 1456.40

On the other hand, resulting trusts arise from the nature or circumstances of the consideration
involved in a transaction whereby one person becomes invested with legal title but is obligated
in equity to hold his title for the benefit of another. This is based on the equitable doctrine that
valuable consideration and not legal title is determinative of equitable title or interest and is
always presumed to have been contemplated by the parties.41 Such intent is presumed as it is
not expressed in the instrument or deed of conveyance and is to be found in the nature of their
transaction.42 Implied trusts of this nature are hence describable as "intention-enforcing
trusts."43 Specific examples of resulting trusts may be found in the Civil Code, particularly
Articles 1448, 1449, 1451, 1452 and 1453.44

Articles 1448 to 1456 of the Civil Code enumerate cases of implied trust, but the list according
to Article 1447 is not exclusive of others which may be established by the general law on trusts
so long as the limitations laid down in Article 1442 are observed,45 that is, that they be not in
conflict with the New Civil Code, the Code of Commerce, the Rules of Court and special laws. 46

While resulting trusts generally arise on failure of an express trust or of the purpose thereof, or
on a conveyance to one person upon a consideration from another (sometimes referred to as a
"purchase-money resulting trust"), they may also be imposed in other circumstances such that
the court, shaping judgment in its most efficient form and preventing a failure of justice, must
decree the existence of such a trust.47 A resulting trust, for instance, arises where, there being
no fraud or violation of the trust, the circumstances indicate intent of the parties that legal title in
one be held for the benefit of another.48 It also arises in some instances where the underlying
transaction is without consideration, such as that contemplated in Article 144949 of the Civil
Code. Where property, for example, is gratuitously conveyed for a particular purpose and that
purpose is either fulfilled or frustrated, the court may affirm the resulting trust in favor of the
grantor or transferor,50 where the beneficial interest in property was not intended to vest in the
grantee.51

Intention – although only presumed, implied or supposed by law from the nature of the
transaction or from the facts and circumstances accompanying the transaction, particularly the
source of the consideration – is always an element of a resulting trust52 and may be inferred
from the acts or conduct of the parties rather than from direct expression of conduct. 53 Certainly,
intent as an indispensable element, is a matter that necessarily lies in the evidence, that is, by
evidence, even circumstantial, of statements made by the parties at or before the time title
passes.54 Because an implied trust is neither dependent upon an express agreement nor
required to be evidenced by writing,55 Article 145756 of our Civil Code authorizes the admission
of parole evidence to prove their existence. Parole evidence that is required to establish the
existence of an implied trust necessarily has to be trustworthy and it cannot rest on loose,
equivocal or indefinite declarations.57

Thus, contrary to the Court of Appeals’ finding that there was no evidence on record showing
that an implied trust relation arose between Margarita and Roberto, we find that petitioner
before the trial court, had actually adduced evidence to prove the intention of Margarita to
transfer to Roberto only the legal title to the properties in question, with attendant expectation
that Roberto would return the same to her on accomplishment of that specific purpose for which
the transaction was entered into. The evidence of course is not documentary, but rather
testimonial.

We recall that the complaint before the trial court alleged that the 1968 Affidavit of Transfer was
executed merely to accommodate Roberto’s request to have the properties in his name and
thereby produce proof of ownership of certain real properties in the Philippines to support his
U.S. visa application. The agreement, the complaint further stated, was for Margarita to transfer
the tax declarations of the subject properties to Roberto for the said purpose and without the
intention to divest her of the rights of ownership and dominion.58 Margarita, however, died
before trial on the merits ensued;59 yet the allegation was substantiated by the open-court
statements of her daughter, Luz, and of her niece, Hilaria Costales (Hilaria), a disinterested
witness.

In her testimony, Luz, who affirmed under oath her own presence at the execution of the
Affidavit of Transfer, described the circumstances under which Margarita and Roberto entered
into the agreement. She narrated that Roberto had wanted to travel to the U.S and to show the
embassy proof of his financial capacity, he asked to "borrow" from Margarita the properties
involved but upon the condition that he would give them back to her upon his arrival from the
United States. She admitted that Roberto’s commitment to return the properties was not put in
writing because they placed trust and confidence in him, and that while she had spent most of
her time in Mindanao since she married in 1956, she would sometimes come to La Union to see
her mother but she never really knew whether at one point or another her mother had
demanded the return of the properties from Roberto.60 She further asserted that even after
Roberto’s arrival from the United States, it was Margarita who paid off the taxes on the subject
properties and that it was only when her health started to deteriorate that Roberto had taken up
those obligations.61 Hilaria’s testimony ran along the same line. Like Luz, she was admittedly
present at the execution of the Affidavit of Transfer which took place at the house she shared
with Jacinto Costales, the notarizing officer who was her own brother. She told that Roberto at
the time had wanted to travel to the U.S. but did not have properties in the Philippines which he
could use to back up his visa application; as accommodation, Margarita "lent" him the tax
declarations covering the properties but with the understanding that upon his return he would
give them back to Margarita. She professed familiarity with the properties involved because one
of them was actually sitting close to her own property.62

While indeed at one point at the stand both of Luz‘s and Hilaria’s presence at the execution of
the affidavit had been put to test in subtle interjections by respondents’ counsel to the effect that
their names and signatures did not appear in the Affidavit of Transfer as witnesses, this, to our
mind, is of no moment inasmuch as they had not been called to testify on the fact of, or on the
contents of, the Affidavit of Transfer or its due execution. Rather, their testimony was offered to
prove the circumstances surrounding its execution – the circumstances from which could be
derived the unwritten understanding between Roberto and Margarita that by their act, no
absolute transfer of ownership would be effected. Besides, it would be highly unlikely for
Margarita to institute the instant complaint if it were indeed her intention to vest in Roberto, by
virtue of the Affidavit of Transfer, absolute ownership over the covered properties.

It is deducible from the foregoing that the inscription of Roberto’s name in the Affidavit of
Transfer as Margarita’s transferee is not for the purpose of transferring ownership to him but
only to enable him to hold the property in trust for Margarita. Indeed, in the face of the credible
and straightforward testimony of the two witnesses, Luz and Hilaria, the probative value of the
ownership record forms in the names of respondents, together with the testimony of their
witness from the municipal assessor’s office who authenticated said forms, are utterly minimal
to show Roberto’s ownership. It suffices to say that respondents did not bother to offer evidence
that would directly refute the statements made by Luz and Hilaria in open court on the
circumstances underlying the 1968 Affidavit of Transfer.

As a trustee of a resulting trust, therefore, Roberto, like the trustee of an express passive trust,
is merely a depositary of legal title having no duties as to the management, control or
disposition of the property except to make a conveyance when called upon by the cestui que
trust.63 Hence, the sales he entered into with respondents are a wrongful conversion of the trust
property and a breach of the trust. The question is: May respondents now be compelled to
reconvey the subject properties to petitioner? We rule in the affirmative.

Respondents posit that petitioner’s claim may never be enforced against them as they had
purchased the properties from Roberto for value and in good faith. They also claim that, at any
rate, petitioner’s cause of action has accrued way back in 1968 upon the execution of the
Affidavit of Transfer and, hence, with the 28 long years that since passed, petitioner’s claim had
long become stale not only on account of laches, but also under the rules on extinctive
prescription governing a resulting trust. We do not agree.

First, fundamental is the rule in land registration law that the issue of whether the buyer of realty
is in good or bad faith is relevant only where the subject of the sale is registered land and the
purchase was made from the registered owner whose title to the land is clean, in which case the
purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in
good faith and for value.64 Since the properties in question are unregistered lands, respondents
purchased the same at their own peril. Their claim of having bought the properties in good faith,
i.e., without notice that there is some other person with a right to or interest therein, would not
protect them should it turn out, as it in fact did in this case, that their seller, Roberto, had no right
to sell them.

Second, the invocation of the rules on limitation of actions relative to a resulting trust is not on
point because the resulting trust relation between Margarita and Roberto had been extinguished
by the latter’s death. A trust, it is said, terminates upon the death of the trustee, particularly
where the trust is personal to him.65 Besides, prescription and laches, in respect of this resulting
trust relation, hardly can impair petitioner’s cause of action. On the one hand, in accordance
with Article 114466 of the Civil Code, an action for reconveyance to enforce an implied trust in
one’s favor prescribes in ten (10) years from the time the right of action accrues, as it is based
upon an obligation created by law.67 It sets in from the time the trustee performs unequivocal
acts of repudiation amounting to an ouster of the cestui que trust which are made known to the
latter.68 In this case, it was the 1992 sale of the properties to respondents that comprised the act
of repudiation which, however, was made known to Margarita only in 1995 but nevertheless
impelled her to institute the action in 1996 – still well within the prescriptive period. Hardly can
be considered as act of repudiation Roberto’s open court declaration which he made in the 1979
adoption proceedings involving respondents to the effect that he owned the subject
properties,69 nor even the fact that he in 1977 had entered into a lease contract on one of the
disputed properties which contract had been subject of a 1996 decision of the Court of
Appeals.70 These do not suffice to constitute unequivocal acts in repudiation of the trust.

On the other hand, laches, being rooted in equity, is not always to be applied strictly in a way
that would obliterate an otherwise valid claim especially between blood relatives. The existence
of a confidential relationship based upon consanguinity is an important circumstance for
consideration; hence, the doctrine is not to be applied mechanically as between near
relatives.71 Adaza v. Court of Appeals72 held that the relationship between the parties therein,
who were siblings, was sufficient to explain and excuse what would otherwise have been a long
delay in enforcing the claim and the delay in such situation should not be as strictly construed
as where the parties are complete strangers vis-a-vis each other; thus, reliance by one party
upon his blood relationship with the other and the trust and confidence normally connoted in our
culture by that relationship should not be taken against him. Too, Sotto v. Teves73 ruled that the
doctrine of laches is not strictly applied between near relatives, and the fact that the parties are
connected by ties of blood or marriage tends to excuse an otherwise unreasonable delay.

Third, there is a fundamental principle in agency that where certain property entrusted to an
agent and impressed by law with a trust in favor of the principal is wrongfully diverted, such trust
follows the property in the hands of a third person and the principal is ordinarily entitled to
pursue and recover it so long as the property can be traced and identified, and no superior
equities have intervened. This principle is actually one of trusts, since the wrongful conversion
gives rise to a constructive trust which pursues the property, its product or proceeds, and
permits the beneficiary to recover the property or obtain damages for the wrongful conversion of
the property. Aptly called the "trust pursuit rule," it applies when a constructive or resulting trust
has once affixed itself to property in a certain state or form.74
Hence, a trust will follow the property – through all changes in its state and form as long as such
property, its products or its proceeds, are capable of identification, even into the hands of a
transferee other than a bona fidepurchaser for value, or restitution will be enforced at the
election of the beneficiary through recourse against the trustee or the transferee personally.
This is grounded on the principle in property law that ownership continues and can be asserted
by the true owner against any withholding of the object to which the ownership pertains, whether
such object of the ownership is found in the hands of an original owner or a transferee, or in a
different form, as long as it can be identified.75 Accordingly, the person to whom is made a
transfer of trust property constituting a wrongful conversion of the trust property and a breach of
the trust, when not protected as a bona fide purchaser for value, is himself liable and
accountable as a constructive trustee. The liability attaches at the moment of the transfer of
trust property and continues until there is full restoration to the beneficiary. Thus, the transferee
is charged with, and can be held to the performance of the trust, equally with the original
trustee, and he can be compelled to execute a reconveyance.76

This scenario is characteristic of a constructive trust imposed by Article 145677 of the Civil Code,
which impresses upon a person obtaining property through mistake or fraud the status of an
implied trustee for the benefit of the person from whom the property comes. Petitioner, in laying
claim against respondents who are concededly transferees who professed having validly
derived their ownership from Roberto, is in effect enforcing against respondents a constructive
trust relation that arose by virtue of the wrongful and fraudulent transfer to them of the subject
properties by Roberto.

Aznar Brother Realty Co. v. Aying,78 citing Buan Vda. de Esconde v. Court of
Appeals,79 explained this form of implied trust as follows:

A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a
typical trust, confidence is reposed in one person who is named a trustee for the benefit of
another who is called the cestui que trust, respecting property which is held by the trustee for
the benefit of the cestui que trust. A constructive trust, unlike an express trust, does not
emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a
trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a
promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust
nor intends holding the property for the beneficiary.

xxxx

x x x [C]onstructive trusts are created by the construction of equity in order to satisfy the
demands of justice and prevent unjust enrichment. They arise contrary to intention against one
who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which
he ought not, in equity and good conscience, to hold.80

It is settled that an action for reconveyance based on a constructive implied trust prescribes in
10 years likewise in accordance with Article 1144 of the Civil Code. Yet not like in the case of a
resulting implied trust and an express trust, prescription supervenes in a constructive implied
trust even if the trustee does not repudiate the relationship. In other words, repudiation of said
trust is not a condition precedent to the running of the prescriptive period.81

As to when the prescriptive period commences to run, Crisostomo v. Garcia82 elucidated as

follows:

When property is registered in another's name, an implied or constructive trust is created by law
in favor of the true owner. The action for reconveyance of the title to the rightful owner
prescribes in 10 years from the issuance of the title. An action for reconveyance based on
implied or constructive trust prescribes in ten years from the alleged fraudulent registration or
date of issuance of the certificate of title over the property.1avvphi1

It is now well settled that the prescriptive period to recover property obtained by fraud or
mistake, giving rise to an implied trust under Art. 1456 of the Civil Code, is 10 years pursuant to
Art. 1144. This ten-year prescriptive period begins to run from the date the adverse party
repudiates the implied trust, which repudiation takes place when the adverse party registers the
land.83

From the foregoing, it is clear that an action for reconveyance under a constructive implied trust
in accordance with Article 1456 does not prescribe unless and until the land is registered or the
instrument affecting the same is inscribed in accordance with law, inasmuch as it is what binds
the land and operates constructive notice to the world.84 In the present case, however, the lands
involved are concededly unregistered lands; hence, there is no way by which Margarita, during
her lifetime, could be notified of the furtive and fraudulent sales made in 1992 by Roberto in
favor of respondents, except by actual notice from Pedro himself in August 1995. Hence, it is
from that date that prescription began to toll. The filing of the complaint in February 1996 is well
within the prescriptive period. Finally, such delay of only six (6) months in instituting the present
action hardly suffices to justify a finding of inexcusable delay or to create an inference that
Margarita has allowed her claim to stale by laches.

WHEREFORE, the Petition is GRANTED. The October 13, 2006 Decision of the Court of
Appeals in CA-G.R. CV No. 72371, affirming the July 2, 2001 judgment of the Regional Trial
Court of La Union, Branch 33 in Civil Case No. 1031-BG, is REVERSED and SET ASIDE, and
a new one is entered (a) directing the cancellation of the tax declarations covering the subject
properties in the name of Roberto D. Laigo and his transferees; (b) nullifying the deeds of sale
executed by Roberto D. Laigo in favor of respondents Pedro Roy Laigo and Marilou Laigo; and
(c) directing said respondents to execute reconveyance in favor of petitioner.

SO ORDERED.
G.R. No. 154645 July 13, 2004

MILAGROS JOAQUINO a.k.a. MILAGROS J. REYES, petitioner,

vs.
LOURDES REYES, MERCEDES, MANUEL, MIRIAM and RODOLFO JR. -- all surnamed
REYES, respondents.

DECISION

PANGANIBAN, J.:

Though registered in the paramour’s name, property acquired with the salaries and earnings of
a husband belongs to his conjugal partnership with the legal spouse. The filiation of the
paramour’s children must be settled in a probate or special proceeding instituted for the
purpose, not in an action for recovery of property.

The Case

Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to nullify
the February 4, 2002 Decision2 and the August 14, 2002 Resolution3 of the Court of Appeals
(CA) in CA-GR CV No. 45883. The CA disposed as follows:

"WHEREFORE, premises considered, the appeal is hereby partially DENIED and

the Decision dated May 30, 1994, of the Regional Trial Court of Pasay City, Branch 111
in Civil Case No. 9722-P is MODIFIED to read, as follows:

"WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the

defendant as follows:

‘a. Declaring the house and lot registered under Transfer Certificate of Title No.
90293 (26627-A) of the Registry of Deeds of Metro Manila, District IV as conjugal
partnership property of the late Spouses Rodolfo and Lourdes Reyes;

‘b. Ordering the [petitioner] to surrender possession of said subject property,

pursuant to the applicable law on succession, to the respective estates of the late
Rodolfo Reyes and Lourdes Reyes and to pay a reasonable rental of P10,000.00
a month, to the same juridical entities, upon their failure to do so until possession
of the property is delivered; and

‘c. To pay [respondents] attorney’s fees in the sum of P20,000.00 and to pay the
costs.’"4

The questioned Resolution, on the other hand, denied petitioner’s Motion for Reconsideration.

The Facts

The CA narrated the facts as follows:

"[Respondents] filed a Complaint for reconveyance and damages, dated January 23,
1982, before the Court of First Instance of Rizal, containing the following allegations:

‘x x x The complaint alleges that [respondent] Lourdes P. Reyes is the widow of

Rodolfo A. Reyes who died on September 12, 1981; that [respondents]
Mercedes, Manuel, Miriam and Rodolfo, Jr. are the legitimate children of
 [respondent] Lourdes P. Reyes and the deceased Rodolfo A. Reyes; that for
years before his death, Rodolfo A. Reyes had illicit relations with [petitioner]
Milagros B. Joaquino; that before his death, x x x Rodolfo A. Reyes was Vice
President and Comptroller of Warner Barnes and Company with an income
of P15,000.00 a month and, after retirement on September 30, 1980, received
from said company benefits and emoluments in the amount of P315,0[1]1.79;
that [respondent] wife was not the recipient of any portion of the said amount.

‘The complaint further alleges that on July 12, 1979, a [D]eed of [S]ale of a
property consisting of a house and lot at BF Homes, Parañaque, Metro Manila
was executed by the spouses Ramiro Golez and Corazon Golez in favor of
[petitioner] Milagros B. Joaquino for which Transfer Certificate of Title No. 90293
of the Register of Deeds of Metro Manila, District IV was issued in the name of
[petitioner] Milagros B. Joaquino; that the funds used to purchase this property
were conjugal funds and earnings of the deceased Rodolfo A. Reyes as
executive of Warner Barnes and Company as [petitioner] Joaquino was without
the means to pay for the same; that [petitioner] executed a Special Power of
Attorney in favor of Rodolfo A. Reyes to mortgage the property to
Commonwealth Insurance Corporation in order to pay the balance of the
purchase price; that said Rodolfo A. Reyes executed a mortgage in favor of
Commonwealth Insurance Corporation for P140,000.00 and to guaranty payment
thereof, he secured a life insurance [policy] with Philam Life Insurance
Corporation for the said amount, assigning the proceeds thereof to
Commonwealth Insurance Corporation; that the monthly amortizations of the
mortgage were paid by said Rodolfo A. Reyes before his death and at the time of
his death, the outstanding balance of P110,000.00 was to be paid out of his
Philam Life Insurance [p]olicy.

‘The complaint finally alleges that the deceased had two cars in [petitioner’s]
possession and that the real and personal properties in [petitioner’s] possession
are conjugal partnership propert[ies] of the spouses Lourdes P. Reyes and
Rodolfo A. Reyes and one-half belongs exclusively to [respondent] Lourdes P.
Reyes and the other half to the estate of Rodolfo A. Reyes to be apportioned
among the [other respondents] as his forced heirs. [Respondents] therefore, pray
that the property covered by T.C.T. No. 90293 be declared conjugal property of
the spouses Lourdes P. Reyes and Rodolfo A. Reyes and that [petitioner] be
ordered to reconvey the property in [respondents’] favor; that the two cars in
[petitioner’s] possession be delivered to [respondents] and that [petitioner] be
made to pay actual, compensatory and moral damages to [respondents] as well
as attorney’s fees.’

xxx xxx xxx

"[Petitioner] eventually filed her Answer, dated August 1, 1982, the allegations of which
have been summarized by the trial court in the following manner:

‘In her Answer, [petitioner] Milagros B. Joaquino alleges that she purchased the
real property in question with her own exclusive funds and it was only for
convenience that the late Rodolfo Reyes facilitated the mortgage over the same;
that although the late Rodolfo Reyes paid the monthly amortization of the
mortgage as attorney-in-fact of [petitioner], the money came exclusively from
[her].

‘[Petitioner] further alleges in her answer, by way of special and affirmative

defenses, that during all the nineteen (19) years that [she] lived with Rodolfo
Reyes from 1962 continuously up to September 12, 1981 when the latter died,
[petitioner] never had knowledge whatsoever that he was married to someone
else, much less to [respondent] Lourdes P. Reyes; that [petitioner] was never the
beneficiary of the emoluments or other pecuniary benefits of the late Rodolfo
Reyes during his lifetime or after his death because [she] had the financial
capacity to support herself and her children begotten with the late Rodolfo
 Reyes. [Petitioner] prays for a judgment dismissing [respondents’] complaint and
for the latter to pay unto [petitioner] moral and exemplary damages in such
amounts as may be determined during the trial, including atto[r]ney’s fees and
the costs of the suit. x x x.’

xxx xxx xxx

"On February 2, 1993, [respondent] Lourdes Reyes died.

"Subsequently, the trial court granted the complaint based on the following factual
findings:

‘Lourdes Reyes was legally married to Rodolfo Reyes on January 3, 1947 in

Manila. They have four children, namely: Mercedes, Manuel, Miriam and Rodolfo
Jr., all surnamed Reyes and co-[respondents] in this case. Rodolfo Reyes died
on September 12, 1981. At the time of his death, Rodolfo Reyes was living with
his common-law wife, Milagros Joaquino, x x x with whom she begot three (3)
children namely: Jose Romillo, Imelda May and Charina, all surnamed Reyes.

‘During his lifetime, Rodolfo Reyes worked with Marsman and Company and later
transferred to Warner Barnes & Co., where he assumed the position of Vice-
President [Comptroller] until he retired on September 30, 1980. His monthly
salary at Warner Barnes & Co. was P15,000.00 x x x and upon his separation or
retirement from said company, Rodolfo Reyes received a lump sum
of P315,011.79 in full payment and settlement of his separation and retirement
benefits.

‘During the common-law relationship of Rodolfo Reyes and [petitioner] Milagros

Joaquino and while living together, they decided to buy the house and lot
situated at No. 12 Baghdad Street, Phase 3, BF Homes, Parañaque, Metro
Manila. A Deed of Absolute Sale dated July 12, 1979 was executed in favor of
[petitioner] Milagros Joaquino and Transfer Certificate of Title No. S-90293
covering the said property was issued in the name of [petitioner only] on July 20,
1979.

‘To secure the finances with which to pay the purchase price of the property in
the amount of P140,000.00, [petitioner] executed on July 20, 1979, a Special
Power of Attorney in favor of Rodolfo A. Reyes for the latter, as attorney-in-fact,
to secure a loan from the Commonwealth Insurance Company. An application for
mortgage loan was filed by Rodolfo Reyes with the Commonwealth Insurance
Company and a Real Estate Mortgage Contract was executed as collateral to the
mortgage loan. The loan was payable in ten (10) years with a monthly
amortization of P1,166.67. The monthly amortizations were paid by Rodolfo
Reyes and after his death, the balance of P109,797.64 was paid in full to the
Commonwealth Insurance by the Philam Life Insurance Co. as insurer of the
deceased Rodolfo A. Reyes.’"5

On appeal to the CA, petitioner questioned the following findings of the trial court: 1) that the
house and lot had been paid in full from the proceeds of the loan that Rodolfo Reyes obtained
from the Commonwealth Insurance Company; 2) that his salaries and earnings, which were his
and Lourdes’ conjugal funds, paid for the loan and, hence, the disputed property was conjugal;
and 3) that petitioner’s illegitimate children, not having been recognized or acknowledged by
him in any of the ways provided by law, acquired no successional rights to his estate.

Ruling of the Court of Appeals

Affirming the RTC, the CA held that the property had been paid out of the conjugal funds of
Rodolfo and Lourdes because the monthly amortizations for the loan, as well as the premiums
for the life insurance policy that paid for the balance thereof, came from his salaries and
earnings. Like the trial court, it found no sufficient proof that petitioner was financially capable of
buying the disputed property, or that she had actually contributed her own exclusive funds to
pay for it. Hence, it ordered her to surrender possession of the property to the respective
estates of the spouses.

The appellate court, however, held that the trial court should not have resolved the issue of the
filiation and the successional rights of petitioner’s children. Such issues, it said, were not
properly cognizable in an ordinary civil action for reconveyance and damages and were better
ventilated in a probate or special proceeding instituted for the purpose.

Hence, this Petition.6

Issues

Petitioner submits the following issues for the Court’s consideration:

"I.

Whether or not it has been indubitably established in a court of law and trier of facts, the
Regional Trial Court, that petitioner’s three [3] illegitimate children are x x x indeed the
children of the late Rodolfo Reyes.

"II.

Whether or not it is legally permissible for [respondents] to make a mockery of the law by
denying [the] filiations of their [two] 2 illegitimate sisters and one [1] illegitimate brother
when in fact the very complaint filed by their mother, the lawful wife, Lourdes[,] shows
that her husband Rodolfo had illicit relations with the petitioner Milagros and had lived
with her in a house and lot at Baghdad Street.

"III.

Whether or not the fact that the Court of Appeals made a finding that the house and lot
at Baghdad Street are conjugal property of lawfully wedded Rodolfo and Lourdes
including the insurance proceeds which was used to pay the final bill for the house and
lot, this will prevail over Articles 19 and 21 of the Civil Code.

"IV.

Whether or not the Supreme Court should enforce the rule that the parties to a lawsuit
should only tell the truth at the trial and in [their] pleadings x x x.

"V.

Whether or not the legitimate children of the late Rodolfo Reyes should respect their
father’s desire that his illegitimate children should have a home or a roof over their
heads in consonance with his duty to love, care and provide for his children even after
his death."7

The issues boil down to the following: 1) the nature of the house and lot on Baghdad Street (BF
Homes Parañaque, Metro Manila); and 2) the propriety of ruling on the filiation and the
successional rights of petitioner’s children.

The Court’s Ruling

The Petition is devoid of merit.

First Issue:
The Conjugal Nature of the Disputed Property

Before tackling the merits, we must first point out some undisputed facts and guiding principles.
As to the facts, it is undisputed that the deceased Rodolfo Reyes was legally married to
Respondent Lourdes Reyes on January 3, 1947.8 It is also admitted that for 19 years or so, and
while their marriage was subsisting, he was actually living with petitioner. It was during this time,
in 1979, that the disputed house and lot was purchased and registered in petitioner’s name.

Plainly, therefore, the applicable law is the Civil Code of the Philippines. Under Article 145
thereof, a conjugal partnership of gains (CPG) is created upon marriage9 and lasts until the legal
union is dissolved by death, annulment, legal separation or judicial separation of
property.10 Conjugal properties are by law owned in common by the husband and wife.11 As to
what constitutes such properties are laid out in Article 153 of the Code, which we quote:

"(1) That which is acquired by onerous title during the marriage at the expense of the
common fund, whether the acquisition be for the partnership, or for only one of the
spouses;

(2) That which is obtained by the industry, or work, or as salary of the spouses, or of
either of them;

(3) The fruits, rents or interests received or due during the marriage, coming from the
common property or from the exclusive property of each spouse."

Moreover, under Article 160 of the Code, all properties of the marriage, unless proven to pertain
to the husband or the wife exclusively, are presumed to belong to the CPG. For the rebuttable
presumption to arise, however, the properties must first be proven to have been acquired during
the existence of the marriage.12

The law places the burden of proof13 on the plaintiffs (respondents herein) to establish their
claim by a preponderance of evidence14 -- evidence that has greater weight or is more
convincing than that which is offered to oppose it.15

On the other hand, Article 14416 of the Civil Code mandates a co-ownership between a man and
a woman who are living together but are not legally married. Prevailing jurisprudence holds,
though, that for Article 144 to apply, the couple must not be incapacitated to contract
marriage.17 It has been held that the Article is inapplicable to common-law relations amounting
to adultery or concubinage, as in this case. The reason therefor is the absurdity of creating a co-
ownership in cases in which there exists a prior conjugal partnership between the man and his
lawful wife.18

In default of Article 144 of the Civil Code, Article 148 of the Family Code has been
applied.19 The latter Article provides:

"Art. 148. In cases of cohabitation not falling under the preceding Article, only the
properties acquired by both of the parties through their actual joint contribution of money,
property, or industry shall be owned by them in common in proportion to their respective
contributions. In the absence of proof to the contrary, their contributions and
corresponding shares are presumed to be equal. The same rule and presumption shall
apply to joint deposits of money and evidence of credit.

"If one of the parties is validly married to another, his or her share in the co-ownership
shall accrue to the absolute community or conjugal partnership existing in such valid
marriage. If the party which acted in bad faith is not validly married to another, his or her
share shall be forfeited in the manner provided in the last paragraph of the preceding
Article.

"The foregoing rules on forfeiture shall likewise apply even if both parties are in bad
faith."

Thus, when a common-law couple have a legal impediment to marriage, only the property
acquired by them -- through their actual joint contribution of money, property or industry -- shall
be owned by them in common and in proportion to their respective contributions.
With these facts and principles firmly settled, we now proceed to the merits of the first issue.

The present controversy hinges on the source of the funds paid for the house and lot in
question. Upon the resolution of this issue depends the determination of whether the property is
conjugal (owned by Rodolfo and Lourdes) or exclusive (owned by Milagros) or co-owned by
Rodolfo and Milagros.

The above issue, which is clearly factual, has been passed upon by both the trial and the
appellate courts, with similar results in favor of respondents. Such finding is generally
conclusive; it is not the function of this Court to review questions of fact. 20

Moreover, it is well-settled that only errors of law and not of facts are reviewable by this Court in
cases brought to it from the Court of Appeals or under Rule 45 of the Rules of Court. 21 This
principle applies with greater force herein, because the CA came up with the same factual
findings as those of the RTC.

Even then, heeding petitioner’s plea, we have gone through the pleadings and the evidence
presented by the parties to find out if there is any circumstance that might warrant a reversal of
the factual findings. Unfortunately for petitioner, we have found none.

Indeed, a preponderance of evidence has duly established that the disputed house and lot was
paid by Rodolfo Reyes, using his salaries and earnings. By substantial evidence, respondents
showed the following facts: 1) that Rodolfo was gainfully employed as comptroller at Warner,
Barnes and Co., Inc. until his retirement on September 30, 1980, upon which he received a
sizeable retirement package;22 2) that at exactly the same time the property was allegedly
purchased,23 he applied for a mortgage loan24 -- intended for "housing"25 -- from the
Commonwealth Insurance Company; 3) that he secured the loan with a real estate
mortgage26 over the same property; 4) that he paid the monthly amortizations for the loan27 as
well as the semi-annual premiums28 for a Philam Life insurance policy, which he was required to
take as additional security; and 5) that with the proceeds of his life insurance policy, the balance
of the loan was paid to Commonwealth by Philam Life Insurance Company.29

All told, respondents have shown that the property was bought during the marriage of Rodolfo
and Lourdes, a fact that gives rise to the presumption that it is conjugal. More important, they
have established that the proceeds of the loan obtained by Rodolfo were used to pay for the
property; and that the loan was, in turn, paid from his salaries and earnings, which were
conjugal funds under the Civil Code.

In contrast, petitioner has failed to substantiate either of her claims -- that she was financially
capable of buying the house and lot, or that she actually contributed to the payments therefor.

Indeed, it does not appear that she was gainfully employed at any time after 196130 when the
property was purchased. Hearsay are the Affidavits31 and the undated Certification32 she had
presented to prove that she borrowed money from her siblings and had earnings from a jewelry
business. Respondents had not been given any opportunity to cross-examine the affiants, who
had not testified on these matters. Based on the rules of evidence, the Affidavits and the
Certification have to be rejected. In fact, they have no probative value.33 The CA was also
correct in disregarding petitioner’s allegation that part of the purchase money had come from
the sale of a drugstore34 four years earlier.

Under the circumstances, therefore, the purchase and the subsequent registration of the realty
in petitioner’s name was tantamount to a donation by Rodolfo to Milagros. By express provision
of Article 739(1) of the Civil Code, such donation was void, because it was "made between
persons who were guilty of adultery or concubinage at the time of the donation."

The prohibition against donations between spouses35 must likewise apply to donations between
persons living together in illicit relations; otherwise, the latter would be better situated than the
former.36 Article 87 of the Family Code now expressly provides thus:

"Art. 87. Every donation or grant of gratuitous advantage, direct or indirect, between the
spouses during the marriage shall be void, except moderate gifts which the spouses
 may give each other on the occasion of any family rejoicing. The prohibition shall also
apply to persons living together as husband and wife without a valid marriage." (Italics
supplied)

Regarding the registration of the property in petitioner’s name, it is enough to stress that a
certificate of title under the Torrens system aims to protect dominion; it cannot be used as an
instrument for the deprivation of ownership.37 It has been held that property is conjugal if
acquired in a common-law relationship during the subsistence of a preexisting legal marriage,
even if it is titled in the name of the common-law wife.38 In this case, a constructive trust is
deemed created under Article 1456 of the Civil Code, which we quote:

"Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by
force of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes."

The registration of the property in petitioner’s name was clearly designed to deprive Rodolfo’s
legal spouse and compulsory heirs of ownership. By operation of law, petitioner is deemed to
hold the property in trust for them. Therefore, she cannot rely on the registration in repudiation
of the trust, for this case is a well-known exception to the principle of conclusiveness of a
certificate of title.39

Second Issue:
Ruling on Illegitimate Filiation
Not Proper

It is petitioner’s alternative submission that her children are entitled to a share in the disputed
property, because they were voluntarily acknowledged by Rodolfo as his children. Claiming that
the issue of her children’s illegitimate filiation was duly established in the trial court, she faults
the CA for ruling that the issue was improper in the instant case.

Her position is untenable.

Indeed, it has been ruled that matters relating to the rights of filiation and heirship must be
ventilated in the proper probate court in a special proceeding instituted precisely for the purpose
of determining such rights.40 Sustaining the appellate court in Agapay v. Palang,41 this Court
held that the status of an illegitimate child who claimed to be an heir to a decedent’s estate
could not be adjudicated in an ordinary civil action which, as in this case, was for the recovery of
property.

Considerations of due process should have likewise deterred the RTC from ruling on the status
of petitioner’s children. It is evident from the pleadings of the parties that this issue was not
presented in either the original42 or the Supplemental Complaint43 for reconveyance of property
and damages; that it was not pleaded and specifically prayed for by petitioner in her
Answers44 thereto; and that it was not traversed by respondents’ Reply to the Supplemental
Complaint.45 Neither did petitioner’s Memorandum,46 which was submitted to the trial court, raise
and discuss this issue. In view thereof, the illegitimate filiation of her children could not have
been duly established by the proceedings as required by Article 887 of the Civil Code.47

In view of the foregoing reasons, the CA cannot be faulted for tackling the propriety of the RTC’s
ruling on the status of the children of petitioner, though she did not assign this matter as an
error. The general rule -- that only errors assigned may be passed upon by an appellate court –
admits of exceptions. Even unassigned errors may be taken up by such court if the
consideration of those errors would be necessary for arriving at a just decision or for serving the
interest of justice.48

The invocation by petitioner of Articles 1949 and 2150 of the Civil Code is also unmeritorious.
Clearly, the illegitimate filiation of her children was not the subject of inquiry and was in fact not
duly established in this case. Thus, she could not have shown that respondents had acted in
bad faith or with intent to prejudice her children. These are conditions necessary to show that an
act constitutes an abuse of rights under Article 19.51 She also failed to show that respondents --
in violation of the provisions of Article 21 of the Civil Code -- had acted in a manner contrary to
morals, good customs or public policy.

Moreover, we note that the issue concerning the applicability of Articles 19 and 21 was not
raised by petitioner in the trial court or even in the CA. Hence, she should not be permitted to
raise it now. Basic is the rule that parties may not bring up on appeal issues that have not been
raised on trial.52

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution of the
Court of Appeals AFFIRMED. Costs against petitioner.

SO ORDERED.
G.R. No. 95748 November 21, 1996

ANASTACIA VDA. DE AVILES, ET AL., petitioners,

vs.
COURT OF APPEALS and CAMILO AVILES, respondents.

PANGANIBAN, J.:

Is the special civil action of Quieting of Title under Rule 64 the proper remedy for settling a
boundary dispute? Did the respondent Court 1 commit a reversible error when it did not declare
the respective rights of the parties over the disputed property in said action?

These are the key issues raised in this petition to review on certiorari the Decision 2 of the
respondent Court promulgated on September 28, 1990 in CA-G.R. CV No. 18155, which
affirmed the decision dated December 29, 1987 of the Regional Trial Court, Branch
38, 3 Lingayen, Pangasinan, dismissing a complaint for quieting of title.

The Facts

In an action for quieting of title commenced before the aforementioned trial court, the following
facts, "stripped of unnecessary verbiage", were established by the respondent Court: 4

PLAINTIFFS aver that they are the actual possessors of a parcel of land situated
in Malawa, Lingayen, Pangasinan, more particularly described as fishpond,
cogonal, unirrigated rice and residential land, bounded on the N by Camilo
Aviles; on the E by Malawa River, on the S by Anastacio Aviles and on the W by
Juana and Apolonio Joaquin, with an area of 18,900 square meters and declared
under Tax Declaration No. 31446. This property is the share of their father,
Eduardo Aviles and brother of the defendant, in the estate of their deceased
parents, Ireneo Aviles and Anastacia Salazar.

SINCE 1957, Eduardo Aviles was in actual possession of the afore-described

property. In fact, the latter mortgaged the same with the Rural Bank and
Philippine National Bank branch in Lingayen. When the property was inspected
by a bank representative, Eduardo Aviles, in the presence of the boundary
owners, namely, defendant Camilo Aviles, Anastacio Aviles and Juana and
Apolonio Joaquin(,) pointed to the inspector the existing earthen dikes as the
boundary limits of the property and nobody objected. When the real estate
mortgage was foreclosed, the property was sold at public auction but this was
redeemed by plaintiffs' mother and the land was subsequently transferred and
declared in her name.

ON March 23, 1983, defendant Camilo Aviles asserted a color of title over the
northern portion of the property with an area of approximately 1,200 square
meters by constructing a bamboo fence (thereon) and moving the earthen dikes,
thereby molesting and disturbing the peaceful possession of the plaintiffs over
said portion.

UPON the other hand, defendant Camilo Aviles admitted the agreement of
partition (Exh. "1") executed by him and his brothers, Anastacio and Eduardo. In
accordance therewith, the total area of the property of their parents which they
divided is 46,795 square meters and the area alloted (sic) to Eduardo Aviles is
16,111 square meters more or less, to Anastacio Aviles is 16,214 square meters
more or less, while the area alloted to defendant Camilo Aviles is 14,470 square
meters more or less. The respective area(s) alloted to them was agreed and
measured before the execution of the agreement but he was not present when
the measurement was made. Defendant agreed to have a smaller area because
his brother Eduardo asked him that he wanted a bigger share because he has
several children to support. The portion in litigation however is part of the share
 given to him in the agreement of partition. At present, he is only occupying an
area of 12,686 square meters which is smaller than his actual share of 14,470
square meters. Tax Declarations Nos. 23575, 481 and 379 covering his property
from 1958 (Exhs. "7", "8" and "9") show that the area of his property is 14,470
square meters. The riceland portion of his land is 13,290 square meters, the
fishpond portion is 500 square meters and the residential portion is 680 square
meters, or a total of 14,470 square meters. That the topography of his land is not
the same, hence, the height of his pilapils are likewise not the same.

5
In its decision dated December 29, 1987, the trial court disposed of the case thus:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering the parties to employ the services of a Land Surveyor of the Bureau
of Lands, Region I, San Fernando, La Union, to relocate and determine the
extent and the boundary limit of the land of the defendant on its southern side in
order that the fourteen thousand four hundred seventy (14,470) square meters
which is the actual area given to the defendant be determined;

2. Ordering the complaint dismissed for lack of basis and merits;

3. Ordering the plaintiffs to pay the defendant the sum of two thousand
(P2,000.00) pesos as attorney's fees and to further pay the costs of the
proceedings;

4. All other claims are denied for lack of basis.

Dissatisfied with the trial court's decision, petitioners appealed to the respondent appellate
Court. In its now-assailed Decision, the Court of Appeals affirmed in part the decision of the trial
court, reasoning that a special civil action for quieting of title is not the proper remedy for settling
a boundary dispute, and that petitioners should have instituted an ejectment suit instead. The
dispositive portion of the impugned Decision reads as follows:

WHEREFORE, in view of the foregoing, the decision dated December 29, 1987
dismissing the complaint is hereby AFFIRMED but without necessarily agreeing
with the ration d'etre (sic) proferred by the Court a quo. The portion thereof
ordering the parties to employ the service of a land surveyor to relocate and
determine the extent and boundary limit of the land of the defendant on its
southern portion in order that the fourteen thousand four hundred seventy
(14,470) square meters which is the actual area given to the defendant be
determined is hereby REVERSED and SET ASIDE. Costs against plaintiffs-
appellants.

The Issues

Disagreeing with the respondent Court, petitioners now raise the following issues: 6

a. Whether or not the Hon. Court of Appeals is correct when it opined that the . . .
complaint for quieting of title instituted by the petitioners against private
respondent before the court a quo is not the proper remedy but rather, it should
be a case for eejectment (sic).

b. Whether or not the Hon. Court of Appeals is correct in rendering a decision,

now subject of the instant petition, without fully determining the respective rights
of the herein parties.

Petitioners deem to be "without basis" the respondent Court's holding that quieting of title is not
the proper remedy in the case a quo. They assert that private respondent is occupying the
disputed lot because he claimed it to be part of his share in the partitioned property of his
parents, whereas petitioners are claiming the said lot as part and parcel of the land allotted to
Eduardo Aviles, petitioners' predecessor-in-interest. They contend that they have been
occupying the aforesaid land as heirs of Eduardo Aviles in "open, actual, continuous, peaceful,
public and adversed (sic) (possession) against the whole world." Further, they argue that, if
indeed the disputed lot belonged to private respondent, why then did it take him "almost 26 long
years from June 27, 1957 or until March 27, 1983" to assert his ownership; why did he not
"assert his ownership" over the property when Eduardo Aviles was still alive; and why did he not
take any "action" when the mortgage over the disputed property was foreclosed? 7

Private respondent corrects the petitioners' claim in regard to the date when he had the bamboo
fence constructed. He alleges that the petitioners maliciously concocted the story that private
respondent had purportedly encroached some 1,200 meters on their property when, in fact, "he
was merely repairing the old bamboo fence existing where it had always been since 1957." 8

The Court's Ruling

First Issue: Quieting of Title Not Proper Remedy

For Settling Boundary Dispute

We agree with respondent Court. The facts presented unmistakably constitute a clear case of
boundary dispute, which is not cognizable in a special civil action to quiet title.

Quieting of title is a common law remedy for the removal of any cloud upon or doubt or
uncertainty with respect to title to real property. 9

The Civil Code authorizes the said remedy in the following language:

Art. 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or proceeding
which is apparently valid or effective but is, in truth and in fact, invalid, ineffective,
voidable, or unenforceable, and may be prejudicial to said title, an action may be
brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon a title to
real property or any interest therein.

In fine, to avail of the remedy of quieting of title, a plaintiff must show that there is an instrument,
record, claim, encumbrance or proceeding which constitutes or casts a cloud, doubt, question or
shadow upon the owner's title to or interest in real property. Thus, petitioners have wholly
misapprehended the import of the foregoing rule by claiming that respondent Court erred in
holding that there was "no . . . evidence of any muniment of title, proceeding, written contract, . .
.", and that there were, as a matter of fact, two such contracts, viz., (i) the Agreement of
Partition executed by private respondent and his brothers (including the petitioners' father and
predecessor-in-interest), in which their respective shares in the inherited property were agreed
upon, and (ii) the Deed of Sale evidencing the redemption by petitioner Anastacia Vda. de
Aviles of the subject property in a foreclosure sale. However, these documents in no way
constitute a cloud or cast a doubt upon the title of petitioners. Rather, the uncertainty arises
from the parties' failure to situate and fix the boundary between their respective properties.

As correctly held by the respondent Court, "(i)n fact, both plaintiffs and defendant admitted the
existence of the agreement of partition dated June 8, 1957 and in accordance therewith, a fixed
area was allotted (sic) to them and that the only controversy is whether these lands were
properly measured. There is no adverse claim by the defendant "which is apparently valid, but
is, in truth and in fact, invalid, ineffective, voidable, or unenforceable" and which constitutes a
cloud thereon.

Corollarily, and equally as clear, the construction of the bamboo fence enclosing the disputed
property and the moving of earthen dikes are not the "clouds" or "doubts" which can be
removed in an action for quieting of title.

An action to quiet title or to remove cloud may not be brought for the purpose of settling a
boundary dispute. The precedent on this matter cited by the respondent Court in its Decision is
herewith reproduced in full: 10
 In Ashurst v. McKenzie (1890) 92 Ala. 484, 9 So. 262, where the complainants'
predecessor in title and the defendant had, during their occupancy, destroyed
and obliterated the boundary line between their adjoining tracts of land, and there
was now a dispute as to its location, it was held that a bill did not lie to remove a
cloud on the complainants' title. The court said: "There is no allegation or
evidence of any muniment of title, proceeding, written contract, or paper showing
any color of title in the defendant, which could cast a shadow on the title of
complainants to any part of the land; there is no overlapping of description in the
muniments held by either. The land of complainants and defendant join. The line
which separates them is in dispute and is to be determined by evidence
aliunde. Each admits that the other has title up to his line wherever it may be,
and the title papers of neither fix its precise location. So that there is no paper the
existence of which clouds the title of either party, and nothing could be delivered
up and canceled under the decree of the court undertaking to remove a cloud.

Another similarly instructive precedent reported in the same reference is also quoted
below:

In Kilgannon v. Jenkinson (1883) 51 Mich. 240, 16 N.W. 390, the court,

dismissing a bill to quiet title, said: "The fundamental dispute is about the correct
position of the line between lots 3 and 7. The case is not one where a
complainant in possession of a specific piece of land, and a defendant out of
possession, but claiming some right or title, are contending as to which one has
the better right to that same parcel; but it is a case where the titles are not
opposed, and the basis and existence of all right and claim depend simply
upon where the original line runs. When that is once settled, there can remain no
semblance of claim or cloud to be passed on, and the issue on that particular
question is one regularly triable at law. . . 11

Second Issue: Should Partie's Rights Have Been Declared?

Petitioners also chide the respondent Court (and the trial court) for not declaring the respective
rights of the parties with respect to the land in question, arguing that "when one is disturbed in
any form in his rights of property over an immovable by the unfounded claims of others, he has
the right to ask from the competent courts: . . . that their respective rights be determined . . . ".
As support for their thesis, petitioners cite the ancient case of Bautista vs.
Exconde. 12

Rule 64 of the Rules of Court, dealing with actions for declaratory relief, specifies in Section 1
thereof the grounds, conditions precedent or requisites for bringing such petitions. 13 This Court
has previously held that —

Under this rule, only a person who is interested "under a deed, will, contract or
other written instrument, and whose rights are affected by a statute or ordinance,
may bring an action to determine any question of construction or validity arising
under the instrument or statute and for a declaration of his rights or duties
thereunder." This means that the subject matter must refer to a deed, will,
contract or other written instrument, or to a statute or ordinance, to warrant
declaratory relief. Any other matter not mentioned therein is deemed excluded.
This is under the principle of expressio unius est exclussio alterius. 14

Inasmuch as the enumeration of the causes, grounds or conditions precedent in the first
paragraph of said Sec. 1 is exclusive, by parity of rea-soning, it follows that similar remedies
provided for in the second paragraph of the same section would also be marked with the same
exclusivity as to bar any other cause possibly clouding one's title as a ground for such petitions.
Thus, even assuming arguendo that the action to quiet title had been brought under Rule 64,
the same would still not have prospered, the subject matter thereof not referring to "a deed, will,
contract or other written instrument, or to a statute or ordinance," but to a boundary dispute, and
therefore not warranting the grant of declaratory relief.
From another perspective, we hold that the trial court (and likewise the respondent Court)
cannot, in an action for quieting of title, order the determination of the boundaries of the claimed
property, as that would be tantamount to awarding to one or some of the parties the disputed
property in an action where the sole issue is limited to whether the instrument, record, claim,
encumbrance or proceeding involved constitutes a cloud upon the petitioners' interest or title in
and to said property. Such determination of boundaries is appropriate in adversarial
proceedings where possession or ownership may properly be considered and where
evidence aliunde, other than the "instrument, record, claim, encumbrance or proceeding" itself,
may be introduced. An action for forcible entry, whenever warranted by the period prescribed in
Rule 70, or for recovery of possession de facto, also within the prescribed period, may be
availed of by the petitioners, in which proceeding the boundary dispute may be fully threshed
out.

WHEREFORE, in view of the foregoing considerations, the instant petition is hereby DENIED
and the Decision appealed from is AFFIRMED. Costs against petitioners.

SO ORDERED.
G.R. No. L-36359 January 31, 1974

FELIX BUCTON AND NICANORA GABAR BUCTON, petitioners,

vs.
ZOSIMO GABAR, JOSEFINA LLAMOSO GABAR AND THE HONORABLE COURT OF
APPEALS, respondents.

Rizalindo V. Diaz for petitioners.

Alfredo Ber. Pallarca for respondents.

ANTONIO, J.:1äwphï1.ñët

Appeal from the decision of the Court of Appeals in CA-G.R. No. 49091-R, dated January
10, 1973, reversing the judgment of the trial court and dismissing the complaint filed by
herein petitioners, and from said appellate court's resolution, dated February 5, 1973,
denying petitioners' motion for reconsideration.

The facts of the case, as found by the trial court, which have not been disturbed by
respondent Court of Appeals, are as follows:

Plaintiff Nicanora Gabar Bucton (wife of her co-plaintiff Felix Bucton) is the
sister of defendant Zosimo Gabar, husband of his co-defendant Josefina
Llamoso Gabar.

This action for specific performance prays, inter-alia, that defendants-

spouses be ordered to execute in favor of plaintiffs a deed of sale of the
western half of a parcel of land having an area of 728 sq. m. covered by
TCT No. II (from OCT No. 6337) of the office of the Register of Deeds of
Misamis Oriental.

Plaintiffs' evidence tends to show that sometime in 1946 defendant

Josefina Llamoso Gabar bought the above-mentioned land from the
spouses Villarin on installment basis, to wit, P500 down, the balance
payable in installments. Josefina entered into a verbal agreement with her
sister-in-law, plaintiff Nicanora Gabar Bucton, that the latter would pay one-
half of the price (P3,000) and would then own one-half of the land. Pursuant
to this understanding Nicanora on January 19, 1946 gave her sister-in-law
Josefina the initial amount of P1,000, for which the latter signed a receipt
marked as Exhibit A.

Subsequently, on May 2, 1948 Nicanora gave Josefina P400. She later

signed a receipt marked as Exhibit B.

On July 30, 1951 plaintiffs gave defendants P1,000 in concept of loan, for
which defendant Zosimo Gabar signed a receipt marked as Exhibit E.

Meanwhile, after Josefina had received in January, 1946 the initial amount
of P1,000 as above stated, plaintiffs took possession of the portion of the
land indicated to them by defendants and built a modest nipa house
therein. About two years later plaintiffs built behind the nipa house another
house for rent. And, subsequently, plaintiffs demolished the nipa house
and in its place constructed a house of strong materials, with three
apartments in the lower portion for rental purposes. Plaintiffs occupied the
upper portion of this house as their residence, until July, 1969 when they
moved to another house, converting and leasing the upper portion as a
dormitory.
In January, 1947 the spouses Villarin executed the deed of sale of the land
abovementioned in favor of defendant Josefina Llamoso Gabar, Exhibit I, to
whom was issued on June 20, 1947 TCT No. II, cancelling OCT No. 6337.
Exhibit D.

Plaintiffs then sought to obtain a separate title for their portion of the land
in question. Defendants repeatedly declined to accommodate plaintiffs.
Their excuse: the entire land was still mortgaged with the Philippine
National Bank as guarantee for defendants' loan of P3,500 contracted on
June 16, 1947: Exhibit D-1.

Plaintiffs continued enjoying their portion of the land, planting fruit trees
and receiving the rentals of their buildings. In 1953, with the consent of
defendants (who were living on their portion), plaintiffs had the entire land
surveyed and subdivided preparatory to obtaining their separate title to
their portion. After the survey and the planting of the concrete monuments
defendants erected a fence from point 2 to point 4 of the plan, Exhibit I,
which is the dividing line between the portion pertaining to defendants,
Exhibit I-1, and that pertaining to plaintiffs, Exhibit I-2.

In the meantime, plaintiffs continued to insist on obtaining their separate

title. Defendants remained unmoved, giving the same excuse. Frustrated,
plaintiffs were compelled to employ Atty. Bonifacio Regalado to intercede;
counsel tried but failed. Plaintiffs persevered, this time employing Atty.
Aquilino Pimentel, Jr. to persuade defendants to comply with their
obligation to plaintiffs; this, too, failed. Hence, this case, which has cost
plaintiffs P1,500 in attorney's fees.

Defendants' evidence — based only on the testimony of defendant Josefina

Llamoso Gabar — denies agreement to sell to plaintiffs one-half of the land
in litigation. She declared that the amounts she had received from plaintiff
Nicanora Gabar Bucton — first, P1,000, then P400 — were loans, not
payment of one-half of the price of the land (which was P3,000). This
defense is devoid of merit.

When Josefina received the first amount of P1,000 the receipt she signed,
Exhibit A, reads:
 Received from Mrs. Nicanora Gabar the sum of one thousand (P1,000)
pesos, victory currency, as part payment of the one thousand five hundred
(P1,500.00) pesos, which sum is one-half of the purchase value of Lot No.
337, under Torrens Certificate of Title No. 6337, sold to me by Mrs. Carmen
Roa Villarin.

"(Sgd.) Josefina Ll. Gabar".

On the basis of the facts quoted above the trial court on February 14, 1970, rendered
judgment the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered for plaintiffs:

1) Ordering defendants within thirty days from receipt hereof to execute a

deed of conveyance in favor of plaintiffs of the portion of the land covered
by OCT No. II, indicated as Lot 337-B in the Subdivision Plan, Exhibit I, and
described in the Technical Description, Exhibit 1-2; should defendants for
any reason fail to do so, the deed shall be executed in their behalf by the
Provincial Sheriff of Misamis Oriental or his Deputy;

2) Ordering the Register of Deeds of Cagayan de Oro, upon presentation to

him of the above-mentioned deed of conveyance, to cancel TCT No. II and
in its stead to issue Transfer Certificates of Title, to wit, one to plaintiffs
and another to defendants, based on the subdivision Plan and Technical
Description above-mentioned; and ordering defendants to present and
surrender to the Register of Deeds their TCT No. II so that the same may be
cancelled; and

3) Ordering defendants to pay unto plaintiffs attorney's fees in the amount

of P1,500 and to pay the costs.

SO ORDERED.

Appeal was interposed by private respondents with the Court of Appeals, which reversed
the judgment of the trial court and ordered petitioners' complaint dismissed, on the
following legal disquisition:

Appellees' alleged right of action was based on the receipt (Exh. A) which
was executed way back on January 19, 1946. An action arising from a
written contract does not prescribe until after the lapse of ten (10) years
from the date of action accrued. This period of ten (10) years is expressly
provided for in Article 1144 of the Civil Code.

From January 19, 1946 to February 15, 1968, when the complaint was filed
in this case, twenty-two (22) years and twenty-six (26) days had elapsed.
Therefore, the plaintiffs' action to enforce the alleged written contract (Exh.
A) was not brought within the prescriptive period of ten (10) years from the
time the cause of action accrued.

The land in question is admittedly covered by a torrens title in the name of

Josefina Llamoso Gabar so that the alleged possession of the land by the
plaintiffs since 1947 is immaterial because ownership over registered realty
 may not be acquired by prescription or adverse possession (Section 40 of
Act 496).

It is not without reluctance that in this case we are constrained to sustain

the defense of prescription, for we think that plaintiffs really paid for a
portion of the lot in question pursuant to their agreement with the
defendants that they would then own one-half of the land. But we cannot
apply ethical principles in lieu of express statutory provisions. It is by law
provided that:

"ART. 1144. The following actions must be brought within ten

years from the time the right of action accrues:

1. Upon a written contract;

2. Upon an obligation created by law;

3. Upon a judgment."

If eternal vigilance is the price of safety, one cannot sleep on one's right
and expect it to be preserved in its pristine purity.

Petitioners' appeal is predicated on the proposition that owners of the property by

purchase from private respondents, and being in actual, continuous and physical
possession thereof since the date of its purchase, their action to compel the vendors to
execute a formal deed of conveyance so that the fact of their ownership may be inscribed
in the corresponding certificate of title, had not yet prescribed when they filed the
present action.

We hold that the present appeal is meritorious.

1. There is no question that petitioner Nicanora Gabar Bucton paid P1,500.00 to

respondent Josefina Gabar as purchase price of one-half of the lot now covered by TCT
No. II, for respondent Court of Appeals found as a fact "that plaintiffs really paid for a
portion of the lot in question pursuant to their agreement with the defendants that they
would own one-half (1/2) of the land." That sale, although not consigned in a public
instrument or formal writing, is nevertheless valid and binding between petitioners and
private respondents, for the time-honored rule is that even a verbal contract of sale or
real estate produces legal effects between the parties.1 Although at the time said
petitioner paid P1,000.00 as part payment of the purchase price on January 19, 1946,
private respondents were not yet the owners of the lot, they became such owners on
January 24, 1947, when a deed of sale was executed in their favor by the Villarin
spouses. In the premises, Article 1434 of the Civil Code, which provides that "[w]hen a
person who is not the owner of a thing sells or alienates and delivers it, and later the
seller or grantor acquires title thereto, such title passes by operation of law to the buyer
or grantee," is applicable.2 Thus, the payment by petitioner by Nicanora Gabar Bucton of
P1,000.00 on January 19, 1946, her second payment of P400.00 on May 2, 1948, and the
compensation, up to the amount of P100.00 (out of the P1,000.00-loan obtained by private
respondents from petitioners on July 30, 1951), resulted in the full payment of the
purchase price and the consequential acquisition by petitioners of ownership over one-
half of the lot. Petitioners therefore became owners of the one-half portion of the lot in
question by virtue of a sale which, though not evidenced by a formal deed, was
nevertheless proved by both documentary and parole evidence.

2. The error of respondent Court of Appeals in holding that petitioners' right of action
had already prescribed stems from its belief that the action of petitioners is based on the
receipt Exh. "A" which was executed way back on January 19, 1946, and, therefore, in the
view of said appellate court, since petitioners' action was filed on February 15, 1968, or
after the lapse of twenty-two (22) years and twenty-six (26) days from, the date of said
document, the same is already barred according to the provisions of Article 1144 of the
New Civil Code. The aforecited document (Exh. "A"), as well as the other documents of
similar import (Exh. "B" and Exh. "E"), are the receipts issued by private respondents to
petitioners, evidencing payments by the latter of the purchase price of one-half of the lot.

The real and ultimate basis of petitioners' action is their ownership of one-half of the lot
coupled with their possession thereof, which entitles them to a conveyance of the
property. In Sapto, et al. v. Fabiana,3 this Court, speaking thru Mr. Justice J.B.L. Reyes,
explained that, under the circumstances no enforcement of the contract is needed, since the
delivery of possession of the land sold had consummated the sale and transferred title to the
purchaser, and that, actually, the action for conveyance is one to quiet title, i.e., to remove the
cloud upon the appellee's ownership by the refusal of the appellants to recognize the sale made
by their predecessors. We held therein that "... it is an established rule of American
jurisprudence (made applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions
to quiet title to property in the possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47;
Cooper vs. Rhea, 20 L.R.A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash. 439, 245
Pac. 14).

The prevailing rule is that the right of a plaintiff to have his title to land quieted, as
against one who is asserting some adverse claim or lien thereon, is not barred
while the plaintiff or his grantors remain in actual possession of the land, claiming
to be owners thereof, the reason for this rule being that while the owner in fee
continues liable to an action, proceeding, or suit upon the adverse claim, he has
a continuing right to the aid of a court of equity to ascertain and determine the
nature of such claim and its effect on his title, or to assert any superior equity in
his favor. He may wait until his possession is disturbed or his title in attacked
before taking steps to vindicate his right. But the rule that the statute of limitations
is not available as a defense to an action to remove a cloud from title can only be
invoked by a complainant when he is in possession. One who claims property
which is in the possession of another must, it seems, invoke remedy within the
statutory period. (44 Am. Jur., p. 47)

The doctrine was reiterated recently in Gallar v. Husain, et al.,4 where We ruled that by the
delivery of the possession of the land, the sale was consummated and title was transferred to
the appellee, that the action is actually not for specific performance, since all it seeks is to quiet
title, to remove the cloud cast upon appellee's ownership as a result of appellant's refusal to
recognize the sale made by his predecessor, and that as plaintiff-appellee is in possession of
the land, the action is imprescriptible. Considering that the foregoing circumstances obtain in the
present case, We hold that petitioners' action has not prescribed.

WHEREFORE, the decision and resolution of respondent Court of Appeals appealed from are
hereby reversed, and the judgment of the Court of First Instance of Misamis Oriental, Branch IV,
in its Civil Case No. 3004, is revived. Costs against private respondents.
G.R. No. 154415. July 28, 2005

GASPAR CALACALA, BALTAZAR CALACALA, MELCHOR CALACALA, SOLOMON

CALACALA, FELICIDAD CALACALA, PETRONILA CALACALA and SALOME
CALACALA, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, represented by the Solicitor General, and SHERIFF
JUAN C. MARQUEZ,Respondents.

DECISION

GARCIA, J.:

In this appeal by way of a petition for review on certiorari under Rule 45 of the Rules of Court,
petitioners urge us to annul and set aside the resolution dated 31 October 2001 and the order
dated 2 July 2002 of the Regional Trial Court at Rosales, Pangasinan which respectively
dismissed petitioners’ complaint in Civil Case No. 1239-R and denied their motion for
reconsideration.

The material facts are not at all disputed:

The spouses Camilo Calacala and Conchita Calacala, predecessors-in-interest of the herein
petitioners, are the registered owners of a parcel of land situated at Barangay Balincanaway,
Rosales, Pangasinan and covered by Transfer Certificate of Title No. T-21204 of the Registry of
Deeds of Pangasinan.

To secure the provisional release of an accused in a criminal case then pending before the then
Court of First Instance (CFI) of Pangasinan, the spouses offered their aforementioned parcel of
land as a property bond in said case. For failure of the accused to appear at his scheduled
arraignment on 4 November 1981, the CFI ordered the bond forfeited in favor of the
government, and, following the bondman’s failure to produce in court the body of the accused,
rendered judgment against the bond in the amount of ₱3,500.00. Thereafter, the court issued a
Writ of Execution1 directing the provincial sheriff to effect a levy on the subject parcel of land
and to sell the same at a public auction to satisfy the amount of the bond. In compliance with the
writ, the deputy provincial sheriff issued on 26 July 1982 a Notice of Levy2 addressed to the
Register of Deeds of Pangasinan who, on 19 August 1982, caused the annotation thereof on
TCT No. T-21204 as Entry No. 83188.

Not long thereafter, a public auction of the subject parcel of land was held on 24 September
1982, at which respondent Republic submitted its bid for ₱3,500, which is the amount of the
judgment on the bond. Hence, on that same day, a Sheriff’s Certificate of Sale3 was issued in
favor of the Republic as the winning bidder.

On 5 October 1982, the same Certificate of Sale was registered and annotated on TCT No. T-
21204 as Entry No. 83793, thereby giving the spouses Calacala a period of one (1) year
therefrom within which to redeem their property. Unfortunately, they never did up to the time of
their respective deaths on 13 January 1988 and 8 January 1994.

Claiming ownership of the same land as legal heirs of the deceased spouses, petitioners filed
with the Regional Trial Court at Rosales, Pangasinan a complaint4 for Quieting of Title and
Cancellation of Encumbrance on TCT No. T-21204 against respondents Republic and Sheriff
Juan C. Marquez. In their complaint, docketed as Civil Case No. 1239-R and raffled to Branch
53 of the court, petitioners prayed, inter alia, for the cancellation of Entries No. 83188 and
83793 on TCT No. T-21204 or the declaration of said entries as null and void.

To the complaint, respondent Republic interposed a Motion to Dismiss5 grounded on the (1)
complaint’s failure to state a cause of action and (2) prescription of petitioners’ right to redeem.

In their Opposition,6 petitioners contend that when respondent Republic moved to dismiss the
complaint for failure to state a cause of action, it thereby hypothetically admitted all the
allegations therein, specifically the averment that despite the lapse of nineteen (19) years,
respondent did not secure the necessary Certificate of Final Sale and Writ of Possession and
failed to execute an Affidavit of Consolidation of Ownership. Petitioners thus submit that the
Republic’s rights over the land in question had either prescribed, been abandoned or waived.
They add that by filing a motion to dismiss, respondent Republic likewise admitted the allegation
in the same complaint that petitioners and their predecessors-in-interest have been in
continuous possession of the subject land and paying the realty taxes thereon.

In the herein assailed resolution7 dated 31 October 2001, the trial court granted the Republic’s
motion to dismiss and accordingly dismissed petitioners’ complaint. Petitioners moved for a
reconsideration but their motion was denied by the same court in its equally challenged order8 of
2 July 2002.

Hence, petitioners’ present recourse, it being their contentions that -

I.

THE INSTANT COMPLAINT FOR QUIETING OF TITLE AND CANCELLATION OF

ENCUMBRANCE ON TCT NO. T-21204, FILED BEFORE THE TRIAL COURT, RGIONAL [sic]
TRIAL COURT, BRANCH 53, ROSALES, PANGASINAN WAS THE PROPER REMEDY.

II.

THE COMPLAINT STATES SUFFICIENT CAUSE OF ACTION.

III.

THE CASE FOR QUIETING OF TITLE HAS NOT PRESCRIBED.

IV.

AND THE RESPONDENT REPUBLIC OF THE PHILIPPINES HAS NOT PERFECTED ITS
TITLE TO THE LAND IN QUESTION.

In the main, it is petitioners’ submission that their complaint a quo sufficiently states a cause of
action because they are still the owners of the subject parcel of land despite their failure to
redeem it within the 1-year redemption period. They premise their argument on the Republic’s
failure to secure the Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership
and obtain a writ of possession over the same property within ten (10) years from the
registration of the Certificate of Sale on 5 October 1982. Prescinding therefrom, they thus argue
that the Republic’s right over the property in question has already prescribed or has been
abandoned and waived, citing, in support thereof, Article 1142 of the Civil Code. In short, it is
petitioners’ thesis that respondent Republic failed to perfect its title.

On the other hand, it is respondent’s posture that its rights and title as owner of the same
property are already perfected by the mere failure of petitioners and/or their predecessors-in-
interest to redeem the same within one (1) year from the registration/annotation of the Sheriff’s
Certificate of Sale on TCT No. T-21204, in accordance with Section 33, Rule 39 of the 1997
Rules of Civil Procedure.

As we see it, the only question which commends itself for our resolution is whether the trial
court’s dismissal of petitioners’ complaint for Quieting of Title was proper. It thus behooves us to
determine if, in the first place, petitioners have a cause of action in their complaint.

We rule for respondent Republic.

To begin with, it bears emphasis that an action for quieting of title is essentially a common law
remedy grounded on equity. As we held in Baricuatro, Jr. vs. CA:9

Regarding the nature of the action filed before the trial court, quieting of title is a common law
remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real
property. Originating in equity jurisprudence, its purpose is to secure ‘x x x an adjudication that a
claim of title to or an interest in property, adverse to that of the complainant, is invalid, so that
the complainant and those claiming under him may be forever afterward free from any danger of
hostile claim.’ In an action for quieting of title, the competent court is tasked to determine the
respective rights of the complainant and other claimants, ‘x x x not only to place things in their
proper place, to make the one who has no rights to said immovable respect and not disturb the
other, but also for the benefit of both, so that he who has the right would see every cloud of
doubt over the property dissipated, and he could afterwards without fear introduce the
improvements he may desire, to use, and even to abuse the property as he deems best xxx
(Italics supplied).

Under Article 476 of the New Civil Code, the remedy may be availed of only when, by reason of
any instrument, record, claim, encumbrance or proceeding, which appears valid but is, in fact,
invalid, ineffective, voidable or unenforceable, a cloud is thereby casts on the complainant’s title
to real property or any interest therein. The codal provision reads:

Article 476. Whenever there is a cloud on title to real property or any interest therein, by reason
of any instrument, record, claim, encumbrance or proceeding which is apparently valid or
effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or
any interest therein.

In turn, Article 477 of the same Code identifies the party who may bring an action to quiet title,
thus:

Article 477. The plaintiff must have legal or equitable title to, or interest in the real property
which is the subject-matter of the action. He need not be in possession of said property.

It can thus be seen that for an action for quieting of title to prosper, the plaintiff must first have a
legal, or, at least, an equitable title on the real property subject of the action and that the alleged
cloud on his title must be shown to be in fact invalid. So it is that in Robles, et al. vs. CA,10 we
ruled:

It is essential for the plaintiff or complainant to have a legal title or an equitable title to or interest
in the real property which is the subject matter of the action. Also, the deed, claim,
encumbrance or proceeding that is being alleged as a cloud on plaintiff’s title must be shown to
be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.

Verily, for an action to quiet title to prosper, two (2) indispensable requisites must concur,
namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real
property subject of the action; and (2) the deed, claim, encumbrance or proceeding claimed to
be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy.

Unfortunately, the foregoing requisites are wanting in this case.

To start with, petitioners base their claim of legal title not on the strength of any independent
writing in their favor but simply and solely on respondent Republic’s failure to secure the
Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership and obtain a writ of
possession over the property in dispute within ten (10) years from the registration of the
Certificate of Sale.

Petitioners’ reliance on the foregoing shortcomings or inactions of respondent Republic cannot

stand.

For one, it bears stressing that petitioners’ predecessors-in-interest lost whatever right they had
over land in question from the very moment they failed to redeem it during the 1-year period of
redemption. Certainly, the Republic’s failure to execute the acts referred to by the petitioners
within ten (10) years from the registration of the Certificate of Sale cannot, in any way, operate
to restore whatever rights petitioners’ predecessors-in-interest had over the same. For sure,
petitioners have yet to cite any provision of law or rule of jurisprudence, and we are not aware of
any, to the effect that the failure of a buyer in a foreclosure sale to secure a Certificate of Final
Sale, execute an Affidavit of Consolidation of Ownership and obtain a writ of possession over
the property thus acquired, within ten (10) years from the registration of the Certificate of Sale
will operate to bring ownership back to him whose property has been previously foreclosed and
sold. As correctly observed by the trial court, the Republic’s failure to do anything within ten (10)
years or more following the registration of the Sheriff’s Certificate of Sale cannot give rise to a
presumption that it has thereby waived or abandoned its right of ownership or that it has
prescribed, "for prescription does not lie against the government", nor could it "be bound or
estopped by the negligence or mistakes of its officials and employees".

Quite the contrary, Section 33,11 Rule 39 of the 1997 Rules of Civil Procedure explicitly provides
that "[u]pon the expiration of the right of redemption, the purchaser or redemptioner shall be
substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the
property as of the time of the levy".

Concededly, the 1997 Rules of Civil Procedure was yet inexistent when the facts of this case
transpired. Even then, the application thereof to this case is justified by our pronouncement
in Lascano vs. Universal Steel Smelting Co., Inc., et al.,12 to wit:

Procedural laws are construed to be applicable to actions pending and undetermined at the time
of their passage, and are deemed retroactive in that sense and to that extent. As a general rule,
the retroactive application of procedural laws cannot be considered violative of any personal
rights because no vested right may attach to nor arise therefrom.

Moreover, with the rule that the expiration of the 1-year redemption period forecloses the
obligor’s right to redeem and that the sale thereby becomes absolute, the issuance thereafter of
a final deed of sale is at best a mere formality and mere confirmation of the title that is already
vested in the purchaser. As this Court has said in Manuel vs. Philippine National Bank, et al.:13

Note must be taken of the fact that under the Rules of Court the expiration of that one-year
period forecloses the owner’s right to redeem, thus making the sheriff’s sale absolute. The
issuance thereafter of a final deed of sale becomes a mere formality, an act merely
confirmatory of the title that is already in the purchaser and constituting official evidence
of that fact. (Emphasis supplied)

With the reality that petitioners are not holders of any legal title over the property subject of this
case and are bereft of any equitable claim thereon, the very first requisite of an action to quiet
title, i.e., that the plaintiff or complainant has a legal or an equitable title to or interest in the real
property subject matter of the action, is miserably wanting in this case.

For another, and worse, petitioners never put in issue, as in fact they admit in their pleadings,
the validity of the Sheriff’s Certificate of Sale duly registered on 5 October 1982. On this score,
the second requisite of an action to quiet title, namely, that the deed, claim, encumbrance or
proceeding alleged to cast cloud on a plaintiff's title is in fact invalid or inoperative despite
its prima facie appearance of validity or legal efficacy, is likewise absent herein.

WHEREFORE, the instant petition is DENIED and the assailed resolution and order of the trial
court AFFIRMED.

Costs against petitioners.

SO ORDERED.
G.R. No. 104813 October 21, 1993

HEIRS OF JOSE OLVIGA, NAMELY: PLACIDA S. OLVIGA, VIRGILIO OLVIGA, LOLITA

OLVIGA, CARMENCITA O. ALPUERTO and JEANETTE OLILA, petitioners,
vs.
THE HON. COURT OF APPEALS, ANGELITA R. GLOR, SERILINA G. JAMON, EMELITA G.
MADELA, EMAN G. MANALO, MYRNA GLOR, FELIPE GLOR, GAUDENCIO GLOR and
CORNELIO GLOR, respondents.

Natalio T. Paril, Jr. for petitioners.

Leovigildo L. Cerilla for private respondents.

GRIÑO-AQUINO, J.:

This is a petition to review the decision of the Court of Appeals in CA-G.R. CV No. 30542,
affirming in toto the decision of the Regional Trial Court of Calauag, Quezon ordering the
defendants, heirs of Jose Olviga (petitioners herein), to reconvey the land in dispute to the
plaintiffs, heirs of Cornelia Glor (now private respondents),and to pay attorney's fees and the
costs of suit.

This case started as an action (Civil Case No. C-883) filed in the Regional Trial Court of
Calauag, Quezon by Angelita Glor and her children against the heirs of Jose Olviga for
reconveyance of a parcel of land, measuring 54,406 square meters (5.44 has), more or less,
known as Lot 13, Pls-84 of the Guinayangan Public Land Subdivision.

The court, after due trial, rendered judgment in favor of the private respondents, the dispositive
portion of which reads:

WHEREFORE, and considering the foregoing judgment is hereby rendered in

favor of the PLAINTIFFS and against the defendants as heirs of Jose Olviga to
reconvey the land in dispute to the plaintiffs as heirs of Cornelio Glor Sr.;
condemning the defendants jointly and severally to pay the plaintiffs attorneys
fees of P5,000.00 plus the costs of the suit. The counterclaim interposed by
defendants is dismissed. ( p. 12, Rollo.)

The judgment was appealed to the Court of Appeals by the defendants who raised several
factual issues regarding possession and fraud, as well as legal issues involving prescription and
purchaser in good faith, but the appellate court dismissed the appeal and affirmed in toto the
decision of the trial court.

It was established by the evidence on record that the land in question was, in 1950, still forest
land when Eutiquio Pureza, then only twelve years old, and his father cleared and cultivated it.
In 1954, they introduced improvements such as, coconut trees, jackfruit, mangoes, avocado and
bananas. When the area was released for disposition, the Bureau of Lands surveyed the same
in 1956 in the name of Eutiquio Pureza. Since then, the land has been known as Lot 13, Pls-84
of the Guinayangan Public Land Subdivision. Godofredo Olviga, a son of Jose Olviga then living
with the latter, protested the survey but without respect to a one-half-hectare portion "sa dakong
panulukan ng Amihanan-Silanganan." This protest or "tutol" (Exh. B) of Godofredo Olviga,
brother of petitioners Virgilio Olviga and Lolita Olviga Olila, is of public record in the Bureau of
Lands (Exh. B). In said document, Godofredo Olviga expressly admitted that the lot belonged to
Eutiquio Pureza, except the 1/2 hectare portion claimed by him (Godofredo) which was included
in the survey of Pureza's Lot 13.

In 1960, Eutiquio Pureza filed a homestead application over Lot 13. Without his application
having been acted upon, he transferred his rights in said lot to Cornelia Glor in 1961. Neither the
homestead application of Eutiquio nor the proposed transfer of his rights to Cornelio Glor was
acted upon by the Director of Lands for reasons that the records of the Bureau of Lands do not
disclose.
In 1967, Jose Olviga obtained a registered title for said lot in a cadastral proceeding, in fraud of
the rights of Pureza and his transferee, Cornelio Glor and his family who were the real and
actual occupants of the land.

What must have happened as found by the Court of Appeals, is that since Cornelio Glor, Sr.
was sickly, and his wife (now widowed) Angelita Glor, was unschooled, they failed to follow up
Pureza's homestead application over Lot 13 in the cadastral proceedings in the Municipal Court
of Guinayangan Public Land Subdivision, Pls-84, Case 1 (Philcusa-Foa). In fact, they were not
aware of the proceedings. Angelita Glor testified that no notice was ever posted on Lot 13 about
the proceedings nor did the barangay captain, tell her about them. Neither did she receive any
notice from the court sheriff or any court employee. This non-posting of the hearing of the
cadastral hearing on the land, or in the barangay hall, was confirmed by petitioner Virgilio Olviga
himself who testified that he did not notice any papers posted on the property in question (tsn,
October 18, 1990, pp. 83-84). On the other hand, petitioner's father Jose Olviga, claimed both
Lots 12 and 13, which are adjoining lots, in the same cadastral proceedings. He falsely omitted
in his answer mention of the fact that other persons were in possession of, and claiming
adverse interest in, Lot 13 and that the land had been surveyed for Eutiquio Pureza, the former
occupant who sold his interests to private respondents' parent. Cornelio Glor, in 1961. Glor was
Olviga's neighbor. As a result, both Lots 12 and 13 were declared as uncontested in the name
of Jose Olviga (Exh. 7), and were registered in his name in 1967 in Original Certificate of Title,
No. 0-12713 (Exh. 5). In 1971, Olviga requested that OCT No. 0-12713 be split into two (2)
TCT's, one each for the two (2) lots. TCT Nos. T-103823 and T-103824 were issued for lots 12
and 13, respectively. Jose Olviga later transferred Lot 13 to his son-in-law, Jaime Olila and
daughter, Lolita Olviga resulting in the cancellation of TCT. No. 241314 in the names of the
spouses (Exh. 3).

It was also established that the spouses Jaime Olila and Lolita Olviga Olila, were not innocent
purchasers for value of the land from their father, and have never been in the possession. The
Glors and their predecessor-in-interest (Cornelio Glor Sr., and Eutiquio Pureza) were the ones
found to be in possession of the property.

From said finding, and conclusions, the appellate court in its decision dated January 13, 1992,
resolved the issues presented, thus:

. . ., whether or not plaintiffs' action is really one for quieting of title that does not
prescribe; or assuming that their demand for reconveyance of the lot in question
prescribes in ten years, being based on an implied trust, whether their cause of
action should be counted from the date of the issuance of the late Jose Olviga's
title over said lot in 1967 and has, therefore, already prescribed, or whether the
prescriptive period should be counted from the date plaintiffs acquired knowledge
of said title sometime in 1988.

The first question should be answered in the affirmative. . . .

xxx xxx xxx

But even assuming that plaintiffs' action for reconveyance, being based on an
implied or constructive trust, prescribes in ten years, the lower court again
correctly ruled that their cause of action should be considered to have accrued
not from the date of registration of the title of Jose Olviga, defendants'
predecessor-in-interest, over the lot in question in 1967, but only from the time
the plaintiffs learned of such title in 1988. . . . .

xxx xxx xxx

All in all, therefore, the court a quo did not err in holding that plaintiffs' action
against defendants-appellants for the reconveyance of the lot in question filed on
April 10, 1989, or in less than a year after they learned of the issuance of a title
over said lot to Jose Olviga, predecessor-in-interest of defendants, has not yet
prescribed.
 WHEREFORE, the decision appealed from herein is AFFIRMED in toto, with
costs against defendants-appellants. (pp. 48-51, Rollo.)

Petitioners now seek a review of the above decision. They allege that the present action has
already prescribed; (2) the Court of Appeals erred when it ruled that the private respondents'
cause of action accrued not in 1967 but in 1988; (3) that the Court of Appeals erred when it
failed to consider that private respondents as mere homestead transferees cannot maintain an
action for reconveyance; (4) that the Faja and Caragay-Layno cases have no bearing and direct
application to the case at bar; and (5) that private respondents have not proven by
preponderance of evidence their ownership and possession of the disputed land.

With regard to the issue of prescription, this Court has ruled a number of times before 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 of 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.

In Sapto vs. Fabiana, 103 Phil. 683, 686-687, appellants' predecessors sold to appellees in
1931 a parcel of land. The sale was approved by the Provincial Governor of Davao but was
never registered. Possession of the land was, however, transferred to Fabiana and the latter
has been in possession thereof from 1931 up to the present. The widow and children of Samuel
Sapto filed an action to recover the land. This Court in affirming the validity of the sale in favor of
appellee (Fabiana) held:

No enforcement of the contract is in fact needed, since the delivery of possession

of the land sold had consummated, the sale and transferred title to the
purchaser, registration of the contract not being indispensable as between the
parties. Actually the action for conveyance was one to quiet title, i.e., to remove
the cloud cast upon appellee's ownership by the refusal of the appellants to
recognize the sale made by their predecessors. This action accrued only when
appellants initiated their suit to recover the land in 1954. Furthermore, it is an
established rule of American jurisprudence (made applicable in this jurisdiction
by Art. 480 of the New Civil Code) that actions to quiet title to property in the
possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47; Cooper vs.
Rhea, 39 L.R.A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash. 439
245 Pac. 14).

In Faja vs. Court of Appeals, 75 SCRA 441, 446, this Court likewise reiterated the ruling that:

. . . 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 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 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
possessor.

In the case at bar, private respondents and their predecessors-in-interest were in actual
possession of the property since 1950. Their undisturbed possession gave them the continuing
right to seek the aid of a court of equity to determine the nature of the adverse claim of
petitioners, who in 198 disturbed their possession.

The other issues raised in the petition are factual.

The Court of Appeals and the trial court correctly based their findings of tact on the testimonies
of the parties and their witnessess. It can be said therefore that those conclusions are based on
substantial evidence. No cogent reason exists to disturb them. As reiterated in a long line of
decisions, it is beyond the province of this Court to make its own findings of facts different from
those of the trial court as affirmed by the Court of Appeals (Vda. de Cailles vs. Mayuga 170
SCRA 347; New Owners/Management of TML Garments, Inc. vs. Zaragosa, 170 SCRA 563). In
petitions for review of decisions of the Court of Appeals, the jurisdiction of this Court is confined
to a review of questions of law, except when the findings of fact are not supported by the
records or are so glaringly erroneous as to constitute a serious abuse of discretion (Lim vs.
Court of Appeals, 158 SCRA 307; Samson vs. CA, 141 SCRA 194; Republic vs. IAC, 144
SCRA 705). The case at bar does not fall under the exceptions.

WHEREFORE, finding no reversible error in the decision of the Court of Appeals, the petition for
review is DENIED, with costs against the petitioners.

SO ORDERED.
G.R. No. 157852 December 15, 2010

HEIRS OF DOMINGO VALIENTES, Petitioners,

vs.
Hon. REINERIO (Abraham) B. RAMAS, Acting Presiding Judge, RTC, Branch 29, 9th
Judicial Region, San Miguel, Zamboanga del Sur and Vilma V. Minor, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Certiorari assailing the Decision1 of the Court of Appeals dated August 16,
2002 and the subsequent Resolution denying reconsideration dated January 16, 2003 in CA-
G.R. SP No. 68501.

Petitioners claim that they are the heirs of Domingo Valientes who, before his death, was the
owner of a parcel of land in Gabay, Margosatubig, Zamboanga del Sur then covered by Original
Certificate of Title (OCT) No. P-18,208 of the Register of Deeds of Zamboanga del Sur. In 1939,
Domingo Valientes mortgaged the subject property to secure his loan to the spouses Leon
Belen and Brigida Sescon (spouses Belen). In the 1950s, the Valientes family purportedly
attempted, but failed, to retrieve the subject property from the spouses Belen. Through an
allegedly forged document captioned VENTA DEFINITIVA purporting to be a deed of sale of the
subject property between Domingo Valientes and the spouses Belen, the latter obtained
Transfer Certificate of Title (TCT) No. T-5,427 in their name. On February 28, 1970, Maria
Valientes Bucoy and Vicente Valientes, legitimate children of the late Domingo Valientes, had
their Affidavit of Adverse Claim2 duly entered in the Memorandum of Encumbrances at the back
of TCT No. T-5,427. Upon the death of the spouses Belen, their surviving heirs Brigida Sescon
Belen and Maria Lina Belen executed an extra-judicial settlement with partition and sale in favor
of private respondent Vilma Valencia-Minor, the present possessor of the subject property.

On June 20, 1979, herein private respondent Minor filed with the then Court of First Instance of
Pagadian City a "PETITION FOR CANCELLATION OF MEMORANDUM OF ENCUMBRANCE
APPEARING IN TCT NO. T-5,427 OF THE REGISTRY OF DEEDS OF ZAMBOANGA DEL
SUR," which was docketed as SPL Case No. 1861.3 On July 31, 2000, the Regional Trial Court
(RTC) granted Minor’s prayer to allow the Register of Deeds to have the title to the subject
property transferred to her name.

In the meantime, on August 20, 1998, petitioners filed a Complaint before the RTC of San
Miguel, Zamboanga del Sur for the "CANCELLATION OF TRANSFER CERTIFICATE OF TITLE
NO. T-5,427, RECONVEYANCE, WITH ACCOUNTING, RECEIVERSHIP AND APPLICATION
FOR A WRIT OF PRELIMINARY PROHIBITORY INJUNCTION PLUS DAMAGES." The
Complaint was docketed as Civil Case No. 98-021.4

Private respondent Minor filed an Omnibus Motion to Dismiss Civil Case No. 98-021 on the
grounds of forum shopping and litis pendentia. On August 3, 2000, the RTC issued an order in
open court ruling that forum shopping does not apply. On September 22, 2000, private
respondent Minor filed a Motion for Reconsideration5 of the August 3, 2000 Order. On May 7,
2001, the RTC issued an Order granting the Motion for Reconsideration by dismissing Civil
Case No. 98-021 on the ground of forum shopping.6 Petitioners filed a Motion for
Reconsideration7 on May 30, 2001, but the same was denied by the RTC in its
Order8 dated September 18, 2001.

On November 12, 2001, petitioners filed with the Court of Appeals a Petition for
Certiorari9 assailing the RTC Orders dated May 7, 2001 and September 18, 2001. Petitioners
raised the sole issue of whether the trial court was correct in finding that Civil Case No. 98-021
constitutes forum shopping, litis pendentia or res judicata with SPL Case No. 186. The Petition
was docketed as CA-G.R. SP No. 68501.

The Court of Appeals rendered its assailed Decision on said petition on August 16, 2002.
Despite agreeing with petitioners that there was no forum shopping, litis pendentia or res
judicata in the filing of Civil Case No. 98-021, the Court of Appeals, asserting that it has the
discretion to review matters not otherwise assigned as errors on appeal if it finds that their
consideration is necessary at arriving at a complete and just resolution of the case, 10 held that
Civil Case No. 98-021 cannot prosper on the grounds of prescription and laches.

Hence, this Petition for Certiorari, wherein petitioners raised the following grounds for assailing
the Court of Appeals’ Decision:

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT APPLIED
PRESCRIPTION IN THE PRESENT PETITION, AFTER ALL, WHEN SHE DID NOT APPEAL
THE DECISION OF THE HONORABLE REGIONAL TRIAL COURT DISMISSING THE
COMPLAINT ON THE SOLE GROUND OF RES JUDICATA, PRIVATE RESPONDENT IS
DEEMED TO HAVE ALREADY WAIVED THE DEFENSE OF PRESCRIPTION.

II

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN DISMISSING THE
COMPLAINT ON THE GROUND OF PRESCRIPTION, THE PRESENT ACTION, ALTHOUGH
CAPTIONED FOR CANCELLATION OF TRANSFER CERTIFICATE OF TITLE NO. T-5,427,
RECONVEYANCE AND ETC., SUBSTANTIALLY, IS FOR QUIETING OF TITLE, HENCE,
PRESCRIPTION WILL NOT LIE.

III

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN APPLYING THE CASES OF
TENIO-OBSEQUIO VERSUS COURT OF APPEALS, 330 SCRA 88, AND DECLARO VS.
COURT OF APPEALS, 346 SCRA 57 WHEN FACTS OBTAINING IN SAID CASES ARE NOT
ATTENDANT IN THE PRESENT CASE FOR CANCELLATION OF TRANSFER CERTIFICATE
OF TITLE NO. T-5,427 ON THE GROUND OF FORGERY OR BY REASON OF FORGED
DOCUMENT CAPTIONED VENTA DEFINITIVA.

IV

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT [RENEGED] FROM ITS
SOLEMN DUTY TO RENDER SUBSTANTIAL JUSTICE DUE THE PARTIES RATHER THAN
THE SANCTIFICATION OF TECHNICAL RULES OR EQUITY ON PRESCRIPTION.11

Authority of the Court of Appeals to Dismiss the Complaint on the Grounds of

Prescription and Laches Despite Respondent’s Failure to Appeal the Dismissal Order

Petitioners recount that private respondent Minor interposed prescription as one of her grounds
for the dismissal of the case in her Answer with Affirmative Defenses. When private respondent
Minor’s Motion to Dismiss was denied by the RTC in open court, she filed a Motion for
Reconsideration dwelling on forum shopping, litis pendentia and/or res judicata.12 The trial court
proceeded to dismiss the case on the ground of forum shopping.13 Petitioners now claim before
us that private respondent Minor’s failure to appeal the RTC’s dismissal of the complaint on the
sole ground of forum shopping constituted a waiver of the defense of prescription. Petitioners
further argue that the consideration by the Court of Appeals of grounds not assigned as errors in
the Appellee’s Brief runs contrary to the precepts of fair play, good taste and estoppel. 14

We rule in favor of private respondent Minor on this issue.

Firstly, it stretches the bounds of credulity for petitioners to argue that a defendant in a case
should appeal the dismissal order she prayed for just because other grounds for dismissal were
not considered by the court.
Secondly, and more importantly, Section 1, Rule 9 of the Rules of Court provides:

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

The second sentence of this provision does not only supply exceptions to the rule that defenses
not pleaded either in a motion to dismiss or in the answer are deemed waived, it also allows
courts to dismiss cases motu proprio on any of the enumerated grounds – (1) lack of jurisdiction
over the subject matter; (2) litis pendentia; (3) res judicata; and (4) prescription – provided that
the ground for dismissal is apparent from the pleadings or the evidence on record.

We therefore rule that private respondent Minor cannot be deemed to have waived the defense
of prescription, and that the Court of Appeals may consider the same motu proprio.
Furthermore, as regards the pronouncement by the Court of Appeals that Civil Case No. 98-021
is likewise heavily infirmed with laches, we rule that the Court of Appeals is not in error when it
considered the same motu proprio. While not included in the above enumeration under Section
1, Rule 9 of the Rules of Court, we have ruled in previous cases that laches need not be
specifically pleaded and may be considered by the court on its own initiative in determining the
rights of the parties.15

Having thus determined the authority of the Court of Appeals to dismiss the Complaint on the
grounds of prescription and laches despite private respondent Minor’s failure to appeal the
dismissal Order, We shall now proceed to determine whether or not prescription or laches has
already set in to bar the filing of Civil Case No. 98-021.

Imprescriptibility of Quieting of Title

After the Court of Appeals ruled in favor of petitioners on the issue of whether Civil Case No. 98-
021 is already barred by forum shopping, res judicata or litis pendentia, the appellate court,
nevertheless, affirmed the dismissal order, but on the grounds of prescription and laches:

Be that as it may, this Court is imbued with sufficient discretion to review matters, not otherwise
assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a
complete and just resolution of the case (Heirs of Ramon Durano, Sr. vs. Uy, 344 SCRA 238).

The case cannot prosper because an action for reconveyance is a legal remedy granted to a
landowner whose property has been wrongfully or erroneously registered in another’s name,
which must be filed within ten years from the issuance of the title since such issuance operates
as a constructive notice (Declaro vs. Court of Appeals, 346 SCRA 57). Where a party has
neglected to assert his rights over a property in question for an unreasonably long period, he is
estopped from questioning the validity of another person’s title to the property (Ibid.) Long
inaction and passivity in asserting one’s rights over a disputed property precludes him from
recovering said property (Po Lam vs. Court vs. Court of Appeals, 347 SCRA 86).

In conclusion, petitioners’ cause of action has already prescribed and now heavily infirmed with
laches.16

Petitioners claim that although the complaint was captioned for "CANCELLATION OF
TRANSFER CERTIFICATE OF TITLE NO. T-5,427, RECONVEYANCE, WITH ACCOUNTING,
RECEIVERSHIP, AND APPLICATION FOR A WRIT OF PRELIMINARY PROHIBITORY
INJUNCTION PLUS DAMAGES," the complaint is substantially in the nature of an action to
quiet title which allegedly does not prescribe. Petitioners also allege that the cases cited by the
Court of Appeals in ruling that prescription has set in, particularly that of Declaro v. Court of
Appeals,17 which in turn cites Tenio-Obsequio v. Court of Appeals,18 are inapplicable to the case
at bar since neither fraud nor forgery was attendant in said cases.
As regards petitioners’ claim that the complaint in Civil Case No. 98-021 is really one of quieting
of title which does not prescribe, it appears that petitioners are referring to the doctrine laid
down in the often-cited case of Heirs of Jose Olviga v. Court of Appeals,19 wherein we held:

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.20

The cause of action of petitioners in Civil Case No. 98-021, wherein they claim that private
respondent Minor’s predecessor-in-interest acquired the subject property by forgery, can indeed
be considered as that of enforcing an implied trust. In particular, Article 1456 of the Civil Code
provides:

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person from whom the
property comes.

However, the Court made a clear distinction in Olviga: when the plaintiff in such action is not
in possession of the subject property, the action prescribes in ten years from the date of
registration of the deed or the date of the issuance of the certificate of title over the
property. When the plaintiff is in possession of the subject property, the action, being in
effect that of quieting of title to the property, does not prescribe. In the case at bar, petitioners
(who are the plaintiffs in Civil Case No. 98-021) are not in possession of the subject property.
Civil Case No. 98-021, if it were to be considered as that of enforcing an implied trust, should
have therefore been filed within ten years from the issuance of TCT No. T-5,427 on December
22, 1969. Civil Case No. 98-021 was, however, filed on August 20, 1998, which was way
beyond the prescriptive period.

As an alternative argument, petitioners claim that the prescriptive period for filing their complaint
is thirty years, pursuant to Article 1141 of the Civil Code, in connection with Articles 1134 and
1137 thereof, which respectively provide:

Art. 1141. Real actions over immovables prescribe after thirty years.

This provision is without prejudice to what is established for the acquisition of ownership and
other real rights by prescription.

Art. 1134. Ownership and other real rights over immovable property are acquired by ordinary
prescription through possession of ten years.

Art. 1137. Ownership and other real rights over immovables also prescribe through
uninterrupted adverse possession thereof for thirty years, without need of title or of good faith.

The theory of petitioners is that the Motion to Dismiss hypothetically admits the allegations of
the complaint, including the allegations thereon that the spouses Belen were successful in
fraudulently acquiring TCT No. T-5,427 in their favor by means of the forged VENTA
DEFINITIVA. Thus, for purposes of ruling on a Motion to Dismiss, it is hypothetically admitted
that private respondent Minor’s predecessors-in-interest are in bad faith. The applicable
prescriptive period, therefore, is that provided in Article 1141 in relation to Article 1137 of the
Civil Code, which is thirty years. Civil Case No. 98-021 was filed on August 20, 1998, 28 years
and eight months from the issuance of TCT No. T-5,427 on December 22, 1969.

Articles 1141, 1134 and 1137 of the Civil Code, however, are general rules on prescription
which should give way to the special statute on registered lands, Presidential Decree No. 1529,
otherwise known as the Property Registration Decree. Under the Torrens System as enshrined
in P.D. No. 1529, the decree of registration and the certificate of title issued become
incontrovertible upon the expiration of one year from the date of entry of the decree of
registration, without prejudice to an action for damages against the applicant or any person
responsible for the fraud.21

As previously discussed, however, we have allowed actions for reconveyance based on implied
trusts even beyond such one-year period, for such actions respect the decree of registration as
incontrovertible. We explained this in Walstrom v. Mapa, Jr.22:

We have ruled before in Amerol vs. Bagumbaran that notwithstanding the irrevocability of the
Torrens title already issued in the name of another person, he can still be compelled under the
law to reconvey the subject property to the rightful owner. The property registered is deemed to
be held in trust for the real owner by the person in whose name it is registered. After all, the
Torrens system was not designed to shield and protect one who had committed fraud or
misrepresentation and thus holds title in bad faith.

In an action for reconveyance, the decree of registration is respected as incontrovertible. What

is sought instead is the transfer of the property, in this case the title thereof, which has been
wrongfully or erroneously registered in another person's name, to its rightful and legal owner, or
to one with a better right. This is what reconveyance is all about.1avvphi1

Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute nor
is it imprescriptible. An action for reconveyance based on an implied or constructive trust must
perforce prescribe in ten years from the issuance of the Torrens title over the property. 23

As discussed above, Civil Case No. 98-021 was filed more than 28 years from the issuance of
TCT No. T-5,427. This period is unreasonably long for a party seeking to enforce its right to file
the appropriate case. Thus, petitioners’ claim that they had not slept on their rights is patently
unconvincing.

As a final note, it should be pointed out that in choosing to file a Petition for Certiorari before this
Court, petitioners are required to prove nothing less than grave abuse of discretion on the part
of the Court of Appeals. We have consistently held that "certiorari will not be issued to cure
errors in proceedings or correct erroneous conclusions of law or fact. As long as a court acts
within its jurisdiction, any alleged errors committed in the exercise of its jurisdiction will amount
to nothing more than errors of judgment which are reviewable by timely appeal and not by a
special civil action of certiorari."24 In the case at bar, petitioners proved neither grave abuse of
discretion, nor even a simple error of judgment on the part of the Court of Appeals. The present
petition should, therefore, fail.

WHEREFORE, the present Petition for Certiorari is DISMISSED. The Decision of the Court of
Appeals dated August 16, 2002 and the Resolution dated January 16, 2003 in CA-G.R. SP No.
68501 are AFFIRMED.

No pronouncement as to costs.

SO ORDERED.
G.R. No. L-38387 January 29, 1990

HILDA WALSTROM, petitioner-appellant,

vs.
FERNANDO MAPA, JR., VICTORINO A. MAPA, MARIA C.M. DE GOCO, FERNANDO
MAPA, III, MARIO L. MAPA, and THE REGISTER OF DEEDS OF THE PROVINCE OF
BENGUET, respondents-appellees.

Pelaez, Adriano & Gregrio for petitioner-appellant.

Tomas G. Mapa & Associates for private respondents.

SARMIENTO, J.:

This is a review of the Order dated December 1, 1973 of the then Court of First Instance of
Baguio-Benguet, Branch IV, which dismissed, before trial on the merits, the petitioner's
complaint in Civil Case No. 2434. The concluding portion of the assailed order states:

This Court is unprepared to consider this case as falling under any of the exceptions to
the rule on exhaustion of administrative remedies because under plaintiffs allegations,
her "Petition for Relief " is still pending resolution by the Secretary of Agriculture and
Natural Resources who may reconsider his action on the matter in dispute; and,
furthermore, an action for annulment of title issued pursuant to a patent must be initiated
by the Director of Lands or at least by his prior authority and consent (Kabayan (sic) 1 vs.
Republic, L-33307, August 30, 1973) who may be directed by the Secretary for that
purpose if plaintiff's "Petition for Relief" is granted and the previous action reconsidered.
The records fail to show that such authority or consent has been secured by the plaintiff
before instituting the present action.

A motion to dismiss of this nature does not affect the jurisdiction of the court but shows
that plaintiff lacks a cause of action. (Commissioner of Immigration vs. Vamenta, Jr., 45
SCRA 342.) In other words, non-compliance with this requirement justifies the dismissal
for lack of cause of action. (Cruz vs. Del Rosario, 9 SCRA 755.)

WHEREFORE, the Court, finding the motion to dismiss to be in order, hereby orders the
dismissal of the case without pronouncement as to costs.

SO ORDERED. 2

This drawn-out controversy between the parties, which is one of the many cases we inherited
from the pre-EDSA Court, arose from the following facts and proceedings:

I.

(1) The petitioner alleges that long before World War II, Cacao Dianson, predecessor-in-
interest of Gabriela Walstrom, filed a Free Patent Application (FPA) for a parcel of land
located between what are known as Lots Nos. 1 and 2 of Psu-153657. Under the said
Free Patent Application, Cacao Dianson was able to secure on April 10, 1933 the
issuance of Free Patent No. 14885 and Original Certificate of Title No. 1217 in his name.

(2) On June 9, 1933, Josefa Abaya Mapa, predecessor- in-interest of the private
respondents, filed Miscellaneous Sales Application No. 6439 for a parcel of land located
in barrio Pico, municipality of La Trinidad, Mountain Province.

(3) According to the petitioner, a public auction of the land subject of Josefa Abaya
Mapa's miscellaneous sales application was held on April 18, 1934. Josefa Abaya Mapa
was the only bidder.
 (4) On May 12, 1934, the Director of Lands awarded Josefa Abaya Mapa a tract of land
with an area of 2,800 square meters which was appraised at P0.05 per square meter,
located in Pico, La Trinidad, Mountain Province, with the following boundaries: N.- Public
Land; S.E. - Public Land; S. - Road; W. - Public Land (not surveyed) No improvements
had been made on the land.

(5) On June l, 1956, Cacao Dianson filed Free Patent Application No. 3-74 covering Lots
Nos. 1, 2, and 3 of Psu-153657, situated in Barrio Beckel, La Trinidad, Mountain
Province, and on the same date he filed with the District Land Office in Baguio City a
letter protesting the construction in April, 1956 by Josefa Abaya Mapa of a camarin on
the parcel of land (described as "portion A") of one of the parcels of land more
specifically, Lot No. 1 of Psu-153657 — covered by Dianson's FPA No. 3-74. 3

(6) The private respondents counter that this portion being claimed by Dianson, which is
designated as Portion "A" of Lot 1, Psu-153657, was already awarded to Josefa Abaya
Mapa in the public bidding held in 1934.

(7) On June 17, 1958, the controversy between Cacao Dianson and Josefa Abaya Mapa
with respect to the disputed property was referred to Bureau of Lands Investigator
Antonio Mejia for investigation. After conducting several hearings and making an ocular
inspection of the controverted premises, Mejia submitted his "Report of Investigation,"
wherein he stated the following:

FINDINGS OF FACTS

Josefa Abaya Mapa has filed a Miscellaneous Sales Application for a parcel of land
located in Pico, La Trinidad, Mt. Province, on June 9, 1933 and the same was awarded
to her on May 12, 1934. The land has an area of 2800 square meters with the following
boundaries. North — Public Land, South-East — Public Land, South-Road and West —
Public Land.

The purchase price has been paid in full in 1943 as per Official Receipt No. B-1982778
dated November 8, 1943.

The land was first applied for by her husband, Fernando Mapa, but it was later
transferred to Josefa Abaya Mapa.

Cacao Dianson filed a Free Patent Application for the same parcel of land on June 1,
1956, alleging that the said land was first occupied by his father, Dianson, in 1884. The
land has been survey under Psu-153657 on September 10, 1956.

Cacao Dianson is occupying the land and has fenced it. Josefa Abaya Mapa has
constructed a sort of a shack near the land. Terraces were made by Cacao Dianson in
the premises. Cacao Dianson has also constructed a shack inside the land.

No survey appears to have been conducted on the land covered by the Miscellaneous
Sales Application of Josefa Abaya Mapa.

Rodrigo H. Romea conducted a survey on the land. However, Mr. Romea made two
surveys separately. One on the land pointed to her by Josefa Abaya Mapa and the
other, on the land which according to his findings and opinion would be the correct place
of the land covered by the application of Josefa Abaya Mapa.

Lands Investigator Mejia also found that:

During the ocular inspection of the land, it was found out that Mrs. Josefa Abaya Mapa
has constructed a shack near the road. On the other hand, Cacao Dianson has also
constructed a hut in the premises of the said land. In fact, Cacao Dianson was in a
threatening mood against the Mapas during the ocular inspection. Of the alleged
improvements introduced by Mrs. Josefa Abaya Mapa, they were not seen by the herein
Investigator, except the shack constructed by her. However, rice terraces were found in
 the premises and other plants, but from the appearance of the said improvements, it
seems to be recently introduced.

This Investigator has searched all the records in the Office of the Bureau of Lands,
Baguio City, but no available records could be found regarding the location of the land
applied for by Josefa Abaya Mapa. A verification of the records, however. show that
Cacao Dianson has sold the land applied for by him to a certain Agripino Farol, a
resident of Davao. 4

(8) The regional land officer of Dagupan City, in a decision dated August 12, 1964,
resolved the controversy between Cacao Dianson and Josefa Abaya Mapa in this wise:

In view of the foregoing, the undersigned holds and so decides that Free Patent
Application No. 3-74 of Cacao Dianson be, as hereby it is, amended so as to exclude
therefrom Portion "A" of Lot No. 1, Psu-153657, as shown on the sketch drawn at the
back hereof and shall cover only portion "B" of Lot No. 1, Lots 2 and 3 of Psu-153657,
and the Miscellaneous Sales Application No. 6439 (E -1341) of Josefa Abaya Mapa shall
cover the said portion "A" of Lot No. 1, Psu-153657 and thereafter both applications shall
continue to be given due course. 5

(9) In the meantime, Cacao Dianson died on August 7, 1964. Nearly two years later, on
July 8,1966, Gabriela Walstrom filed a motion for reconsideration with the Director of
Lands of the decision dated August 12, 1964 of the regional land officer, claiming that
she had acquired the rights and interests of Cacao Dianson to the subject parcel of land
by virtue of a transfer of said rights and interests. by Dianson to one Agripino Farol who,
in turn, transferred the same rights and interests to Gabriela Walstrom.

(10) On September 9, 1966, the Director of Lands, acting on the motion for
reconsideration filed by Gabriela Walstrom, issued an order setting aside the decision of
August 12, 1964 of the district land officer of Dagupan City.

(11) On November 9, 1966, Josefa Abaya Mapa appealed the order dated September 9,
1966 of the Director of Lands to the Department of Agriculture and Natural Resources
(DANR).

This became DANR Case No. 3118.

II.

(1) On July 28, 1967, the DANR Secretary rendered a decision, dismissing Josefa
Abaya Mapa's appeal from the order dated September 9, 1966 of the Director of Lands.

(2) On September 21, 1967, the heirs of Josefa Abaya Mapa, through their judicial
administrator, Victorino Mapa, filed a motion for reconsideration of the decision of the
DANR promulgated on July 28, 1967.

(3) On June 13, 1968, the DANR Secretary Set aside the order of the Director of Lands
dated September 9, 1966 and ordered that the decision of the regional land officer in
Dagupan City dated August 12, 1964 be reinstated and given full force and effect.

(4) On July 30, 1968, counsel of Gabriela Walstrom manifested his intention to file a
motion for reconsideration against the DANR order, dated June 13, 1968, but it was only
on September 20, 1968 that a memorandum in support of his motion for reconsideration
was filed.

(5) On March 4, 1969, DANR Secretary Fernando Lopez promulgated an order denying
the motion for reconsideration of Gabriela Walstrom on two (2) grounds, as follows:

1. From the foregoing, it is clear that more than thirty days had elapsed from the
time plaintiff received the order she is seeking to be reconsidered to the time she
manifested any intention to have the same reconsidered. Such being the case,
 her motion does not merit any consideration whatsoever for having been filed out
of tune.

2. Nevertheless, this office reviewed the records of this case in view of the errors
mentioned by movant in her memorandum and the answer thereto filed by
defendant. This office, however does not find any reversible error in its Order of
June 13, 1968.6

(6) Gabriela Walstrom filed a second motion for reconsideration of the Order of the
DANR dated June 13, 1968. In the meantime Mapa filed a motion for execution of the
said order of DANR.

(7) The DANR, in its order dated March 24, 1970, denied the second motion for
reconsideration of Walstrom and granted the motion for execution filed by the heirs of
Josefa Abaya Mapa.

(8) On June 8, 1970, Gabriela Walstrom filed a petition for relief with the DANR. Before
her petition was heard, she died on October 4, 1970. The heirs of Josefa Abaya Mapa,
pursuing the case, filed an answer dated March 29, 1972, to the petition of Walstrom,
stating that:

Preliminary Statement

The land being controverted by Appellee Walstrom was the subject of the Miscellaneous
Sales Application and not a Homestead Patent Application. The property now being
contested by Appellee Walstrom is already titled in the name of the HEIRS OF JOSEFA
ABAYA MAPA, under original Certificate of Title No. P-456 of the Registry of deeds for
the Province of Benguet, pursuant to a Miscellaneous Sales Patent No. 4487. This
property, therefore, is now under the Torrens System.

It is also worthwhile to note that the land in question is only a small portion of the claim
of Cacao Dianson and Walstrom. This is the land in question particularly designated as
Portion "A" of Lot 1, Psu-153657. 7

(Emphasis supplied by petitioner Walstrom)

It was only upon receipt on April 11, 1972 of the above-stated answer of the heirs of Josefa
Abaya Mapa to the petition for relief of the late Gabriela Walstrom, that the herein petitioner
Hilda Walstrom, daughter and successor-in-interest of the late Gabriela, learned for the first time
that the property being contested by Walstrom was already titled in the name of the heirs of
Josefa Abaya Mapa, under Original Certificate of Title No. P-456 of the Registry of Deeds for
the Province of Benguet, pursuant to Miscellaneous Sales Patent No. 4487.8

III.

Upon subsequent inquiry with respect to the claim of the heirs of Josefa Abaya Mapa that the
property in dispute in DANR Case No. 3118 had already been titled pursuant to Miscellaneous
Sales Patent No. 4487, the petitioner further became aware, also for the first time, that
Miscellaneous Sales Patent No. 4487 was issued by the DANR Secretary on July 19,1971 and
released for transmittal to the office of the Register of Deeds for Benguet Province on July 22,
1971; that on September 30, 1971, respondent register of deeds issued Original Certificate of
Title No. P-456, pursuant to Miscellaneous Sales Patent No. 4487; and that on or about
November 13, 1971, respondent Fernando Mapa, Jr. transferred the property covered by
Original Certificate of Title No. P-456 to the other heirs of Josefa Abaya Mapa, namely,
defendants Victorino A. Mapa, Jose A. Mapa, Maria C.M. de Goco, Fernando Mapa III, and
Mario L. Mapa, in connection with which transfer, Transfer Certificate of Title No. T-6644 was
issued by the Register of Deeds of Benguet. 9

During all this time, the petition for relief filed by Gabriela Walstrom on June 8, 1970 remained
unresolved. In fact, the DANR Secretary issued an order, dated January 9,1972, giving due
course to the said petition. According to petitioner Hilda Walstrom, she was compelled to file an
action in the then Court of First Instance of Baguio-Benguet on July 19, 1972 because the one-
year prescriptive period for seeking judicial relief provided for in Sec. 38 of the Land Registration
Act was about to lapse.

The court a quo dismissed petitioner Hilda Walstrom's petition on the ground of "failure to
exhaust administrative remedy dies."

Hence, this petition.

The petitioner submits two questions:

I.

DID PETITIONER-APPELLEE (sic) REALLY FAIL TO EXHAUST ADMINISTRATIVE

REMEDIES?

II.

IN THE LIGHT OF THE FACT THAT THE DISPUTED MISCELLANEOUS SALES

PATENT WAS ISSUED ONJUNE 19, 1971, DOES THE FACT THAT THE PETITION
FOR REVIEW IN DANR CASE NO. 3118 HAD NOT YET BEEN RESOLVED AS OF
JULY 19, 1972, PRECLUDE PETITIONER-APPELLANT FROM FILING ON SAID DATE
(JULY 19,1972) HER SUIT TO ANNUL SAID SALES PATENT AND THE TORRENS
CERTIFICATES OF TITLE ISSUED BY THE REGISTER OF DEEDS BY VIRTUE
THEREOF? 10

Petitioner Hilda Walstrom filed a civil complaint against the respondents praying for the
nullification of the Mapas' sales patent and certificates of title issued by the register of deeds of
Benguet Province 11 under Section 38 of Act 496 or the Land Registration Act.

The pertinent portions of Section 38 of said Act are quoted as follows:

SEC. 38. Decree of registration and remedies after entry of decree.

If the court after hearing finds that the applicant or adverse claimant has title as stated in
his application or adverse claim and proper for registration, a decree of confirmation and
registration shall be entered. Every decree of registration shall bind the land, and quiet
title thereto, subject only to the exceptions stated in the following section. It shall be
conclusive upon and against all persons, including the Insular Government and all the
branches thereof, whether mentioned by name in the application, notice of citation, or
included in the general description "To all whom it may concern," Such decree shall not
be opened by reason of the absence, infancy, or other disability of any person affected
thereby, nor by any proceeding in any court for reversing judgments or decrees; subject,
however, to the right of any person deprived of land or of any estate or interest therein
by decree of registration obtained by fraud to file in the competent Court of First Instance
a petition for review within one year after entry of the decree provided no innocent
purchaser for value has acquired an interest....

It is the teaching of the foregoing provisions that a decree of registration may be reopened or
reviewed by the proper Regional Trial Court upon the concurrence of five essential requisites, to
wit: (a) that the petitioner has a real and a dominical right; (b) that he has been deprived
thereof;(c) through fraud; (d) that the petition is filed within one year from the issuance of the
decree; and (e) that the property has not as yet been transferred to an innocent purchaser for
value. 12

An examination of the records of the case shows non-concurrence of the essential elements
enumerated above.

The first element is patently not present because the petitioner can not allege that she has
already a real and dominical right to the piece of property in controversy. The latest order of the
DANR Secretary, dated June 13,1968, was to give full force and effect to the regional land
officer's decision, dated August 12, 1964. 13 The regional land officer held that the petitioner's
Free Patent Application No. 3-74 shall exclude the disputed portion "A" of Lot No. 1, which,
instead, shall be included in the Mapas' Miscellaneous Sales Application.

The second element is also absent since corollary to the aforecited ruling of the DANR
Secretary, the petitioner can not aver that she was deprived of property because she did not
have a real right over portion "A".

Apropos the third element, the records are bereft of any indication that there was fraud in the
issuance of the certificates of title. As matters stand, the prerequisites have not been complied
with. The petitioner's recourse to Section 38 would not have prospered; accordingly, the
respondent court's dismissal of petitioner's complaint was proper.

We also find that the lower court was correct in holding that the case does not fall under any of
the exceptions to the rule on exhaustion of administrative remedies. The petitioner herself
admits that her petition for relief is still pending resolution by the Secretary of Agriculture and
Natural Resources who may reconsider his action on the matter in dispute. The petitioner's
failure to exhaust administrative remedies is a flaw which to our mind is fatal to a court review at
this time. 14

Instead of invoking Section 38, the petitioner should have pressed for the speedy resolution of
her petition with the DANR. The petitioner avers that since the one-year prescriptive period for
seeking judicial relief provided for in Sec. 38 of the Land Registration Act was about to lapse,
she was compelled to file the action to nullify said patent. 15 The petitioner's submission is not
correct. Her fear of the futility, or even only inefficacy, of exhausting the administrative remedies
granted her by law is clearly unfounded.

We have ruled before in Amerol vs. Bagumbaran 16 that notwithstanding the irrevocability of the
Torrens title already issued in the name of another person, he can still be compelled under the
law to reconvey the subject property to the rightful owner. The property registered is deemed to
be held in trust for the real owner by the person in whose name it is registered. After all, the
Torrens system was not designed to shield and protect one who had committed fraud or
misrepresentation and thus holds title in bad faith. 17

In an action for reconveyance, the decree of registration is respected as

incontrovertible.1âwphi1 What is sought instead is the transfer of the property, in this case the
title thereof, which has been wrongfully or erroneously registered in another person's name, to
its rightful and legal owner, or to one with a better right. This is what reconveyance is all
about. 18

Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute nor
is it imprescriptible. An action for reconveyance based on an implied or constructive trust must
perforce prescribe in ten years from the issuance of the Torrens title over the property.19

We find no reversible error in the challenged order of the trial court.

WHEREFORE, the petition is DENIED. No costs.

SO ORDERED.
G.R. No. L-4656 November 18, 1912

RICARDO PARDELL Y CRUZ and

VICENTA ORTIZ Y FELIN DE PARDELL, plaintiffs-appellees,
vs.
GASPAR DE BARTOLOME Y ESCRIBANO and
MATILDE ORTIZ Y FELIN DE BARTOLOME, defendants-appellants.

Gaspar de Bartolome, in his own behalf.

B. Gimenez Zoboli, for appellees.

TORRES, J.:

This is an appeal by bill of exceptions, from the judgment of October 5, 1907, whereby the
Honorable Dionisio Chanco, judge, absolved the defendants from the complaint, and the plaintiff
from a counterclaim, without special finding as to costs.

Counsel for the spouses Ricardo y Cruz and Vicente Ortiz y Felin de Pardell, the first of whom,
absent in Spain by reason of his employment, conferred upon the second sufficient and ample
powers to appear before the courts of justice, on June 8, 1905, in his written complaint, alleged
that the plaintiff, Vicente Ortiz, and the defendant, Matilde Ortiz, are the duly recognized natural
daughters of the spouses Miguel Ortiz and Calixta Felin y Paula who died in Vigan, Ilocos Sur,
in 1875 and 1882, respectively; that Calixta Felin, prior to her death, executed on August 17,
1876, a nuncupative will in Vigan whereby she made her four children, named Manuel,
Francisca, Vicenta, and Matilde, surnamed Ortiz y Felin, her sole and universal heirs of all her
property; that, of the persons enumerated, Manuel died before his mother and Francisca a few
years after her death, leaving no heirs by force of law, and therefore the only existing heirs of
the said testatrix are the plaintiff Vicenta Ortiz and the defendant Matilde Ortiz; that, aside from
some personal property and jewelry already divided among the heirs, the testatrix possessed, at
the time of the execution of her will, and left at her death the real properties which, with their
respective cash values, are as follows:

1. A house of strong material, with the lot on which it is built, situated on

P6,000.00
Escolta Street, Vigan, and valued at
2. A house of mixed material, with the lot on which it stands, at No. 88
1,500.00
Washington Street, Vigan; valued at
3. A lot on Magallanes Street, Vigan; valued at 100.00
4. A parcel of rice land, situated in the barrio of San Julian, Vigan; valued
60.00
at
5. A parcel of rice land in the pueblo of Santa Lucia; valued at 86.00
6. Three parcels of land in the pueblo of Candon; valued at 150.00
Total 7,896.00

That, on or about the first months of the year 1888, the defendants, without judicial
authorization, nor friendly or extrajudicial agreement, took upon themselves the administration
and enjoyment of the said properties and collected the rents, fruits, and products thereof, to the
serious detriment of the plaintiffs' interest; that, notwithstanding the different and repeated
demands extrajudicially made upon Matilde Ortiz to divide the aforementioned properties with
the plaintiff Vicente and to deliver to the latter the one-half thereof, together with one-half of the
fruits and rents collected therefrom, the said defendant and her husband, the self-styled
administrator of the properties mentioned, had been delaying the partition and delivery of the
said properties by means of unkept promises and other excuses; and that the plaintiffs, on
account of the extraordinary delay in the delivery of one-half of said properties, or their value in
cash, as the case might be, had suffered losses and damages in the sum of P8,000. Said
counsel for the plaintiffs therefore asked that judgment be rendered by sentencing the
defendants, Gaspar de Bartolome, and Matilde Ortiz Felin de Bartolome, to restore and deliver
to the plaintiffs one-half of the total value in cash, according to appraisal, of the undivided
property specified, which one-half amounted approximately to P3,948, or if deemed proper, to
recognize the plaintiff Vicenta Ortiz to be vested with the full and absolute right of ownership to
the said undivided one-half of the properties in question, as universal testamentary heir thereof
together with the defendant Matilde Ortiz, to indemnify the plaintiffs in the sum of P8,000, for
losses and damages, and to pay the costs.

Counsel for the defendants, in his answer denied the facts alleged in paragraphs 1, 4, 6, 7, and
8 thereof, inasmuch as, upon the death of the litigating sister's brother Manuel, their mother,
who was still living, was his heir by force of law, and the defendants had never refused to give to
the plaintiff Vicente Ortiz her share of the said properties; and stated that he admitted the facts
alleged in paragraph 2, provided it be understood, however, that the surname of the defendant's
mother was Felin, and not Feliu, and that Miguel Ortiz died in Spain, and not in Vigan; that he
also admitted paragraph 3 of the complaint, with the difference that the said surname should be
Felin, and likewise paragraph 5, except the part thereof relating to the personal property and the
jewelry, since the latter had not yet been divided; that the said jewelry was in the possession of
the plaintiffs and consisted of: one Lozada gold chronometer watch with a chain in the form of a
bridle curb and a watch charm consisting of the engraving of a postage stamp on a stone
mounted in gold and bearing the initials M. O., a pair of cuff buttons made of gold coins, four
small gold buttons, two finger rings, another with the initials M. O., and a gold bracelet; and that
the defendants were willing to deliver to the plaintiffs, in conformity with their petitions, one-half
of the total value in cash, according to appraisement, of the undivided real properties specified
in paragraph 5, which half amounted to P3,948.

In a special defense said counsel alleged that the defendants had never refused to divide the
said property and had in fact several years before solicited the partition of the same; that, from
1886 to 1901, inclusive, there was collected from the property on Calle Escolta the sum of 288
pesos, besides a few other small amounts derived from other sources, which were delivered to
the plaintiffs with other larger amounts, in 1891, and from the property on Calle Washington,
called La Quinta, 990.95 pesos, which proceeds, added together, made a total of 1,278.95
pesos, saving error or omission; that, between the years abovementioned, Escolta, and that on
Calle Washington, La Quinta, 376.33, which made a total of 1,141.71, saving error or omission;
that, in 1897, the work of reconstruction was begun of the house on Calle Escolta, which been
destroyed by an earthquake, which work was not finished until 1903 and required an
expenditure on the part of the defendant Matilde Ortiz, of 5,091.52 pesos; that all the collections
made up to August 1, 1905, including the rent from the stores, amounted to only P3,654.15, and
the expenses, to P6,252.32, there being, consequently, a balance of P2,598.17, which divided
between the sisters, the plaintiff and the defendant, would make the latter's share P1,299.08;
that, as shown by the papers kept by the plaintiffs, in the year 1891 the defendant Bartolome
presented to the plaintiffs a statement in settlements of accounts, and delivered to the person
duly authorized by the latter for the purpose, the sum of P2,606.29, which the said settlement
showed was owing his principals, from various sources; that, the defendant Bartolome having
been the administrator of the undivided property claimed by the plaintiffs, the latter were owing
the former legal remuneration of the percentage allowed by law for administration; and that the
defendants were willing to pay the sum of P3,948, one-half of the total value of the said
properties, deducting therefrom the amount found to be owing them by the plaintiffs, and asked
that judgment be rendered in their favor to enable them to recover from the latter that amount,
together with the costs and expenses of the suit.

The defendants, in their counter claim, repeated each and all of the allegations contained in
each of the paragraphs of section 10 of their answer; that the plaintiffs were obliged to pay to
the administrator of the said property the remuneration allowed him by law; that, as the
revenues collected by the defendants amounted to no more than P3,654.15 and the
expenditures incurred by them, to P6,252.32, it followed that the plaintiffs owed the defendants
P1,299.08, that is one-half of the difference between the amount collected from and that
extended on the properties, and asked that judgment be therefore rendered in their behalf to
enable them to collect this sum from the plaintiffs, Ricardo Pardell and Vicenta Ortiz, with legal
interest thereon from December 7, 1904, the date when the accounts were rendered, together
with the sums to which the defendant Bartolome was entitled for the administration of the
undivided properties in question.

By a written motion of August 21, 1905, counsel for the plaintiffs requested permission to amend
the complaint by inserting immediately after the words "or respective appraisal," fifth line of
paragraph 5, the phrase "in cash in accordance with the assessed value," and likewise further to
amend the same, in paragraph 6 thereof, by substituting the following word in lieu of the petition
for the remedy sought: "By reason of all the foregoing, I beg the court to be pleased to render
the judgment by sentencing the defendants, Gaspar de Bartolome and Matilde Ortiz Felin de
Bartolome, to restore and deliver to the plaintiffs an exact one-half of the total vale of the
undivided properties described in the complaint, such value to be ascertained by the expert
appraisal of two competent persons, one of whom shall be appointed by the plaintiffs and the
other by the defendants, and, in case of disagreement between these two appointees such
value shall be determined by a third expert appraiser appointed by the court, or, in a proper
case, by the price offered at public auction; or, in lieu thereof, it is requested that the court
recognize the plaintiff, Vicenta Ortiz, to be vested with a full and absolute right to an undivided
one-half of the said properties; furthermore, it is prayed that the plaintiffs be awarded an
indemnity of P8,000 for losses and damages, and the costs." Notwithstanding the opposition of
the defendants, the said amendment was admitted by the court and counsel for the defendants
were allowed to a period of three days within which to present a new answer. An exception was
taken to this ruling.

The proper proceedings were had with reference to the valuation of the properties concerned in
the division sought and incidental issues were raised relative to the partition of some of them
and their award to one or the other of the parties. Due consideration was taken of the averments
and statements of both parties who agreed between themselves, before the court, that any of
them might at any time acquire, at the valuation fixed by the expert judicial appraiser, any of the
properties in question, there being none in existence excluded by the litigants. The court,
therefore, by order of December 28, 1905, ruled that the plaintiffs were entitled to acquire, at the
valuation determined by the said expert appraiser, the building known as La Quinta, the lot on
which it stands and the warehouses and other improvements comprised within the inclosed
land, and the seeds lands situated in the pueblos of Vigan and Santa Lucia; and that the
defendants were likewise entitled to acquire the house on Calle Escolta, the lot on Calle
Magallanes, and the three parcels of land situated in the pueblo of Candon.

After this partition had been made counsel for the defendants, by a writing of March 8, 1906, set
forth: That, having petitioned for the appraisement of the properties in question for the purpose
of their partition, it was not to be understood that he desired from the exception duly entered to
the ruling made in the matter of the amendment to the complaint; that the properties retained by
the defendants were valued at P9,310, and those retained by the plaintiffs, at P2,885, one-half
of which amounts each party had to deliver to the other, as they were pro indiviso properties;
that, therefore, the defendants had to pay the plaintiffs the sum of P3,212.50, after deducting
the amount which the plaintiffs were obliged to deliver to the defendants, as one-half of the price
of the properties retained by the former; that, notwithstanding that the amount of the
counterclaim for the expenses incurred in the reconstruction of the pro indiviso property should
be deducted from the sum which the defendants had to pay the plaintiffs, the former, for the
purpose of bringing the matter of the partition to a close, would deliver to the latter, immediately
upon the signing of the instrument of purchase and sale, the sum of P3,212.50, which was one-
half of the value of the properties alloted to the defendants; such delivery, however, was not to
be understood as a renouncement of the said counterclaim, but only as a means for the final
termination of the pro indiviso status of the property.

The case having been heard, the court on October 5, 1907, rendered judgment holding that the
revenues and the expenses were compensated by the residence enjoyed by the defendant
party, that no losses or damages were either caused or suffered, nor likewise any other
expense besides those aforementioned, and absolved the defendants from the complaint and
the plaintiffs from the counterclaim, with no special finding as to costs. An exception was taken
to this judgment by counsel for the defendants who moved for a new trial on the grounds that
the evidence presented did not warrant the judgment rendered and that the latter was contrary
to law. This motion was denied, exception whereto was taken by said counsel, who filed the
proper bill of exceptions, and the same was approved and forwarded to the clerk of this court,
with a transcript of the evidence.
Both of the litigating sisters assented to a partition by halves of the property left in her will by
their mother at her death; in fact, during the course of this suit, proceedings were had, in
accordance with the agreement made, for the division between them of the said hereditary
property of common ownership, which division was recognized and approved in the findings of
the trial court, as shown by the judgment appealed from.

The issues raised by the parties, aside from said division made during the trial, and which have
been submitted to this court for decision, concern: (1) The indemnity claimed for losses and
damages, which the plaintiffs allege amount to P8,000, in addition to the rents which should
have been derived from the house on Calle Escolta, Vigan; (2) the payment by the plaintiffs to
the defendants of the sum of P1,299.08, demanded by way of counterclaim, together with legal
interest thereon from December 7, 1904; (3) the payment to the husband of the defendant
Matilde Ortiz, of a percentage claimed to be due him as the administrator of the property of
common ownership; (4) the division of certain jewelry in the possession of the plaintiff Vicenta
Ortiz; and (5) the petition that the amendment be held to have been improperly admitted, which
was made by the plaintiffs in their written motion of August 21, 1905, against the opposition of
the defendants, through which admission the latter were obliged to pay the former
P910.50.lawphil.net

Before entering upon an explanation of the propriety or impropriety of the claims made by both
parties, it is indispensable to state that the trial judge, in absolving the defendants from the
complaint, held that they had not caused losses and damages to the plaintiffs, and that the
revenues and the expenses were compensated, in view of the fact that the defendants had
been living for several years in the Calle Escolta house, which was pro indiviso property of joint
ownership.

By this finding absolving the defendants from the complaint, and which was acquiesced in by
the plaintiffs who made no appeal therefrom, the first issue has been decided which was raised
by the plaintiffs, concerning the indemnity for losses and damages, wherein are comprised the
rents which should have been obtained from the upper story of the said house during the time it
was occupied by the defendants, Matilde Ortiz and her husband, Gaspar de Bartolome.

Notwithstanding the acquiescence on the part of the plaintiffs, assenting to the said finding
whereby the defendants were absolved from the complaint, yet, as such absolution is based on
the compensation established in the judgment of the trial court, between the amounts which
each party is entitled to claim from the other, it is imperative to determine whether the defendant
Matilde Ortiz, as coowner of the house on Calle Escolta, was entitled, with her husband, to
reside therein, without paying to her coowner, Vicenta Ortiz, who, during the greater part of the
time, lived with her husband abroad, one-half of the rents which the upper story would have
produced, had it been rented to a stranger.

Article 394 of the Civil Code prescribes:

Each coowner may use the things owned in common, provided he uses them in
accordance with their object and in such manner as not to injure the interests of the
community nor prevent the coowners from utilizing them according to their rights.

Matilde Ortiz and her husband occupied the upper story, designed for use as a dwelling, in the
house of joint ownership; but the record shows no proof that, by so doing, the said Matilde
occasioned any detriment to the interest of the community property, nor that she prevented her
sister Vicenta from utilizing the said upper story according to her rights. It is to be noted that the
stores of the lower floor were rented and accounting of the rents was duly made to the plaintiffs.

Each coowner of realty held pro indiviso exercises his rights over the whole property and may
use and enjoy the same with no other limitation than that he shall not injure the interests of his
coowners, for the reason that, until a division be made, the respective part of each holder can
not be determined and every one of the coowners exercises, together with his other
coparticipants, joint ownership over the pro indiviso property, in addition to his use and
enjoyment of the same.
As the hereditary properties of the joint ownership of the two sisters, Vicenta Ortiz, plaintiff, and
Matilde Ortiz, defendant, were situated in the Province of Ilocos Sur, and were in the care of the
last named, assisted by her husband, while the plaintiff Vicenta with her husband was residing
outside of the said province the greater part of the time between 1885 and 1905, when she left
these Islands for Spain, it is not at all strange that delays and difficulties should have attended
the efforts made to collect the rents and proceeds from the property held in common and to
obtain a partition of the latter, especially during several years when, owing to the insurrection,
the country was in a turmoil; and for this reason, aside from that founded on the right of
coownership of the defendants, who took upon themselves the administration and care of the
properties of joint tenancy for purposes of their preservation and improvement, these latter are
not obliged to pay to the plaintiff Vicenta one-half of the rents which might have been derived
from the upper of the story of the said house on Calle Escolta, and, much less, because one of
the living rooms and the storeroom thereof were used for the storage of some belongings and
effects of common ownership between the litigants. The defendant Matilde, therefore, in
occupying with her husband the upper floor of the said house, did not injure the interests of her
coowner, her sister Vicenta, nor did she prevent the latter from living therein, but merely
exercised a legitimate right pertaining to her as coowner of the property.

Notwithstanding the above statements relative to the joint-ownership rights which entitled the
defendants to live in the upper story of the said house, yet in view of the fact that the record
shows it to have been proved that the defendant Matilde's husband, Gaspar de Bartolome,
occupied for four years a room or a part of the lower floor of the same house on Calle Escolta,
using it as an office for the justice of the peace, a position which he held in the capital of that
province, strict justice, requires that he pay his sister-in-law, the plaintiff, one half of the monthly
rent which the said quarters could have produced, had they been leased to another person. The
amount of such monthly rental is fixed at P16 in accordance with the evidence shown in the
record. This conclusion as to Bartolome's liability results from the fact that, even as the husband
of the defendant coowner of the property, he had no right to occupy and use gratuitously the
said part of the lower floor of the house in question, where he lived with his wife, to the
detriment of the plaintiff Vicenta who did not receive one-half of the rent which those quarters
could and should have produced, had they been occupied by a stranger, in the same manner
that rent was obtained from the rooms on the lower floor that were used as stores. Therefore,
the defendant Bartolome must pay to the plaintiff Vicenta P384, that is, one-half of P768, the
total amount of the rents which should have been obtained during four years from the quarters
occupied as an office by the justice of the peace of Vigan.

With respect to the second question submitted for decision to this court, relative to the payment
of the sum demanded as a counterclaim, it was admitted and proved in the present case that,
as a result of a serious earthquake on August 15, 1897, the said house on Calle Escolta was left
in ruins and uninhabitable, and that, for its reconstruction or repair, the defendants had to
expend the sum of P6,252.32. This expenditure, notwithstanding that it was impugned, during
the trial, by the plaintiffs, was duly proved by the evidence presented by the defendants.
Evidence, unsuccessfully rebutted, was also introduced which proved that the rents produced
by all the rural and urban properties of common ownership amounted, up to August 1, 1905, to
the sum of P3,654.15 which, being applied toward the cost of the repair work on the said house,
leaves a balance of P2,598.17, the amount actually advanced by the defendants, for the rents
collected by them were not sufficient for the termination of all the work undertaken on the said
building, necessary for its complete repair and to replace it in a habitable condition. It is
therefore lawful and just that the plaintiff Vicenta Ortiz, who was willing to sell to her sister
Matilde for P1,500, her share in the house in question, when it was in a ruinous state, should
pay the defendants one-half of the amount expanded in the said repair work, since the building
after reconstruction was worth P9,000, according to expert appraisal. Consequently, the
counterclaim made by the defendants for the payment to them of the sum of P1,299.08, is a
proper demand, though from this sum a reduction must be made of P384, the amount of one-
half of the rents which should have been collected for the use of the quarters occupied by the
justice of the peace, the payment of which is incumbent upon the husband of the defendant
Matilde, as aforesaid, and the balance remaining, P915.08, is the amount which the plaintiff
Vicenta must pay to the defendants.

The defendants claim to be entitled to the collection of legal interest on the amount of the
counterclaim, from December 7, 1904. This contention can not be sustained, inasmuch as, until
this suit is finally decided, it could not be known whether the plaintiffs would or would not be
obliged to pay the sum whatever in reimbursement of expenses incurred by the plaintiffs in the
repair work on the said house on Calle Escolta, whether or not the defendants, in turn, were
entitled to collect any such amount, and, finally, what the net sum would be which the plaintiff's
might have to pay as reimbursement for one-half of the expenditure made by the defendants.
Until final disposal of the case, no such net sum can be determined, nor until then can the
debtor be deemed to be in arrears. In order that there be an obligation to pay legal interest in
connection with a matter at issue between the parties, it must be declared in a judicial decision
from what date the interest will be due on the principal concerned in the suit. This rule has been
established by the decisions of the supreme court of Spain, in reference to articles 1108, 1109,
and 1110 of the Civil Code, reference on April 24, 1867, November 19, 1869, and February 22,
1901.

With regard to the percentage, as remuneration claimed by the husband of the defendant
Matilde for his administration of the property of common ownership, inasmuch as no stipulation
whatever was made in the matter by and between him and his sister-in-law, the said defendant,
the claimant is not entitled to the payment of any remuneration whatsoever. Of his own accord
and as an officious manager, he administered the said pro indiviso property, one-half of which
belonged to his wife who held it in joint tenancy, with his sister-in-law, and the law does not
allow him any compensation as such voluntary administrator. He is merely entitled to a
reimbursement for such actual and necessary expenditures as he may have made on the
undivided properties and an indemnity for the damages he may have suffered while acting in
that capacity, since at all events it was his duty to care for and preserve the said property, half
of which belonged to his wife; and in exchange for the trouble occasioned him by the
administration of his sister-in-law's half of the said property, he with his wife resided in the upper
story of the house aforementioned, without payment of one-half of the rents said quarters might
have produced had they been leased to another person.

With respect to the division of certain jewelry, petitioned for by the defendants and appellants
only in their brief in this appeal, the record of the proceedings in the lower court does not show
that the allegation made by the plaintiff Vicenta is not true, to the effect that the deceased
mother of the litigant sisters disposed of this jewelry during her lifetime, because, had she not
done so, the will made by the said deceased would have been exhibited in which the said
jewelry would have been mentioned, at least it would have been proved that the articles in
question came into the possession of the plaintiff Vicenta without the expressed desire and the
consent of the deceased mother of the said sisters, for the gift of this jewelry was previously
assailed in the courts, without success; therefore, and in view of its inconsiderable value, there
is no reason for holding that the said gift was not made.

As regards the collection of the sum of P910.50, which is the difference between the assessed
value of the undivided real properties and the price of the same as determined by the judicial
expert appraiser, it is shown by the record that the ruling of the trial judge admitting the
amendment to the original complaint, is in accord with the law and principles of justice, for the
reason that any of the coowners of a pro indiviso property, subject to division or sale, is entitled
to petition for its valuation by competent expert appraisers. Such valuation is not prejudicial to
any of the joint owners, but is beneficial to their interests, considering that, as a general rule, the
assessed value of a building or a parcel of realty is less than the actual real value of the
property, and this being appraiser to determine, in conjunction with the one selected by the
plaintiffs, the value of the properties of joint ownership. These two experts took part in the latter
proceedings of the suit until finally, and during the course of the latter, the litigating parties
agreed to an amicable division of the pro indiviso hereditary property, in accordance with the
price fixed by the judicial expert appraiser appointed as a third party, in view of the
disagreement between and nonconformity of the appraisers chosen by the litigants. Therefore it
is improper now to claim a right to the collection of the said sum, the difference between the
assessed value and that fixed by the judicial expert appraiser, for the reason that the increase in
price, as determined by this latter appraisal, redounded to the benefit of both parties.

In consideration of the foregoing, whereby the errors assigned to the lower court have been duly
refuted, it is our opinion that, with a partial reversal of the judgment appealed from, in so far as it
absolves the plaintiffs from the counterclaim presented by the defendants, we should and
hereby do sentence the plaintiffs to the payment of the sum of P915.08, the balance of the sum
claimed by the defendants as a balance of the one-half of the amount which the defendants
advanced for the reconstruction or repair of the Calle Escolta house, after deducting from the
total of such sum claimed by the latter the amount of P384 which Gaspar de Bartolome, the
husband of the defendant Matilde, should have paid as one-half of the rents due for his
occupation of the quarters on the lower floor of the said house as an office for the justice of the
peace court of Vigan; and we further find: (1) That the defendants are not obliged to pay one-
half of the rents which could have been obtained from the upper story of the said house; (2) that
the plaintiffs can not be compelled to pay the legal interest from December 7, 1904, on the sum
expanded in the reconstruction of the aforementioned house, but only the interest fixed by law,
at the rate of 6 per cent per annum, from the date of the judgment to be rendered in accordance
with this decision; (3) that the husband of the defendant Matilde Ortiz is not entitled to any
remuneration for the administration of the pro indiviso property belonging to both parties; (4)
that, neither is he entitled to collect from the plaintiffs the sum of P910.50, the difference
between the assessed valuation and the price set by the expert appraisal solicited by the
plaintiffs in their amendment to the complaint; and, (5) that no participation shall be made of
jewelry aforementioned now in the possession of the plaintiff Vicenta Ortiz. The said judgment,
as relates to the points appealed, is affirmed, in so far as its findings agree with those of this
decision, and is reversed, in so far as they do not. No special finding is made regarding the
costs of both instances. So ordered.
G.R. No. L-49731 September 29, 1988

ALFREDO SERING, petitioner,

vs.
RESTITUTO PLAZO and GERTRUDES SUAN, respondents.

Manuel Tesiorna and Noel P. Catre for petitioner.

Timoteo R. Quimpo, Jr. for respondents.

NARVASA, J.:

The application of settled principles is all that is needed to resolve the instant appeal. Article 487
of the Civil Code provides that anyone of the co-owners of an immovable may bring an action in
ejectment. A co-owner may thus bring an ejectment action without joining the other co-owners,
the suit being deemed instituted for the benefit of all. 1 And the term, "action in ejectment,"
includes a suit of forcible entry (detentacion) or unlawful detainer (desahucio). 2

The proceeding at bar had its inception in a forcible entry suit filed by petitioner Sering against
respondent Spouses Restituto Plazo and Gertrudes Suan with the then Municipal Court of del
Carmen, Surigao del Norte. 3 The case resulted in a judgment against the Plazos who
thereupon appealed to the Court of First Instance of Surigao del Norte. In the latter court the
Plazos learned that the property subject of the suit was not owned solely by Sering but was
owned in common by him and others. This prompted the Plazos to move for the impleading of
the other co-owners as parties plaintiff, on the theory that they were indispensable parties. 4 The
Court agreed and ordered Sering to amend his complaint so as to include his co-owners as co-
plaintiffs. Sering demurred claiming that under the law anyone of the co-owners could bring suit
for ejectment without joining the others. 5 The Plazos contended, on the other hand, that the
provision invoked by Sering had no application to forcible entry actions, but only to suits of
unlawful detainer. Because Sering failed to comply with the Courts order for amendment of the
complaint, the Trial Court dismissed his complaint. 6 It also thereafter denied his motion for
reconsidereration 7 Sering has come to this Court praying for the nullification and reversal of
said order of dismissal and that denying his plea for reconsideration.

The orders complained of are indeed tainted by serious error and should therefore be reversed
and set aside, upon the considerations set out in the opening paragraph of this resolution. The
same issues had been raised and resolved as early as eight (8) years before promulgation of
the contested orders. In Vencilao v. Camarento, decided in 1969, 8 this Court pertinently ruled
as follows: 9

2. Anent the question of whether an action of forcible entry and detainer should
be brought in the name of all co-owners, We hold that under Article 487 of the
new Civil Code, any of the co-owners may bring the action ... . In forcible
entry and detainer action(s) the matter to be determined is simply the question of
prior physical possession. It having been alleged in the complaint that the plaintiff
was in actual possession of the properties, certainly the plaintiff alone, who was
in actual possession, could file the complaint.

The Court has been cited to no reason of substance for modifying or overruling this doctrine.

WHEREFORE, the challenged Orders dismissing the petitioner's complaint for ejectment and
denying reconsideration of the dismissal decree 10 are REVERSED AND SET ASIDE, and the
case is REMANDED to the Regional Trial Court for resolution, with all deliberate dispatch, of the
respondents' appeal from the judgment of the inferior court. This Resolution is immediately
executory.
G.R. No. 168943 October 27, 2006

IGLESIA NI CRISTO, petitioner,

vs.
HON. THELMA A. PONFERRADA, in her capacity as Presiding Judge, Regional Trial
Court, Br. 104, Quezon City, and HEIRS OF ENRIQUE G. SANTOS, respondents.

DECISION

CALLEJO, SR, J.:

This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-
G.R. SP No. 72686 and its Resolution2 denying the motion for reconsideration of the said
decision.

On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all surnamed Santos, and
Sonia Santos-Wallin, represented by Enrique G. Santos, filed a complaint3 for Quieting of Title
and/or Accion Reinvindicatoria before the Regional Trial Court (RTC) of Quezon City against
the Iglesia Ni Cristo (INC), defendant therein.

Plaintiffs alleged therein that, during his lifetime, Enrique Santos was the owner of a 936-
square-meter parcel of land located in Tandang Sora, Quezon City covered by Transfer
Certificate of Title (TCT) No. 57272 issued by the Register of Deeds on July 27, 1961 which
cancelled TCT No. 57193-289. He had been in possession of the owner’s duplicate of said title
and had been in continuous, open, adverse and peaceful possession of the property. He died
on February 9, 1970 and was survived by his wife, Alicia Santos, and other plaintiffs, who were
their children. Thereafter, plaintiffs took peaceful and adverse possession of the property, and of
the owner’s duplicate of said title. When the Office of the Register of Deeds of Quezon City was
burned on June 11, 1988, the original copy of said title was burned as well. The Register of
Deeds had the title reconstituted as TCT No. RT-110323, based on the owner’s duplicate of
TCT No. 57272. Sometime in February 1996, plaintiffs learned that defendant was claiming
ownership over the property based on TCT No. 321744 issued on September 18, 1984 which,
on its face, cancelled TCT No. 320898, under the name of the Philippine National Bank, which
allegedly cancelled TCT No. 252070 in the names of the spouses Marcos and Romana dela
Cruz. They insisted that TCT Nos. 321744, 320898 and 252070 were not among the titles
issued by the Register of Deeds of Quezon City and even if the Register of Deeds issued said
titles, it was contrary to law. Enrique Santos, during his lifetime, and his heirs, after his death,
never encumbered or disposed the property. In 1996, plaintiffs had the property fenced but
defendant deprived them of the final use and enjoyment of their property.

Plaintiffs prayed that, after due proceedings, judgment be rendered in their favor, thus:

WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered

quieting the title of plaintiffs over and/or recover possession of their said property in the
name of deceased Enrique Santos, covered by said TCT No. RT-110323(57272) of the
Register of Deeds at Quezon City and that:

1. The title of defendant, TCT No. 321744 be ordered cancelled by the Register
of Deeds of Quezon City;

2. The defendant be ordered to pay plaintiffs’ claims for actual damages in the
sum of P100,000.00;

3. The defendant be ordered to pay plaintiffs’ claims for compensatory damages

in the sum of at least P1,000,000.00;
 4. The defendant be ordered to pay plaintiffs’ claims for reimbursement of the
lawyer’s professional fees consisting of the aforesaid P50,000.00 acceptance fee
and reimbursement of the said success fee in par. 10 above; and lawyer’s
expenses of P2,000.00 for each hearing in this case;

5. The defendant be ordered to pay expenses and costs of litigation in the sum of
at least P200,000.00.

Other reliefs that are just and equitable in the premises are, likewise, prayed for. 4

As gleaned from the caption of the complaint, plaintiffs appear to be the heirs of Enrique Santos,
represented by Enrique G. Santos. The latter signed the Verification and Certificate of Non-
Forum Shopping which reads:

I, ENRIQUE G. SANTOS, of legal age, under oath, state that I am one of the children of
the late Enrique Santos and I represent the heirs of said Enrique Santos who are my co-
plaintiffs in the above-captioned case and that I directed the preparation of the instant
complaint, the contents of which are true and correct to the best of my knowledge and
the attachments are faithful reproductions of the official copies in my possession.

I hereby certify that I have not commenced any other action or proceeding involving the
same issues in the Supreme Court, the Court of Appeals, or different Divisions thereof,
or any other tribunal or agency, and to the best of my knowledge, no such action or
proceeding is pending in the Supreme Court, the Court of Appeals, or different Divisions
thereof, or any other tribunal or agency, and that I shall notify this Commission within
three days from notice that a similar action or proceeding has been filed or is pending
thereat.

IN WITNESS WHEREOF, I hereby affix my signature this 23rd day of October 2001 at
Pasig City, Metro Manila.

(Sgd.)

ENRIQUE G. SANTOS

SUBSCRIBED AND SWORN to before me this 23rd day of October 2001 at Pasig City,
affiant exhibiting to me his CTC No. 07303074 issued at Sta. Cruz, Laguna on April 16,
2001.

(Sgd.)

PETER FRANCIS G. ZAGALA

Notary Public
Until December 31, 2002
PTR No. 0287069
Issued on 1-10-01
At Pasig City5

Defendant moved to dismiss plaintiffs’ complaint on the following grounds: (1) plaintiffs failed to
faithfully comply with the procedural requirements set forth in Section 5, Rule 7 of the 1997
Rules of Civil Procedure; (2) the action (either Quieting of Title or Accion Reinvindicatoria) had
prescribed, the same having been filed only on October 24, 2001 beyond the statutory ten-year
period therefor; and (3) that the complaint is defective in many respects.6

Defendant asserted that the case involved more than one plaintiff but the verification and
certification against forum shopping incorporated in the complaint was signed only by Enrique
Santos. Although the complaint alleges that plaintiffs are represented by Enrique Santos, there
is no showing that he was, indeed, authorized to so represent the other plaintiffs to file the
complaint and to sign the verification and certification of non-forum shopping.7 Thus, plaintiffs
failed to comply with Section 5, Rule 7 of the Rules of Court. Defendant cited the ruling of this
Court in Loquias v. Office of the Ombudsman.8
Defendant maintained that the complaint is defective in that, although there is an allegation that
Enrique Santos represents the other heirs, there is nothing in the pleading to show the latter’s
authority to that effect; the complaint fails to aver with particularity the facts showing the
capacity of defendant corporation to sue and be sued; and the pleading does not state the
address of plaintiffs. Defendant likewise averred that the complaint should be dismissed on the
ground of prescription. It argued that plaintiffs anchor their claim on quieting of title and
considering that they are not in possession of the land in question, their cause of action
prescribed after ten years. On the other hand, if the supposed right of plaintiffs is based
on accion reinvindicatoria, prescription would set in after 10 years from dispossession. In both
cases, defendant asserts, the reckoning point is 1984 when defendant acquired TCT No.
321744 and possession of the land in question.

In their Comment9 on the motion, plaintiffs averred that the relationship of a co-owner to the
other co-owners is fiduciary in character; thus, anyone of them could effectively act for another
for the benefit of the property without need for an authorization. Consequently, Enrique Santos
had the authority to represent the other heirs as plaintiffs and to sign the verification and
certification against forum shopping.10 On the issue of prescription, plaintiffs argued that the
prescriptive period for the actions should be reckoned from 1996, when defendant claimed
ownership over the property and barred plaintiffs from fencing their property, not in 1984 when
TCT No. 321744 was issued by the Register of Deeds in the name of defendant as owner.

In its reply, defendant averred that absent any authority from his co-heirs, Enrique Santos must
implead them as plaintiffs as they are indispensable parties. In response, plaintiffs aver that a
co-owner of a property can execute an action for quieting of title without impleading the other
co-owners.

The trial court issued an Order11 denying defendant’s motion to dismiss. It declared that since
Enrique Santos was one of the heirs, his signature in the verification and certification constitutes
substantial compliance with the Rules. The court cited the ruling of this Court in Dar v. Alonzo-
Legasto.12 The court, likewise, held that prescription had not set in and that failure to state the
address of plaintiffs in the complaint does not warrant the dismissal of the complaint.

Defendant filed a motion for reconsideration, which the court likewise denied in an Order13 dated
July 10, 2002.

Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari and Prohibition with Prayer for
the Issuance of a Temporary Restraining Order and/or Preliminary Injunction14 before the CA,
raising the following issues:

I.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER

DISCRETION WHEN SHE HELD THAT THE CERTIFICATION OF NON-FORUM
SHOPPING SIGNED BY ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL
COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL
PROCEDURE, IN CLEAR CONTRAVENTION OF THE RULES OF COURT, AND THE
RULING IN LOQUIAS V. OFFICE OF THE OMBUDSMAN, G.R. NO. 1399396 (SIC),
AUGUST 16, 2000, 338 SCRA 62, AND ORTIZ V. COURT OF APPEALS, G.R. NO.
127393, 299 SCRA 708 (DECEMBER 4, 1998).

II.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER

DISCRETION IN APPLYING THE RULING IN DAR, ET. AL. V. HON. ROSE MARIE
ALONZO-LEGASTO, ET. AL., G.R. NO. 143016, AUGUST 30, 2000 TO THE INSTANT
CASE.

III.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER

DISCRETION WHEN SHE HELD THAT THE AUTHORITY OF ENRIQUE G. SANTOS
 TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE
"INC" IS A MATTER OF EVIDENCE.

IV.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER

DISCRETION WHEN SHE HELD THAT THE ACTION FOR QUIETING OF TITLE
AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET
PRESCRIBED.15

Petitioner averred that, of the plaintiffs below, only plaintiff Enrique Santos signed the
verification and certification of non-forum shopping. Under Section 5, Rule 7 of the 1997 Rules
of Civil Procedure, all the plaintiffs must sign, unless one of them is authorized by a special
power of attorney to sign for and in behalf of the others. Petitioner argues that the bare claim of
Enrique Santos that he signed the verification and certification in his behalf and of the other
plaintiffs who are his co-heirs/co-owners of the property does not even constitute substantial
compliance of the rule. Contrary to the ruling of the trial court, the absence or existence of an
authority of Enrique Santos to sign the verification and certification for and in behalf of his co-
plaintiffs is not a matter of evidence. The defect is fatal to the complaint of respondents and
cannot be cured by an amendment of the complaint. The trial court erred in applying the ruling
of this Court in Dar v. Alonzo-Legasto.16

Petitioner maintained that the action of respondents, whether it be one for quieting of title or an
accion reinvindicatoria, had prescribed when the complaint was filed on October 24, 2001.
Petitioner asserts that this is because when respondents filed their complaint, they were not in
actual or physical possession of the property, as it (petitioner) has been in actual possession of
the property since 1984 when TCT No. 321744 was issued to it by the Register of Deeds. This
is evident from the nature of a reinvindicatory action itself – which is an action whereby plaintiff
alleges ownership over the subject parcel of land and seeks recovery of its full possession. By
their action, respondents thereby admitted that petitioner was in actual possession of the
property, and as such, respondents’ action for quieting of title or accion reinvindicatoria may
prescribe in ten (10) years from 1984 or in 1994, it appearing that it acted in good faith when it
acquired the property from the registered owner, conformably with Article 555(4) of the New
Civil Code.

On April 7, 2005, the CA rendered the assailed decision17 dismissing the petition, holding that
the RTC did not commit grave abuse of its discretion amounting to lack or excess of jurisdiction
in denying petitioner’s motion to dismiss. As the Court held in DAR v. Alonzo-Legasto18 and in
Gudoy v. Guadalquiver,19 the certification signed by one with respect to a property over which
he shares a common interest with the rest of the plaintiffs (respondents herein) substantially
complied with the Rules. As to the issue of prescription, the appellate court held that the
prescriptive period should be reckoned from 1996, when petitioner claimed ownership and
barred respondents from fencing the property.

Petitioner is now before this Court on petition for review on certiorari, raising the following
issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE

CERTIFICATION OF NON-FORUM SHOPPING SIGNED BY RESPONDENT ENRIQUE
G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7
OF THE 1997 RULES OF CIVIL PROCEDURE AND IN APPLYING THE CASE OF
GUDOY V. GUADALQUIVER, 429 SCRA 723, WITHOUT REGARD TO MORE
RECENT JURISPRUDENCE.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE
AUTHORITY OF RESPONDENT ENRIQUE G. SANTOS TO REPRESENT HIS CO-
 HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE PETITIONER IS A
MATTER OF EVIDENCE.

III.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE

ACTION FOR QUIETING OF TITLE AND/OR ACCION REINVINDICATORIA (CIVIL
CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED.20

Petitioner reiterated its arguments in support of its petition in the CA as its arguments in support
of its petition in the present case.

Sections 4 and 5, Rule 7 of the Revised Rules of Court on verification and certification against
forum shopping read:

Sec. 4. Verification. – Except when otherwise specifically required by law or rule,

pleadings need not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his personal knowledge or based on authentic
records.

A pleading required to be verified which contains a verification based on "information

and belief" or upon "knowledge, information and belief," or lacks a proper verification,
shall be treated as an unsigned pleading.

Sec. 5. Certification against forum shopping. – The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed therewith: (a) that he has
not theretofore commenced any action or filed any claim involving the same issues in
any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is such other pending action or claim,
a complete statement of the present status thereof; and (c) if he should thereafter learn
that the same or similar action or claim has been filed or is pending, he shall report that
fact within five (5) days therefrom to the court wherein his aforesaid complaint or
initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt of court, without prejudice to the
corresponding administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as a
cause for administrative sanctions.

The purpose of verification is simply to secure an assurance that the allegations of the petition
(or complaint) have been made in good faith; or are true and correct, not merely speculative.
This requirement is simply a condition affecting the form of pleadings, and noncompliance
therewith does not necessarily render it fatally defective. Indeed, verification is only a formal, not
a jurisdictional requirement.21

The issue in the present case is not the lack of verification but the sufficiency of one executed
by only one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo,22 that the
verification requirement is deemed substantially complied with when, as in the present case,
only one of the heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth of
the allegations in the petition (complaint), signed the verification attached to it. Such verification
is deemed sufficient assurance that the matters alleged in the petition have been made in good
faith or are true and correct, not merely speculative.
The same liberality should likewise be applied to the certification against forum shopping. The
general rule is that the certification must be signed by all plaintiffs in a case and the signature of
only one of them is insufficient. However, the Court has also stressed in a number of cases that
the rules on forum shopping were designed to promote and facilitate the orderly administration
of justice and thus should not be interpreted with such absolute literalness as to subvert its own
ultimate and legitimate objective. The rule of substantial compliance may be availed of with
respect to the contents of the certification. This is because the requirement of strict compliance
with the provisions merely underscores its mandatory nature in that the certification cannot be
altogether dispensed with or its requirements completely disregarded.23

The substantial compliance rule has been applied by this Court in a number of cases: Cavile v.
Heirs of Cavile,24where the Court sustained the validity of the certification signed by only one of
petitioners because he is a relative of the other petitioners and co-owner of the properties in
dispute; Heirs of Agapito T. Olarte v. Office of the President of the Philippines,25 where the
Court allowed a certification signed by only two petitioners because the case involved a family
home in which all the petitioners shared a common interest; Gudoy v. Guadalquiver,26 where the
Court considered as valid the certification signed by only four of the nine petitioners because all
petitioners filed as co-owners pro indiviso a complaint against respondents for quieting of title
and damages, as such, they all have joint interest in the undivided whole; and Dar v. Alonzo-
Legasto,27 where the Court sustained the certification signed by only one of the spouses as they
were sued jointly involving a property in which they had a common interest.

It is noteworthy that in all of the above cases, the Court applied the rule on substantial
compliance because of the commonality of interest of all the parties with respect to the subject
of the controversy.

Applying the doctrines laid down in the above cases, we find and so hold that the CA did not err
in affirming the application of the rule on substantial compliance. In the instant case, the
property involved is a 936-square-meter real property. Both parties have their respective TCTs
over the property. Respondents herein who are plaintiffs in the case below have a common
interest over the property being the heirs of the late Enrique Santos, the alleged registered
owner of the subject property as shown in one of the TCTs. As such heirs, they are considered
co-owners pro indiviso of the whole property since no specific portion yet has been adjudicated
to any of the heirs. Consequently, as one of the heirs and principal party, the lone signature of
Enrique G. Santos in the verification and certification is sufficient for the RTC to take cognizance
of the case. The commonality of their interest gave Enrique G. Santos the authority to inform the
RTC on behalf of the other plaintiffs therein that they have not commenced any action or claim
involving the same issues in another court or tribunal, and that there is no other pending action
or claim in another court or tribunal involving the same issues. Hence, the RTC correctly denied
the motion to dismiss filed by petitioner.

Considering that at stake in the present case is the ownership and possession over a prime
property in Quezon City, the apparent merit of the substantive aspects of the case should be
deemed as a special circumstance or compelling reason to allow the relaxation of the rule.

Time and again, this Court has held that rules of procedure are established to secure
substantial justice. Being instruments for the speedy and efficient administration of justice, they
may be used to achieve such end, not to derail it. In particular, when a strict and literal
application of the rules on non-forum shopping and verification will result in a patent denial of
substantial justice, these may be liberally construed.28 The ends of justice are better served
when cases are determined on the merits – after all parties are given full opportunity to ventilate
their causes and defenses – rather than on technicality or some procedural imperfections.29

Indeed, this Court strictly applied the rules on verification and certification against forum
shopping as in the cases of Loquias v. Office of the Ombudsman30 and Tolentino v.
Rivera.31 However, in both cases, the commonality of interest between or among the parties is
wanting. In Loquias, the co-parties were being sued in their individual capacities as mayor, vice
mayor and members of the municipal board. In Tolentino, the lone signature of Tolentino was
held insufficient because he had no authority to sign in behalf of the Francisco spouses. In such
case, the Court concluded that Tolentino merely used the spouses’ names for whatever mileage
he thought he could gain. It is thus clear from these cases that the commonality of interest is
material in the relaxation of the Rules.

Anent the issue of the authority of Enrique G. Santos to represent his co-heirs/co-plaintiffs, we
find no necessity to show such authority. Respondents herein are co-owners of the subject
property. As such co-owners, each of the heirs may properly bring an action for ejectment,
forcible entry and detainer, or any kind of action for the recovery of possession of the subject
properties. Thus, a co-owner may bring such an action, even without joining all the other co-
owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all.32

We uphold the validity of the complaint because of the following circumstances: (1) the caption
of the instant case is Heirs of Enrique Santos v. Iglesia ni Cristo;33 (2) the opening statement of
the complaint states that plaintiffs are the heirs of Enrique Santos and likewise names the
particular heirs of the latter who instituted the complaint below;34 (3) the case involves a
property owned by the predecessor-in-interest of plaintiffs therein;35 and (4) the verification
signed by Enrique G. Santos clearly states that he is one of the children of the late Enrique
Santos and that he represents the heirs of said Enrique Santos.36

On the issue of prescription of action, petitioner avers that the action of respondents is one to
quiet title and/or accion reinvindicatoria, and that respondents asserted ownership over the
property and sought the recovery of possession of the subject parcel of land. It insists that the
very nature of the action presupposes that respondents had not been in actual and material
possession of the property, and that it was petitioner which had been in possession of the
property since 1984 when it acquired title thereon. The action of respondent prescribed in ten
years from 1984 when petitioner allegedly dispossessed respondents, in accordance with Article
555(4) of the New Civil Code.

The contention of petitioner has no merit. The nature of an action is determined by the material
allegations of the complaint and the character of the relief sought by plaintiff, and the law in
effect when the action was filed irrespective of whether he is entitled to all or only some of such
relief.37 As gleaned from the averments of the complaint, the action of respondents was one for
quieting of title under Rule 64 of the Rules of Court, in relation to Article 476 of the New Civil
Code. The latter provision reads:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is apparently
valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove
such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.

A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in

land appearing in some legal form but which is, in fact, unfounded, or which it would be
inequitable to enforce.38 An action for quieting of title is imprescriptible until the claimant is
ousted of his possession.39

The owner of a real property, as plaintiff, is entitled to the relief of quieting of title even if, at the
time of the commencement of his action, he was not in actual possession of real property. After
all, under Article 477 of the New Civil Code, the owner need not be in possession of the
property. If on the face of TCT No. 321744 under the name of plaintiff, its invalidity does not
appear but rests partly in pais, an action for quieting of title is proper.40

In the present case, respondents herein, as plaintiffs below, alleged in their complaint, that their
father, Enrique Santos, was the owner of the property based on TCT No. 57272 issued on July
27, 1961; and that, after his death on February 9, 1970, they inherited the property; Enrique
Santos, during his lifetime, and respondents, after the death of the former, had been in actual,
continuous and peaceful possession of the property until 1994 when petitioner claimed
ownership based on TCT No. 321744 issued on September 18, 1984 and barred respondents
from fencing their property.
Petitioner’s claim that it had been in actual or material possession of the property since 1984
when TCT No. 321744 was issued in its favor is belied by the allegations in the complaint that
respondents had been in actual and material possession of the property since 1961 up to the
time they filed their complaint on October 24, 2001.

Admittedly, respondents interposed the alternative reinvindicatory action against petitioner.

An accion reinvindicatoria does not necessarily presuppose that the actual and material
possession of the property is on defendant and that plaintiff seeks the recovery of such
possession from defendant. It bears stressing that an accion reinvindicatoria is a remedy
seeking the recovery of ownership and includes jus possidendi, jus utendi, and jus fruendi as
well. It is an action whereby a party claims ownership over a parcel of land and seeks recovery
of its full possession.41 Thus, the owner of real property in actual and material possession
thereof may file an accion reinvindicatoria against another seeking ownership over a parcel of
land including jus vindicandi, or the right to exclude defendants from the possession thereof. In
this case, respondents filed an alternative reinvindicatory action claiming ownership over the
property and the cancellation of TCT No. 321744 under the name of petitioner. In fine, they
sought to enforce their jus utendi and jus vindicandi when petitioner claimed ownership and
prevented them from fencing the property.

Since respondents were in actual or physical possession of the property when they filed their
complaint against petitioner on October 24, 2001, the prescriptive period for the reinvindicatory
action had not even commenced to run, even if petitioner was able to secure TCT No. 321744
over the property in 1984. The reason for this is that

x x x 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, 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.42

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of
Appeals in CA-G.R. SP No. 72686 is AFFIRMED. Costs against petitioner.

SO ORDERED.
G.R. No. 75884 September 24, 1987

JULITA GO ONG, FOR HERSELF AND AS JUDICIAL GUARDIAN OF STEVEN GO

ONG, petitioners,
vs.
THE HON. COURT OF APPEALS, ALLIED BANKING CORPORATION and the CITY
SHERIFF OF QUEZON CITY, respondents.

PARAS, J.:

This is a petition for review on certiorari of the March 21, 1986 Decision * of the Court of
Appeals in AC-G.R. CV No. 02635, "Julita Ong etc. vs. Allied Banking Corp. et al." affirming,
with modification, the January 5, 1984 Decision of the Regional Trial Court of Quezon City in
Civil Case No. Q-35230.

The uncontroverted facts of this case, as found by the Court of Appeals, are as follows:

...: Two (2) parcels of land in Quezon City Identified as Lot No. 12, Block 407,
Psd 37326 with an area of 1960.6 sq. m. and Lot No. 1, Psd 15021, with an area
of 3,660.8 sq. m. are covered by Transfer Certificate of Title No. 188705 in the
name of "Alfredo Ong Bio Hong married to Julita Go Ong "(Exh. D). Alfredo Ong
Bio Hong died on January 18, 1975 and Julita Go Ong was appointed
administratrix of her husband's estate in Civil Case No. 107089. The letters of
administration was registered on TCT No. 188705 on October 23, 1979.
Thereafter, Julita Go Ong sold Lot No. 12 to Lim Che Boon, and TCT No. 188705
was partially cancelled and TCT No. 262852 was issued in favor of Lim Che
Boon covering Lot No. 12 (Exh. D-4). On June 8, 1981 Julita Go Ong through her
attorney-in-fact Jovita K. Yeo (Exh. 1) mortgaged Lot No. 1 to the Allied Banking
Corporation to secure a loan of P900,000.00 obtained by JK Exports, Inc. The
mortgage was registered on TCT No. 188705 on the same date with the following
notation: "... mortgagee's consent necessary in case of subsequent alienation or
encumbrance of the property other conditions set forth in Doc. No. 340, Page No.
69, Book No. XIX, of the Not. Public of Felixberto Abad". On the loan there was
due the sum of P828,000.00 and Allied Banking Corporation tried to collect it
from Julita Go Ong, (Exh. E). Hence, the complaint alleging nullity of the contract
for lack of judicial approval which the bank had allegedly promised to secure from
the court. In response thereto, the bank averred that it was plaintiff Julita Go Ong
who promised to secure the court's approval, adding that Julita Go Ong informed
the defendant that she was processed the sum of P300,000.00 by the JK
Exports, Inc. which will also take charge of the interest of the loan.

Concluding, the trial court ruled:

Absent (of) any evidence that the property in question is the

capital of the deceased husband brought into the marriage, said
property should be presumed as acquired during the marriage
and, therefore, conjugal property,

After the dissolution of the marriage with the death of plaintiff's

husband, the plaintiff acquired, by law, her conjugal share,
together with the hereditary rights thereon. (Margate vs. Rabacal,
L-14302, April 30, 1963). Consequently, the mortgage constituted
on said property, upon express authority of plaintiff,
notwithstanding the lack of judicial approval, is valid, with respect
to her conjugal share thereon, together with her hereditary rights.

On appeal by petitioner, respondent Court of Appeals affirmed, with modification, the appealed
decision (Record, pp. 19-22). The dispositive portion of the appellate court's decision reads:
 WHEREFORE, with the modification that the extrajudicial foreclosure
proceedings instituted by defendant against plaintiff shall be held in abeyance to
await the final result of Civil Case No. 107089 of the Court of First Instance of
Manila, 6th Judicial District Branch XXXII, entitled "IN THE MATTER OF THE
INTESTATE ESTATE OF THE LATE ALFREDO ONG BIO: JULITA GO ONG,
ADMINISTRATRIX". In pursuance with which the restraining order of the lower
court in this case restraining the sale of the properties levied upon is hereby
ordered to continue in full force and effect coterminous with the final result of Civil
Case No. 107089, the decision appealed from is hereby affirmed. Costs against
plaintiff-appellant.

SO ORDERED.

On April 8, 1986, petitioner moved for the reconsideration of the said decision (Ibid., pp. 24-29),
but in a Resolution dated September 11, 1986, respondent court denied the motion for lack of
merit (Ibid., p. 23). Hence, the instant petition (Ibid., pp. 6-17).

The Second Division of this Court, in a Resolution dated November 19, 1986 (Rollo, p. 30),
without giving due course to the petition, resolved to require private respondent to comment
thereon and it did on February 19, 1987 (Ibid., pp. 37-42). Thereafter, in a Resolution dated
April 6, 1987, the petition was given due course and the parties were required to file their
respective memoranda (Ibid., p. 43).

Petitioner filed her Memorandum on May 13, 1987 (Ibid., pp. 45-56), while private respondent
filed its Memorandum on May 20, 1987 (Ibid., pp. 62-68).

The sole issue in this case is —

WHETHER OR NOT THE MORTGAGE CONSTITUTED OVER THE PARCEL OF LAND

UNDER PETITIONER'S ADMINISTRATION IS NULL AND VOID FOR WANT OF JUDICIAL
APPROVAL.

The instant petition is devoid of merit.

The well-settled rule that the findings of fact of the trial court are entitled to great respect, carries
even more weight when affirmed by the Court of Appeals as in the case at bar.

In brief, the lower court found: (1) that the property under the administration of petitioner — the
wife of the deceased, is a community property and not the separate property of the latter; (2)
that the mortgage was constituted in the wife's personal capacity and not in her capacity as
administratrix; and (3) that the mortgage affects the wife's share in the community property and
her inheritance in the estate of her husband.

Petitioner, asserting that the mortgage is void for want of judicial approval, quoted Section 7 of
Rule 89 of the Rules of Court and cited several cases wherein this Court ruled that the
regulations provided in the said section are mandatory.

While petitioner's assertion may have merit insofar as the rest of the estate of her husband is
concerned the same is not true as regards her conjugal share and her hereditary rights in the
estate. The records show that petitioner willingly and voluntarily mortgaged the property in
question because she was processed by JK Exports, Inc. the sum of P300,000.00 from the
proceeds of the loan; and that at the time she executed the real estate mortgage, there was no
court order authorizing the mortgage, so she took it upon herself, to secure an order.

Thus, in confirming the findings of the lower court, as supported by law and the evidence, the
Court of Appeals aptly ruled that Section 7 of Rule 89 of the Rules of Court is not applicable,
since the mortgage was constituted in her personal capacity and not in her capacity as
administratrix of the estate of her husband.

Nevertheless, petitioner, citing the cases of Picardal, et al. vs. Lladas (21 SCRA 1483)
and Fernandez, et al. vs. Maravilla (10 SCRA 589), further argues that in the settlement
proceedings of the estate of the deceased spouse, the entire conjugal partnership property of
the marriage is under administration. While such may be in a sense true, that fact alone is not
sufficient to invalidate the whole mortgage, willingly and voluntarily entered into by the
petitioner. An opposite view would result in an injustice. Under similar circumstances, this Court
applied the provisions of Article 493 of the Civil Code, where the heirs as co-owners shall each
have the full ownership of his part and the fruits and benefits pertaining thereto, and he may
therefore alienate, assign or mortgage it, and even effect of the alienation or mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the
division upon the termination of the co-ownership (Philippine National Bank vs. Court of
Appeals, 98 SCRA 207 [1980]).

Consequently, in the case at bar, the trial court and the Court of Appeals cannot be faulted in
ruling that the questioned mortgage constituted on the property under administration, by
authority of the petitioner, is valid, notwithstanding the lack of judicial approval, with respect to
her conjugal share and to her hereditary rights. The fact that what had been mortgaged was in
custodia legis is immaterial, insofar as her conjugal share and hereditary share in the property is
concerned for after all, she was the ABSOLUTE OWNER thereof. This ownership by hers is not
disputed, nor is there any claim that the rights of the government (with reference to taxes) nor
the rights of any heir or anybody else have been prejudiced for impaired. As stated by Associate
Justice (later Chief Justice) Manuel Moran in Jakosalem vs. Rafols, et al., 73 Phil. 618 —

The land in question, described in the appealed decision, originally belonged to

Juan Melgar. The latter died and the judicial administration of his estate was
commenced in 1915 and came to a close on December 2, 1924, only. During the
pendency of the said administration, that is, on July 5, 1917, Susana Melgar,
daughter of the deceased Juan Melgar, sold the land with the right of repurchase
to Pedro Cui, subject to the stipulation that during the period for the repurchase
she would continue in possession of the land as lessee of the purchase. On
December 12, 1920, the partition of the estate left by the deceased Juan Melgar
was made, and the land in question was adjudicated to Susana Melgar. In 1921,
she conveyed, in payment of professional fees, one-half of the land in favor of
the defendant-appellee Nicolas Rafols, who entered upon the portion thus
conveyed and has been in possession thereof up to the present. On July 23,
1921, Pedro Cui brought an action to recover said half of the land from Nicolas
Rafols and the other half from the other defendants, and while that case was
pending, or about August 4, 1925, Pedro Cui donated the whole land in question
to Generosa Teves, the herein plaintiff-appellant, after trial, the lower court
rendered a decision absolving Nicolas Rafols as to the one-half of the land
conveyed to him by Susana Melgar, and declaring the plaintiff owner of the other
half by express acknowledgment of the other defendants. The plaintiff appealed
from that part of the judgment which is favorable to Nicolas Rafols.

The lower court absolved Nicolas Rafols upon the theory that Susana Melgar
could not have sold anything to Pedro Cui because the land was then in custodia
legis, that is, under judicial administration. This is error. That the land could not
ordinary be levied upon while in custodia legis, does not mean that one of the
heirs may not sell the right, interest or participation which he has or might have in
the lands under administration. The ordinary execution of property in custodia
legis is prohibited in order to avoid interference with the possession by the court.
But the sale made by an heir of his share in an inheritance, subject to the result
of the pending administration, in no wise stands in the way of such
administration.

The reference to judicial approval in Sec. 7, Rule 89 of the Rules of Court cannot adversely
affect the substantiverights of private respondent to dispose of her Ideal [not inchoate, for the
conjugal partnership ended with her husband's death, and her hereditary rights accrued from
the moment of the death of the decedent (Art. 777, Civil Code) share in the co-heirship and/or
co-ownership formed between her and the other heirs/co-owners (See Art. 493, Civil Code,
supra.). Sec. 7, Art. 89 of the Civil Code applies in a case where judicial approval has to be
sought in connection with, for instance, the sale or mortgage of property under administration for
the payment, say of a conjugal debt, and even here, the conjugal and hereditary shares of the
wife are excluded from the requisite judicial approval for the reason already adverted to
hereinabove, provided of course no prejudice is caused others, including the government.

Moreover, petitioner is already estopped from questioning the mortgage. An estoppel may arise
from the making of a promise even though without consideration, if it was intended that the
promise should be relied upon and in fact it was relied upon, and if a refusal to enforce it would
be virtually to sanction the perpetration of fraud or would result in other injustice (Gonzalo Sy
Trading vs. Central Bank, 70 SCRA 570).

PREMISES CONSIDERED, the instant petition is hereby DENIED and the assailed decision of
the Court of Appeals is hereby AFFIRMED.

SO ORDERED.
G.R. No. 102380 January 18, 1993

HERODOTUS P. ACEBEDO and DEMOSTHENES P. ACEBEDO, petitioners,

vs.
HON. BERNARDO P. ABESAMIS, MIGUEL ACEBEDO, ALEXANDER ACEBEDO,
NAPOLEON ACEBEDO, RIZALINO ACEBEDO, REPUBLICA ACEBEDO, FILIPINAS
ACEBEDO and YU HWA PING, respondents.

Heminio L. Ruiz for petitioners.

Vicente D. Millora for private respondents.

Romero A. Yu for respondent Yu Hua Ping.

CAMPOS, JR., J.:

The lower court's jurisdiction in approving a Deed of Conditional Sale executed by respondents-
heirs and ordering herein administrator-petitioner Herodotus Acebedo to sell the remaining
portions of said properties, despite the absence of its prior approval as a probate court, is being
challenged in the case at bar.

The late Felix Acebedo left an estate consisting of several real estate properties located in
Quezon City and Caloocan City, with a conservative estimated value of about P30 million. Said
estate allegedly has only the following unsettled claims:

a. P87,937.00 representing unpaid real estate taxes due Quezon City;

b. P20,244.00 as unpaid real estate taxes due Caloocan City;

c. The unpaid salaries/allowances of former Administrator Miguel Acebedo, and

the incumbent Administrator Herodotus Acebedo; and

d. Inheritance taxes that may be due on the net estate.

The decedent was succeeded by eight heirs, two of whom are the petitioners herein, and the
others are the private respondents.

Due to the prolonged pendency of the case before the respondent Court for sixteen years,
respondents-heirs filed a "Motion for Approval of Sale", on October 4, 1989. The said sale
involved the properties covered by Transfer Certificate of Title Nos. 155569, 120145, 9145, and
18709, all of which are registered in Quezon City, and form part of the estate. The consideration
for said lots was twelve (12) million pesos and by that time, they already had a buyer. It was
further stated in said Motion that respondents-heirs have already received their proportionate
share of the six (6) million pesos paid by the buyer, Yu Hwa Ping, as earnest money; that the
balance of P6,000,000.00 is more than enough to pay the unsettled claims against the estate.
Thus, they prayed for the Court to direct the administrator, Herodotus Acebedo (referred to as
petitioner-administrator hereafter):

1. to sell the properties mentioned in the motion;

2. with the balance of P6 million, to pay all the claims against the Estate; and

3. to distribute the residue among the Heirs in final settlement of the Estate.

To the aforesaid Motion, herein petitioner-administrator interposed an "Opposition to Approval of

Sale", to wit:
 1. That he has learned that some of the heirs herein have sold some real estate
property of the Estate located at Balintawak, Quezon City, without the knowledge
of the herein administrator, without the approval of this Honorable Court and of
some heirs, and at a shockingly low price;

2. That he is accordingly hereby registering his vehement objection to the

approval of the sale, perpetrated in a manner which can even render the
proponents of the sale liable for punishment for contempt of this Honorable
Court;

3. The herein Administrator instead herein prays this Honorable Court to

authorize the sale of the above mentioned property of the Estate to generate
funds to pay certain liabilities of the Estate and with the approval of this
Honorable Court if warranted, to give the heirs some advances chargeable
against theirs (sic) respective shares, and, for the purpose to authorize the herein
Administrator, and the other heirs to help the Administrator personally or through
a broker, to look for a buyer for the highest obtainable price, subject always to
the approval of this Honorable Court.1

On October 30, 1989, herein petitioners moved to be given a period of forty-five (45) days within
which to look for a buyer who will be willing to buy the properties at a price higher than
P12,000,000.00.

The case was set for hearing on December 15, 1989. However, by said date, petitioners have
not found any buyer offering better terms. Thus, they asked the Court, on February 8, 1990, for
an in extendible period of thirty days to look for a buyer.

Petitioner-administrator then filed a criminal complaint for falsification of a public document

against Yu Hwa Ping and notary public Eugenio Obon on February 26, 1990. He initiated this
complaint upon learning that it was Yu Hwa Ping who caused the notarization of the Deed of
Conditional Sale wherein allegedly petitioner-administrator's signature was made to appear. He
also learned that after he confronted the notary public of the questioned document, the latter
revoked his notarial act on the same.

On April 2, 1990, petitioner-administrator filed the civil action to secure the declaration by the
Court of the nullity of the Deed of Conditional Sale and the Deed of Absolute Sale.

The period granted herein petitioners having lapsed without having found a buyer, petitioner
Demosthenes Acebedo sought to nullify the Orders granting them several periods within which
to look for a better buyer. Respondents filed a comment thereon.

Having miserably failed to find a better buyer, after seven long months, petitioner-administrator
filed another "Opposition to Approval of Sale", dated May 10, 1990, maintaining that the sale
should wait for the country to recover from the effects of the coup d'etat attempts, otherwise, the
properties should be divided among the heirs.

On June 21, 1990, petitioners filed a "Motion for Leave of Court to Mortgage and Lease some of
the Properties of the Estate". To this Motion, respondents filed an Opposition on the following
grounds : that the motion is not proper because of the pending motion to approve the sale of the
same properties; that said conditional sale was initiated by petitioner-administrator who had
earlier signed a receipt for P500,000.00 as earnest money; that the approval of the sale would
mean Yu Hwa Ping's assumption of payment of the realty taxes; that the estate has no further
debts and thus, the intestate administrator may be terminated.

On August 17, 1990, respondent Court issued an Order, the dispositive portion of which, stated,
among others, to wit:2

b. the motion filed by the heirs-movants, dated October 4, 1989, praying that the
new administrator be directed to sell the properties covered by TCT Nos.
155569, 120145, 9145 and 18709, in favor of Yu Hwa Ping is hereby denied; and
 c. the new administrator is hereby granted leave to mortgage some properties of
the estate at a just and reasonable amount, subject to the approval of the Court.

On December 4, 1990, the respondent Judge issued an order resolving to call the parties to a
conference on December 17, 1990. The conference was held, but still the parties were unable
to arrive at an agreement. So, on January 4, 1991, it was continued, wherein the parties actually
agreed that the heirs be allowed to sell their shares of the properties to Yu Hwa Ping for the
price already agreed upon, while herein petitioners negotiate for a higher price with Yu Hwa
Ping.

Petitioners, then, instead filed a "Supplemental Opposition" to the approval of the Deed of
Conditional Sale.

On March 29, 1991, the respondent Court issued the challenged Order, the dispositive portion
of which states, to wit:

WHEREFORE, the Order dated August 7, 1990, is hereby lifted, reconsidered

and set aside, and another one is hereby issued as follows:

1. Approving the conditional sale, dated September 10, 1989, executed by the
heirs-movants, in favor of Yu Hwa Ping, pertaining to their respective shares in
the properties covered by TCT Nos. 155569, 120145, 1945 and 18709 of the
Register of Deeds of Quezon City;

2. Ordering the administrator Herodotus Acebedo to sell the remaining portions

of the said properties also in favor of Yu Hwa Ping at the same price as the sale
executed by the herein heirs-movants;

3. Ordering Yu Hwa Ping to deposit with the Court the total remaining balance of
the purchase price for the said lots within TWENTY (20) DAYS from notice
hereof;

4. The motion to cite former administrator Miguel Acebedo in contempt of court,

resulting from his failure to submit the owner's copy of TCT Nos. 155569, and
120145 is hereby denied.3

Yu Hwa Ping, on April 4, 1991, deposited the remaining balance of the purchase price for the
properties subject of the Deed of Conditional Sale in the amount of P6,500,000.00.

Petitioners herein received the questioned Order on April 11, 1991. Twenty one (21) days
thereafter, they filed a Motion for Reconsideration, praying that the Court reinstate its Order of
August 17, 1990. To this, private respondents filed their Opposition.4

Instead of making a reply, petitioners herein filed a Supplemental Motion for Reconsideration.
The motions for reconsideration of herein petitioners were denied by the respondent Court on
August 23, 1991.

On September 23, 1991, herein petitioners filed a Motion for Partial Reconsideration, hoping for
the last time that they would be able to convince the Court that its Order dated March 29, 1991
in effect approving the conditional sale is erroneous and beyond its jurisdiction.

On October 17, 1991, the respondent Court denied the Motion for Partial Reconsideration for
"lack of merit".

On November 7, 1991, private respondents filed a Motion for Execution of the Order dated
March 29, 1991. This was pending resolution when the petitioners filed this Petition
for Certiorari.

The controversy in the case at bar revolves around one question: Is it within the jurisdiction of
the lower court, acting as a probate court, to issue an Order approving the Deed of Conditional
Sale executed by respondents-heirs without prior court approval and to order herein
Administrator to sell the remaining portion of said properties?

We answer in the positive?

In the case of Dillena vs. Court of Appeals,5 this Court made a pronouncement that it is within
the jurisdiction of the probate court to approve the sale of properties of a deceased person by
his prospective heirs before final adjudication. Hence, it is error to say that this matter should be
threshed out in a separate action.

The Court further elaborated that although the Rules of Court do not specifically state that the
sale of an immovable property belonging to an estate of a decedent, in a special proceeding,
should be made with the approval of the court, this authority is necessarily included in its
capacity as a probate court. Therefore, it is clear that the probate court in the case at bar, acted
within its jurisdiction in issuing the Order approving the Deed of Conditional Sale.

We cannot countenance the position maintained by herein petitioners that said conditional sale
is null and void for lack of prior court approval. The sale precisely was made conditional, the
condition being that the same should first be approved by the probate court.

Petitioners herein anchor their claim on Section 7, Rule 89 of the Rules of Court.6 It is settled
that court approval is necessary for the validity of any disposition of the decedent's estate.
However, reference to judicial approval cannot adversely affect the substantive rights of the
heirs to dispose of their ideal share in the co-heirship and/or co-ownership among the heirs.7

This Court had the occasion to rule that there is no doubt that an heir can sell whatever right,
interest, or participation he may have in the property under administration. This is a matter
which comes under the jurisdiction of the probate court.8

The right of an heir to dispose of the decedent's property, even if the same is under
administration, is based on the Civil Code provision9 stating that the possession of hereditary
property is deemed transmitted to the heir without interruption and from the moment of the
death of the decedent, in case the inheritance is accepted. Where there are however, two or
more heirs, the whole estate of the decedent is, before its partition, owned in common by such
heirs. 10

The Civil Code, under the provisions on co-ownership, further qualifies this right.11 Although it is
mandated that each co-owner shall have the full ownership of his part and of the fruits and
benefits pertaining thereto, and thus may alienate, assign or mortgage it, and even substitute
another person in its enjoyment, the effect of the alienation or the mortgage, with respect to the
co-owners, shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership.12 In other words, the law does not prohibit a co-owner from
selling, alienating or mortgaging his ideal share in the property held in common. 13

As early as 1942, this Court has recognized said right of an heir to dispose of property under
administration. In the case of Teves de Jakosalem vs. Rafols, et al.,14 it was said that the sale
made by an heir of his share in an inheritance, subject to the result of the pending
administration, in no wise, stands in the way of such administration. The Court then relied on the
provision of the Old Civil Code, Article 440 and Article 339 which are still in force as Article 533
and Article 493, respectively, in the new Civil Code. The Court also cited the words of a noted
civilist, Manresa: "Upon the death of a person, each of his heirs 'becomes the undivided owner
of the whole estate left with respect to the part or portion which might be adjudicated to him, a
community of ownership being thus formed among the co-owners of the estate which remains
undivided'."

Private respondents having secured the approval of the probate court, a matter which is
unquestionably within its jurisdiction, and having established private respondents' right to
alienate the decedent's property subject of administration, this Petition should be dismissed for
lack of merit.

PREMISES considered, Petition is hereby DISMISSED. With Costs.

SO ORDERED.
G.R. No. L-14429 June 30, 1962

RAMON MERCADO, BASILIA MERCADO joined by her husband,

FRANCISCO RONQUILLO, plaintiffs-appellants,
vs.
PIO D. LIWANAG, defendant-appellee.

Patricio D. Senador and Ricardo D. Galano for plaintiffs-appellants.

D. B. Melliza and D. M. Gangoso for defendant-appellee.

MAKALINTAL, J.:

The present appeal, taken by the plaintiff from the decision of the Court of First Instance of Rizal
(Quezon City), is before us on a certification by the Court of Appeals, the questions involved
being purely legal. The case was submitted to the trial court upon the following stipulation of
facts:

1. That the complaint filed by the plaintiffs against the defendant seeks to annul a Deed
of Sale on the ground of fraud and on the provisions of Article 493 of the Civil Code.

2. That on July 14, 1956, in the City of Manila, Philippines, the plaintiff Ramon Mercado
and the defendant Pio D. Liwanag executed a Deed of Sale, photostat copy of which is
attached hereto marked as Annex "A" and forming an integral hereof, covering a divided
half and described in meter and bounds, or an area of 2,196 square meters at P7.00 per
square meter or for a total amount of P15,372.00, of a parcel of land situated at
Kangkong, Quezon City, covered Transfer Certificate of Title No. 20805 of the Register
of Deeds for the province of Rizal, now Quezon City:

3. That the said T.C.T. No. 20805 containing an area of 4,392 square meters, is issued
in the name of the plaintiffs Ramon Mercado and Basilia Mercado as co-owners PRO-
INDIVISO, and the sale was without the knowledge and consent of plaintiff Basilia
Mercado;

4. That out of the total area of 4,392 square meters, an area consisting of 391 square
meters was expropriated by the National Power Corporation sometime in December
1953 at a price of P10.00 per square meter, Civil Case No. Q-829 (Eminent Domain) of
the Court of First Instance of Rizal, Quezon City Branch, entitled "National Power
Corporation, plaintiff, versus Brigido Almodoban, et als., defendants," but this fact of
expropriation came to the knowledge of the defendant Pio D. Liwanag upon the
registration of the Deed of Sale Annex "A". .

5. That pursuant to the Deed of Sale Annex "A" T.C.T. No. 32757 was issued in the
name of Pio Liwanag and Basilia photostat copy of which is hereto attached and marked
as Annex "B".

6. That defendant submits the receipt signed by plaintiff Ramon Mercado dated July 14,
1956 photostat copy of which is attached hereto and marked as Annex "C" and
promissory note of the same date for P10,000.00, photostat copy of which is attached
hereto and marked is Annex "D" which are both self-explanatory, but plaintiff Ramon
Mercado disclaims payment and receipt of such check and promissory note, the check
being uncashed and is still in the possession of Atty. Eugenio de Garcia;

7. That plaintiffs and defendant respectfully submit for resolution of this Honorable Court
the issue of whether or not the Deed of Sale Annex "A" court be annulled based in the
foregoing facts in relation to Article 493 of the Civil Code, setting aside all other issues in
the pleadings.

Upon the issue thus presented the trial court held that under Article 493 of the Civil Code the
sale in question was valid and so dismissed the complaint, without costs. This ruling is now
assailed as erroneous.
Article 493 provides:

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

Appellants except to the application of this provision in this case for the reason that in the deed
of sale sought to be annulled the vendor disposed of a divided and determinate half of the land
under co-ownership. The argument, as far as it goes, seems to be tenable. What a co-owner
may dispose of under Article 493 is only his undivided aliquot share, which shall be limited to
the portion which may be allotted to him upon the termination of the co-ownership. He has no
right to divide the property into parts and then convey one part by metes and bounds. Lopez vs.
Ilustre, 5 Phil. 567; Gonzales, et al. vs. Itchon, et al., 47 O.G. 6290; Manresa, Vol. 3, 7th ed. p.
630.

The pertinent recitals in the disputed deed of sale read:

I hereby sell, transfer and convey absolutely and irrevocably unto said Pio D. Liwanag,
his heirs, successors, and assigns my rights, title and interest on my chosen portion of
the above described property which consist of one-half of aforesaid ownership bounded
on the West by Pacifico Gahudo, on the North by Hacienda de Piedad and on the South
by Circumferential Road, consisting of 50 meters more or less frontal length along
Circumferential Road, and with a total area of 2,196 square meters as indicated in Co-
owners Transfer Certificate of Title No. 20805.

Nevertheless, upon registration of the sale and cancellation of transfer certificate of title No.
20805 in the names of the previous co-owners, the new transfer certificate that was issued (No.
32757) did not reproduce the description in the instrument but carried the names of appellee Pio
D. Liwanag and Basilia Mercado as "co-owners pro-indiviso." There is no suggestion by any of
the parties that this new certificate of title is invalid, irregular or inaccurate. There is no prayer
that it be canceled. As far as Basilia Mercado is concerned she retains in all their integrity her
rights as co-owner which she had before the sale, and consequently, she has no cause to
complain. Much less has Ramon Mercado, for it was he who was responsible for whatever
indicia there may be in the deed of sale that a determinate portion of the property was being
sold, as shown by the second paragraph thereof, quoted without contradiction in appellee's brief
as follows:

That the aforesaid Transfer Certificate of Title was originally in my name, but was split
into two equal parts by virtue of my desire to donate to my sister-in-law Juana Gregorio
an equal half thereof with the understanding that I as donor would have the absolute
power to choose from the property owned in common that part which I would like to
segregate for myself or my heir and assigns.

And of course appellee himself not only does not challenge the new certificate of title, wherein
he appears as co-owner of an undivided one-half share, but precisely relies upon it for his
defense in this action.

The title is the final and conclusive repository of the rights of the new co-owners. The question
of whether or not the deed of sale should be annulled must be considered in conjunction with
the title issued pursuant thereto. Since, according to this title, what appellee acquired by virtue
of the sale is only an undivided half-share of the property, which under the law the vendor
Ramon Mercado had the absolute right to dispose of, the trial court committed no error in
dismissing the action. The end-result of the transaction is in accordance with Article 493 of the
Civil Code.1äwphï1.ñët

The other point raised by appellants refers to the statement in the dispositive portion of the
decision appealed from that "the stipulation with regards to the deed of sale based on the
ground of fraud is insufficient for all purposes and besides, no proof showing the allegation of
such fraud exists in the accord." It is contended that the trial court erred in making such
statement, the same being contrary to the stipulation in which the parties expressly eliminated
the issue of fraud. From the entire context of the decision, however, it can be gathered that the
case was not decided on the basis of the said issue. In any event, even if the court did err in
considering the question of fraud in spite of the stipulation, the error is not a prejudicial one. As
far as the dismissal of the actions concerned, it makes no difference whether fraud has not been
proven or fraud has been abandoned as an issue by express agreement.

WHEREFORE, the decision appealed from is affirmed, with costs against appellants in this
instance.
G.R. No. 61584 November 25, 1992

DONATO S. PAULMITAN, JULIANA P. FANESA and RODOLFO FANESA, petitioners,

vs.
COURT OF APPEALS, ALICIO PAULMITAN, ELENA PAULMITAN, ABELINO PAULMITAN,
ANITA PAULMITAN, BAKING PAULMITAN, ADELINA PAULMITAN and ANITO
PAULMITAN, respondents.

ROMERO, J.:

This is a petition for review on certiorari seeking the reversal of the decision 1 of the Court of
Appeals, dated July 14, 1982 in CA-G.R. No. 62255-R entitled "Alicio Paulmitan, et al. v. Donato
Sagario Paulmitan, et al." which affirmed the decision 2 of the then Court of First Instance (now
RTC) of Negros Occidental, 12th Judicial District, Branch IV, Bacolod City, in Civil Case No.
11770.

The antecedent facts are as follows:

Agatona Sagario Paulmitan, who died sometime in 1953, 3 left the two following parcels of land
located in the Province of Negros Occidental: (1) Lot No. 757 with an area of 1,946 square
meters covered by Original Certificate of Title (OCT) No. RO-8376; and (2) Lot No. 1091 with an
area of 69,080 square meters and covered by OCT No. RO-11653. From her marriage with
Ciriaco Paulmitan, who is also now deceased, Agatona begot two legitimate children, namely:
Pascual Paulmitan, who also died in 1953, 4 apparently shortly after his mother passed away,
and Donato Paulmitan, who is one of the petitioners. Petitioner Juliana P. Fanesa is Donato's
daughter while the third petitioner, Rodolfo Fanes, is Juliana's husband. Pascual Paulmitan, the
other son of Agatona Sagario, is survived by the respondents, who are his children, name:
Alicio, Elena, Abelino, Adelina, Anita, Baking and Anito, all surnamed Paulmitan.

Until 1963, the estate of Agatona Sagario Paulmitan remained unsettled and the titles to the two
lots mentioned above remained in the name of Agatona. However, on August 11, 1963,
petitioner Donato Paulmitan executed an Affidavit of Declaration of Heirship, extrajudicially
adjudicating unto himself Lot No. 757 based on the claim that he is the only surviving heir of
Agatona Sagario. The affidavit was filed with the Register of Deeds of Negros Occidental on
August 20, 1963, cancelled OCT No. RO-8376 in the name of Agatona Sagario and issued
Transfer Certificate of Title (TCT) No. 35979 in Donato's name.

As regards Lot No. 1091, Donato executed on May 28, 1974 a Deed of Sale over the same in
favor of petitioner Juliana P. Fanesa, his daughter. 5

In the meantime, sometime in 1952, for non-payment of taxes, Lot No. 1091 was forfeited and
sold at a public auction, with the Provincial Government of Negros Occidental being the buyer.
A Certificate of Sale over the land was executed by the Provincial Treasurer in favor of the
Provincial Board of Negros Occidental. 6

On May 29, 1974, Juliana P. Fanesa redeemed the property from the Provincial Government of
Negros Occidental for the amount of P2,959.09. 7

On learning of these transactions, respondents children of the late Pascual Paulmitan filed on
January 18, 1975 with the Court of First Instance of Negros Occidental a Complaint against
petitioners to partition the properties plus damages.

Petitioners set up the defense of prescription with respect to Lot No. 757 as an affirmative
defense, contending that the Complaint was filed more than eleven years after the issuance of a
transfer certificate of title to Donato Paulmitan over the land as consequence of the registration
with the Register of Deeds, of Donato's affidavit extrajudicially adjudicating unto himself Lot No.
757. As regards Lot No. 1091, petitioner Juliana P. Fanesa claimed in her Answer to the
Complaint that she acquired exclusive ownership thereof not only by means of a deed of sale
executed in her favor by her father, petitioner Donato Paulmitan, but also by way of redemption
from the Provincial Government of Negros Occidental.

Acting on the petitioners' affirmative defense of prescription with respect to Lot No. 757, the trial
court issued an order dated April 22, 1976 dismissing the complaint as to the said property upon
finding merit in petitioners' affirmative defense. This order, which is not the object of the present
petition, has become final after respondents' failure to appeal therefrom.

Trial proceeded with respect to Lot No. 1091. In a decision dated May 20, 1977, the trial court
decided in favor of respondents as to Lot No. 1091. According to the trial court, the
respondents, as descendants of Agatona Sagario Paulmitan were entitled to one-half (1/2) of
Lot No. 1091, pro indiviso. The sale by petitioner Donato Paulmitan to his daughter, petitioner
Juliana P. Fanesa, did not prejudice their rights. And the repurchase by Juliana P. Fanesa of the
land from the Provincial Government of Negros Occidental did not vest in Juliana exclusive
ownership over the entire land but only gave her the right to be reimbursed for the amount paid
to redeem the property. The trial court ordered the partition of the land and directed petitioners
Donato Paulmitan and Juliana P. Fanesa to pay private respondents certain amounts
representing the latter's share in the fruits of the land. On the other hand, respondents were
directed to pay P1,479.55 to Juliana P. Fanesa as their share in the redemption price paid by
Fanesa to the Provincial Government of Negros Occidental. The dispositive portion of the trial
court's decision reads:

WHEREFORE, judgment is hereby rendered on the second cause of action

pleaded in the complain as follows:

1. The deed of sale (Exh. "F") dated May 28, 1974 is valid insofar as the one-half
undivided portion of Lot 1091 is concerned as to vest ownership over said half
portion in favor of defendant Juliana Fanesa and her husband Rodolfo Fanesa,
while the remaining half shall belong to plaintiffs, pro-indiviso;

2. Lot 1091, Cadastral Survey of Pontevedra, Province of Negros Occidental,

now covered by TCT No. RO-11653 (N.A.), is ordered partitioned. The parties
must proceed to an actual partition by property instrument of partition, submitting
the corresponding subdivision within sixty (60) days from finality of this decision,
and should they fail to agree, commissioners of partition may be appointed by the
Court;

3. Pending the physical partition, the Register of Deeds of Negros Occidental is

ordered to cancel Original Certificate of Title No. RO-11653 (N.A.) covering Lot
1091, Pontevedra Cadastre, and to issue in lieu thereof a new certificate of title in
the name of plaintiffs and defendants, one-half portion each,pro-indiviso, as
indicated in paragraph 1 above;

4. Plaintiffs are ordered to pay, jointly and severally, defendant Juliana Fanesa
the amount of P1,479.55 with interest at the legal rate from May 28, 1974 until
paid;

5 Defendants Donato Sagario Paulmitan and Juliana Paulmitan Fanesa are

ordered to account to plaintiffs and to pay them, jointly and severally, the value of
the produce from Lot 1091 representing plaintiffs' share in the amount of
P5,000.00 per year from 1966 up to the time of actual partition of the property,
and to pay them the sum of P2,000.00 as attorney's fees as well as the costs of
the suit.

xxx xxx xxx

On appeal, the Court of Appeals affirmed the trial court's decision. Hence this petition.

To determine the rights and obligations of the parties to the land in question, it is well to review,
initially, the relatives who survived the decedent Agatona Sagario Paulmitan. When Agatona
died in 1953, she was survived by two (2) sons, Donato and Pascual. A few months later in the
same year, Pascual died, leaving seven children, the private respondents. On the other had,
Donato's sole offspring was petitioner Juliana P. Fanesa.

At the time of the relevant transactions over the properties of decedent Agatona Sagario
Paulmitan, her son Pascual had died, survived by respondents, his children. It is, thus, tempting
to apply the principles pertaining to the right of representation as regards respondents. It must,
however, be borne in mind that Pascual did no predecease his mother, 8 thus precluding the
operation of the provisions in the Civil Code on the right of representation 9 with respect to his
children, the respondents. When Agatona Sagario Paulmitan died intestate in 1952, her two (2)
sons Donato and Pascual were still alive. Since it is well-settled by virtue of Article 777 of the
Civil Code that "[t]he rights to the succession are transmitted from the moment of the death of
the decedent," 10 the right of ownership, not only of Donato but also of Pascual, over their
respective shares in the inheritance was automatically and by operation of law vested in them in
1953 when their mother died intestate. At that stage, the children of Donato and Pascual did not
yet have any right over the inheritance since "[i]n every inheritance, the relative nearest in
degree excludes the more distant
ones." 11 Donato and Pascual excluded their children as to the right to inherit from Agatona
Sagario Paulmitan, their mother.

From the time of the death of Agatona Sagario Paulmitan to the subsequent passing away of
her son Pascual in 1953, the estate remained unpartitioned. Article 1078 of the Civil Code
provides: "Where there are two or more heirs, the whole estate of the decedent is, before its
partition, owned in common by such heirs, subject to the payment of debts of the
deceased." 12 Donato and Pascual Paulmitan were, therefore, co-owners of the estate left by
their mother as no partition was ever made.

When Pascual Paulmitan died intestate in 1953, his children, the respondents, succeeded him
in the co-ownership of the disputed property. Pascual Paulmitan's right of ownership over an
undivided portion of the property passed on to his children, who, from the time of Pascual's
death, became co-owners with their uncle Donato over the disputed decedent estate.

Petitioner Juliana P. Fanesa claims ownership over Lot No. 1091 by virtue of two transactions,
namely: (a) the sale made in her favor by her father Donato Paulmitan; and (b) her redemption
of the land from the Provincial of Negros Occidental after it was forfeited for non-payment of
taxes.

When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his daughter Juliana P. Fanesa,
he was only a co-owner with respondents and as such, he could only sell that portion which may
be allotted to him upon termination of the co-ownership. 13 The sale did not prejudice the rights
of respondents to one half (1/2) undivided share of the land which they inherited from their
father. It did not vest ownership in the entire land with the buyer but transferred only the
seller's pro-indiviso share in the property 14 and consequently made the buyer a co-owner of the
land until it is partitioned. In Bailon-Casilao v. Court of Appeals, 15 the Court, through Justice
Irene R. Cortes, outlined the effects of a sale by one co-owner without the consent of all the co-
owners, thus:

The rights of a co-owner of a certain property are clearly specified in Article 493
of the Civil Code, Thus:

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

As early as 1923, this Court has ruled that even if a co-owner sells the whole
property as his, the sale will affect only his own share but not those of the other
co-owners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320
(1923)]. This is because under the aforementioned codal provision, the sale or
 other disposition affects only his undivided share and the transferee gets only
what would correspond to his grantor in the partition of the thing owned in
common [Ramirez v. Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of
the sales made by Rosalia and Gaudencio Bailon which are valid with respect to
their proportionate shares, and the subsequent transfers which culminated in the
sale to private respondent Celestino Afable, the said Afable thereby became a
co-owner of the disputed parcel of land as correctly held by the lower court since
the sales produced the effect of substituting the buyers in the enjoyment thereof
[Mainit v. Bandoy, 14 Phil. 730 (1910)].

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

Applying this principle to the case at bar, the sale by petitioner Donato Paulmitan of the land to
his daughter, petitioner Juliana P. Fanesa, did not give to the latter ownership over the entire
land but merely transferred to her the one half (1/2) undivided share of her father, thus making
her the co-owner of the land in question with the respondents, her first cousins.

Petitioner Juliana P. Fanesa also claims ownership of the entire property by virtue of the fact
that when the Provincial Government of Negros Occidental bought the land after it was forfeited
for non-payment of taxes, she redeemed it.

The contention is without merit.

The redemption of the land made by Fanesa did not terminate the co-ownership nor give her
title to the entire land subject of the co-ownership. Speaking on the same issue raised by
petitioners, the Court, in Adille v. Court of Appeals, 16 resolved the same with the following
pronouncements:

The petition raises a purely legal issue: May a co-owner acquire exclusive
ownership over the property held in common?

Essentially, it is the petitioners' contention that the property subject of dispute

devolved upon him upon the failure of his co-heirs to join him in its redemption
within the period required by law. He relies on the provisions of Article 1515 of
the old Civil Code, Article 1613 of the present Code, giving the vendee a retro the
right to demand redemption of the entire property.

There is no merit in this petition.

The right of repurchase may be exercised by co-owner with respect to his share
alone (CIVIL CODE, art. 1612, CIVIL CODE (1889), art. (1514.). While the
records show that petitioner redeemed the property in its entirety, shouldering the
expenses therefor, that did not make him the owner of all of it. In other words, it
did not put to end the existing state of co-ownership (Supra, Art. 489). There is
no doubt that redemption of property entails a necessary expense. Under the
Civil Code:

Art. 488. Each co-owner shall have a right to compel the other co-owners to
contribute to the expenses of preservation of the thing or right owned in common
and to the taxes. Any one of the latter may exempt himself from this obligation by
renouncing so much of his undivided interest as may be equivalent to his share
of the expenses and taxes. No such waiver shall be made if it is prejudicial to the
co-ownership.

The result is that the property remains to be in a condition of co-ownership. While

a vendee a retro, under Article 1613 of the Code, "may not be compelled to
consent to a partial redemption," the redemption by one co-heir or co-owner of
 the property in its totality does not vest in him ownership over it. Failure on the
part of all the co-owners to redeem it entitles the vendee a retro to retain the
property and consolidate title thereto in his name (Supra, art. 1607). But the
provision does not give to the redeeming co-owner the right to the entire
property. It does not provide for a mode of terminating a co-ownership.

Although petitioner Fanesa did not acquire ownership over the entire lot by virtue of the
redemption she made, nevertheless, she did acquire the right to reimbursed for half of the
redemption price she paid to the Provincial Government of Negros Occidental on behalf of her
co-owners. Until reimbursed, Fanesa hold a lien upon the subject property for the amount due
her. 17

Finally, petitioners dispute the order of the trial court, which the Court of Appeals affirmed, for
them to pay private respondents P5,000.00 per year from 1966 until the partition of the estate
which represents the share of private respondents in the fruits of the land. According to
petitioners, the land is being leased for P2,000.00 per year only. This assigned error, however
raises a factual question. The settled rule is that only questions of law may be raised in a
petition for review. As a general rule, findings of fact made by the trial court and the Court of
Appeals are final and conclusive and cannot be reviewed on appeal. 18

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals AFFIRMED.

SO ORDERED.
G.R. No. L-33158 October 17, 1985

VALENTINA G. VILLANUEVA, assisted by her husband SEVERINO FERI, ANTONIO G.

VILLANUEVA, ANGEL G. VILLANUEVA and OLIMPIA G. VILLANUEVA, assisted by her
husband F. DAGUIMOL, petitioners,
vs.
HON. ALFREDO C. FLORENDO, Judge of the CFI of Cagayan, Second Branch, ERLINDA
V. VALLANGCA, CONCEPCION G. VILLANUEVA and MACARIO K.
VILLANUEVA, respondents.

CUEVAS, J.:

Petition for review on certiorari of the decision 1 dated July 14, 1970 of the then Court of First
Instance of Cagayan Branch II, in Civil Case No. 1486-A, entitled "Valentina G. Villanueva, et
al., plaintiffs, versus Erlinda V. Vallangca, et al., defendants", the dispositive portion of which
reads as follows:

WHEREFORE, the Court hereby renders judgment—

1. Ordering the reformation and amendment of Exhibit "3" by deleting the phrase
located at the western side of the lot which is five and one half (5-½) meters in
width and fifteen (15) meters long';

2. Declaring Erlinda Vallangca, married to Concepcion Villanueva absolute

owners of an Ideal and undivided share of one-half (½) of the land described in
paragraph 2 of the complaint, which was conveyed to them by Exhibit;

3. Ordering the partition of the land described in paragraph 2 of the complaint

among the heirs of Basilia Garcia;

4. Ordering the dismissal of the defendants' counterclaim; and

5. Ordering the Clerk of Court to return to the plaintiffs the sum of P1,000.00
deposited by them with costs de oficio.

SO ORDERED.

Petitioners and respondent Concepcion Villanueva are the children of spouses Macario
Villanueva (one of the respondents) and Basilia Garcia. Said spouses owned a small parcel of
land with an area of 165 square meters situated along Pres. Quezon St., in the Poblacion of
Aparri, Cagayan. Sometime in 1944, Basilia Garcia died intestate, leaving her husband, Macario
Villanueva and children (herein petitioners) as her sole and only legitimate heirs.

On May 13, 1964, the surviving spouse, Macario, without the subject lot having been
partitioned, sold in favor of Erlinda Vallangca, the wife of respondent Concepcion Villanueva,
one-half or 82.5 square meters of the aforementioned lot, particularly the western portion
thereof, measuring 15-½ meters by 15 meters, for P1,100.00, as evidenced by a Deed of Sale
marked as Exhibit "3". 2 Having been informed of the sale, petitioners signified their intention to
redeem the lot in question but respondent vendee refused to allow such redemption contending
that she is the wife of one of the legal heirs and therefore redemption will not lie against her
because she is not the "third party" or "stranger" contemplated in the law.

Petitioners filed a complaint for rescission of sale and legal redemption of the portion sold to
Vallangca. The trial court, on July 14, 1970, rendered a decision ordering among other things,
the reformation of the Deed of Sale and declaring the vendee the absolute owner of the subject
lot.

Petitioners now submit 3 that the lower court erred—

(1) in holding that the property sold to Erlinda Vallangca, married to Concepcion Villanueva, is a
conjugal partnership property of the spouses, and therefore, the right of legal redemption will not
lie against Erlinda Vallangca and Concepcion Villanueva, instead of holding that Erlinda V.
Vallangca, being a "third person" or .stranger the right of legal redemption contemplated under
Art. 1620 and, or 1088 (NCC) can be exercised as against the vendee in the sale;

(2) inordering for the formation and amendment Exh. 3 by deletion of the phrase "located at the
western side of the lot which is five and one-half meters in width and 15 meters long" instead of
annulling and rescinding the sale as called for under the circumstances; and

(3) in ordering the partition of the property described in par. 2 of the complaint among the heirs
of Basilia Garcia, where partition is not warranted considering that there is still pending before
the same court a separate action for partition of the same property filed by Concepcion
Villanueva against plaintiff-petitioners.

Art. 1620 of the New Civil Code provides:

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

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

It is not disputed that co-ownership exists but the lower court disallowed redemption because it
considered the vendee, Erlinda Vallangca, a co-heir, being married to Concepcion Villanueva,
and the conveyance was held valid since it was in favor of the conjugal partnership of the
spouses in the absence of any statement that it is paraphernal in character. Within the meaning
of Art. 1620, the term "third person" or "stranger" refers to all persons who are not heirs in
succession, and by heirs are meant only those who are called either by will or the law to
succeed the deceased and who actually succeeds. In short, a third person is any one who is not
a co-owner. 4 The vendee is related by affinity to the deceased by reason of her marriage to one
of the heirs and being married to Concepcion does not entitle the vendee to inherit or succeed
in her own right. She is not an heir of Basilia Garcia nor included in the "family relations" of
spouses Macario and Basilia as envisioned in Art. 217 of the Civil Code.

Art. 217. Family relations shall in lude those:

(1) Between Husband and wife;

(2) Between parent and child;
(3) Among other ascendants and their descendants;
(4) Among brothers and sisters.

The co-owners should therefore be allowed to exercise their right to redeem the property sold to
Erlinda Vallangca. To deny petitioners the right of redemption recognized in Art. 1620 of the
Civil Code is to defeat the purpose of minimizing co-ownership and to contravene the public
policy in this regard. Moreover, it would result in disallowing the petitioners a way out of what, in
the words of Manresa, "might be a disagreeable or inconvenient association into which they
have been thrust." 5 Respondent seller Macario, as co-owner and before partition, has the right
to freely sell and dispose of his undivided interest or his Ideal share but not a divided part and
one with boundaries as what was done in the case at bar. It is an inherent and peculiar feature
of co-ownership that although the co-owners may have unequal shares in the common property
quantitatively speaking, each co-owner has the same right in a qualitative sense as any one of
the other co-owners. In other words, every co-owner is the owner of the whole and over the
whole, he exercises the right of dominion, but he is at the same time the owner of a portion
which is truly abstract because until division is effected, such portion is not correctly
determined. 6
It appearing that a separate action for partition of the subject lot is still pending before the CFI of
Cagayan, the trial court's order of partition is, therefore, uncalled for.

WHEREFORE, the petition is hereby GRANTED and the decision dated July 14, 1970 of the
then CFI of Cagayan, Br. II, is accordingly REVERSED. Costs against private respondents.

SO ORDERED.

Concepcion, Jr., Abad Santos, Escolin and Alampay, JJ., concur.

Separate Opinions

AQUINO, J., dissenting:

This is an intra-family litigation over 82.5 square meters of land. The spouses Macario K.
Villanueva and Basilia Garcia owned a lot with an area of 165 square meters located on
President Quezon Street, Aparri, Cagayan. Basilia died in 1944 survived by Macario and their
five children named Valentina, Olimpia, Angel, Antonio and Concepcion (a male person), the
husband of Erlinda V. Villangca.

The five children each owned a 1/10 share of that same lot while Macario owned ½ thereof as
his conjugal share or 82,5 square meters. Note that north of the lot is the lot of Severino Feri,
Valentina's husband. On 3/4 of the lot stands a house of strong materials occupied by
Valentina.

Macario claims that he is the owner of the house because after liberation he bought a house for
P500 and transferred to the lot (6 tsn Jan. 16, 1970). On the other hand, the trial court found
that it is owned by Valentina (p. 64, Rollo). Macario admits in his letter, Exhibit D.

On May 13, 1964 Macario (he is an insurance under-writer and was 79 in 1970 when he
testified) sold for P1,1 00 to Erlinda, the wife of his son Concepcion, his ½ conjugal share in
said lot but he made the mistake of selling "the western side of the lot". He should have sold
only his Ideal proindiviso ½ share. He had to sell because he had to pay one Timbang the
mortgage debt secured by the lot (4 tsn Jan. 16, 1970; p. 35, Rollo).

Four years after the sale, or on October 17, 1968, the four children sued their father brother and
sister-in-law for rescision of the sale and for redemption. The alleged that there was no written
notice to them of the sale, that they learned of it only in September 1968 and that the house on
the lot was valued at P7,000. They consigned the redemption price of P1,100.

Macario answered the complaint without Counsel's assistance. He stated therein that to avoid
trouble and quarelling among the members of his family he would like to cancel the sale since
Erlinda could not buy Valentina's house, to sell his ½ share to Valentina and to return the
P1,100 to Erlinda (Exh. C. pp. 32-33, Rollo).

That answer should have terminated the case. But later a motion to dismiss and an answer
were filed by Erlinda, Concepcion and Macario. They insisted on the validity of the sale to
Erlinda. Valentina filed another case, Civil Case No. 1501-A, for partition.

When the trial judge categorically asked Macario what was his proposition about the case, he
said that it was his desire that his son Concepcion should stay on the disputed lot because he
had no lot on which to build his house (9-10 tsn Jan. 16, 1970).
Judge Florendo in his decision dated July 14, 1970 declared Erlinda the owner of the ½ portion
bought by her after ordering the reformation of the deed of sale to make it appear that an Ideal
½ share was bought by her and ordering the return of the P1,100 to Valentina. Judge Florendo
also ordered partition of the lot. Valentina and her brothers and sister appealed to this Court
under Republic Act No. 5440.

Macario created in this case a big legal problem for a small property. That problem would not
have arisen had he been properly legally advised. Instead of selling his proindiviso) ½ share or
82.5 square meters to his son Concepcion, a co-owner to the extent of 1/06 or 16.5 square
meters, he chose to sell it to his daughter-in-law, Erlinda, thus provoking the issue of whether
Erlinda is a third-person with respect to the co-owners.

Had he sold his 11/2 share to his son Concepcion, a co-owner, there would be no question
about the sale to a "third person". The right of redemption does not exist with respect to the
vendee-co-owner. The Civil Code provides:

ART. 1620. A co-owner of a thing may exercise the right of redemption in case
the shares of all the other co-owners or of any of them, are sold to a third
person. ... (1522a)

ART. 1088. Should any of the heirs sell his hereditary rights to
a (stranger) before the partition, any or all of the co-heirs may be subrogated to
the rights of the purchaser by reimbursing him for the price of the sale, provided
they do so within the period of one month from the time they were notified in
writing of the sale by the vendor. (1067a)

Note that the "third person" in article 1620 is extrano (stranger) in the Spanish original of article
1522, not "tercero" which is the Spanish for "third person".

Manresa, commenting on article 1067, now article 1088, observes, that "el marido de una
heredera" is a stranger (7 Codigo Civil Espanol, 7th Ed., 1955, p. 812).

I am of the opinion that no right of redemption exists in favor of Erlinda's sisters-in-law and
brothers-in-law because the sale was made to the (conjugal partnership of Erlinda and
Concepcion), a co-owner. The sale made Concepcion and Erlinda the co-owners of 6/10 or 3/5
of the 165-square- meter lot. We have to be realistic and pragmatic in this case.

Even now, Macario could himself revoke or rectify the sale and resell his ½ share to
Concepcion.

Castan Tobenas says that an "extrano" is a person who is not a co-owner. Literally, Erlinda is
not a co-owner but the unblinkable fact is that she is married to a co-owner and the ½ portion
sold became her conjugal property and that of her husband. They in turn are co-owners of that
conjugal 1/2 portion.

The view that Erlinda is not a third person with respect to the co-ownership is supported by the
ruling in Saclolo and Pascual vs. Madlangsakay and Court of Agrarian Relations, 106 Phil.
1038. It was held in that case:

Under legal principles, by the contract of marriage, a man and woman enter a
joint life, acting, living, and working as one, whether under the common law or
under the civil upon marriage the husband and the wife become one single,
moral, spritual and social being, not only for purposes of procreation for the
purpose of mutual help and protection, physically, morally and materially. There
is between them a full and complete community existence.

Castan Tobenas says that "el matrimonio es el acto solemne por medio del cual el hombre y la
mujer constituyen entre si una union legal para la plena y perpetua comunidad de existencia".

Justice Labrador says that "if there is unity and community of existence between husband and
wife, then the husband may not be considered as a being distinct and different from the wife."
Hence, in the Saclolo case it was ruled that for purposes of the Agricultural Tenancy Law,
Republic Act No. 1199, where the wife sought to eject a tenant from her paraphernal land on the
ground that her husband, who was jobless, would work on the land, the tenant may be ejected
although the law provides that the landowner may eject the tenant only when he
will personally cultivate his land.

The unity of husband and wife is patent in this case. Plaintiffs Valentina and Olimpia had to
bring this case with the assistance of their husbands against Erlinda and her husband,
Concepcion.

The majority opinion relies on Basa vs. Aguilar, 117 SCRA 128 where one-half of a parcel of
land, with an area of 32,383 square meters, was owned proindiviso by Olimpia, Arsenio,
Nemesio, Ricardo, Atanacia Juliana and Feliciano, surnamed Basa, and the other half was
owned proindiviso by the spouses Genaro Puyat and Brigida Mesina.

The Puyat's sold their undivided ½ share to their son-in-law, Primo Tiongson, who was married
to their daughter Macaria It was held that the Basas had the right to redeem the ½ share sold to
Tiongson who was considered a third person with respect to the co-ownership inspite of the fact
that he was a son-in-law of the two co-owners.

The instant case is different from the Basa case because the vendee herein is the wife of a co-
owner Concepcion, who owns a 1/10 (proindiviso) share of the disputed lot.

What is the just solution of this case? To a fair-minded person, the judicious solution is to award
the lot to Valentina whose house is built on 3/4 of the lot. The P1,100 deposited by her in
payment of the ½ (proindiviso) share of her father should be paid to Erlinda. This is in
accordance with the original answer of Macario (Exh. C) which should be regarded as binding
on him.

The second case filed by Valentina, Civil Case No. 1501-A, should be consolidated with the
instant case. In the two cases the trial judge should determine what amount at current prices
should be paid by Valentina for the 1/10 share of Concepcion and the 1/10 share of each of the
other children. This solution should establish peace among the five children.

Separate Opinions

AQUINO, J., dissenting:

This is an intra-family litigation over 82.5 square meters of land. The spouses Macario K.
Villanueva and Basilia Garcia owned a lot with an area of 165 square meters located on
President Quezon Street, Aparri, Cagayan. Basilia died in 1944 survived by Macario and their
five children named Valentina, Olimpia, Angel, Antonio and Concepcion (a male person), the
husband of Erlinda V. Villangca.

The five children each owned a 1/10 share of that same lot while Macario owned ½ thereof as
his conjugal share or 82,5 square meters. Note that north of the lot is the lot of Severino Feri,
Valentina's husband. On 3/4 of the lot stands a house of strong materials occupied by
Valentina.

Macario claims that he is the owner of the house because after liberation he bought a house for
P500 and transferred to the lot (6 tsn Jan. 16, 1970). On the other hand, the trial court found
that it is owned by Valentina (p. 64, Rollo). Macario admits in his letter, Exhibit D.

On May 13, 1964 Macario (he is an insurance under-writer and was 79 in 1970 when he
testified) sold for P1,1 00 to Erlinda, the wife of his son Concepcion, his ½ conjugal share in
said lot but he made the mistake of selling "the western side of the lot". He should have sold
only his Ideal proindiviso ½ share. He had to sell because he had to pay one Timbang the
mortgage debt secured by the lot (4 tsn Jan. 16, 1970; p. 35, Rollo).

Four years after the sale, or on October 17, 1968, the four children sued their father brother and
sister-in-law for rescision of the sale and for redemption. The alleged that there was no written
notice to them of the sale, that they learned of it only in September 1968 and that the house on
the lot was valued at P7,000. They consigned the redemption price of P1,100.

Macario answered the complaint without Counsel's assistance. He stated therein that to avoid
trouble and quarelling among the members of his family he would like to cancel the sale since
Erlinda could not buy Valentina's house, to sell his ½ share to Valentina and to return the
P1,100 to Erlinda (Exh. C. pp. 32-33, Rollo).

That answer should have terminated the case. But later a motion to dismiss and an answer
were filed by Erlinda, Concepcion and Macario. They insisted on the validity of the sale to
Erlinda. Valentina filed another case, Civil Case No. 1501-A, for partition.

When the trial judge categorically asked Macario what was his proposition about the case, he
said that it was his desire that his son Concepcion should stay on the disputed lot because he
had no lot on which to build his house (9-10 tsn Jan. 16, 1970).

Judge Florendo in his decision dated July 14, 1970 declared Erlinda the owner of the ½ portion
bought by her after ordering the reformation of the deed of sale to make it appear that an Ideal
½ share was bought by her and ordering the return of the P1,100 to Valentina. Judge Florendo
also ordered partition of the lot. Valentina and her brothers and sister appealed to this Court
under Republic Act No. 5440.

Macario created in this case a big legal problem for a small property. That problem would not
have arisen had he been properly legally advised. Instead of selling his proindiviso) ½ share or
82.5 square meters to his son Concepcion, a co-owner to the extent of 1/06 or 16.5 square
meters, he chose to sell it to his daughter-in-law, Erlinda, thus provoking the issue of whether
Erlinda is a third-person with respect to the co-owners.

Had he sold his 11/2 share to his son Concepcion, a co-owner, there would be no question
about the sale to a "third person". The right of redemption does not exist with respect to the
vendee-co-owner. The Civil Code provides:

ART. 1620. A co-owner of a thing may exercise the right of redemption in case
the shares of all the other co-owners or of any of them, are sold to a third
person. ... (1522a)

ART. 1088. Should any of the heirs sell his hereditary rights to
a (stranger) before the partition, any or all of the co-heirs may be subrogated to
the rights of the purchaser by reimbursing him for the price of the sale, provided
they do so within the period of one month from the time they were notified in
writing of the sale by the vendor. (1067a)

Note that the "third person" in article 1620 is extrano (stranger) in the Spanish original of article
1522, not "tercero" which is the Spanish for "third person".

Manresa, commenting on article 1067, now article 1088, observes, that "el marido de una
heredera" is a stranger (7 Codigo Civil Espanol, 7th Ed., 1955, p. 812).

I am of the opinion that no right of redemption exists in favor of Erlinda's sisters-in-law and
brothers-in-law because the sale was made to the (conjugal partnership of Erlinda and
Concepcion), a co-owner. The sale made Concepcion and Erlinda the co-owners of 6/10 or 3/5
of the 165-square- meter lot. We have to be realistic and pragmatic in this case.

Even now, Macario could himself revoke or rectify the sale and resell his ½ share to
Concepcion.
Castan Tobenas says that an "extrano" is a person who is not a co-owner. Literally, Erlinda is
not a co-owner but the unblinkable fact is that she is married to a co-owner and the ½ portion
sold became her conjugal property and that of her husband. They in turn are co-owners of that
conjugal 1/2 portion.

The view that Erlinda is not a third person with respect to the co-ownership is supported by the
ruling in Saclolo and Pascual vs. Madlangsakay and Court of Agrarian Relations, 106 Phil.
1038. It was held in that case:

Under legal principles, by the contract of marriage, a man and woman enter a
joint life, acting, living, and working as one, whether under the common law or
under the civil upon marriage the husband and the wife become one single,
moral, spritual and social being, not only for purposes of procreation for the
purpose of mutual help and protection, physically, morally and materially. There
is between them a full and complete community existence.

Castan Tobenas says that "el matrimonio es el acto solemne por medio del cual el hombre y la
mujer constituyen entre si una union legal para la plena y perpetua comunidad de existencia".

Justice Labrador says that "if there is unity and community of existence between husband and
wife, then the husband may not be considered as a being distinct and different from the wife."

Hence, in the Saclolo case it was ruled that for purposes of the Agricultural Tenancy Law,
Republic Act No. 1199, where the wife sought to eject a tenant from her paraphernal land on the
ground that her husband, who was jobless, would work on the land, the tenant may be ejected
although the law provides that the landowner may eject the tenant only when he
will personally cultivate his land.

The unity of husband and wife is patent in this case. Plaintiffs Valentina and Olimpia had to
bring this case with the assistance of their husbands against Erlinda and her husband,
Concepcion.

The majority opinion relies on Basa vs. Aguilar, 117 SCRA 128 where one-half of a parcel of
land, with an area of 32,383 square meters, was owned proindiviso by Olimpia, Arsenio,
Nemesio, Ricardo, Atanacia Juliana and Feliciano, surnamed Basa, and the other half was
owned proindiviso by the spouses Genaro Puyat and Brigida Mesina.

The Puyat's sold their undivided ½ share to their son-in-law, Primo Tiongson, who was married
to their daughter Macaria It was held that the Basas had the right to redeem the ½ share sold to
Tiongson who was considered a third person with respect to the co-ownership inspite of the fact
that he was a son-in-law of the two co-owners.

The instant case is different from the Basa case because the vendee herein is the wife of a co-
owner Concepcion, who owns a 1/10 (proindiviso) share of the disputed lot.

What is the just solution of this case? To a fair-minded person, the judicious solution is to award
the lot to Valentina whose house is built on 3/4 of the lot. The P1,100 deposited by her in
payment of the ½ (proindiviso) share of her father should be paid to Erlinda. This is in
accordance with the original answer of Macario (Exh. C) which should be regarded as binding
on him.

The second case filed by Valentina, Civil Case No. 1501-A, should be consolidated with the
instant case. In the two cases the trial judge should determine what amount at current prices
should be paid by Valentina for the 1/10 share of Concepcion and the 1/10 share of each of the
other children. This solution should establish peace among the five children.
G.R. No. L-44546 January 29, 1988

RUSTICO ADILLE, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA ASEJO,
DOMINGO ASEJO, JOSEFA ASEJO and SANTIAGO ASEJO, respondents.

SARMIENTO, J.:

In issue herein are property and property rights, a familiar subject of controversy and a
wellspring of enormous conflict that has led not only to protracted legal entanglements but to
even more bitter consequences, like strained relationships and even the forfeiture of lives. It is a
question that likewise reflects a tragic commentary on prevailing social and cultural values and
institutions, where, as one observer notes, wealth and its accumulation are the basis of self-
fulfillment and where property is held as sacred as life itself. "It is in the defense of his property,"
says this modern thinker, that one "will mobilize his deepest protective devices, and anybody
that threatens his possessions will arouse his most passionate enmity." 1

The task of this Court, however, is not to judge the wisdom of values; the burden of
reconstructing the social order is shouldered by the political leadership-and the people
themselves.

The parties have come to this Court for relief and accordingly, our responsibility is to give them
that relief pursuant to the decree of law.

The antecedent facts are quoted from the decision 2 appealed from:

xxx xxx xxx

... [T]he land in question Lot 14694 of Cadastral Survey of Albay located in
Legaspi City with an area of some 11,325 sq. m. originally belonged to one
Felisa Alzul as her own private property; she married twice in her lifetime; the
first, with one Bernabe Adille, with whom she had as an only child, herein
defendant Rustico Adille; in her second marriage with one Procopio Asejo, her
children were herein plaintiffs, — now, sometime in 1939, said Felisa sold the
property in pacto de retro to certain 3rd persons, period of repurchase being 3
years, but she died in 1942 without being able to redeem and after her death, but
during the period of redemption, herein defendant repurchased, by himself alone,
and after that, he executed a deed of extra-judicial partition representing himself
to be the only heir and child of his mother Felisa with the consequence that he
was able to secure title in his name alone also, so that OCT. No. 21137 in the
name of his mother was transferred to his name, that was in 1955; that was why
after some efforts of compromise had failed, his half-brothers and sisters, herein
plaintiffs, filed present case for partition with accounting on the position that he
was only a trustee on an implied trust when he redeemed,-and this is the
evidence, but as it also turned out that one of plaintiffs, Emeteria Asejo was
occupying a portion, defendant counterclaimed for her to vacate that, —

Well then, after hearing the evidence, trial Judge sustained defendant in his
position that he was and became absolute owner, he was not a trustee, and
therefore, dismissed case and also condemned plaintiff occupant, Emeteria to
vacate; it is because of this that plaintiffs have come here and contend that trial
court erred in:

I. ... declaring the defendant absolute owner of the property;

II. ... not ordering the partition of the property; and

 III. ... ordering one of the plaintiffs who is in possession of the portion of the
property to vacate the land, p. 1 Appellant's brief.

which can be reduced to simple question of whether or not on the basis of evidence and law,
judgment appealed from should be maintained. 3

xxx xxx xxx

The respondent Court of appeals reversed the trial Court, 4 and ruled for the plaintiffs-
appellants, the private respondents herein. The petitioner now appeals, by way of certiorari,
from the Court's decision.

We required the private respondents to file a comment and thereafter, having given due course
to the petition, directed the parties to file their briefs. Only the petitioner, however, filed a brief,
and the private respondents having failed to file one, we declared the case submitted for
decision.

The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the
property held in common?

Essentially, it is the petitioner's contention that the property subject of dispute devolved upon
him upon the failure of his co-heirs to join him in its redemption within the period required by
law. He relies on the provisions of Article 1515 of the old Civil Article 1613 of the present Code,
giving the vendee a retro the right to demand redemption of the entire property.

There is no merit in this petition.

The right of repurchase may be exercised by a co-owner with aspect to his share alone. 5 While
the records show that the petitioner redeemed the property in its entirety, shouldering the
expenses therefor, that did not make him the owner of all of it. In other words, it did not put to
end the existing state of co-ownership.

Necessary expenses may be incurred by one co-owner, subject to his right to collect
reimbursement from the remaining co-owners. 6 There is no doubt that redemption of property
entails a necessary expense. Under the Civil Code:

ART. 488. Each co-owner shall have a right to compel the other co-owners to
contribute to the expenses of preservation of the thing or right owned in common
and to the taxes. Any one of the latter may exempt himself from this obligation by
renouncing so much of his undivided interest as may be equivalent to his share
of the expenses and taxes. No such waiver shall be made if it is prejudicial to the
co-ownership.

The result is that the property remains to be in a condition of co-ownership. While a vendee a
retro, under Article 1613 of the Code, "may not be compelled to consent to a partial
redemption," the redemption by one co-heir or co-owner of the property in its totality does not
vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the
vendee a retro to retain the property and consolidate title thereto in his name. 7 But the provision
does not give to the redeeming co-owner the right to the entire property. It does not provide for
a mode of terminating a co-ownership.

Neither does the fact that the petitioner had succeeded in securing title over the parcel in his
name terminate the existing co-ownership. While his half-brothers and sisters are, as we said,
liable to him for reimbursement as and for their shares in redemption expenses, he cannot claim
exclusive right to the property owned in common. Registration of property is not a means of
acquiring ownership. It operates as a mere notice of existing title, that is, if there is one.

The petitioner must then be said to be a trustee of the property on behalf of the private
respondents. The Civil Code states:
 ART. 1456. If property is acquired through mistake or fraud, the person obtaining
it is, by force of law, considered a trustee of an implied trust for the benefit of the
person from whom the property comes.

We agree with the respondent Court of Appeals that fraud attended the registration of the
property. The petitioner's pretension that he was the sole heir to the land in the affidavit of
extrajudicial settlement he executed preliminary to the registration thereof betrays a clear effort
on his part to defraud his brothers and sisters and to exercise sole dominion over the property.
The aforequoted provision therefore applies.

It is the view of the respondent Court that the petitioner, in taking over the property, did so either
on behalf of his co-heirs, in which event, he had constituted himself a negotiorum gestor under
Article 2144 of the Civil Code, or for his exclusive benefit, in which case, he is guilty of fraud,
and must act as trustee, the private respondents being the beneficiaries, under the Article 1456.
The evidence, of course, points to the second alternative the petitioner having asserted claims
of exclusive ownership over the property and having acted in fraud of his co-heirs. He cannot
therefore be said to have assume the mere management of the property abandoned by his co-
heirs, the situation Article 2144 of the Code contemplates. In any case, as the respondent Court
itself affirms, the result would be the same whether it is one or the other. The petitioner would
remain liable to the Private respondents, his co-heirs.

This Court is not unaware of the well-established principle that prescription bars any demand on
property (owned in common) held by another (co-owner) following the required number of years.
In that event, the party in possession acquires title to the property and the state of co-ownership
is ended . 8 In the case at bar, the property was registered in 1955 by the petitioner, solely in his
name, while the claim of the private respondents was presented in 1974. Has prescription then,
set in?

We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must

have been preceded by repudiation (of the co-ownership). The act of repudiation, in turn is
subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of
repudiation is clearly made known to the other co-owners; (3) the evidence thereon is clear and
conclusive, and (4) he has been in possession through open, continuous, exclusive, and
notorious possession of the property for the period required by law. 9

The instant case shows that the petitioner had not complied with these requisites. We are not
convinced that he had repudiated the co-ownership; on the contrary, he had deliberately kept
the private respondents in the dark by feigning sole heirship over the estate under dispute. He
cannot therefore be said to have "made known" his efforts to deny the co-ownership. Moreover,
one of the private respondents, Emeteria Asejo, is occupying a portion of the land up to the
present, yet, the petitioner has not taken pains to eject her therefrom. As a matter of fact, he
sought to recover possession of that portion Emeteria is occupying only as a counterclaim, and
only after the private respondents had first sought judicial relief.

It is true that registration under the Torrens system is constructive notice of title, 10 but it has
likewise been our holding that the Torrens title does not furnish a shield for fraud. 11 It is
therefore no argument to say that the act of registration is equivalent to notice of repudiation,
assuming there was one, notwithstanding the long-standing rule that registration operates as a
universal notice of title.

For the same reason, we cannot dismiss the private respondents' claims commenced in 1974
over the estate registered in 1955. While actions to enforce a constructive trust prescribes in ten
years, 12 reckoned from the date of the registration of the property, 13 we, as we said, are not
prepared to count the period from such a date in this case. We note the petitioner's sub
rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent
misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only heir and
child of his mother Feliza with the consequence that he was able to secure title in his name
also." 14 Accordingly, we hold that the right of the private respondents commenced from the time
they actually discovered the petitioner's act of defraudation. 15 According to the respondent
Court of Appeals, they "came to know [of it] apparently only during the progress of the
litigation." 16 Hence, prescription is not a bar.
Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either in a
motion to dismiss or in the answer otherwise it is deemed waived, 17 and here, the petitioner
never raised that defense. 18 There are recognized exceptions to this rule, but the petitioner has
not shown why they apply.

WHEREFORE, there being no reversible error committed by the respondent Court of Appeals,
the petition is DENIED. The Decision sought to be reviewed is hereby AFFIRMED in toto. No
pronouncement as to costs.

SO ORDERED,
G.R. No. 109910 April 5, 1995

REMEDIOS G. SALVADOR and GRACIA G. SALVADOR, petitioners,

vs.
COURT OF APPEALS, ALBERTO and ELPIA YABO, FRANCISCA YABO, et al.,
respondents.

DAVIDE, JR., J.:

Assailed in this petition is the legal determination made by the Court of Appeals on the issues of
which portion of Lot No. 6080 and Lot No. 6180 formed part of the conjugal assets of the
spouses Pastor Makibalo and Maria Yabo, and of whether or not the rights of Pastor's co-heirs
in the estate of Maria Yabo were extinguished through prescription or laches.

Alipio Yabo was the owner of Lot No. 6080 and Lot No. 6180 situated in Barrio Bulua, Cagayan
de Oro City, containing an area of 1,267 and 3,816 square meters, respectively. Title thereto
devolved upon his nine children, namely, Victoriano, Procopio, Lope, Jose, Pelagia, Baseliza,
Francisca, Maria, and Gaudencia, upon his death sometime before or during the second world
war.

On 28 April 1976, Pastor Makibalo, who is the husband of Maria Yabo, one of Alipio's children,
filed with the then Court of First Instance of Misamis Oriental a complaint, docketed as Civil
Case No. 5000, against the spouses Alberto and Elpia Yabo for "Quieting of Title, Annulment of
Documents, and Damages." In the complaint, he alleged that he owned a total of eight shares of
the subject lots, having purchased the shares of seven of Alipio's children and inherited the
share of his wife, Maria, and that except for the portion corresponding to Gaudencia's share
which he did not buy, he occupied, cultivated, and possessed continuously, openly, peacefully,
and exclusively the two parcels of land. He then prayed that he be declared the absolute owner
of 8/9 of the lots in question.1

On 8 October 1976, the grandchildren and great-grandchildren of the late Alipio Yabo2 lodged
with the same court a complaint for partition and quieting of title with damages,3 docketed as
Civil Case No. 5174, against Pastor Makibalo, Enecia Cristal, and the spouses Eulogio and
Remedies Salvador. They alleged that Lot No. 6080 and Lot No. 6180 are the common property
of the heirs of Alipio Yabo, namely, the plaintiffs, defendant Enecia Cristal, Maria Yabo and Jose
Yabo, whose share had been sold to Alberto Yabo; that after Alipio's death, the spouses Pastor
and Maria Makibalo, Enecia Cristal and Jose Yabo became the de facto administrators of the
said properties; and that much to their surprise, they discovered that the Salvador spouses, who
were strangers to the family, have been harvesting coconuts from the lots, which act as a cloud
on the plaintiffs' title over the lots.

The plaintiffs then prayed that (a) they, as well as defendant Pastor Makibalo, in representation
of his wife, and Enecia Cristal, in representation of Gaudencia, be declared as the owners of the
lots; (b) the Salvador spouses be declared as having no rights thereto except as possible
assignees of their co-defendants, Pastor Makibalo and Enecia Cristal; (c) the lots be partitioned
according to law among the aforementioned co-owners; and (d) the defendants be made to pay
for the value of the fruits they harvested from the lots and for moral and exemplary damages,
attorney's fees, expenses of the litigation, and costs of the suit.

The two cases were consolidated and jointly heard by Branch 5 of the Court of First Instance of
Cagayan de Oro City.

By evidence, Pastor, Makibalo sought to prove the following allegations:

He was married to Maria Yabo who died on 17 March 1962.4 In August 1949, Jose and
Victoriano, both surnamed Yabo, sold their respective shares in the disputed lots to one Pedro
Ebarat, and in 1952 the latter sold both shares to Pastor Makibalo.5 Ebarat formalized this
conveyance by executing an Affidavit of Waiver and Quitclaim dated 30 May 1969 in favor of
Pastor.6
On 16 January 1951, the heirs of the late Lope Yabo sold Lope's shares in the litigated
properties to one Dominador Canomon,7 who, in turn, sold the same to Pastor.8 Canomon
afterwards executed an Affidavit of Waiver and Quitclaim in favor of the latter.9

Pastor Makibalo likewise purchased the shares of Baseliza in the two lots in 1942, of Procopio
in 1957, of Francisca in 1958, and of Pelagia in 1967. The only share he did not buy was that of
Gaudencia. After every purchase, he took possession of the portions bought and harvested the
products thereof.10

In 1966, Pastor sold back to Alberto a portion of Lot No. 6180 which was formerly the share of
Alberto's father, Procopio. 11

In December 1968, Pastor mortgaged the two lots to the spouses Eulogio and Remedios
Salvador. 12 On 26 September 1978, he executed a document denominated as a "Confirmation
and Quitclaim" whereby he waived all his rights, interests, and participation in the lots in favor of
the Salvador spouses. 13

On the other hand, by their evidence, l4 the spouses Alberto and Elpia Yabo tried to prove that
they had repurchased from Pastor Makibalo the share of Procopio, which was previously sold to
Pastor, and had bought the shares of Jose and Maria. 15

Filoteo Yabo denied having sold the share of his father, Lope Yabo, in the contested lots and
disowned his signature and those of his mother, brothers, and sisters appearing at the back of
Exhibit "C". 16

Ignacio Yabo testified that his father, Victoriano Yabo, did not know how to write and sign his
name. He further declared that he had no knowledge that his father affixed his thumbmark in the
document marked as Exhibit "A" purporting to alienate his father's share in the disputed lots. l7

On 15 January 1983, the trial court rendered its decision 18 holding as follows:

Assuming that the thumbmark on the typewritten name "Jose Yabo" in Exh. 3
was that of Jose Yabo, Alberto Yabo and Elpia R. Yabo purchased the share of
Jose Yabo in bad faith because they knew before and up to the execution of Exh.
3 on October 24, 1972 that Jose Yabo was no longer the owner of that area
because from the documents she borrowed from Mrs. Salvador they came to
know that Jose Yabo had sold his shares to Pedro Ebarat, and they have seen
that Pastor Makibalo has been in possession of those shares together with the
seven others exclusively as owner, he having mortgaged them to Mrs. Salvador.

As Jose Yabo was no longer the owner of the one-ninth (1/9) shares which he
sold to Alberto Yabo and Elpia Yabo under Exh. 3, the sale is null and void, and
Alberto and Elpia acquired nothing because Jose Yabo had no more title, right or
interest to dispose of.

...

Pastor Makibalo had been in possession of Jose Yabo's share since 1949 after
purchasing it from Ebarat, and has been in possession thereof up to September
26, 1978 when he sold it to the spouses Eulogio Salvador and Remedios
Salvador, who are now in possession of the same.

Exh. A, evidencing the sale of Victoriano Yabo's share to Pedro Ebarat was
identified by the latter who testified that he sold it to Pastor Makibalo in 1951.
Exh. A is an ancient document — 1949 when the document came to existence
up to now is more than 30 years, and the document had been in the possession
of Pastor Makibalo, then Remedios Salvador who had interest in its preservation.

As regards the shares of Lope Yabo, the same had been sold by his surviving
spouse Juana Legaspi, and his children Filoteo, Andresa, Jovita, Bonifacio, and
Rundino for P105.00 on January 16, 1951 to Dominador Conomon (Exh. C and
C-1), who in turn sold it to Pastor Makibalo in 1952, executing a formal Deed of
Waiver and Quitclaim on May 30, 1969
(Exh. D).

Exh. C is an ancient document, being more than 30 years old and has been in
the possession of Pastor Makibalo and then the spouses Eulogio and Remedios
Salvador — who had an interest in its preservation. The claim of Filoteo Yabo
that the signatures appearing in Exh. C are not his and those of his brothers and
sisters are of no avail, for if they were not the ones who affixed those signatures
and so they did not sell the shares of their father Lope Yabo, why did they not
then take possession of said shares — they remained silent from 1951 to
September 16, 1976 a period of 25 years. They are now [e]stopped by laches.

And as regards the shares of Baseliza, Francisca and Pelagia, there is no

evidence presented to effectively rebut the testimony of Pastor Makibalo that he
acquired the shares of Baseliza Yabo in 1942 by changing it with a buffalo; that
he bought the shares of Francisca Yabo in 1958 and that he bought the shares of
Pelagia Yabo in 1967; Pastor Makibalo had been in possession of these shares
from the time he acquired them, continuously, adversely, openly, and peacefully,
as owner up to the time he sold his rights and interest therein to the spouses
Eulogio and Remedies Salvador. The heirs of Baseliza, Francisca and Pelagia
have not taken any step to protect their rights over those shares for over 40
years in the case of Baseliza's share, for about 20 years in the case of
Francisca's share, and for more than 10 years in the case of Pelagia's share.
Laches, likewise has rendered their rights stale.

On March 10, 1966 Pastor Makibalo sold back to Alberto Yabo the share of
Procopio Yabo in Lot 6180 (Exh. 1 and 2), but there is nothing to show that.
Pastor Makibalo also sold back Procopio's share in Lot 6080.

So then, by purchase, Pastor Makibalo and Maria Yabo acquired the shares of
Baseliza, Victoriano, Jose, Lope, Procopio and Francisca, or six (6) shares from
Lots 6080 and 6180. These belonged to the conjugal partnership of Pastor
Makibalo and Maria Yabo. Maria Yabo had also a share from Lots 6080 and
6180, and Pastor Makibalo acquired the shares of Pelagia Yabo in both Lots
6080 and 6180. All in all; Pastor Makibalo acquired eight shares in both Lot 6080
and 6180.

While Maria Yabo died on March 17, 1962, and so one-fourth (1/4) of the shares
of Baseliza, Victoriano, Jose, Lope, and Francisca, or one-fourth of five-ninth
(5/9) of both lots and one-fourth (1/4) of Lot 6080 should go to the children of the
brothers and sisters of Maria Yabo by virtue of the provisions of Article 1001 of
the New Civil Code, the latter have lost their rights thereto by laches for their
inaction for a very long period and their rights have become stale. On the other
hand, Pastor Makibalo who had been in possession of the whole of the eight
shares in both Lots 6080 and 6180, enjoying the fruits thereof exclusively,
uninterruptedly, publicly, peacefully, and continuously from the death of Maria
Yabo up to the filing of the complaint in Civil Case No. 5174 on October 8, 1976,
or a period of 14 years, had acquired title to the whole of the eight shares in Lot
6080 and seven shares in Lot 6180 (the share of Procopio in Lot 6180 had been
sold back to Alberto Yabo).

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered finding Pastor

Makibalo, now Eulogio Salvador and Remedios Salvador the owner of eight (8)
shares, equivalent to eight-ninth (8/9) of Lot No. 6080, and of seven (7) shares,
equivalent to seven-ninth (7/9) of Lot No. 6180, and therefore, ordering the
partition of Lot 6080 so that the one-ninth (1/9) alloted to Gaudencia Yabo will go
to her heirs or their assigns, and the remaining eight-ninth (8/9) will go to the
spouses Eulogio Salvador and Remedios Salvador, as successor of Pastor
Makibalo, and the partition of Lot 6180 so that the seven-ninth (7/9) portion which
formerly belonged to Baseliza, Victoriano, Jose, Lope, Maria, Francisca, and
 Pelagia will go to the spouses Eulogio and Remedios Salvador, the one-ninth
(1/9) which formerly belonged to Procopio, will go to Alberto Yabo, and the
remaining one-ninth (1/9) which formerly belonged to Gaudencia, will go to
Gaudencia's heirs or their assigns.

Doc. No. 720, recorded on page 28 of Notarial Register No. VII, and
acknowledged before Notary Public Isidro S. Baculio (Exh. E) [purportedly
executed by Maria Yabo and Pastor Makibalo] is hereby declared null and void,
and so the Office of the City Fiscal is directed to cause an investigation of this
matter to find out the person or persons responsible for the falsification of the
said document, and if the evidence warrants, to file the corresponding criminal
action in court. The Office of the City Assessor of Cagayan de Oro City is,
likewise, directed to cause the cancellation of Tax Declarations Nos. 33553,
marked as Exh. H-3, 33557, marked as Exh. H-2, both in the name of Alberto
Yabo, for having been issued on the basis of a falsified document. Let copies of
this decision be furnished the Offices of the City Fiscal and City Assessor, both of
Cagayan de Oro City.

No pronouncement as to damages, attorney's fees and costs.

SO ORDERED. 19

The defendants in Civil Case No. 5000 and the plaintiffs in Civil Case No. 5174 appealed from
the decision to the Court of Appeals on 19 August 1983. 20

In its decision of 3 February 1993, 21 the Court of Appeals held that (a) Maria Yabo did not sell
her share to Alberto and Elpia Yabo; (b) prescription and laches have not run against the private
respondents with respect to the 1/9 share of Maria Yabo in the estate of her father and to her
conjugal share in the portions acquired from her brothers and sisters; and (c) Procopio never
sold his share in Lot No. 6080 to Pastor Makibalo. More specifically it stated:

Exh. E is the document found by the lower court to be a falsification. This finding
appellants do not dispute and have not raised an error.

...

While acknowledging. that upon the death of Maria Yabo on March 17, 1962,
one-half (1/2) of the share of Maria Yabo in Lots 6080 and 6180 and one-half
(1/2) of Maria Yabo's conjugal share in the portions bought from Basiliza,
Victoriano, Jose, Lope, Pelagia and Francisca should go to the children of the
brothers and sisters of Maria in accordance with Article 1001 of the Civil Code,
the lower court rule that said children have lost their rights by laches "for their
inaction for a very long period and their rights have become stale" (Decision, p.
16; Record, Vol. 2, p. 158).

Appellants in their second assignment of error aver that this is an error.

We agree that the lower court erred.

While between March 17, 1962 when Maria Yabo died and October 8, 1976,
when Civil Case No. 5174 for partition was filed, was a period of more than
fourteen (14) years, that alone to our mind would not suffice to establish laches
or prescription. Upon the death of Maria Yabo, appellee Pastor Makibalo and
appellants and the other children of the brothers and sisters of Maria, by
operation of law become co-owners of the one-ninth (1/9) share of Maria as heir
of her father Alipio and the conjugal share of Maria in the portions acquired from
Basiliza, Victoriano, Jose, Lope, Pelagia and Francisca. Time alone is not a
decisive factor. Appellee Pastor Makibalo, it must be remembered, is the
husband of Maria and, therefore, an uncle in-law of appellants. In our culture, a
demand by an heir or heirs for partition immediately upon the death of a relative
is more often taken not as a legitimate assertion of a right but of something else,
 like greed. It must also be noted that the spouses, the appellee Pastor Makibalo
and his deceased wife Maria, were childless and, therefore, appellants and the
other children of the brothers and sisters of Maria must have felt that at any rate
the property would go to them in the course of time. This probably explains why
appellants started asserting their right over the property only after appellee
Pastor Makibalo sold the same to the spouses Eulogio and Remedios Salvador.
Besides, Lots 6080 and 6180 have a combined area only of 5,083 square meters
and before the development of Northern Mindanao, and even in 1962 when
Maria Yabo died, were not that valuable. This is shown by the fact that each heir
sold his other share only for P110.00.

As we have said not time alone. In the early case of Cortes v. Oliva, 33 Phil. 480,
it was held that"(o)rdinarily, possession by one joint owner will not be presumed
to be adverse to the others, but will, as a rule, be held to be for the benefit of all.
Much stronger evidence is required to show an adverse holding by one of several
joint owners than by a stranger; and in such cases, to sustain a plea of
prescription, it must always clearly appear that one who was originally a joint
owner has repudiated the claims of his co-owners, and that his co-owners were
apprised or should have been apprised of his claim of adverse and exclusive
ownership before the alleged prescription began to run (at page 484). This ruling
on prescription should apply with equal force to laches.

The third assignment of error challenges the finding of the lower court that "there
is nothing to show that Pastor Makibalo also sold back Procopio's share in Lot
6080" (Decision, p. 16; Records, Vol. 2,p. 158).

Exhibits 1 and 2 cover only Procopio's share in Lot 6180. In other words, Exhibits
1 and. 2 conveyed back to Alberto Yabo only his father, Procopio's share in Lot
6180.

There is indeed no evidence that Pastor Makibalo also sold back to Alberto, his
father Procopio's share in Lot 6080.

But from the evidence it appears that Procopio Yabo never sold his share in Lot
6080 to Pastor Makibalo. So there was no need to convey back Procopio's share
in Lot 6080.

This fact is evident from the Affidavit of Confirmation of Sale (Exh. M) dated April
22, 1970, executed by Alberto Yabo, which is the very document relied upon by
the lower court (Decision, p. 11; Record, Vol. 2, p. 153) in finding that "Alberto
Yabo admitted that the share of his father Procopio Yabo was previously bought
by Pastor Makibalo." A look at Exh. M, particularly par. 3 thereof, reveals that
AlbertoYabo merely acknowledged or confirmed the sale of his father's share to
Pastor Makibalo in Lot 6180. In effect, it at the same time proves that Lot 6080
was never sold by Procopio to appellee Pastor Makibalo; otherwise, it would
have been included in the said Affidavit of Confirmation of Sale. The Deed of
Absolute Sale (Exh. 2) subsequently executed by Pastor Makibalo in favor of
Alberto Yabo on April 23, 1970, further proves this point, since the latter merely
bought back what was previously sold, his father's share in Lot 6180.22

The respondent court then concluded and held as follows:

In summary, appellee Pastor Makibalo and his assigns, the spouses Eulogio and
Remedios Salvador, are entitled only to one-half (½) of the one-ninth (1/9) share
of Maria and three-fourths (3/4) of the six-ninth (6/9) shares acquired from
Basiliza, Victoriano, Jose, Lope, Pelagia and Francisca. Accordingly, the partition
should be done as follows:

(1) 1/9 of Lots 6080 end 6180 should be given to the heirs of
Gaudencia Yabo or their successors and assigns;
 (2) 1/9 of Lot 6180 should go to Alberto Yabo and his wife Elpia
Yabo;

(3) 1/9 of Lot 6080 should be given to the heirs of Procopio Yabo
and their successors end assigns, including Alberto Yabo;

(4) The 1/9 share of Maria Yabo in Lots 6080 and 6180 should be
partitioned: One-half (1/2) for the surviving spouse Pastor
Makibalo (now the spouses Eulogio Salvador and Remedios
Salvador) and the other half for the children of the brothers and
sisters of Maria Yabo in equal shares.

(5) The remaining 6/9, one-half (1/2) of which is conjugal between

Maria Yabo and appellee Pastor Makibalo should be partitioned
three-fourths (3/4) for Pastor Makibalo (now the spouses Eulogio
Salvador and Remedios Salvador) and one-fourth (1/4) for the
children of the brothers and sisters of Maria Yabo in equal shares.

(6) Jose Yabo if he is still alive should participate in the partition

as heir of Maria otherwise he shall be represented by his children.

WHEREFORE, premises considered, subject to the modification in the partition,

as indicated above, the decision appealed from is AFFIRMED, without
pronouncement as to costs. The lower court is directed if necessary to fully effect
the partition, to conduct further hearings and determine whether Jose Yabo is still
alive and who are the children of the brothers and sisters of Maria Yabo.23

Unable to obtain a reconsideration of the said-decision, Remedios Salvador, together with her
daughter, Ma. Gracia Salvador, as one of the successors-in-interest of Eulogio M. Salvador who
died during the pendency of the appeal, 24 elevated the case to this Court contending that the
respondent court erred in ruling that: (1) the shares of Pelagia Yabo should be included in the
partition; (2) prescription and laches have not run against the private respondents in relation to
the 1/9 share of Maria Yabo in the estate of her father and to her ½ conjugal share in those
acquired by purchase; (3) Procopio Yabo never sold to Pastor Makibalo his share in Lot No.
6080; and(4) Jose Yabo should be allowed to participate as heir of Maria even as he had openly
rejected this option by refusing to participate in both civil cases. 25

Article 160 of the Civil Code provides that all property of the marriage is presumed to belong to
the conjugal partnership, unless it be proved that it pertains .exclusively to the husband or to the
wife. Since the shares of Jose, Victoriano, Lope, Baseliza, Procopio, and Francisca in Lot No.
6180 and Lot No. 6080 had been purchased by Pastor during his marriage with Maria, and there
is no proof that these were acquired with his exclusive money, the same are deemed conjugal
properties. Not forming part of the conjugal partnership are: (1) the 1/9 share inherited by Maria
which remained as her exclusive property pursuant to Article 146 (2) of the Civil Code; (2) the
1/9 share of Gaudencia which was not sold to Pastor; and (3) the 1/9 share of Pelagia which
was acquired by Pastor in 1967 or five years after the death of his wife and which was therefore
his exclusive property.

There is, thus; merit in the petitioners' first assigned error. The Court of .Appeals should have
excluded from the conjugal partnership the share of Pelagia which Pastor had acquired after his
wife's death.

Upon Maria's death in 1962, the conjugal partnership of gains was dissolved. 26 Half of the
conjugal properties, together with Maria's l/9 hereditary share in the disputed lots, constituted
Maria's estate and should thus go to her surviving heirs. 27 Under Article 1001 of the Civil Code,
her heirs are her spouse, Pastor Makibalo, who shall be entitled to-one-half (1/2) of her estate,
her brother, Jose, and the children of her other brothers and sisters, who shall inherit the other
half. There having been no actual partition of the estate yet, the said heirs became co-owners
thereof by operation of law. 28
We now determine whether prescription and laches can be applied against the co-heirs of
Pastor Makibalo.

It has been said that Article 494 of the Civil Code which provides that each co-owner may
demand at any time the partition of the common property implies that an action to demand
partition is imprescriptible or cannot be barred by laches. 29 The imprescriptibility of the action
cannot, however, be invoked when one of the co-owners has possessed the property as
exclusive owner and for a period sufficient to acquire it by prescription. 30

What needs to be addressed first is whether or not Pastor Makibalo has acquired by
prescription the shares of his other co-heirs or co-owners. Prescription as a mode of acquiring
ownership requires a continuous, open, peaceful, public, and adverse possession for a period of
time fixed by law.

This Court has held that the possession of a co-owner is like that of a trustee and shall not be
regarded as adverse to the other co-owners but in fact as beneficial to all of them. 31 Acts which
may be considered adverse to strangers may not be considered adverse insofar as co-owners
are concerned. A mere silent possession by a co-owner, his receipt of rents, fruits or profits from
the property, the erection of buildings and fences and the planting of trees thereon, and the
payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by
clear and convincing evidence that he exercised acts of possession which unequivocably
constituted an ouster or deprivation of the rights of the other co-owners. 32

Thus, in order that a co-owner's possession may be deemed adverse to the cestui que trust or
the other co-owners, the following elements must concur: (1) that he has performed unequivocal
acts of repudiation amounting to an ouster of the cestui que trust or the other co-owners; (2) that
such positive acts of repudiation have been made known to the cestui que trust or the other co-
owners; and (3) that the evidence thereon must be clear and convincing. 33

In Pangan vs. Court of Appeals, 34 this Court had occasion to lay down specific acts which are
considered as acts of repudiation:

Filing by a trustee of an action in court against the trustor to quiet title to property,
or for recovery of ownership thereof, held in possession by the former, may
constitute an act of repudiation of the trust reposed on him by the latter.

The issuance of the certificate of title would constitute an open and clear
repudiation of any trust, and the lapse of more than 20 years, open and adverse
possession as owner would certainly suffice to vest title by prescription.

An action for the reconveyance of land based on implied or constructive trust

prescribes within 10 years. And it is from the date of the issuance of such
title that the effective assertion of adverse title for purposes of the statute of
limitation is counted.

The prescriptive period may only be counted from the time petitioners repudiated
the trust relation in 1955 upon the filing of the complaint for recovery of
possession against private respondents so that the counterclaim of the private
respondents contained in their amended answer wherein they asserted absolute
ownership of the disputed realty by reason of the continuous and adverse
possession of the same is well within the l0-year prescriptive period.

There is clear repudiation of a trust when one who is an apparent administrator of

property causes the cancellation of the title thereto in the name of the apparent
beneficiaries and gets a new certificate of title in his own name.

It is only when the defendants, alleged co-owners of the property in

question, executed a deed of partition and on the strength thereof obtained the
cancellation of the title in the name of their predecessor and the issuance of a
new one wherein they appear as the new owners of a definite area each, thereby
in effect denying or repudiating the ownership of one of the plaintiffs over his
 alleged share in the entire lot, that the statute of limitations started to run for the
purposes of the action instituted by the latter seeking a declaration of the
existence of the co-ownership and of their rights thereunder.

The records do not show that Pastor Makibalo adjudicated to himself the whole estate of his
wife by means of an affidavit filed with the Office of the Register of Deeds as allowed under
Section 1 Rule 74 of the Rules of Court, or that he caused the issuance of a certificate of title in
his name or the cancellation of the tax declaration in Alipio's name and the issuance of a new
one in his own name. The only act which may be deemed as a repudiation by Pastor of the co-
ownership over the lots is his filing on 28 April 1976 of an action to quiet title (Civil Case No.
5000). The period of prescription started to run only from this repudiation. However, this was
tolled when his co-heirs, the private respondents herein, instituted on 8 October 1976 an action
for partition (Civil Case No. 5174) of the lots. Hence, the adverse possession by Pastor being
for only about six months would not vest in him exclusive ownership of his wife's estate, and
absent acquisitive prescription of ownership, laches and prescription of the action for partition
will not lie in favor of Pastor. 35

The issue presented by the petitioners in their third assigned error involves a question of fact.
This Court is not ordinarily a trier of facts, its jurisdiction being limited to errors of law. Thus; the
findings of facts of the Court of Appeals are as a rule deemed conclusive. However, when the
findings of facts of the appellate court vary with those of the trial court, this Court has to review
the evidence in order to arrive at the correct findings. 36

In the instant case, a conflict in the findings of facts of the lower courts exists. The trial court
found that Pastor was the owner of Procopio's share in Lot No. 6080, as there was nothing to
show that he sold it back to Alberto Yabo. The respondent court on the other hand, held that
Procopio Yabo never sold his share in Lot No. 6080 to pastor, thus, there was no need to
convey it back to Procopio's son, Alberto.

At this juncture, it is worthy to quote pertinent portions of the testimony of Pastor Makibalo:

COURT: (To the witness.)

Q Where is AlbertoYabo living?

A It is there in their house at Bulua.

ATTY. JARAULA: (Continuing.)

Q In whose land?

A Alipio Yabo's land.

Q What relation has that land to the two (2) parcels of land under
litigation?

A I bought already.

Q So, will you please tell the Honorable Court, why Alberto Yabo
is staying on that land when you said you have bought that land
already.

A So, I sold back a portion to them because they requested me.

COURT: (To the witness.)

Q When was that when you said that Alberto Yabo requested a
portion?

A In 1967.
COURT:

Q Did you give that portion which they requested?

A Their share being inherited from their father Procopio was the
portion they requested.

COURT

Q Yes. Did you grant that?

A Yes.

Q That is the area you sold to Alberto Yabo, pursuant to his

request?

A Because that was the land they inherited from their father that
was what they requested.

Q All right. So that, the area now being occupied by Alberto Yabo?

A Yes. That land in the Centro.

Q This is now identified as Lot No. 6180?

A Yes, Your Honor.

ATTY. JARAULA: (Continuing.)

Q Where did you sign a document ceding that portion requested

by Alberto Yabo?

A We did not make any receipt in favor of AlbertoYabo because

they got only the receipt of that of his father.

COURT: (To the witness.)

Q You mean to say, that the receipt which Procopio signed when
he sold his share for [sic] the document which Alberto got?

A Yes.

COURT:

All right.

ATTY. JARAULA (Continuing.)

Q Now, for how much did you buy. the shares of each of the
brothers and sisters of your wife?

A One Hundred Ten (P110.00) Pesos.

Q When you sold back to Alberto Yabo, the portion corresponding

to the share of his father Procopio in the Poblacion, how much did
he pay you?

A The same.
 Q By the same, you are referring by the same amount of One
Hundred Ten (P110.00) Pesos?

A Yes, Sir. The same amount. 37

The petitioners contend that the sales or conveyances made by Alipio's heirs were for their
consolidated shares in the two lots. If this was so, and the receipt which Procopio signed when
he sold his consolidated share to Pastor was turned over to Alberto, the inevitable conclusion is
that Alberto redeemed his father's share in both lots, not only in Lot: No. 6180. This conclusion
is further buttressed by the above-quoted testimony of Pastor that he bought the shares
(consolidated) of each of Alipio's heirs for P110.00 and that when he sold back to Alberto the
former share of Procopio, Alberto paid him the same amount of P110.00.

However, since the share of Procopio in the two litigated parcels of land was purchased by
Pastor during his marriage with Maria, the same became conjugal property, and half of it formed
part of Maria's estate upon her death in 1962. Accordingly, Pastor's resale in favor of Alberto
could only be valid with respect to Pastor's one-half (1/2) conjugal share and one-fourth (1/4)
hereditary share as heir of Maria. 38 The remaining one-fourth (1/4) should go to Pastor's co-
heirs, the private respondents herein.

Now on the fourth assigned error.

Section 1, Rule 69 of the Rules of Court requires that all persons interested in the land sought to
be partitioned must be joined as defendants in the complaints. All co-owners and persons
having an interest in the property are considered indispensable parties and an action for
partition will not lie without the joinder of said persons. 39 It has been held that the absence of an
indispensable party in a case renders ineffective all the proceedings subsequent to the filing of
the complaint including the judgment. 40

It must be recalled that in Civil Case No. 5174 the private respondents sought the partition of
the two lots based on the co-ownership which arose from the right of succession to Alipio's
estate. Since Jose Yabo confirmed, through his thumbmark in the verification of the complaint,
that he had already parted with his share in Alipio's estate, he in effect admitted that he had
ceased to be a co-owner of the two lots which comprised his father's estate. Thus, his non-
joinder as a party-plaintiff in the complaint would appear to be proper. He does not, as well,
appear to be an indispensable party in Civil Case No. 5000.

As it turned out, however, the evidence and the issues which cropped up rendered imperative
the determination of the conjugal assets of Pastor Makibalo and Maria Yabo and the partition of
the latter's estate among her heirs. Her estate consists of one-half(½) of the conjugal properties,
which should then be divided pursuant to Article 1001 of the Civil Code since the marriage
produced no child; thus: one-half (½) to Pastor, and the other half to her brother Jose, and to
her nephews and nieces.

Insofar as the partition of Maria Yabo's estate is concerned, Jose is an indispensable party.
Strictly, the rule on indispensable parties may bar a partition of Maria's estate. Considering,
however, that such estate or its partition are but incidents in Civil Case No. 5000 and Civil Case
No. 5174, and the parties have not offered any objection to the propriety of the determination
and partition of her estate, then in the light of Section 11 of Rule 3 41 and Sections 1 and 5, Rule
10 42 of the Rules of Court, and following the rulings of this Court in the 1910 case of Alonso vs.
Villamor43 and the 1947 case of Cuyugan vs. Dizon, 44 an amendment of the complaint in Civil
Case No. 5174 to implead Jose Yabo as party plaintiff would be in order.

In Alonso, it was held that under Section 110 of the Code of Civil Procedure — whose first
paragraph is substantially the same as the aforesaid Section 1 of Rule 10 — and Section 503
thereof, this Court "has full power, apart from that power and authority which is inherent, to
amend the process, pleadings, proceedings, and decision in this case by substituting, as party
plaintiff, the real party in interest." Our ruling in Cuyugan states:

We, however, do not believe that the case should be dismissed for plaintiff's
failure to join her husband. (Sec. 11, Rule 2, Rules of Court). Nor should the case
 be remanded to the court below and a new trial ordered on this account. The
complaint may and should be amended here, to cure the defect of party plaintiffs,
after final decision is rendered. Section 11, Rule 2, and Section 2, Rule 17,
explicitly authorize such procedure. As this Court had occasion to say in Quison
vs. Salud, (12 Phil., 109, 116), "a second action would be but a repetition of the
first and would involve both parties, plaintiffs and defendant, in much additional
expense and would cause much delay, in that way defeating the purpose of the
section, which is expressly stated to be "that the actual merits of the controversy
may speedily be determined without regard to technicalities and in the most
expeditious and inexpensive manner." (See also Diaz vs. De la Rama, 73 Phil.,
104)

To avoid further delay in the disposition of this case, we declare Civil Case No. 5174 as thus
duly amended. Consequently, Jose Yabo may participate in the partition of the estate of Maria
Yabo. The fourth assigned error must then be rejected.

In view of the foregoing disquisitions, the appealed judgment should be modified as follows: (a)
the former 1/9 share of Pelagia Yabo in Lots No. 6180 and 6080 which she sold to Pastor
should be treated as the latter's exclusive property which should now pertain to the petitioners,
his successors-in-interest; and (b) the former 1/9 share of Procopio Yabo in both lots should be
divided as follows: 3/4 (respondent Pastor's 1/2 conjugal share and 1/4 representing his share
therein as Maria's heir) for the spouses Alberto and Elpia Yabo, and 1/4 (representing the share
therein of Maria's collateral relatives as Maria's heirs) for the private respondents, including
Alberto and Jose Yabo. The partition of the two lots in controversy should therefore be made in
this wise:

(1) 1/9 share of Gaudencia Yabo should be allotted to her heirs or successors-in-
interest;

(2) 1/9 share formerly belonging to Pelagia Yabo — to the petitioners as

successors-in-interest of Pastor Makibalo;

(3) 1/9 hereditary share of Maria Yabo to be divided as follows:

(a) 1/2 for the petitioners (as successors-in-interest of Pastor

Makibalo), and

(b) 1/2 for the private respondents, including Jose Yabo or his
heirs;

(4) 1/9 share formerly belonging to Procopio Yabo to be divided thus:

(a) 3/4 for Spouses Alberto and Elpia Yabo, and

(b) 1/4 for the other private respondents, including Jose Yabo or
his heirs;

(5) 5/9 shares which became the conjugal properties of Pastor Makibalo and
Maria Yabo to be divided thus:

(a) 3/4 for the petitioners (as successors-in-interest of Pastor

Makibalo), and

(b) ¼ for the private respondents, including Jose Yabo or his

heirs.

In sum, Lots Nos. 6180 anid 6080 should be partitioned as follows:

1/9 or 4/36 — to Guadencia Yabo's heirs or successors-in-interest;

 3/4 of 1/9 or 3/36 — to the spouses Alberto and Elpina Yabo;

8/36 — to the private respondents, including Jose Yabu or his heirs;

21/36 — to the petitioners as successors-in-interest of Pastor Makibalo.

WHEREFORE, the challenged decision of the Court of Appeals of 8 February 1993 in CA-G.R.
CV No. 12839 is AFFIRMED, subject to the modifications indicated above. Upon the finality of
this decision, let this case be forthwith remanded to the court a quo for further proceedings on
the partition of Lots Nos. 6180 and 6080 in conformity with this decision.

No pronouncement as to costs.

SO ORDERED.
G.R. No. L-39299 October 18, 1988

ISAAC, SEVERINO, MARIA, TELESFORA, FELISA, SERAPIO, SIMEON and MACARIA all
surnamed PANGAN, petitioners,
vs.
COURT OF APPEALS and TEODORA GARCIA, respondents.

Magtanggol C. Gunigundo for petitioners.

David C. Canta for private respondent.

CRUZ, J.:

The property in question is a parcel of land with an area of 635 square meters and situated in
San Pascual, Obando, Bulacan. 1 It was originally owned by Leon Hilario and is now being
disputed between the herein petitioners, who are his great grandchildren by his daughter
Silvestra, and the private respondent, Teodora Garcia, who is his granddaughter by his
daughter Catalina. 2

In 1964, the petitioners filed an application for the registration of the land in their names by
virtue of their continuous and exclusive possession thereof since 1895, by themselves and their
father and grandfather before them. After proper notices by publication and posting as required,
the trial court issued an order of general default, there being no opposition to the application,
and proceeded to hear the evidence of the applicants ex-parte. On the basis thereof, the
application was approved on March 31, 1966.

On June 8, 1966, the herein private respondent filed a petition to set aside the said decision,
which the trial Court granted, 3 admitting at the same time her opposition to the application and
setting the case for reception of her evidence. This evidence sought to show that the land was
inherited by Leon Hilario's three children, but the son, Felicisimo, waived his right thereto and
thereby made his two sisters, Silvestra and Catalina, its exclusive co-owners. As Catalina's
daughter, she was entitled to one-half of the property, the other half going to Silvestra's heirs,
the petitioners herein and the latter's
grandchildren. 4

On September 13, 1968, the trial judge issued an order dismissing the opposition and
reinstating his original order of March 31,1966. 5 His reason was that whatever rights Teodora
might have had over the property had been forfeited by extinctive prescription because she had
left the land in 1942 and had not since then asserted any claim thereto until 1966.

On appeal to the respondent court, 6 this decision was reversed on the ground that the
appellees had not clearly proved that they had acquired the property by prescription. Hence, the
appellant was entitled to one-half of the property as heir, conformably to her opposition in the
court a quo. Their motion for reconsideration having been denied, they have now come to this
Court in a petition for review by certiorari under Rule 45 of the Rules of Court.

The petitioners' position is that the respondent court erred in holding that the private respondent
was entitled to one-half of the land, which she had not lost by extinctive prescription because it
was held by them in trust for her. They also insist that the appealed decision completely
disregarded the factual findings of the trial court that they had acquired the whole land by virtue
of their long, continued and adverse possession thereof, which should bar any claim by Teodora
to her supposed part ownership.

It is stressed at the outset that the appellate court is not necessarily bound by the factual
findings of the trial court simply because the latter had the opportunity to observe the witnesses
directly and assess their credibility by their deportment. While this may be a conceded
advantage of the trial judge, the appellate court may still reverse his findings of fact if they are
not based on the evidence submitted or have been reached without considering the other
matters of record that might have dictated a different conclusion. The Court of Appeals precisely
is vested with jurisdiction to review questions of fact as decided by the lower court. It would be
evading this responsibility if it should merely adopt the findings in the decision under review on
the convenient justification that the trial judge had the opportunity, which it did not have, of
gauging the reliability of the witnesses first-hand.

When, therefore, the respondent court accepted the private respondent's allegation that the land
was inherited by the parties from their common ancestor, Leon Hilario, such a finding, based on
the record and not rejected but even assumed by the trial court, did not, in our view, constitute
grave abuse of discretion. And when, on the strength of this finding, it then held that an implied
trust was created between the petitioners who were in possession of the land, and Teodora
Garcia, their aunt and co-heir, that too, as we see it, is not an arbitrary assumption.

In fact, the Court feels this is the more plausible relationship between the parties, compared to
the version offered by the petitioners, who claim they acquired the property from their
grandfather through their father, who apparently acquired it from his mother, Leon Hilario's
daughter. It does not appear that they have pre-empted the other heirs to the property through
any other mode of acquisition, like sale or some similar exclusive transaction. They have not
submitted any evidence of how they acquired the land from their great grandfather, confining
themselves to the assertion that they have continued his original possession, presumably as
heirs of their father, who inherited from his mother Silvestra, who was the daughter of Hilario. If
this be their theory, then they unavoidably must recognize Teodora Garcia's own claim to the
subject property as she too was an heir, being the daughter of Catalina, who was also a
daughter of Hilario.

The trial court said, however, that assuming Teodora had the right to the disputed property, the
same was forfeited by her through extinctive prescription by failure to assert it in time. In its
original decision, it affirmed the petitioners' claim that they had acquired ownership over the
whole property by their adverse possession thereof for more than thirty years in concept of
owner. Teodora Garcia apparently did not challenge such ownership and so by her inaction
forever lost the right to do so.

The respondent court, rejecting this contention, held that the petitioners' possession was not for
their benefit alone but also in favor of Teodora, who was a co-heir with them and therefore also
a co-owner of the property. In other words, their possession, while adverse to the rest of the
world, was not against Teodora herself, whose share they held in implied trust for her as a co-
owner of the land, and whose fruits their father shared with her occasionally, or at least
promised her she would get eventually. The Court believes that this, too, is not an arbitrary
conclusion.

To support their claim of exclusive ownership of the entire land, the petitioners stress that the
property was declared for taxation purposes in the name of Tomas Pangan, their father, in 1948
and another tax declaration was issued, also in his name, in 1965. Moreover, real estate taxes
were paid by them from 1908 to 1914, 1930 to 1932, 1956 to 1957, and 1960 to 1965, whereas
Teodora Garcia, by her own admission, never paid any tax at all on the disputed land. 7

Tax declarations are indicia but not conclusive proof of ownership. 8 If the property was declared
in the name of To as Pangan only, it could be that this was done only for reasons of
convenience, more so if it was understood, as the private respondent did, that he was declaring
the property not only for himself but for herself also as the other co-owner. As for the admitted
fact that Teodora Garcia never actually paid the real estate taxes, the explanation she gave was
that she assumed her share of such taxes was being paid from her share in the fruits of her
portion of the land, which she said she was not getting regularly, much less in full. We hold that
this explanation is also plausible enough.

But for all this, there is still the question of whether or not Teodora Garcia, by her failure to
assert her right, allowed the statutory period to lapse, thus enabling the petitioners to perfect
their claim of ownership by acquisitive prescription and so exclude her from her share in the
subject property.

It is a settled rule that possession by one co-owner will not be regarded as adverse to the other
co-owners but in fact as beneficial to all of them. 9 Hence, as long as his co-ownership is
recognized, an action to compel partition will not prescribe and may be filed at any time against
the actual possessor by any of the other co-owners. 10 However, if the co-owner actually holding
the property asserts exclusive dominion over it against the other co-owners, the corollary of the
rule is that he can acquire sole title to it after the lapse of the prescribed prescriptive period.
From that moment, the question involved will be one of ownership and no longer mere
partition. 11

According to the petitioners, there was such repudiation which was admitted by the private
respondent herself Testifying for herself at the hearing on her opposition in the registration
proceedings, she declared:

ATTY. CANLAS:

Q: After the death of Tomas Pangan, did you ask the heirs of
Tomas Pangan of your alleged share in the property in question?

A: Yes, sir.

Q: What did they tell you?

A: They said that I have no right to a share and they won't give me my share.

Q: How many years ago did you ask from them?

A: Immediately after the death of their father.

Q: That was some 20 years ago?

A: I do not know how many years ago.

Q: And during all that span of more than 20 years ago you did not
file any action to recover your share on the land in question?

A: No sir, it was only this time . 12

For title to prescribe in favor of the co-owner, however, there must be a clear showing that he
has repudiated the claims of the other co-owners and that they have been categorically advised
of the exclusive claim he is making to the property in question. It is only when such unequivocal
notice has been given that the period of prescription will begin to run against the other co-
owners and ultimately divest them of their own title if they do not seasonably defend it. 13

Adverse possession requires the concurrence of the following circumstances:

1. That the trustee has performed unequivocal acts amounting to an ouster of the cestui que
trust;

2. That such positive acts of repudiation had been made known to the cestui que trust; and

3. That the evidence thereon should be clear and conclusive. 14

On the basis of the evidence presented by the parties, the Court is not convinced that the above
requirements have been satisfied. Although there are admittedly some precedents to the
contrary, it would appear that the weight of authority requires a categorical and final rejection of
the co-owners' claim, usually manifested by a formal legal action, to make the prescriptive
period start to run against the claimant. Thus—

Filing by a trustee of an action in court against the trustor to quiet title to property,
or for recovery of ownership thereof, held in possession by the former, may
constitute an act of repudiation of the trust reposed on him by the latter. 15
 The issuance of the certificate of title would constitute an open and clear
repudiation of any trust, and the lapse of more than 20 years, open and adverse
possession as owner would certainly suffice to vest title by prescription. 16

An action for the reconveyance of land based on implied or constructive trust

prescribes within 10 years. And it is from the date of the issuance of such
title that the effective assertion of adverse title for purposes of the statute of
limitation is counted. 17

The prescriptive period may only be counted from the time petitioners repudiated
the trust relation in 1956 upon the filing of the complaint for recovery of
possession against private respondents so that the counterclaim of the private
respondents contained in their amended answer wherein they asserted absolute
ownership of the disputed realty by reason of the continuous and adverse
possession of the same is well within the 10-year prescriptive period. 18

There is clear repudiation of a trust when one who is an apparent administrator of

property causes the cancellation of the title thereto in the name of the apparent
beneficiaries and gets a new certificate of title in his own name. 19

It is only when the defendants, alleged co-owners of the property in

question, executed a deed of partition and on the strength thereof obtained the
cancellation of the title in the name of their predecessor and the issuance of a
new one wherein they appear as the new owners of a definite area each, thereby
in effect denying or repudiating the ownership of one of the plaintiffs over his
alleged share in the entire lot, that the statute of limitations started to run for the
purposes of the action instituted by the latter seeking a declaration of the
existence of the co-ownership and of their rights thereunder. 20

The established evidence clearly shows that the subject land was inherited by the petitioners
and the private respondent as co-heirs of their common ancestor, Leon Hilario, whose
possession they continued to acquire prescriptive title over the property. That possession was
originally in the name of all the heirs, including Teodora Garcia, who in fact had been assured
by Tomas Pangan, the petitioners' father, that she would get the share to which she was
entitled. The petitioners have not proved that their possession excluded their co-owner and aunt
or that they derived their title from a separate conveyance to them of the property by Leon
Hilario. Parenthetically, such a conveyance, if it existed, would be questionable as it might have
deprived Leon's other children of their legitime. In any case, the petitioners appear to have
arrogated the entire property to themselves upon their father's death sometime in 1942 or at the
latest in 1965 when they sought to register the land in their names to the exclusion of Teodora
Garcia. The question is, Did such an act begin the period of extinctive prescription against the
private respondent?

Manifestly, the petitioners have acted in bad faith in denying their aunt and co-heir her legal
share to the property they had all inherited from Leon Hilario through their respective parents.
This is regrettable as Teodora Garcia is their father's first cousin who apparently trusted him
and, indeed, relied on his promise that her share would be protected. Tomas Pangan
presumably was sincere in this assurance, but it was unfortunately not honored by his children
upon his death for they soon dismissed out of hand Teodora Garcia's claim to the subject
property.

In cases where there is a clear showing of imposition and improper motives, the courts must be
vigilant in the protection of the rights of the exploited. 21 So said the respondent court, and we
agree, We note that the private respondent "is a poor and ignorant 62-year old widow" * whose
misplaced trust in her nephews and nieces is being used now precisely to defeat her claim to
the share that she believes is rightfully hers. It is a sorry spectacle, indeed, to see her own close
kin longing up on her, so to speak, to deprive her of her small heritage, and in her old age at
that.

With all this in mind, we affirm the finding of the respondent court that there was no adequate
notice by the petitioners to the private respondent of the rejection of her claim to her share in the
subject property. Noticeably absent here is a categorical assertion by the petitioners of their
exclusive right to the entire property that barred her own claim of ownership of one-half thereof
nor is there any explanation as to why they said she had no right to a share. If this trusting
woman did not immediately take legal action to protect her rights, it was simply because of
forbearance toward her nephews and nieces, let alone the fact that there was really no cases
belli as yet that required her to act decisively. That legal provocation arose only when the
petitioners commenced the registration proceedings in 1965, and it was from that time she was
required to act, as she did, to protect her interests.

In an earlier case 22 we stressed that this Court is not only a court of law but also of justice.
Faced with a choice between a decision that will serve justice and another that will deny it
because of a too strict interpretation of the law, we must resolve in favor of the former, for the
ultimate end of the law is justice. Bonus judex secundum aequum at bonum judicat stricto juri
praefert. 23 This is a wise maxim we will follow here in ruling for the deprived and ignorant old
widow.

WHEREFORE, the petition is DENIED and the challenged decision AFFIRMED in full, with
costs against the petitioners. It is so ordered.

Narvasa, Griño-Aquino and Medialdea, JJ., concur.

Separate Opinions

GANCAYCO, J., dissenting:

As private respondent admitted that petitioners verbally repudiated her claim as co-owner of the
property, it was effectively an unequivocal notice amounting to an ouster of the cestui que
trust and the period of prescription began to run since then. It is not required that such a
repudiation should be through a formal legal action. I, therefore vote to grant the petition by
reversing and setting aside the decision of respondent court and its resoluttion denying the
motion for reconsideration thereof, and reinstating the order of March 31, 1966 of the trial court.
G.R. No. 79899 April 24, 1989

D. ANNIE TAN, petitioner,

vs.
COURT OF APPEALS, CHINA BANKING CORPORATION, GEORGE LAUREL TAN,
TEODORA TAN ONG, ROSA TAN, ROSITA TAN, and MAURO UMALI TAN, respondents.

Tabaquero, Albano & Evangelista for petitioner.

Del Rosario, Lim, Telan De Vera & Vigilia for respondent China Banking Corporation. Estela B.
Perlas for respondents Tan.

GUTIERREZ, JR., J.:

Tan Tiong Tick, married to Tan Ong Hun, was the registered owner of a 178 square meter
parcel of land and its improvements located at Lot No. 5, Block No. 2021 of the Cadastral
Survey of Manila, Carvajal Street, Binondo, Manila.

Mr. and Mrs. Tan had six children - respondents George Laurel Tan, Teodora Tan Ong, Rosa
Tan, Rosita Tan, Mauro Umali Tan, and the petitioner, D. Annie Tan.

On February 6, 1963, in order to secure payment of various obligations with respondent China
Banking Corporation or China Bank for short, Mr. and Mrs. Tan Tiong Tick mortgaged the
disputed property to the bank. Tan Tiong Tick died on December 22, 1969 without having paid
his obligations.

On June 27, 1972, China Bank foreclosed the mortgage and purchased the property at public
auction as the highest bidder for the sum of P186,100.00.

On August 31, 1972, the widow and children of Tan Tiong Tick filed a complaint against China
Bank with the Court of First Instance of Manila praying for the nullity of the real estate mortgage
executed by the spouses Tan and the foreclosure sale conducted by the Sheriff. They also
asked that the redemption period be suspended.

The one year period for redemption expired on July 6, 1973 without the Tan heirs having
exercised the right to redeem the property. The widow Tan Ong Hun having died, only the
children were left to redeem the lot and building. China Bank consolidated its ownership over
the land and improvements and a new title, Transfer Certificate Title No. 112924 was issued in
the name of the bank on August 16, 1973.

About two weeks earlier, however, the heirs of Tan and China Bank agreed to amicably settle
the action for nullity of mortgage before the Court of First Instance of Manila. The parties filed a
joint motion to dismiss.

The verbal agreement regarding the disposition of the property was confirmed in a letter of
China Bank signed by four of the children and one daughter-in-law on August 3, 1973. The heirs
were given the right to repurchase the property for P180,000.00 provided it was done on or
before August 31,1974. The agreement reads in part:

xxx xxx xxx

It is understood, that should you fail to pay us in full the aforesaid sum of
P180,000.00 on or before August 31, 1974, your right to repurchase the property
shall terminate and we shall be free to dispose of the property to any other party.
(p. 81, Folder of Exhibits; Exhibit 2, CBC)

There are allegations that some of the heirs tried to buy the property in the ensuing one year
period but for one reason or another, were unable to do so.
Finally, on August 30, 1974, or one day before the end of the period to buy back, petitioner D.
Annie Tan went to the office of Mr. Dee K. Chiong of China Bank and tendered her China Bank
Manager's Check for P180,000.00 as payment. Upon the insistence of the bank official, the
deed of sale returning the property to the heirs was executed in favor, not of D. Annie Tan who
alone paid for the property but of all the six heirs of Tan Tiong Tick who would, therefore, share
and share alike.

This led to the filing of the action by D. Annie Tan against her brothers and sisters and the
China Banking Corporation, now respondents in this petition. The petitioner prayed the trial
court to order the respondents-(1) to reconvey the disputed property to her and (2) to pay actual
damages in the amount of P300,000.00, moral damages in the amount of P100,000.00,
exemplary damages in the amount of P50,000.00, and attorney's fees in the amount of
P10,000.00.

On September 1, 1980, the Court of First Instance of Manila rendered a decision, the dispositive
portion of which reads:

ACCORDINGLY, judgment is hereby rendered as follows:

(1) Dismissing the complaint as well as defendants' counter-claim;

(2) Ordering each of the defendants, namely George Laurel Tan, Teodora Tan
Ong, Rosa Tan and Rosita Tan to reimburse the plaintiff the sum of P30,000.00
plus 12% interest from August 20, 1974 until the whole amount is fully paid;

(3) Ordering the defendant Mauro Umali Tan who had been ordered in default to
execute the deed of sale of his rights and interests over the property covered in
Transfer Certificate of Title No. 64806 in favor of the plaintiff in accordance with
his instrument of waiver dated June 25, 1974, and

(4) Without pronouncement as to costs. (Annex B, Rollo, pp. 43-44)

On October 17, 1986, the Court of Appeals affirmed the decision of the trial court. On
September 7, 1987, a motion for reconsideration was denied. Hence this petition.

The petitioner gives the following grounds why her petition should be given due course:

1. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AFFIRMING

THE DECISION OF THE TRIAL COURT ORDERING REIMBURSEMENT TO
THE PETITIONER INSPITE OF THE FACT THAT THE LEGAL BASIS FOR THE
REIMBURSEMENT, WHICH WAS NOT CLEARLY EXPLAINED IN THE
DECISION, MAY HAVE BEEN THE ALLEGED EXISTENCE OF (1) A CO-
OWNERSHIP AMONG THE HEIRS, AND (2) CREDITOR-DEBTOR
RELATIONSHIP BETWEEN THE HEIRS AND THE BANK, WHICH HAVE NOT
BEEN FULLY ESTABLISHED BY EVIDENCE.

2. ASSUMING, WITHOUT ADMITTING, THE EXISTENCE AMONG THE HEIRS

OF A CO-OWNERSHIP AND/OR A CREDITOR/ DEBTOR RELATIONSHIP
BETWEEN THE RESPONDENT BANK AND THE HEIRS, RESPONDENT
COURT GRAVELY ERRED IN NOT HOLDING THAT THE CO-HEIRS OF
PETITIONER, THE PRIVATE RESPONDENTS HEREIN, HAVE IMPLIEDLY
WAIVED THEIR RIGHT TO BUY BACK THE PROPERTY BY THEIR FAILURE
TO RAISE THE MONEY FOR THEIR RESPECTIVE SHARES UP TO THE LAST
DAY GIVEN THEM BY THE RESPONDENT BANK ON AUGUST 31, 1974,
THUS WHEN PETITIONER BOUGHT THE PROPERTY BY HER EXCLUSIVE
FUNDS, IT BENEFITED HER ALONE AND NOT HER CO-HEIRS.

3. RESPONDENT COURT OF APPEALS, GRAVELY ERRED IN NOT HOLDING

THAT THE LETTER-AGREEMENT DATED AUGUST 3, 1973, FOR WHICH
THE RIGHTS OF THE PETITIONER AND HER CO-HEIRS TO BUY BACK THE
FORECLOSED PROPERTY AROSE, IS ACTUALLY NOT A RIGHT TO
 REPURCHASE BUT IS AN OPTION TO BUY BACK THE PROPERTY WHICH
MAY BE EXERCISED BY THE HEIRS SINGLY OR COLLECTIVELY. (Rollo, pp.
21-22)

The decision of the trial court, affirmed by the Court of Appeals, is based on the principle that
the heirs of Mr. and Mrs. Tan Tiong Tick being co- owners of the foreclosed property, a
repurchase or reconveyance effected by only one of those heirs redounds to the co-ownership.
This explains why the courts below ordered four of the heirs - George Laurel Tan, Teodora Tan
Ong, Rosa Tan and Rosita Tan - to reimburse D. Annie Tan the sum of P30,000.00 each plus
12% interests while the share of the fifth heir who was in default and who had waived his
interest would go to the petititioner.

The petitioner contends that there was no co-ownership and no creditor/debtor relationship
between her and the other children.

The petitioner states:

This controversy addresses itself to the question of whether or not the co-
ownership among the heirs over a parcel of land formerly belonging to their
parents had been dissolved by the foreclosure and consolidation of title by a
bank after the redemption period of one (1) year had expired, such that a
unilateral obligation given by the bank to the heirs to buy back the foreclosed
property out of liberality is actually an option to buy given to the heirs as group of
persons singly or collectively, and not strictly a right of repurchase to be
exercised by the heirs as co-owners. If it is admitted that the co-ownership of the
heirs over the foreclosed property of their parents had been dissolved by the
consolidation of the title in the mortgagee's name, which in this case is
respondent Bank and that there exists no creditor-debtor relationship between
respondent Bank and the heirs, then the bank may not impose an obligation to
the heirs that they should purchase back the property only as former co-owners
or as solidary debtors, but as groups of persons, singly or collectively. The bank
would then be imposing an onerous condition upon the heirs of going back to the
dissolved co- ownership which the law frowns upon. To settle this case once and
for all, herein petitioner anchors her claim on the theory that when the
respondent Bank foreclosed the property and consolidated its title on August 16,
1973 and T.C.T. No. 112924 was issued in its name, the co-ownership of the
heirs of the deceased parents of petitioner and private respondents over the
property in question have been dissolved. In this wise, the decision of the
respondent court premised on the existence of a co-ownership or in a creditor-
debtor relationship, and ordering the reimbursement to petitioner of the money
for the purchase of the property in question which allegedly redounded to the
benefits of her co-heirs as co-owners or solidary debtors has no leg to stand on.
It is this erroneous decision of respondent court based on a misapprehension of
facts and contrary to settled jurisprudence that petitioner comes to this Honorable
Court, for relief. (Sese v. Intermediate Appellate Court, G.R. No. 66186, July 31,
1987; Moran, Jr. v. Court of Appeals, 133 SCRA 88; Manero v. Court of Appeals,
102 SCRA 817; Carolina Industries v. CMS Brokerage, 97 SCRA 734; Sacay v.
Sandiganbayan, 142 SCRA 593) (Rollo, pp. 7-9)

The first question which arises is the correctness of the assumption that there was a co-
ownership among the children of Tan Tiong Tick and Tan Ong Hun when the petitioner
purchased the property.

Since the lot and its improvement were mortgaged by the deceased parents, there can be no
question that a co-ownership existed among the heirs during the period given by law to redeem
the foreclosed property. Redemption by one during this period would have inured to the benefit
of all (Adille v. Court of Appeals, G.R. No. 44546, 157 SCRA 455 [1988]; and De Guzman v.
Court of Appeals, G.R. No. 47378, 148 SCRA 75 [1987]).

The records show, however, that when the petitioner purchased the disputed property on
August 30, 1974, any co-ownership among the brothers and sisters no longer existed. The
period to redeem had expired more than one year earlier, on July 6, 1973. The respondent
China Bank consolidated its ownership and a new title was issued in the bank's name. When
the heirs allowed the one year redemption period to expire without redeeming their parents'
former property and permitted the consolidation of ownership and the issuance of a new title,
the co-ownership was extinguished. The challenged ruling of the respondent court is, therefore,
based on erroneous premises.

Under Section 63-B of Presidential Decree No. 1529, the Property Registration Decree, in case
of non-redemption, the purchaser at the foreclosure sale, meaning the respondent Bank in this
case, is entitled to a new certificate of title in its name after filing the necessary papers with the
Register of Deeds (Spouses Teofisto and Eulalia Verceles v. Court of First Instance of Rizal, et
al., G.R. No. 62219, February 28, 1989). It becomes a ministerial duty to place the buyer in
possession of the property he now owns (Banco Filipino v. Intermediate Appellate Court, G.R.
No. 68878,142 SCRA 44 [1986]). Ownership, therefore, passed to China Bank and there was
no more co-ownership among the heirs.

The non-existence of a common inheritance of the Tan children at the time the disputed
property was purchased from China Bank is moreover supported by the evidence showing that
there was no more inheritance to divide. It had already been divided. Tan Tiong Tick left other
properties in addition to the property disputed in this petition. The eldest son, George Laurel
Tan, inherited practically all the properties consisting of several hectares of real estate in
Novaliches, Metro Manila; a furnished house in Greenhills, Mandaluyong; and a cigar factory
(t.s.n., November 18, 1976, p. 24). The petitioner also claims that stock certificates went to
another sister, Teodora Tan Ong because she "forced" the other heirs to sign a deed of sale in
her favor.

May the heirs be considered as debtors in common, substituting for their parents in liquidating
the latter's obligations?

The answer is again, No.

Upon the foreclosure of the mortgaged property and its purchase by China Bank as the highest
bidder, the proceeds of the auction sale were applied to the various debts of the Tan spouses.
The parents' debts were paid. The obligation having been extinguished, there was no more
common debt and no legal subrogation arising when one pays the debts properly accruing to
several others.

Respondent China Bank contends that the letter agreement dated August 3, 1973 called for the
reconveyance of the land and improvements to all the heirs "in equal undivided shares."

There is no such stipulation in the letter. There is reference to a verbal agreement to reconvey
to the "heirs of your late father" but no requirement that everybody must share in the purchase
or the offer would be withdrawn.

What is clear is that the bank's general manager, Mr. Dee K. Chiong tried to impose the above
requirement when the one year period to buy back was about to expire. Mr. Dee rejected the
offer of D. Annie Tan to buy the property for herself alone. He insisted that the money brought
by the petitioner would be considered a joint fund of all the heirs and ordered the same
annotated on the back of the check given as payment for the property.

This attitude of Mr. Dee K. Chiong is in sharp contrast to the bank's official stand embodied in a
letter to the Central Bank.

Asked to comment on a letter-complaint filed by D. Annie Tan with Malacañang and forwarded
to the Central Bank, the respondent bank through its Legal Officer wrote the Director,
Department of Commercial and Savings Bank, Central Bank an explanation, part of which
states:

To our mind, the dispute is not between the Bank and the heirs or any one of
them, but among the heirs themselves, for as far as the Bank is concerned, it
makes no difference whether the property is reconveyed to all the heirs or to any
 one of them alone as they may agree. As a matter of fact the complainant has
already filed a Petition under the Cadastral Case now pending in the CFI, Manila,
involving the property and all the heirs. (Copy of the Petition is hereto attached
as Annex "l0").

At any rate, it is our honest conviction that the charges filed by the complainant
and the interpretation of Articles 1302 and 1303 of the New Civil Code properly
belong to the Courts where the complainant can always have her right, if any,
vindicated, and if only to resolve the issue, we shall welcome any court action to
clear the matter. (Folder of Exhibits, pp. 97- 98)

The petitioner questions the unusual interest shown by China Bank in the case when its stand
should be one of neutrality. She claims that there is an orchestrated alliance between the bank
and the other private respondents as shown by the fact that the bank seems to be more eager
and vigorous than the other heirs to win the case. (Rollo, p. 310).

As earlier stated, there is nothing in the August 3, 1973 letter-agreement which called for either
a purchase by all the heirs or no purchase at all. But could not Mr. Dee K. Chiong validly impose
such a requirement at the time the tender of money to buy the property was made?

Again, the answer is in the negative.

We agree with the petitioner that her agreeing to sign an annotation at the back of the check
was a case of vitiated consent. She states that her conformity was null and void because it was
made under duress. The records show that up to the last hour the petitioner was pleading with
Mr. Dee K. Chiong to buy the property for herself alone as the money she had raised was not in
any way owned by the other heirs. Since the period was expiring, the petitioner had no choice. It
was a case of either agreeing to the bank executive's requirement or losing the family property
forever to strangers.

Mr. Dee could not impose a new co-ownership upon the petitioner, her brothers and sisters. Co-
ownership is discouraged by law.

As held in the case of Basa v. Aguilar (G.R. No. L-30994, 117 SCRA 128, 130-131 [1982]):

Legal redemption is in the nature of a privilege created by law partly for reasons
of public policy and partly for the benefit and convenience of the redemptioner, to
afford him a way out of what might be a disagreeable or inconvenient association
into which he has thrust. (10 Manresa, 4th Ed., 317.) It is intended to minimize
co-ownership. The law grants a co-owner the exercise of the said right of
redemption when the shares of the other owners are sold to "a third person." A
third person, within the meaning of this Article, is anyone who is not a co-owner.
(Sentencia of February 7, 1944 as cited in Tolentino, Comments on the Civil
Code, Vol. V, p. 160.) (Emphasis supplied)

The records show that the annotation at the back of the P180,000.00 manager's check that the
funds were contributed by all the heirs was made by a China Bank representative and that D.
Annie Tan was told by Dee K Chiong that if she would not sign it, he would not accept the
manager's check and she would lose her right to buy the lot within the period offered by the
bank. The petitioner, at first, refused but being placed between the difficulty of agreeing to the
condition or losing the property, she decided to agree. (t.s.n., September 27, 1976, pp. 24-25;
t.s.n., November 18, 1976, p. 36) The petitioner was also aware that a certain Mr. Ang who
operated a travel agency in the next door building was eager to buy the property at double the
price stated in the letter-agreement executed more than a year earlier. (Court of Appeals Rollo,
Brief for Plaintiff-Appellant, p. 77)

The petitioner further argues:

The insistence by respondent Bank that the said letter-agreement is a right to re-
purchase given to all the heirs of the late Tan Tiong Tick to be exercised only
collectively cannot legally stand considering the following circumstances:
a) What will happen if one of the heirs of the late Tan Tiong Tick refuses or fails
to exercise his right to purchase for whatever reason? Cannot any of the other
heirs, but all, raise sufficient funds for the full amount of the purchase price
because the other heirs could not let him or her borrow money to cover his or her
share? Would such refusal then prejudice the other heirs?

b) Cannot two or more heirs, but not all, who have sufficient funds exercise the
right of purchase?

c) Would all the heirs then who signed the letter-agreement as in the case at bar
lose their right to purchase the property because of the refusal of one heir?

d) If only one of the heirs has sufficient funds to purchase the property and the
others do not have, and this particular heir does not want to lend her or his
money to the other heirs who have none, can the offer of the other heir to
exercise the option to buy in her or his own name alone be legally refused?

e) Finally, can the buying back of the property by one heir alone be disallowed
considering that she is the one who has enough or sufficient funds and that her
action will prevent the property from going to third persons, like respondent Bank,
for failure to pay the purchase price on the last day of the period given by
respondent Bank?'

It is petitioner's submission that to follow the arguments of respondent Bank that

the letter-agreement can only be exercised collectively and not singly would
render the said agreement a useless piece of paper, and gravely prejudicial to
the property itself.

What is more, even the respondent bank's legal officer, Atty. Arsenio Sy Santos,
when asked to comment on the case of the petitioner, admitted that indeed the
letter-agreement of August 3,1973 is actually an option to buy. Said legal officer
gave the following observations and comments, to wit:

xxxxxxxxx

Observations and comments -

It may be interesting to note that the provisions of Articles 1302 and 1303 which
read as follows:

"Art. 1302. It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor who is preferred even

without the debtor's knowledge;

(2) When a third person, not interested in the obligation, pays with
the express or tacit approval of the debtor.

(3) When even without the knowledge of the debtor, a person

interested in the fulfillment of the obligation pays, without prejudice
to the effects of confusion as to the latter's share.

Art. 1303. Subrogation transfers to the person subrogated the

credit with all the rights thereto appertaining, either against the
debtor or against third person, be they guarantors or possessors
of mortgages, subject to stipulated in a conventional subrogations
(sic)."

refer to cases where the creditor-debtor relationship exists among the

parties. (Rollo, pp. 243-246)
xxx xxx xxx

There was no creditor-debtor relationship existing among the heirs and Mr. Dee had no legal
authority to create one.

China Bank contends that when it told the petitioner that the property could not be reconveyed
to her alone, she was likewise informed that a similar offer from some of the other co-heirs had
also been politely turned down. (Exhibit 7, China Bank, Folder of Exhibits, p. 87)

The petitioner disputes this claim. She states that there was no such offer by her co-heirs
because she was the only one willing to buy back the lot and the only one with the means to do
so at that time. It was only on September 12, 1974 that the individual respondents offered to
repurchase. By that time, D. Annie Tan had already paid for the lot and was already insisting on
a conveyance of the property in her name alone.

The petitioner states:

There is, therefore, no doubt that the money used in buying back the property
belongs exclusively to the petitioner. Private respondents' in action in not
contributing the necessary money up to the last day of the buy back period is
fatal to their cause. To paraphrase one case decided by this Honorable Court,
courts cannot look with favor at parties who, by their silence, delay and inaction,
knowingly induce another to spend time, effort and expense in protecting their
interests over the property by paying the buy back money only to spring from
ambush and claim title or interest over the property when the land and building
value have become higher. (See Lola v. Court of Appeals, G.R. No. 46575,
November 13, 1986). Moreover, the laws aid the vigilant, not those who slumber
on their rights. (Miraflor v. Court of Appeals, G.R. Nos. 40151-52, April 8, 1986).

Definetly, the effects of a waiver militates against the private respondents.

Having forfeited, abandoned and/or waived their rights, private respondents are
now estopped from taking an inconsistent position. They cannot now assert that
they are still CO-owners of the property with the petitioner. (Sec. 65, Rule 123,
Rules of Court; Hernaez v. Hernaez, 32 Phil. 214) (See also Banco de Oro
Savings & Mortgage Bank v. Equitable Banking Corporation, G.R. No. 74917,
January 20, 1988, citing Saura Import and Export Co. v. Court of Appeals, 24
SCRA 974). All the elements of a valid waiver (1) the existence of a right; (2) the
knowledge of the existence thereof; and (3) the intention to relinquish such right,
either expressly or impliedly are present. (Director of Lands v. Abiertas, 44 O.G.
928). ... (Rollo, pp. 238-239)

The claim of the respondents Tan in their memorandum that they gave their individual
contributions to the petitioner to raise the P180,000.00 is not worthy of credence. At the time of
the repurchase, the petitioner was already estranged from the respondents Tan and they would
not have given her any money without corresponding receipts or given her money under any
circumstance, for that matter. In fact, there is no reason why the petitioner should be the one to
collect the money of the heirs and bring it to China Bank. She was neither a son nor the eldest.
Neither did the others feel kindly towards her. The petitioner had called for a conference on July
23, 1974 at 619 Carvajal Street, Binondo, Manila to discuss compliance with the letter-
agreement considering the fast approaching deadline. Not one showed up. (Rollo, pp. 44-45)
The money was raised by D. Annie Tan through her connections with Jardine Davies because
of her construction business. The decision of the respondent court confirmed the factual findings
of the trial court. It declared that the respondents Tan became debtors of petitioner Tan and
ordered them to reimburse the P30,000.00 each which were advanced by the petitioner. There
was no pooling of resources up to August 30,1974 when at 4:00 in the afternoon, D. Annie Tan
went to Mr. Dee K. Chiong with the China Bank manager's check for P180,000.00.

The equities of this case also favor the grant of the petition. D. Annie Tan went to plenty of
trouble in her effort to buy back the property formerly owned by her parents. There is nothing in
the records to show that, beyond making some perfunctory allegations, the respondents Tan did
anything to save the property from falling into the hands of other persons. The petitioner states
that she has now spent substantial sums to pay for real estate taxes and to renovate, and
improve the premises. According to her she has "spent her little fortunes to preserve the
patrimony left by her parents." She alone deserves to be entitled to the property, in law and
equity. (Rollo, p. 317)

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the Court of
Appeals is REVERSED and SET ASIDE. The respondent China Banking Corporation is ordered
to execute the deed of sale over the disputed property in favor of the petitioner alone.

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

EPITACIO DELIMA, PACLANO DELIMA, FIDEL DELIMA, VIRGILIO DELIMA, GALILEO

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

Gabriel J. Canete for petitioners.

Emilio Lumontad, Jr. for private respondents.

MEDIALDEA, J.:

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

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

During his lifetime, Lino Delima acquired Lot No. 7758 of the Talisay-Minglanilla Friar Lands
Estate in Cebu by sale on installments from the government. Lino Delima later died in 1921
leaving as his only heirs three brothers and a sister namely: Eulalio Delima, Juanita Delima,
Galileo Delima and Vicente Delima. After his death, TCT No. 2744 of the property in question
was issued on August 3, 1953 in the name of the Legal Heirs of Lino Delima, deceased,
represented by Galileo Delima.

On September 22, 1953, Galileo Delima, now substituted by respondents, executed an affidavit
of "Extra-judicial Declaration of Heirs." Based on this affidavit, TCT No. 2744 was cancelled and
TCT No. 3009 was issued on February 4,1954 in the name of Galileo Delima alone to the
exclusion of the other heirs.

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

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

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

IN VIEW OF THE FOREGOING CONSIDERATIONS, the following are the declared

owners of Lot No. 7758 of the Talisay-Minglanilla Friar Lands Estate presently covered
by transfer Certificate of Title No. 3009, each sharing a pro-indiviso share of one-fourth;

1) Vicente Delima (one-fourth)

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

3) Heirs of Eulalio Delima, namely Epitacio, Pagano, Fidel, Virgilio and Galileo Jr., all
surnamed Delima (one-fourth); and
 4) The Heirs of Galileo Delima, namely Flaviana Vda. de Delima, Lily D. Arias, Helen
Niadas and Dionisio, Antonio, Eotu Irenea, and Fely, all surnamed Delima (one-fourth).

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

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

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

Defendants are condemned to pay the costs of the suit.

The counterclaim is dismissed.

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

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

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

1) In not holding that the right of a co-heir to demand partition of inheritance is

imprescriptible. If it does, the defenses of prescription and laches have already been
waived.

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

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

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

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

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

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

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

As a rule, possession by a co-owner will not be presumed to be adverse to the others, but will
be held to benefit all. It is understood that the co-owner or co-heir who is in possession of an
inheritance pro-indiviso for himself and in representation of his co-owners or co-heirs, if, as such
owner, he administers or takes care of the rest thereof with the obligation of delivering it to his
co-owners or co-heirs, is under the same situation as a depository, a lessee or a trustee
(Bargayo v. Camumot, 40 Phil, 857; Segura v. Segura, No. L-29320, September 19, 1988, 165
SCRA 368). Thus, an action to compel partition may be filed at any time by any of the co-
owners against the actual possessor. In other words, no prescription shall run in favor of a co-
owner against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-
ownership (Del Blanco v. Intermediate Appellate Court, No. 72694, December 1, 1987, 156
SCRA 55).

However, from the moment one of the co-owners claims that he is the absolute and exclusive
owner of the properties and denies the others any share therein, the question involved is no
longer one of partition but of ownership (De Castro v. Echarri, 20 Phil. 23; Bargayo v.
Camumot, supra; De los Santos v. Santa Teresa, 44 Phil. 811). In such case, the
imprescriptibility of the action for partition can no longer be invoked or applied when one of the
co-owners has adversely possessed the property as exclusive owner for a period sufficient to
vest ownership by prescription.

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

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

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

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

SO ORDERED.
G.R. No. L-57062 January 24, 1992

MARIA DEL ROSARIO MARIATEGUI, ET AL., petitioners,

vs.
HON. COURT OF APPEALS, JACINTO MARIATEGUI, JULIAN MARIATEGUI and PAULINA
MARIATEGUI, respondents.

Montesa, Albon & Associates for petitioners.

Parmenio B. Patacsil, Patacsil Twins Law Office for the heirs of the late Maria del Rosario
Mariategui.

Tinga, Fuentes & Tagle Firm for private respondents.

BIDIN, J.:

This is a petition for review on certiorari of the decision * of the Court of Appeals dated
December 24, 1980 in CA-G.R. No. 61841, entitled "Jacinto Mariategui, et al. v. Maria del
Rosario Mariategui, et al.," reversing the judgment of the then Court of First Instance of Rizal,
Branch VIII ** at Pasig, Metro Manila.

The undisputed facts are as follows:

Lupo Mariategui died without a will on June 26, 1953 (Brief for respondents, Rollo, pp. 116; 8).
During his lifetime, Lupo Mariategui contracted three (3) marriages. With his first wife, Eusebia
Montellano, who died on November 8, 1904, he begot four (4) children, namely: Baldomera,
Maria del Rosario, Urbana and Ireneo. Baldomera died and was survived by her children named
Antero, Rufina, Catalino, Maria, Gerardo, Virginia and Federico, all surnamed Espina. Ireneo
also died and left a son named Ruperto. With his second wife, Flaviana Montellano, he begot a
daughter named Cresenciana who was born on May 8, 1910 (Rollo, Annex "A", p. 36).

Lupo Mariategui and Felipa Velasco (Lupo's third wife) got married sometime in 1930. They had
three children, namely: Jacinto, born on July 3, 1929, Julian, born on February 16, 1931 and
Paulina, born on April 19, 1938. Felipa Velasco Mariategui died in 1941 (Rollo, Ibid).

At the time of his death, Lupo Mariategui left certain properties which he acquired when he was
still unmarried (Brief for respondents, Rollo, pp. 116; 4). These properties are described in the
complaint as Lots Nos. 163, 66, 1346 and 156 of the Muntinglupa Estate (Rollo, Annex "A", p.
39).

On December 2, 1967, Lupo's descendants by his first and second marriages, namely, Maria
del Rosario, Urbana, Ruperto, Cresencia, all surnamed Mariategui and Antero, Rufina, Catalino,
Maria, Gerardo, Virginia and Federico, all surnamed Espina, executed a deed of extrajudicial
partition whereby they adjudicated unto themselves Lot No. 163 of the Muntinglupa Estate.
Thereafter, Lot No. 163 was the subject of a voluntary registration proceedings filed by the
adjudicatees under Act No. 496, and the land registration court issued a decree ordering the
registration of the lot. Thus, on April 1, 1971, OCT No. 8828 was issued in the name of the
above-mentioned heirs. Subsequently, the registered owners caused the subdivision of the said
lot into Lots Nos. 163-A to 163-H, for which separate transfer certificates of title were issued to
the respective parties (Rollo, ibid).

On April 23, 1973, Lupo's children by his third marriage with Felipa Velasco (Jacinto, Julian and
Paulina) filed with the lower court an amended complaint claiming that Lot No. 163 together with
Lots Nos. 669, 1346 and 154 were owned by their common father, Lupo Mariategui, and that,
with the adjudication of Lot No. 163 to their co-heirs, they (children of the third marriage) were
deprived of their respective shares in the lots. Plaintiffs pray for partition of the estate of their
deceased father and annulment of the deed of extrajudicial partition dated December 2, 1967
(Petition, Rollo, p. 10). Cresencia Mariategui Abas, Flaviana Mariategui Cabrera and Isabel
Santos were impleaded in the complaint as unwilling defendants as they would not like to join
the suit as plaintiffs although they acknowledged the status and rights of the plaintiffs and
agreed to the partition of the parcels of land as well as the accounting of their fruits (Ibid., Rollo,
p. 8; Record on Appeal, p. 4).

The defendants (now petitioners) filed an answer with counterclaim (Amended Record on
Appeal, p. 13). Thereafter, they filed a motion to dismiss on the grounds of lack of cause of
action and prescription. They specifically contended that the complaint was one for recognition
of natural children. On August 14, 1974, the motion to dismiss was denied by the trial court, in
an order the dispositive portion of which reads:

It is therefore the opinion of the Court that Articles 278 and 285 of the Civil Code
cited by counsel for the defendants are of erroneous application to this case. The
motion to dismiss is therefore denied for lack of merit.

SO ORDERED. (Ibid, p. 37).

However, on February 16, 1977, the complaint as well as petitioners' counterclaim were
dismissed by the trial court, in its decision stating thus:

The plaintiffs' right to inherit depends upon the acknowledgment or recognition of

their continuous enjoyment and possession of status of children of their
supposed father. The evidence fails to sustain either premise, and it is clear that
this action cannot be sustained. (Ibid, Rollo, pp. 67-68)

The plaintiffs elevated the case to the Court of Appeals on the ground that the trial court
committed an error ". . . in not finding that the parents of the appellants, Lupo Mariategui and
Felipa Velasco (were) lawfully married, and in holding (that) they (appellants) are not legitimate
children of their said parents, thereby divesting them of their inheritance . . . " (Rollo, pp. 14-15).

On December 24, 1980, the Court of Appeals rendered a decision declaring all the children and
descendants of Lupo Mariategui, including appellants Jacinto, Julian and Paulina (children of
the third marriage) as entitled to equal shares in the estate of Lupo Mariategui; directing the
adjudicatees in the extrajudicial partition of real properties who eventually acquired transfer
certificates of title thereto, to execute deeds of reconveyance in favor, and for the shares, of
Jacinto, Julian and Paulina provided rights of innocent third persons are not prejudiced
otherwise the said adjudicatees shall reimburse the said heirs the fair market value of their
shares; and directing all the parties to submit to the lower court a project of partition in the net
estate of Lupo Mariategui after payment of taxes, other government charges and outstanding
legal obligations.

The defendants-appellees filed a motion for reconsideration of said decision but it was denied
for lack of merit. Hence, this petition which was given due course by the court on December 7,
1981.

The petitioners submit to the Court the following issues: (a) whether or not prescription barred
private respondents' right to demand the partition of the estate of Lupo Mariategui, and (b)
whether or not the private respondents, who belatedly filed the action for recognition, were able
to prove their successional rights over said estate. The resolution of these issues hinges,
however, on the resolution of the preliminary matter, i.e., the nature of the complaint filed by the
private respondents.

The complaint alleged, among other things, that "plaintiffs are the children of the deceased
spouses Lupo Mariategui . . . and Felipa Velasco"; that "during his lifetime, Lupo Mariategui had
repeatedly acknowledged and confirmed plaintiffs as his children and the latter, in turn, have
continuously enjoyed such status since their birth"; and "on the basis of their relationship to the
deceased Lupo Mariategui and in accordance with the law on intestate succession, plaintiffs are
entitled to inherit shares in the foregoing estate (Record on Appeal, pp. 5 & 6). It prayed, among
others, that plaintiffs be declared as children and heirs of Lupo Mariategui and adjudication in
favor of plaintiffs their lawful shares in the estate of the decedent (Ibid, p. 10).
A perusal of the entire allegations of the complaint, however, shows that the action is principally
one of partition. The allegation with respect to the status of the private respondents was raised
only collaterally to assert their rights in the estate of the deceased. Hence, the Court of Appeals
correctly adopted the settled rule that the nature of an action filed in court is determined by the
facts alleged in the complaint constituting the cause of action (Republic vs. Estenzo, 158 SCRA
282 [1988]).

It has been held that, if the relief demanded is not the proper one which may be granted under
the law, it does not characterize or determine the nature of plaintiffs' action, and the relief to
which plaintiff is entitled based on the facts alleged by him in his complaint, although it is not the
relief demanded, is what determines the nature of the action (1 Moran, p. 127, 1979 ed., citing
Baguioro vs. Barrios, et al., 77 Phil. 120).

With respect to the legal basis of private respondents' demand for partition of the estate of Lupo
Mariategui, the Court of Appeals aptly held that the private respondents are legitimate children
of the deceased.

Lupo Mariategui and Felipa Velasco were alleged to have been lawfully married in or about
1930. This fact is based on the declaration communicated by Lupo Mariategui to Jacinto who
testified that "when (his) father was still living, he was able to mention to (him) that he and (his)
mother were able to get married before a Justice of the Peace of Taguig, Rizal." The spouses
deported themselves as husband and wife, and were known in the community to be such.
Although no marriage certificate was introduced to this effect, no evidence was likewise offered
to controvert these facts. Moreover, the mere fact that no record of the marriage exists does not
invalidate the marriage, provided all requisites for its validity are present (People vs. Borromeo,
133 SCRA 106 [1984]).

Under these circumstances, a marriage may be presumed to have taken place between Lupo
and Felipa. The laws presume that a man and a woman, deporting themselves as husband and
wife, have entered into a lawful contract of marriage; that a child born in lawful wedlock, there
being no divorce, absolute or from bed and board is legitimate; and that things have happened
according to the ordinary course of nature and the ordinary habits of life (Section 5 (z), (bb),
(cc), Rule 131, Rules of Court; Corpus v. Corpus, 85 SCRA 567 [1978]; Saurnaba v. Workmen's
Compensation, 85 SCRA 502 [1978]; Alavado v. City Gov't. of Tacloban, 139 SCRA 230 [1985];
Reyes v. Court of Appeals, 135 SCRA 439 [1985]).

Courts look upon the presumption of marriage with great favor as it is founded on the following
rationale:

The basis of human society throughout the civilized world is that of marriage.
Marriage in this jurisdiction is not only a civil contract, but it is a new relation, an
institution in the maintenance of which the public is deeply interested.
Consequently, every intendment of the law leans toward legalizing matrimony.
Persons dwelling together in apparent matrimony are presumed, in the absence
of any counterpresumption or evidence special to that case, to be in fact married.
The reason is that such is the common order of society and if the parties were
not what they thus hold themselves out as being, they would be living in the
constant violation of decency and of
law . . . (Adong vs. Cheong Seng Gee, 43 Phil. 43, 56 [1922] quoted in Alavado
vs. City Government of Tacloban, 139 SCRA 230 [1985]).

So much so that once a man and a woman have lived as husband and wife and such
relationship is not denied nor contradicted, the presumption of their being married must be
admitted as a fact (Alavado v. City Gov't. of Tacloban,supra).

The Civil Code provides for the manner under which legitimate filiation may be proven.
However, considering the effectivity of the Family Code of the Philippines, the case at bar must
be decided under a new if not entirely dissimilar set of rules because the parties have been
overtaken by events, to use the popular phrase (Uyguangco vs. Court of Appeals, G.R. No.
76873, October 26, 1989). Thus, under Title VI of the Family Code, there are only two classes
of children — legitimate and illegitimate. The fine distinctions among various types of illegitimate
children have been eliminated (Castro vs. Court of Appeals, 173 SCRA 656 [1989]).

Article 172 of the said Code provides that the filiation of legitimate children may be established
by the record of birth appearing in the civil register or a final judgment or by the open and
continuous possession of the status of a legitimate child.

Evidence on record proves the legitimate filiation of the private respondents. Jacinto's birth
certificate is a record of birth referred to in the said article. Again, no evidence which tends to
disprove facts contained therein was adduced before the lower court. In the case of the two
other private respondents, Julian and Paulina, they may not have presented in evidence any of
the documents required by Article 172 but they continuously enjoyed the status of children of
Lupo Mariategui in the same manner as their brother Jacinto.

While the trial court found Jacinto's testimonies to be inconsequential and lacking in substance
as to certain dates and names of relatives with whom their family resided, these are but minor
details. The nagging fact is that for a considerable length of time and despite the death of Felipa
in 1941, the private respondents and Lupo lived together until Lupo's death in 1953. It should be
noted that even the trial court mentioned in its decision the admission made in the affidavit of
Cresenciana Mariategui Abas, one of the petitioners herein, that " . . . Jacinto, Julian and
Paulina Mariategui ay pawang mga kapatid ko sa
ama . . ." (Exh. M, Record on Appeal, pp. 65-66).

In view of the foregoing, there can be no other conclusion than that private respondents are
legitimate children and heirs of Lupo Mariategui and therefore, the time limitation prescribed in
Article 285 for filing an action for recognition is inapplicable to this case. Corollarily, prescription
does not run against private respondents with respect to the filing of the action for partition so
long as the heirs for whose benefit prescription is invoked, have not expressly or impliedly
repudiated the co-ownership. In other words, prescription of an action for partition does not lie
except when the co-ownership is properly repudiated by the co-owner (Del Banco vs.
Intermediate Appellate Court, 156 SCRA 55 [1987] citing Jardin vs. Hollasco, 117 SCRA 532
[1982]).

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

Petitioners contend that they have repudiated the co-ownership when they executed the
extrajudicial partition excluding the private respondents and registered the properties in their
own names (Petition, p. 16; Rollo, p. 20). However, no valid repudiation was made by
petitioners to the prejudice of private respondents. Assuming petitioners' registration of the
subject lot in 1971 was an act of repudiation of the co-ownership, prescription had not yet set in
when private respondents filed in 1973 the present action for partition (Ceniza vs. C.A., 181
SCRA 552 [1990]).

In their complaint, private respondents averred that in spite of their demands, petitioners, except
the unwilling defendants in the lower court, failed and refused to acknowledge and convey their
lawful shares in the estate of their father (Record on Appeal, p. 6). This allegation, though
denied by the petitioners in their answer (Ibid, p. 14), was never successfully refuted by them.
Put differently, in spite of petitioners' undisputed knowledge of their relationship to private
respondents who are therefore their co-heirs, petitioners fraudulently withheld private
respondent's share in the estate of Lupo Mariategui. According to respondent Jacinto, since
1962, he had been inquiring from petitioner Maria del Rosario about their (respondents) share in
the property left by their deceased father and had been assured by the latter (Maria del Rosario)
not to worry because they will get some shares. As a matter of fact, sometime in 1969, Jacinto
constructed a house where he now resides on Lot No. 163 without any complaint from
petitioners.
Petitioners' registration of the properties in their names in 1971 did not operate as a valid
repudiation of the co-ownership. In Adille vs. Court of Appeals (157 SCRA 455, 461-462 [1988]),
the Court held:

Prescription, as a mode of terminating a relation of co-ownership, must have

been preceded by repudiation (of the co-ownership). The act of repudiation, in
turn, is subject to certain conditions: (1) a co-owner repudiates the co-ownership;
(2) such an act of repudiation is clearly made known to the other co-owners; (3)
the evidence thereon is clear and conclusive; and (4) he has been in possession
through open, continuous, exclusive, and notorious possession of the property
for the period required by law.

xxx xxx xxx

It is true that registration under the Torrens system is constructive notice of title,
but it has likewise been our holding that the Torrens title does not furnish shield
for fraud. It is therefore no argument to say that the act of registration is
equivalent to notice of repudiation, assuming there was one, notwithstanding the
long-standing rule that registration operates as a universal notice of title.

Inasmuch as petitioners registered the properties in their names in fraud of their co-heirs
prescription can only be deemed to have commenced from the time private respondents
discovered the petitioners' act of defraudation (Adille vs. Court of Appeals, supra). Hence,
prescription definitely may not be invoked by petitioners because private respondents
commenced the instant action barely two months after learning that petitioners had registered in
their names the lots involved.

WHEREFORE, the petition is DENIED and the assailed decision of the Court of Appeals dated
December 24, 1980 is Affirmed.

SO ORDERED.
G.R. No. L-3404 April 2, 1951

ANGELA I. TUASON, plaintiff-appellant,

vs.
ANTONIO TUASON, JR., and GREGORIO ARANETA, INC., defendants-appellees.

Alcuaz & Eiguren for appellant.

Araneta & Araneta for appellees.

MONTEMAYOR, J.:

In 1941 the sisters Angela I. Tuason and Nieves Tuason de Barreto and their brother Antonio
Tuason Jr., held a parcel of land with an area of 64,928.6 sq. m. covered by Certificate of Title
No. 60911 in Sampaloc, Manila, in common, each owning an undivided 1/3 portion. Nieves
wanted and asked for a partition of the common property, but failing in this, she offered to sell
her 1/3 portion. The share of Nieves was offered for sale to her sister and her brother but both
declined to buy it. The offer was later made to their mother but the old lady also declined to buy,
saying that if the property later increased in value, she might be suspected of having taken
advantage of her daughter. Finally, the share of Nieves was sold to Gregorio Araneta Inc., a
domestic corporation, and a new Certificate of Title No. 61721 was issued in lieu of the old title
No. 60911 covering the same property. The three co-owners agreed to have the whole parcel
subdivided into small lots and then sold, the proceeds of the sale to be later divided among
them. This agreement is embodied in a document (Exh. 6) entitled "Memorandum of
Agreement" consisting of ten pages, dated June 30, 1941.

Before, during and after the execution of this contract (Exh. 6), Atty. J. Antonio Araneta was
acting as the attorney-in-fact and lawyer of the two co-owners, Angela I. Tuason and her brother
Antonio Tuason Jr. At the same time he was a member of the Board of Director of the third co-
owner, Araneta, Inc.

The pertinent terms of the contract (Exh. 6) may be briefly stated as follows: The three co-
owners agreed to improve the property by filling it and constructing roads and curbs on the
same and then subdivide it into small lots for sale. Araneta Inc. was to finance the whole
development and subdivision; it was prepare a schedule of prices and conditions of sale,
subject to the subject to the approval of the two other co-owners; it was invested with authority
to sell the lots into which the property was to be subdivided, and execute the corresponding
contracts and deeds of sale; it was also to pay the real estate taxes due on the property or of
any portion thereof that remained unsold, the expenses of surveying, improvements, etc., all
advertising expenses, salaries of personnel, commissions, office and legal expenses, including
expenses in instituting all actions to eject all tenants or occupants on the property; and it
undertook the duty to furnish each of the two co-owners, Angela and Antonio Tuason, copies of
the subdivision plans and the monthly sales and rents and collections made thereon. In return
for all this undertaking and obligation assumed by Araneta Inc., particularly the financial burden,
it was to receive 50 per cent of the gross selling price of the lots, and any rents that may be
collected from the property, while in the process of sale, the remaining 50 per cent to be divided
in equal portions among the three co-owners so that each will receive 16.33 per cent of the
gross receipts.

Because of the importance of paragraphs 9, 11 and 15 of the contract (Exh. 6), for purposes of
reference we are reproducing them below:

(9) This contract shall remain in full force and effect during all the time that it may be
necessary for the PARTY OF THE SECOND PART to fully sell the said property in small
and subdivided lots and to fully collect the purchase prices due thereon; it being
understood and agreed that said lots may be rented while there are no purchasers
thereof;

(11) The PARTY OF THE SECOND PART (meaning Araneta Inc.) is hereby given full
power and authority to sign for and in behalf of all the said co-owners of said property all
contracts of sale and deeds of sale of the lots into which this property might be
subdivided; the powers herein vested to the PARTY OF THE SECOND PART may,
 under its own responsibility and risk, delegate any of its powers under this contract to
any of its officers, employees or to third persons;

(15) No co-owner of the property subject-matter of this contract shall sell, alienate or
dispose of his ownership, interest or participation therein without first giving preference
to the other co-owners to purchase and acquire the same under the same terms and
conditions as those offered by any other prospective purchaser. Should none of the co-
owners of the property subject-matter of this contract exercise the said preference to
acquire or purchase the same, then such sale to a third party shall be made subject to all
the conditions, terms, and dispositions of this contract; provided, the PARTIES OF THE
FIRST PART (meaning Angela and Antonio) shall be bound by this contract as long as
the PARTY OF THE SECOND PART, namely, the GREGORIO ARANETA, INC. is
controlled by the members of the Araneta family, who are stockholders of the said
corporation at the time of the signing of this contract and/or their lawful heirs;

On September 16, 1944, Angela I. Tuason revoked the powers conferred on her attorney-in-fact
and lawyer, J. Antonio Araneta. Then in a letter dated October 19, 1946, Angela notified
Araneta, Inc. that because of alleged breach of the terms of the "Memorandum of Agreement"
(Exh. 6) and abuse of powers granted to it in the document, she had decided to rescind said
contract and she asked that the property held in common be partitioned. Later, on November
20, 1946, Angela filed a complaint in the Court of First Instance of Manila asking the court to
order the partition of the property in question and that she be given 1/3 of the same including
rents collected during the time that the same including rents collected during the time that
Araneta Inc., administered said property.

The suit was administered principally against Araneta, Inc. Plaintiff's brother, Antonio Tuason
Jr., one of the co-owners evidently did not agree to the suit and its purpose, for he evidently did
not agree to the suit and its purpose, for he joined Araneta, Inc. as a co-defendant. After hearing
and after considering the extensive evidence introduce, oral and documentary, the trial court
presided over by Judge Emilio Peña in a long and considered decision dismissed the complaint
without pronouncement as to costs. The plaintiff appealed from that decision, and because the
property is valued at more than P50,000, the appeal came directly to this Court.

Some of the reasons advanced by appellant to have the memorandum contract (Exh. 6)
declared null and void or rescinded are that she had been tricked into signing it; that she was
given to understand by Antonio Araneta acting as her attorney-in-fact and legal adviser that said
contract would be similar to another contract of subdivision of a parcel into lots and the sale
thereof entered into by Gregorio Araneta Inc., and the heirs of D. Tuason, Exhibit "L", but it
turned out that the two contracts widely differed from each other, the terms of contract Exh. "L"
being relatively much more favorable to the owners therein the less favorable to Araneta Inc.;
that Atty. Antonio Araneta was more or less disqualified to act as her legal adviser as he did
because he was one of the officials of Araneta Inc., and finally, that the defendant company has
violated the terms of the contract (Exh. 6) by not previously showing her the plans of the
subdivision, the schedule of prices and conditions of the sale, in not introducing the necessary
improvements into the land and in not delivering to her her share of the proceeds of the rents
and sales.

We have examined Exh. "L" and compared the same with the contract (Exh. 6) and we agree
with the trial court that in the main the terms of both contracts are similar and practically the
same. Moreover, as correctly found by the trial court, the copies of both contracts were shown
to the plaintiff Angela and her husband, a broker, and both had every opportunity to go over and
compare them and decide on the advisability of or disadvantage in entering into the contract
(Exh. 6); that although Atty. Antonio Araneta was an official of the Araneta Inc.; being a member
of the Board of Directors of the Company at the time that Exhibit "6" was executed, he was not
the party with which Angela contracted, and that he committed no breach of trust. According to
the evidence Araneta, the pertinent papers, and sent to her checks covering her receive the
same; and that as a matter of fact, at the time of the trial, Araneta Inc., had spent about
P117,000 in improvement and had received as proceeds on the sale of the lots the respectable
sum of P1,265,538.48. We quote with approval that portion of the decision appealed from on
these points:
 The evidence in this case points to the fact that the actuations of J. Antonio Araneta in
connection with the execution of exhibit 6 by the parties, are above board. He committed
nothing that is violative of the fiduciary relationship existing between him and the plaintiff.
The act of J. Antonio Araneta in giving the plaintiff a copy of exhibit 6 before the same
was executed, constitutes a full disclosure of the facts, for said copy contains all that
appears now in exhibit 6.

Plaintiff charges the defendant Gregorio Araneta, Inc. with infringing the terms of the
contract in that the defendant corporation has failed (1) to make the necessary
improvements on the property as required by paragraphs 1 and 3 of the contract; (2) to
submit to the plaintiff from time to time schedule of prices and conditions under which
the subdivided lots are to be sold; and to furnish the plaintiff a copy of the subdivision
plans, a copy of the monthly gross collections from the sale of the property.

The Court finds from the evidence that he defendant Gregorio Araneta, Incorporated has
substantially complied with obligation imposed by the contract exhibit 6 in its paragraph
1, and that for improvements alone, it has disbursed the amount of P117,167.09. It has
likewise paid taxes, commissions and other expenses incidental to its obligations as
denied in the agreement.

With respect to the charged that Gregorio Araneta, Incorporated has failed to submit to
plaintiff a copy of the subdivision plains, list of prices and the conditions governing the
sale of subdivided lots, and monthly statement of collections form the sale of the lots, the
Court is of the opinion that it has no basis. The evidence shows that the defendant
corporation submitted to the plaintiff periodically all the data relative to prices and
conditions of the sale of the subdivided lots, together with the amount corresponding to
her. But without any justifiable reason, she refused to accept them. With the indifferent
attitude adopted by the plaintiff, it was thought useless for Gregorio Araneta,
Incorporated to continue sending her statement of accounts, checks and other things.
She had shown on various occasions that she did not want to have any further dealings
with the said corporation. So, if the defendant corporation proceeded with the sale of the
subdivided lots without the approval of the plaintiff, it was because it was under the
correct impression that under the contract exhibit 6 the decision of the majority co-
owners is binding upon all the three.

The Court feels that recission of the contract exhibit 6 is not minor violations of the terms
of the agreement, the general rule is that "recission will not be permitted for a slight or
casual breach of the contract, but only for such breaches as are so substantial and
fundamental as to defeat the object of the parties in making the agreement" (Song Fo &
Co. vs. Hawaiian-Philippine Co., 47 Phil. 821).

As regards improvements, the evidence shows that during the Japanese occupation from 1942
and up to 1946, the Araneta Inc. although willing to fill the land, was unable to obtain the
equipment and gasoline necessary for filling the low places within the parcel. As to sales, the
evidence shows that Araneta Inc. purposely stopped selling the lots during the Japanese
occupantion, knowing that the purchase price would be paid in Japanese military notes; and
Atty. Araneta claims that for this, plaintiff should be thankfull because otherwise she would have
received these notes as her share of the receipts, which currency later became valueles.

But the main contention of the appellant is that the contract (Exh. 6) should be declared null and
void because its terms, particularly paragraphs 9, 11 and 15 which we have reproduced, violate
the provisions of Art. 400 of the Civil Code, which for the purposes of reference we quote below:

ART. 400. No co-owner shall be obliged to remain a party to the community. Each may,
at any time, demand the partition of the thing held in common.

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

We agree with the trial court that the provisions of Art. 400 of the Civil Code are not applicable.
The contract (Exh., 6) far from violating the legal provision that forbids a co-owner being obliged
to remain a party to the community, precisely has for its purpose and object the dissolution of
the co-ownership and of the community by selling the parcel held in common and dividing the
proceeds of the sale among the co-owners. The obligation imposed in the contract to preserve
the co-ownership until all the lots shall have been sold, is a mere incident to the main object of
dissolving the co-owners. By virtue of the document Exh. 6, the parties thereto practically and
substantially entered into a contract of partnership as the best and most expedient means of
eventually dissolving the co-ownership, the life of said partnership to end when the object of its
creation shall have been attained.

This aspect of the contract is very similar to and was perhaps based on the other agreement or
contract (Exh. "L") referred to by appellant where the parties thereto in express terms entered
into partnership, although this object is not expressed in so many words in Exh. 6. We repeat
that we see no violation of Art. 400 of the Civil Code in the parties entering into the contract
(Exh. 6) for the very reason that Art. 400 is not applicable.

Looking at the case from a practical standpoint as did the trial court, we find no valid ground for
the partition insisted upon the appellant. We find from the evidence as was done by the trial
court that of the 64,928.6 sq. m. which is the total area of the parcel held in common, only 1,600
sq. m. or 2.5 per cent of the entire area remained unsold at the time of the trial in the year 1947,
while the great bulk of 97.5 per cent had already been sold. As well observed by the court
below, the partnership is in the process of being dissolved and is about to be dissolved, and
even assuming that Art. 400 of the Civil Code were applicable, under which the parties by
agreement may agree to keep the thing undivided for a period not exceeding 10 years, there
should be no fear that the remaining 1,600 sq. m. could not be disposed of within the four years
left of the ten-years period fixed by Art. 400.

We deem it unnecessary to discuss and pass upon the other points raised in the appeal and
which counsel for appellant has extensively and ably discussed, citing numerous authorities. As
we have already said, we have viewed the case from a practical standpoint, brushing aside
technicalities and disregarding any minor violations of the contract, and in deciding the case as
we do, we are fully convinced that the trial court and this Tribunal are carrying out in a practical
and expeditious way the intentions and the agreement of the parties contained in the contract
(Exh. 6), namely, to dissolve the community and co-ownership, in a manner most profitable to
the said parties.

In view of the foregoing, the decision appealed from is hereby affirmed. There is no
pronouncement as to costs.

So ordered.
G.R. No. L-45142 April 26, 1991

SIMPROSA VDA. DE ESPINA, RECAREDO ESPINA, TIMOTEO ESPINA, CELIA ESPINA,

GAUDIOSA ESPINA and NECIFORA ESPINA, petitioners,
vs.
THE HON. OTILIO ABAYA and SOFIA ESPINA and JOSE ESPINA, respondents.

Cipriano C. Alvizo, Sr. for private respondents.

MEDIALDEA, J.:

This is a petition for certiorari with prayer for the issuance of a writ of preliminary injunction
seeking the nullification of the orders issued by the respondent Judge Otilio Abaya, in his
capacity as the presiding judge of the Court of First Instance of Surigao del Sur, Branch II,
Lianga, Surigao del Sur in Civil Case No. L-108, entitled "Simprosa Vda. de Espina, et. al. v.
Sofia Espina, et. al." dated May 9, 1975 dismissing the complaint for partition; July 25, 1975
denying the motion for reconsideration; August 13, 1975 denying the second motion for
reconsideration and March 15, 1976 denying plaintiffs' notice of appeal.

The antecedent facts are as follows:

Marcos Espina died on February 14, 1953 and was survived by his spouses, Simprosa Vda. de
Espina and their children namely, Recaredo, Timoteo, Celia, Gaudiosa, Necifora, Sora and
Jose, all surnamed Espina. Decedent's estate comprises of four (4) parcels of land located at
the Municipality of Barobo Province of Surigao del Sur.

On August 23, 1973 an action for partition of the aforementioned parcels of land was filed by
petitioners Simprosa and her children Recaredo, Timoteo, Celia, Gaudencia and Necifora.

The complaint alleges that parcel No. 1 is the exclusive property of the deceased, hence the
same is owned in common by petitioners and private respondents in eight (8) equal parts, while
the other three (3) parcels of land being conjugal properties, are also owned in common, one-
half (1/2) belongs to the widow Simprosa and the other half is owned by her and her children in
eight (8) equal parts.

It also alleges that parcel No. 1 has been subdivided into two lots. Lot No. 994 PL8-44 is
covered by Original Certificate of Title No. 5570 in the name of one of the heirs, Sofia Espina,
who acquired the title as a trustee for the beneficiaries or heirs of Marcos Espina, while lot No.
1329 PCS-44 is covered by Original Certificate of Title No. 3732 issued in the name of one of
the heirs, Jose Espina as trustee for the heirs of Marcos Espina. Said parcel of land is in the
possession of petitioners and private respondents who have their respective houses thereon.

Simprosa presently occupies parcel No. 2 while parcel No. 3 is occupied by Timoteo, although
the same is actually titled in the name of Sofia. Parcel No. 4 is occupied by Recaredo.

Petitioners have several times demanded the partition of the aforementioned properties, but
notwithstanding such demands private respondents refused to accede.

Private respondents alleged in their answer that in or about April, 1951, the late Marcos Espina
and his widow, Simprosa, together with their children made a temporary verbal division and
assignment of shares among their children. After the death of Marcos, the temporary division
was finalized by the heirs. Thereafter the heirs took immediate possession of their respective
shares on April 20, 1952. Private respondents took actual physical possession of their
respective shares including the portions ceded to them by Simprosa upon their payment of
P50.00 each per quarter starting April, 1952 until the latter's death pursuant to their contract of
procession The assignment of shares was as follows:
 (a) To the surviving spouses, (sic) Simprosa Vda. de Espina, herein plaintiffs, one-half
(1/2) of the parcel of land adjudicated to each of said plaintiffs-heirs and defendants;

(b) To each of the following compulsory heirs, to wit:

1. To Recaredo (sic) Espina, one-half (1/2) portion which contains an area of one and
three-fourths (1 3/4) hectares and which forms part of Parcel 4 whose description is
given in paragraph III of the complaint, the said Parcel IV has been in the possession of
both Recaredo Espina and plaintiff Simprosa Vda. de Espina from April 20, 1952 until
the present time;

2. To Timoteo Espina, one half (1/2) portion which contains an area of not less than one-
half (1/2) hectare and which forms part of Parcel 3 whose description is given in
paragraph III of the complaint, the said Parcel III was originally assigned by Marcos
Espina who thereupon obtained an Original Certificate of Title in her (sic) name but was
finally adjudicated to said Timoteo Espina in April, 1952, the other half (1/2) portion of
which parcel III was the share of the surviving spouses (sic), Simprosa Vda. de Espina,
and said Parcel III has been in the possession of said Timoteo Espina and Simprosa
Vda. de Espina from April, 1952 until the present time as their share;

3. To Cecilia (sic) Espina, Gaudiosa Espina and Necifora Espina, one-half (1/2) portion,
share and share alike which contains two (2) hectares and which forms part of Parcel II
whose description is given in paragraph III of the complaint, the other half (1/2) of said
Parcel III (sic) is the share of the surviving spouses (sic) Simprosa Vda. de Espina, and
said Parcel III (sic) has been in the possession of said Cecilia. (sic) Espina, Gaudiosa
Espina and Necifora Espina and Simprosa Vda. de Espina from April, 1952 until the
present time;

4. To Sofia Espina, one-half (1/2) portion of the parcel of land included in the deception
of Parcel 1 in paragraph III of the complaint, the other half (1/2) of said parcel being the
share of the surviving spouses (sic) Simprosa Vda. de Espina and having been ceded by
said Simprosa Vda. de Espina to said Sofia Espina for a valuable consideration payable
quarterly at the rate of P50.00 beginning April, 1952 until her death, and said Sofia
Espina has been regularly paying to said Simprosa Vda. de Espina quarterly from April,
1952 the said amount of P50.00 until the present time, and by virtue of said agreement,
Sofia Espina obtained Original Certificate of Title in her name of said parcel of land
which is included in the description of said parcel 1, as her exclusive property;

5. To Jose Espina, one-half (1/2) portion of the other parcel of land included in the
description of Parcel 1 in paragraph 1 of the complaint, the other half (1/2) of said parcel
being the share of the surviving spouses (sic) Simprosa Vda. de Espina and having
been coded (sic) by said Simprosa Vda. de Espina to said Jose Espina for a valuable
consideration payable quarterly at the rate of P50.00 beginning April, 1952 until her
death, and said Jose Espina has been regularly quarterly paying to said Simprosa Vda.
de Espina from April, 1952 until the present time, the said amount of P50.00, and by
virtue of said agreement, Jose Espina obtained Original Certificate of Title in his name of
said parcel of land which is included in the description of said Parcel 1 as his exclusive
property. (Rollo, pp. 27-28)

On February 13, 1974 private respondents filed a motion to dismiss the complaint alleging the
following grounds, to wit:

THAT THE FACTS ALLEGED IN THE COMPLAINT FAIL TO CONFER UPON THE
COURT COMPLETE AND LAWFUL JURISDICTION OVER THE CASE FOR NON-
COMPLIANCE WITH THE CONDITION SINE QUA NON CONCERNING SUIT
BETWEEN MEMBERS OF THE SAME FAMILY.

xxx xxx xxx

 II

THAT THE CAUSE OF ACTION IS BARRED BY . . . . STATUTE OF LIMITATIONS.

xxx xxx xxx

III

THAT THE PLAINTIFFS HAS NO LEGAL CAPACITY TO SUE, (Motion to Dismiss

Complaint, pp. 1-5; Rollo, pp. 34-38)

xxx xxx xxx

On May 9, 1975 the trial court granted the motion and thereafter dismissed the complaint. On
May 23, 1975 petitioners filed a motion for reconsideration on the following grounds, to wit:

1. THAT THE ORDER OF DISMISSAL HAS NO LEGAL BASIS IN FACT AND IN LAW.

2. THAT THE STATUTE OF LIMITATIONS IS NOT APPLICABLE IN THE CASE AT

BAR. (Rollo, p. 50)

However, petitioners' motion was denied in an order dated July 23, 1975. On August 11, 1975
petitioners filed another motion for reconsideration stressing that they were denied due process
when their motion was not heard. Again said motion was denied on August 13, 1975.

Thereafter, petitioners filed their notice of appeal on September 11, 1975 and a motion for
extension of time to file their Record on Appeal on September 18, 1975.

On March 15, 1976, the respondent judge disapproved petitioners' Record on Appeal and
appeal bond on the ground that the notice of appeal was filed out of time. Hence, this petition.
The petitioners raised four (,41) assignment of errors:

1. Whether or not an action for partition among co-heirs prescribes.

2. Whether or not an oral partition among co-heirs is valid.

3. Whether or not a hearing on a motion for reconsideration is indispensable the lack of

which is a deal of due process.

4. Whether or not the second motion for reconsideration is pro forma Rollo, p. 10)

Petitioners maintain that the present action is not for reconveyance but one for partition. Hence,
the rule insisted by the private respondents on prescriptibility of an action for reconcile
conveyance of real property based on an implied trust is not applicable in the case at bar. In
addition, petitioners, argue that private respondents cannot set up the defense of prescription or
laches because their possession of the property no matter how long cannot ripen into
ownership. (Memorandum for Petitioners, p. 7)

However, the private respondents stress that 'any supposed right of the petitioners to demand a
new division or partition of said estate of Marcos Espina has long been barred by the Statute of
Limitations and has long prescribed." (Memorandum for Private Respondents, p. 5)

The petitioners claim that the alleged oral partition is invalid and strictly under the coverage of
the statute of Frauds on two grounds, to wit:

Firstly, parcel No. 1 being an exclusive property of the deceased should have been divided into
eight (8) equal parts. Therefore, Simprosa . could only cede her share of the land which is 1/8
portion thereof and cannot validly cede the shares of her then minor children without being duly
appointed as guardian.
Secondly, under Article 1358 of the New Civil Code, Simprosa could not have ceded her right
and that of her other children except by a public document. (Memorandum of Petitioners, pp. 8-
9)

On the other hand, private respondents insist that the oral partition is valid and binding and does
not fall under the coverage of the Statute of Frauds.

Petitioners claim that they were denied due process when the motion for reconsideration was
denied without any hearing.

However, private respondents maintain that the hearing of a motion for reconsideration in oral
argument is a matter which rest upon the sound discretion of the Court.

Finally, petitioners stress that the second motion for reconsideration is not pro forma, thus, it
suspends the running of the period of appeal. Hence, the notice of appeal was timely filed.

On this point, private respondent maintain that the order of respondent judge dated March 1 5,
1976 disapproving petitioners' Record on Appeal and appeal bond may not properly be a
subject of a petition for certiorari. (Memorandum of Private Respondents, p. 13)

We find the petition devoid of merit.

We already ruled in Lebrilla, et al. v. Intermediate Appellate Court (G.R. No. 72623, December
18, 1989, 180 SCRA 188; 192) that an action for partition is imprescriptible. However, an action
for partition among co-heirs ceases to be such, and becomes one for title where the defendants
allege exclusive ownership.

In the case at bar, the imprescriptibility of the action for partition cannot be invoked because two
of the co-heirs, namely private respondents Sora and Jose Espina possessed the property as
exclusive owners and their possession for a period of twenty one (21) years is sufficient to
acquire it by prescription. Hence, from the moment these co-heirs claim that they are the
absolute and exclusive owners of the properties and deny the others any share therein, the
question involved is no longer one of partition but of ownership.

Anent the issue of oral partition, We sustain the validity of said partition.1âwphi1 "An agreement
of partition may be made orally or in writing. An oral agreement for the partition of the property
owned in common is valid and enforceable upon the parties. The Statute of Frauds has no
operation in this kind of agreements, for partition is not a conveyance of property but simply a
segregation and designation of the part of the property which belong to the co-owners."
(Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. II, 1983
Edition, 182-183 citing Hernandez v. Andal, et. al., G.R. No. L275, March 29, 1957)

Time and again, the Court stresses that the hearing of a motion for reconsideration in oral
argument is a matter which rests upon the sound discretion of the Court. Its refusal does not
constitute a denial of due process in the absence of a showing of abuse of discretion.
(see Philippine Manufacturing Co. v. Ang Bisig ng PMC et. al., 118 Phil. 431, 434)

The absence of a formal hearing on the petitioners' motion for reconsideration is thoroughly
explained in the order of the respondent judge dated August 13, 1975, which is hereunder
quoted as follows:

When the court issued its order of June 5, 1975 requiring counsel for defendants to
answer plaintiffs' motion for reconsideration, the court opted to resolve plaintiffs' motion
based on the pleadings of the parties, without further oral arguments. The court
considered the arguments of the parties stated in their pleadings as already sufficient to
apprise the court of the issues involved in said motion.

Plaintiffs' allegation that the Clerk of Court failed to calendar their motion for
reconsideration for oral argument has not deprived the plaintiffs of any substantial right
or his right to due process.
 SO ORDERED. (Memorandum of Private Respondents, pp. 1213)

A cursory reading of the aforequoted order will show that there was indeed no formal hearing on
the motion for reconsideration. There is no question however, that the motion is grounded on
the lack of basis in fact and in law of the order of dismissal and the existence or lack of it is
determined by a reference to the facts alleged in the challenged pleading. The issue raised in
the motion was fully discussed therein and in the opposition thereto. Under such circumstances,
oral argument on the motion is reduced to an unnecessary ceremony and should be overlooked
(see Ethel Case, et al. v. Jugo, 77 Phil. 517, 522).

We adhere to the findings of the trial court that the second motion for reconsideration dated
August 11, 1975 is pro forma, to it

The grounds stated in said motion being in reiteration of the same grounds alleged in his
first motion, the same is pro-forma. (Order dated March 15, 1976, p. 2, Rollo, p. 74)

xxx xxx xxx

Furthermore, the second motion for reconsideration has not stated new grounds
considering that the alleged failure of the Clerk of Court to set plaintiffs' motion for
reconsideration, although seemingly a different ground than those alleged in their first
motion for reconsideration, is only incidental to the issues raised in their first motion for
reconsideration, as it only refers to the right of plaintiffs' counsel to argue his motion in
court just to amplify the same grounds already deed by the court. (Ibid, p. 3, Rollo, p. 75)

Therefore, it is very evident that the second motion for reconsideration being pro-forma did not
suspend the running of the period of appeal. Thus, the lower court committed no error when it
held that the notice of appeal was filed after the lapse of thirty five (35) days, which is clearly
beyond the period of thirty (30) days allowed by the rules.

Finally, it has been a basic rule that certiorari is not a substitute for appeal which had been lost.
(see Edra v. Intermediate Appellate Court, G.R. No. 75041, November 13, 1989, 179 SCRA
344) A special civil action under Rule 65 of the Rules of Court will not be a substitute or cure for
failure to file a timely petition for review on certiorari(appeal) under Rule 45 of the Rules of
Court. (Escudero v. Dulay, G.R. No. 60578, February 23, 1988, 158 SCRA 69, 77)

The application of the abovecited rule should be relaxed where it is shown that it will result in a
manifest failure or miscarriage of justice. (Ibid, p. 77) However, as emphasized earlier, the case
at bar is totally devoid of merit, thus, the strict application of the said file will not in any way
override sub-substantial justice.

Therefore, the delay of five (5) days in filing a notice of appeal and a motion for extension to file
a record on appeal cannot be excused on the basis of equity.

All premises considered, the Court is convinced that the acts of respondent judge, in dismissing
the action for partition and in subsequently denying the motions for reconsideration of the
petitioners, does not amount to grave abuse of discretion.

ACCORDINGLY, the petition is DISMISSED.

SO ORDERED.
G.R. No. L-29727 December 14, 1988

PEDRO OLIVERAS, TEODORA GASPAR, MELECIO OLIVERAS and ANICETA

MINOR, plaintiffs-appellees,
vs.
CANDIDO LOPEZ, SEVERO LOPEZ, HIPOLITO LOPEZ, EUGENIA LOPEZ, PRIMITIVO
GASPAR, CORAZON LOPEZ, ALEJANDRO CACAYURIN, FAUSTINA BOTUYAN,
MODESTO SALAZAR, ADORACION BOTUYAN, CLAUDIO GANOTICE and ENONG
BOTUYAN, defendants-appellants.

Venancio B. Fernando for defendants-appellants.

FERNAN, C.J.:

This case exemplifies the Filipino custom of keeping inherited property in a prolonged juridical
condition of co-owner ship.

Lorenzo Lopez owned Lot 4685 of the Cadastral survey of Villasis, Pangasinan with an area of
69,687 square meters as evidenced by Original Certificate of Title No. 15262.1 In December,
1931, Lorenzo Lopez died, 2 leaving said property to his wife, Tomasa Ramos and six (6)
children. From that time on, the heirs of Lorenzo Lopez did not initiate any moves to legally
partition the property.

More than twenty-one years later, or on February 11, 1953, Tomasa Ramos and her eldest son,
Candido Lopez, executed a deed of absolute sale of the "eastern undivided four thousand two
hundred and fifty seven-square meters (4,257) more or less, of the undivided portion of (their)
interests, rights and participation" over Lot 4685, in favor of the spouses Melecio Oliveras and
Aniceta Minor, in consideration of the amount of one thousand pesos (P1,000). 3

On the same day, Tomasa and Candido executed another deed of absolute sale of the
"undivided" four thousand two hundred and fifty-seven (4,257) square meters of the "eastern
part" of Lot 4685 in favor of the spouses Pedro Oliveras and Teodora Gaspar, also in
consideration of P1,000. 4 Each of the said documents bear the thumbmark of Tomasa and the
signature of Candido.

In his affidavit also executed on February 11, 1953, Candido stated that a month prior to the
execution of the deed of sale in favor of Melecio Oliveras, he offered his: "undivided portion" of
Lot 4685 to his "adjacent owners" but none of them was "in a position to purchase" said
property. 5

Since the execution of the two deeds of absolute sale, the vendees, brothers Melecio and
Pedro, had been paying the real property taxes for their respectively purchased
properties. 6 They also had been in possession of their purchased properties which, being
planted to palay and peanuts, were segregated from the rest of Lot 4685 by dikes. 7

More than thirteen years later or on November 21, 1966, the counsel of the Oliveras brothers
wrote the heirs of Lorenzo Lopez reminding them of the Oliverases' demands to partition the
property so that they could acquire their respective titles thereto without resorting to court
action, and that, should they fail to respond, he would be forced to file a case in
court. 8 Apparently, the Lopezes did not answer said letter since on December 15, 1966, the
Oliveras brothers and their wives filed a complaint for partition and damages 9 in the Court of
First Instance of Pangasinan. 10

The Oliverases stated in their complaint that possession of the disputed properties was
delivered to them with the knowledge and consent of the defendants; that they had been paying
the real estate taxes thereon; that prior to the sale, said properties were offered to the other co-
owners for sale but they refused to buy them; that on February 18, 1953, the transactions were
duly annotated and entered in the Memorandum of encumbrances of OCT No. 15262 as
adverse claims; and that their desire to segregate the portions of Lot 4685 sold to them was
frustrated by defendants' adamant refusal to lend them the owner's duplicate of OCT No. 15262
and to execute a deed of partition of the whole lot.

In claiming moral damages in the amount of P2,000.00 plaintiffs alleged that defendants also
refused to allow them to survey and segregate the portions bought by them. Plaintiffs prayed
that the court order the defendants to partition Lot 4685 and to allow them to survey and
segregate the portions they had purchased. They also demanded payment of P800.00 as
attorney's fees and cost of the suit.

In their answer, the defendants alleged that no sale ever transpired as the alleged vendors
could not have sold specific portions of the property; that plaintiffs' possession and occupation
of specific portions of the properties being illegal, they could not ripen into ownership; and that
they were not under any obligation to lend their copy of the certificate of title or to accede to
plaintiffs' request for the partition or settlement of the property. As special and affirmative
defenses, the defendants contended that the deeds of sale were null and void and hence,
unenforceable against them; that the complaint did not state a cause of action and that the
cause or causes of action if any, had prescribed.

Defendants averred in their counterclaim that despite repeated demands, plaintiffs refused and
failed to vacate the premises; that the properties occupied by the plaintiffs yielded an average
net produce in palay and peanuts in the amount of P1,600.00 annually, and that the complaint
was filed to harass them. They prayed for the dismissal of the complaint and the payment of
P1,600.00 per year from 1953 until plaintiffs shall have vacated the premises and P1,000.00 for
attorney's fees.

Plaintiffs filed an answer to defendants' counterclaim, denying all the allegations therein and
stating that defendants never demanded that plaintiffs vacate the portions of Lot 4685 they had
bought.

The lower court explored the possibility of an amicable settlement between the parties without
success. Hence, it set the case for trial and thereafter, it rendered a
decision 11 declaring valid the deeds of absolute sale 12 and ordering the defendants to allow the
segregation of the sold portions of Lot 4685 by a licensed surveyor in order that the plaintiffs
could obtain their respective certificates of title over their portions of said lot.

In resolving the case, the lower court passed upon the issue of whether the two deeds of
absolute sale were what they purported to be or merely mortgage documents. It considered as
indicia of plaintiffs' absolute dominion over the portions sold to them their actual possession
thereof without any opposition from the defendants until the filing of the complaint, their payment
of taxes thereon and their having benefited from the produce of the land. The court ruled that
the defendants' testimonial evidence that the deeds in question were merely mortgage
documents cannot overcome the evidentiary value of the public instruments presented by the
plaintiffs.

On the issue of whether the two deeds of absolute sale were null and void considering that the
land subject thereof had not yet been partitioned, the court observed that the total area of 8,514
square meters sold to plaintiffs by Candido was less than his share should Lot 4685 with an
area of 69,687 square meters be divided among the six children of Lorenzo Lopez and their
mother. In this connection, the lower court also found that during his lifetime, and before
Candido got married, Lorenzo Lopez had divided Lot 4685 among his children who then took
possession of their respective shares. *

The defendants appealed said decision to this Court contending that the lower court erred in
declaring the two deeds of absolute sale as valid, in ordering the segregation of the sold
portions of Lot 4685 to enable the plaintiffs to obtain their respective certificates of title, and in
not considering their defense of prescription.

The extrinsic validity of the two deeds of absolute sale is not in issue in this case in view of the
finding of the trial court that the defendants admittedly do not question their due
execution.13 What should pre-occupy the Court is the intrinsic validity of said deeds insofar as
they pertain to sales of designated portions of an undivided, co-owned property.
In a long line of decisions, this Court has held that before the partition of a land or thing held in
common, no individual co-owner can claim title to any definite portion thereof. All that the co-
owner has is an Ideal or abstract quota or proportionate share in the entire land or thing. 14

However, the duration of the juridical condition of co-ownership is not limitless. Under Article
494 and 1083 of the Civil Code, co-ownership of an estate should not exceed the period of
twenty (20) years. And, under the former article, any agreement to keep a thing or property
undivided should be for a ten-year period only. Where the parties stipulate a definite period of in
division which exceeds the maximum allowed by law, said stipulation shall be void only as to the
period beyond such maximum.15

Although the Civil Code is silent as to the effect of the in division of a property for more than
twenty years, it would be contrary to public policy to sanction co-ownership beyond the period
set by the law. Otherwise, the 20-year limitation expressly mandated by the Civil Code would be
rendered meaningless.

In the instant case, the heirs of Lorenzo Lopez maintained the co-ownership for more than
twenty years. We hold that when Candido and his mother (who died before the filing of the
complaint for partition) sold definite portions of Lot 4685, they validly exercised dominion over
them because, by operation of law, the co-ownership had ceased. The filing of the complaint for
partition by the Oliverases who, as vendees, are legally considered as subrogated to the rights
of Candido over portions of Lot 4685 in their possession, 16 merely served to put a stamp of
formality on Candido's otherwise accomplished act of terminating the co-ownership.

The action for partition has not prescribed. Although the complaint was filed thirteen years from
the execution of the deeds of sale and hence, as contended by the defendants-appellants,
prescription might have barred its filing under the general provision of Article 1144 (a) of the
Civil Code, Article 494 specifically mandates that each
co-owner may demand at any time the partition of the thing owned in common insofar as his
share is concerned. Hence, considering the validity of the conveyances of portions of Lot 4685
in their favor and as subrogees of Candido Lopez, the Oliverases' action for partition was timely
and properly filed. 17

We cannot write finis to this decision without commenting on the compliance with the resolution
of September 1, 1986 of counsel for defendants-appellants. In said resolution, the court required
the parties to move in the premises "considering the length of time that this case has remained
pending in this Court and to determine whether or not there might be supervening events which
may render the case moot and academic. 18 In his manifestation and motion dated August 12,
1987, said counsel informed the Court that he had contacted the defendants-appellants whom
he advised "to move in the premises which is the land in question and to maintain the status
quo with respect to their actual possession thereon" and that he had left a copy of said
resolution with the defendants-appellants" for their guidance in the compliance of their
obligations (sic) as specified in said
resolution." 19

Obviously, said counsel interpreted literally the Court's directive "to move in the premises." For
the enlightenment of said counsel and all others of similar perception, a "move in the premises"
resolution is not a license to occupy or enter the premises subject of litigation especially in
cases involving real property. A "move in the premises" resolution simply means what is stated
therein: the parties are obliged to inform the Court of developments pertinent to the case which
may be of help to the Court in its immediate disposition.

WHEREFORE, the decision of the lower court insofar as it declares the validity of the two deeds
of sale and directs the partition of Lot 4685, is AFFIRMED. The lower court is hereby ordered to
facilitate with dispatch the preparation of a project of partition which it should thereafter approve.
This decision is immediately executory. No costs.

SO ORDERED.
G.R. No. L-38736 May 21, 1984

FELIPE G. TAC-AN, petitioner,

vs.
HONORABLE COURT OF APPEALS and ELEUTERIO ACOPIADO, MAXIMINO ACOPIADO,
the SPOUSES JESUS PAGHASIAN and PILAR LIBETARIO, respondents.

Liliano B. Neri for petitioner.

Vic T. Lacaya for private respondents.

ABAD SANTOS, J.:

The petitioner, Felipe G. Tac-An, is a lawyer whose services were engaged by the brothers
Eleuterio Acopiado and Maximino Acopiado who were accused of frustrated murder and theft of
large cattle before the Municipal Court of New Piñan, Zamboanga del Norte in March, 1960.

On April 4, 1960, Tac-An caused a document entitled, "Deed of Quitclaim" to be thumb-marked

by the Acopiado brothers whereby for the sum of P1,200.00 representing his fees as their
lawyer in the criminal cases, they conveyed to him a parcel of land with an area of three
hectares. The document was acknowledged before Notary Public Pacifico Cimafranca on the
same date who explained its contents to the Acopiados.

On April 6, 1960, or two days after the execution of the deed, the Acopiados told Tac-An that
they were terminating his services because their wives and parents did not agree that the land
be given to pay for his services. They also said that they had hired another lawyer, a relative, to
defend them. But Tac-An continued to represent them.

In the case for frustrated murder, the Acopiados were acquitted. The cases for theft of large
cattle were dismissed due to the desistance of the complainants.

On April 2, 1961, Eleuterio sold his share of the land previously conveyed to Tac-An to Jesus
Paghasian and Pilar Libetario but the latter did not take possession thereof.

In June, 1964, Tac-An appointed Irineo Villejo, a barrio captain, as his overseer in the land. On
July 2, 1964, Tac-An also secured the approval of the Provincial Governor of Zamboanga del
Norte to the Deed of Quitclaim. And on October 7, 1964, Tac-An filed a complaint against the
Acopiado brothers, Paghasian and Libetario in the CFI of Zamboanga del Norte. He prayed that
he be declared the owner of the land; that the sale made in favor of Paghasian and owner
Libetario be annulled; and that he be paid damages, attorney's fees, etc.

The Court of First Instance decided in favor of Tac-An whereupon the Acopiados, et al.
appealed to the Court of Appeals.

The Court of Appeals voided the transfer of the land to Tac-An but held that for his services in
the criminal cases he was entitled to the agreed upon amount of P1,200.00. The judgment of
the Court of Appeals reads as follows:

WHEREFORE, the judgment appealed from is hereby reversed and set aside. In
lieu thereof, another one is rendered ordering the defendants Acopiados to pay
the plaintiff the sum of P1,200.00 with interest at a legal rate from the date of the
finality of this judgment until full payment thereof. No pronouncement as to costs.
(Rollo, pp. 40-41.)

Petitioner Tac-An prays that the decision of the Court of Appeals be set aside and that the
decision of the Court of First Instance be upheld instead.

The petition is not impressed with merit.

The Court of Appeals found as a fact that the Acopiado brothers fully understood the tenor of
the Deed of Quitclaim which they executed. But the Court of Appeals also found as a fact that
the Acopiado brothers are Non-Christians, more specifically Subanons, and that each is married
to a Subanon. And because they are Non-Christians, the Court of Appeals applied Section 145
of the Administrative Code of Mindanao and Sulu which reads as follows:

Sec. 145. Contracts with Non-Christians requisites. -- Save and except contracts
of sale or barter of personal property and contracts of personal service
comprehended in chapter seventeen hereof no contract or agreement shall be
made in the Department by any person with any Moro or other non-Christian tribe
or portion thereof the Department or with any individual Moro or other non-
Christian inhabitants of the same for the payment or delivery of money or other
things of value in present or in prospective, or in the manner affecting or relating
to any real property, unless such contract or agreement be executed and
approved as follows:

xxx xxx xxx

(b) It shall be executed before a judge of a court of record, justice or auxilliary

justice of the peace, or notary public, and shall bear the approval of the provincial
governor wherein the same was executed or his representative duly authorized in
writing for such purpose, indorsed upon it.

It should be stated that under Section 146 of the same Code, contracts or agreements made in
violation of Sec. 145 shall be "null and void."

It should be recalled that on July 2, 1964, Tac-An secured the approval of the Provincial
Governor of Zamboanga del Norte to the Deed of Quitclaim and that should have satisfied the
requirement of Sec. 145 of the Administrative Code for Mindanao and Sulu. But it appears that
on April 12, 1965, while Tac-An's suit was pending in the trial court, the Governor of
Zamboanga del Norte revoked his approval for the reasons stated therein.

The petitioner now asserts that the revocation of the approval which had been given by the
Provincial Governor has no legal effect and cannot affect his right to the land which had already
vested. But as Justice Conrado M. Vasquez, with Justices Mateo Canonoy and Ameurfina M.
Herrera concurring, said:

The approval by Provincial Governor Felipe Azcuna appearing on the face of the
Deed of Quitclaim (Exh. "E ") made on July 2, 1964 may no longer be relied upon
by the plaintiff in view of the revocation thereof by the same official on April 12,
1965 (Exh. 4). The revocation was based on the ground that the signature of
Governor Azcuna was obtained thru a false representation to the effect that the
alleged transaction was legal and voluntary when in truth and in fact, as found
out later, the said parcel of land was the subject matter of a court litigation; and,
moreover, the non-Christian vendors were not brought before him for
interrogation, confirmation or ratification of the alleged deed of quitclaim. The fact
that the revocation was made after the filing of instant action on October 10,
1964 does not vitiate the aforesaid action of the Provincial Governor.
Significantly, no attempt was made to disprove the truth of the reasons stated in
the certificate of revocation (Exh. 4). (Rollo, p. 37.)

The petitioner also argues that the Administrative Code of Mindanao and Sulu was repealed on
June 19, 1965 by Republic Act No, 4252, hence the approval of the Provincial Governor
became unnecessary. Suffice it to say that at times material to the case, i.e. when the Deed of
Quitclaim was executed, when the approval by the Provincial Governor was given and when the
approval was revoked, Sections 145 and 146 of the Administrative Code of Mindanao and Sulu
were in full force and effect and since they were substantive in nature the repealing statute
cannot be given retroactive effect. It should also be stated that the land in question must be
presumed to be conjugal in nature and since the spouses of the Acopiado brothers did not
consent to its transfer to the petitioner, the transaction was at least voidable.
WHEREFORE finding the petition to be lacking in merit, the same is hereby dismissed with
costs against the petitioner.

SO ORDERED.
G.R. No. 72694 December 1, 1987

AURORA DEL BANCO, EVELYN DEL BANCO, FEDERICO TAINO, SOLEDAD TAINO,
JOVENCIO TAINO, SAMSON TAINO, NOE TAINO, SOCORRO TAINO and CLEOFAS
TAINO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT (Second Civil Cases Division), ALEJANDRA
PANSACOLA, LEONILA ENCALLADO, VEDASTO ENCALLADO, JOSE YEPES, et
al., respondents.

PARAS, J.:

This is a petition for review on certiorari by way of appeal from: (a) the decision of respondent
Court of Appeals (Intermediate Appellate Court) * promulgated on May 17, 1985 in AC-G.R. CV
No. 70460, entitled "Alejandra Pansacola, et al. vs. Domen Villabona del Banco, et al." which
reversed and set aside the judgment ** of the trial court; and (b) its resolution ** of October 15,
1985 in the same case, denying petitioners' motion for reconsideration of the aforementioned
decision and their supplement to motion for reconsideration.

The dispositive portion of the questioned decision (Rollo, p. 97) reads, as follows:

ACCORDINGLY, the decision appealed from is hereby SET ASIDE insofar as it

dismisses the complaint, and another one entered —

(1) Declaring plaintiffs-appellants and defendants-appellees, in their respective

capacities as described in par. V of the complaint, as co-owners of the property
in dispute, but subject to the four-part pro-indiviso division already made by said
property;

(2) Ordering the cancellation of all certificates of title that may have been issued
to any of the parties hereto; and

(3) Ordering the complete and final partition of the subject property in conformity
with law.

For this purpose, this case is hereby remanded to the Court of origin so that a
final partition shall be made in accordance with Sections 2, 3, et. seq., Rule 69 of
the Rules of Court.

Let a copy of this decision be furnished to the Register of Deeds for the Province
of Quezon.

The facts of the case are taken from the decision of the Appellate Court (Rollo, p. 39) as follows:

In a document executed in the Municipality of San Rafael, Bulacan, on February 11, 1859, three
brothers, Benedicto Pansacola, Jose Pansacola and Manuel Pansacola (known as Fr. Manuel
Pena) entered into an agreement which provided, among others:

(1) That they will purchase from the Spanish Government the lands comprising the Island of
Cagbalite which is located within the boundaries of the Municipality of Mauban, Province of
Tayabas (now Quezon) and has an approximate area of 1,600 hectares;

(2) That the lands shall be considered after the purchase as their common property;

(3) That the co-ownership includes Domingo Arce and Baldomera Angulo, minors at that time
represented by their father, Manuel Pansacola (Fr. Manuel Pena) who will contribute for them in
the proposed purchase of the Cagbalite Island;
(4) That whatever benefits may be derived from the Island shall be shared equally by the co-
owners in the following proportion: Benedicto Pansacola-1/4 share; Jose Pansacola-1/4 share;
and, Domingo Arce and Baldomera Angulo-2/4 shares which shall be placed under the care of
their father, Manuel Pansacola (Fr. Manuel Pena).

On August 14, 1866, co-owners entered into the actual possession and enjoyment of the Island
purchased by them from the Spanish Government. On April 11, 1868 they agreed to modify the
terms and conditions of the agreement entered into by them on February 11, 1859. The new
agreement provided for a new sharing and distribution of the lands, comprising the Island of
Cagbalite and whatever benefits may be derived therefrom, as follows:

(a) The first one-fourth (1/4) portion shall belong to Don Benedicto Pansacola;

(b) The second one-fourth (1/4) portion shall belong to Don Jose Pansacola;

(c) The third one-fourth(1/4) portion shall henceforth belong to the children of
their deceased brother, Don Eustaquio Pansacola, namely: Don Mariano
Pansacola,- Maria Pansacola and Don Hipolito Pansacola;

(d) The fourth and last one-fourth (1/4) portion shall belong to their nephews and
nieces (1) Domingo Arce, (2) Baldomera Angulo, (3) Marcelina
Flores, (4) Francisca Flores, (5) Candelaria dela Cruz, and (6) Gervasio
Pansacola who, being all minors, are still under the care of their brother, Manuel
Pansacola (Fr. Manuel Pena). The latter is the real father of said minors.

About one hundred years later, on November 18, 1968, private respondents brought a special
action for partition in the Court of First Instance of Quezon, under the provisions of Rule 69 of
the Rules of Court, including as parties the heirs and successors-in-interest of the co-owners of
the Cagbalite Island in the second contract of co-ownership dated April 11, 1968. In their
answer some of the defendants, petitioners herein, interposed such defenses as prescription,
res judicata, exclusive ownership, estoppel and laches.

After trial on the merits, the trial court rendered a decision *** dated November 6, 1981
dismissing the complaint, the dispositive portion of which reads as follows:

WHEREFORE, and in the fight of all the foregoing this Court finds and so holds
that the Cagbalite Island has already been partitioned into four (4) parts among
the original co-owners or their successors-in-interest.

Judgment is therefore rendered for the defendants against the plaintiffs

dismissing the complaint in the above entitled case.

Considering that the cross claims filed in the above entitled civil case are not
compulsory cross claims and in order that they may be litigated individually the
same are hereby dismissed without prejudice.

IT IS SO ORDERED.

The motion for reconsideration filed by the plaintiffs, private respondents herein, was denied by
the trial court in an order dated February 25, 1982 (Record on Appeal, p. 241).

On appeal, respondent Court reversed and set aside the decision of the lower court (Rollo, p.
117). It also denied the motion for reconsideration and the supplement to motion for
reconsideration filed by private respondents, in its resolution dated October 15, 1983 (Rollo, p.
86).

Instant petition was filed with the Court on December 5, 1985 (Rollo, p. 12). Petitioners Josefina
Pansacola, et al. having filed a separate petition (G.R. No. 72620) on the same subject matter
and issues raised in the instant 'petition, the counsel for private respondents filed a consolidated
comment on the separate petitions for review on February 24, 1986 with the First Division of the
Court (Rollo, p. 119). It appears that counsel for petitioners also filed a consolidated reply to the
consolidated comment of private respondents as required by the Second Division of the Court
(Rollo, p. 151). However, petitioners filed a separate reply in the instant case on February
18,1987 (Rollo, p. 168)as required by the Court in a Resolution of the Second Division dated
November 24, 1986 (Rollo, p. 160).

On May 19, 1987, private respondents in the instant petition filed a manifestation praying for the
denial of the instant petition in the same manner that G.R. No. 72620 was denied by the Court
in its Resolution dated July 23, 1986 (Rollo, p. 151). Their rejoinder to the reply of petitioners
was filed on May 25,1987 (Rollo, p. 179).

On June 8, 1987, the Court resolved to give due course to the petition (Rollo, p. 192). The
memorandum of private respondents was mailed on July 18, 1987 and received in the Court on
July 29, 1987 (Rollo, p. 112); the memorandum for petitioners was mailed on August 18, 1987
and received in the Court on September 7, 1987 (Rollo, p. 177).

The sole issue to be resolved by the Court is the question of whether or not Cagbalite Island is
still undivided property owned in common by the heirs and successors-in-interest of the
brothers, Benedicto, Jose and Manuel Pansacola.

The Pansacola brothers purchased the Island in 1859 as common property and agreed on how
they would share in the benefits to be derived from the Island. On April 11, 1868, they modified
the terms and conditions of the agreement so as to include in the co-ownership of the island the
children of their deceased brothers Eustaquio and the other children of Manuel Pansacola (Fr.
Manuel Pena) who were committed in the agreement of February 11, 1859. The new agreement
provided for a new sharing proportion and distribution of the Island among the co-owners.

On January 20, 1907, the representative of the heirs of all the original owners of Cagbalite
Island entered into an agreement to partition the Island, supplemented by another agreement
dated April 18, 1908. The contract dated January 20, 1907 provides as follows:

Sa Mauban, Tayabas, ika 20 ng Enero ng 1907 caming mga quinatawan ng mga

ibang co-herederos na hindi caharap, sa pulong na ito, sa nasa naming lahat na
magcaroon na ng catahimikan ang aming-aming cabahagui sa Pulong Kagbalete
sumacatuid upang mapagtoos ang hangahan ng apat na sapul na
pagcacabahagui nitong manang ito, pagcacausap na naming lahat at maihanay
at mapagtalonan ang saysay ng isa't isa, ay cusa naming pinagcasunduan at
pinasiya ang nangasosonod:—

Una: Ang malaquing calupaan, alis ang lahat na pacatan ay babahaguin

alinsunod sa pagcabaki na guinawa sa croquis na niyari ng practico agrimensor
Don Jose Garcia.

Icalawa: Ang Lomingoy, doon ang tuid na guhit sa ilong ng Pait ay pagaapatin
ding sinlaqui ayon sa dating pagkakabaki.

Icatlo: Cung magawa na ang tunay na piano at icapit na sa lupa, paglalagay ng

nadarapat na mojon, ang masacupan ng guhit, sumacatuid ang caingin at
pananim ng isa na nasacupan ng pucto na noocol sa iba, ay mapapasulit sa
dapat mag-ari, na pagbabayaran nito ang nagtanim sa halagang:- bawat
caponong niog na nabunga, P 1.00 'un peso); cung ang bias ay abot sa isang
vara, P 0.50; cung bagong tanim o locloc P 0. 50 ang capono.

Icapat: Ang lahat na pacatan ay bacod na pagaapatin at bawat bahagui ay

noocol sa isat-isa sa apat na sanga ng paganacang nagmana.

Icalima: Upang ang naipatanim ng bawat isa ay matama sa canya ng mailagan

ang hirap ng loob ng nagatikha; ay pagtotolong-tolongan ng lahat naiba na
mahusay ang dalawang partes na magcalapit na mapa ayong tumama, hangang
may pagluluaran, sa nagsikap at maoyanam, maidaco sa lugar na walang
cailangang pagusapan.
 Icanim: Ang casulatang ito, cung mapermahan na na magcacaharap sampong
ng mga ibang co-herederos na notipicahan nitong lahat na pinagcasundoan ay
mahahabilin sa camay ng agrimensor, Amadeo Pansacola, upang canyang
mapanusugan ang maipaganap ang dito'y naootos.

Na sa catunayan at catibayan ng lahat na nalalagda dito, sa pag galang at pag

ganap dito sa paingacaisahan ay pumirma sampo ng mga sacsing caharap at
catanto ngayong fecha ayon sa itaas.

The contract dated April 18, 1908 provides as follows:

Sa Mauban, ika 18 ng Abril ng 1908, sa pagcacatipon ng lahat na firmantes nito

ay pinagcaisahan itong nangasosonod:—

Una — Pinagtitibay ang mga pinagcasundoan sa itaas noong 20 ng Enero ng

1907, liban na lamang sa mga pangcat na una at icapat at tongcol doon pinasiya
naming bahaguinin ng halohalo at paparejo ang calupaan at pacatan.

Ycalawa — Sa pagsucat ng agrimensor na si Amadeo at paggawa ng piano at

descripcion ay pagbabayaran siya ng sa bawat isa naoocol sa halagang isang
piso sa bawat hectares.

Icatlo — Ang counting pucto sa 'Mayanibulong' na may caingin ni G. Isidro

Altamarino, asawa ni Restitute ay tutumbasan naman cay G. Norberto Pansacola
sa lugar ng Dapo calapit ng Pinangalo ng gasing sucat.

Icapat — Sa inilahad na piano ay pinasiya nang itoloy at upang maca

pagparehistro ang isa't isa ay pinagcaisahang magcacagastos na parepareho
para sa tablang pangmohon at ibat iba pang cagastusan.

Sa catunayan at catibayan ay cami, pumirma. (Record on Appeal, p. 224)

There is nothing in all four agreements that suggests that actual or physical partition of the
Island had really been made by either the original owners or their heirs or successors-in-
interest. The agreement entered into in 1859 simply provides for the sharing of whatever
benefits can be derived from the island. The agreement, in fact, states that the Island to be
purchased shall be considered as their common property. In the second agreement entered in
1868 the co-owners agreed not only on the sharing proportion of the benefits derived from the
Island but also on the distribution of the Island each of the brothers was allocated a 1/4 portion
of the Island with the children of the deceased brother, Eustaquio Pansacola allocated a 1/4
portion and the children of Manuel Pansacola (Fr. Manuel Pena) also allocated a 1/4 portion of
the Island. With the distribution agreed upon each of the co-owner is a co-owner of the whole,
and in this sense, over the whole he exercises the right of dominion, but he is at the same time
the sole owner of a portion, in the instant case, a 1/4 portion (for each group of co-owners) of
the Island which is truly abstract, because until physical division is effected such portion is
merely an Ideal share, not concretely determined (3 Manresa, Codigo Civil, 3rd Ed., page 486,
cited in Lopez vs. Cuaycong, 74 Phil. 601; De la Cruz vs. Cruz, 32 SCRA 307 [1970]; Felices
vs. Colegado, 35 SCRA 173 [1970],; Dultra vs. CFl 70 SCRA 465 [1976]; Gatchalian vs. Arlegui,
75 SCRA 234 [1977].)

In the agreement of January 20, 1907, the heirs that were represented agreed on how the
Island was to be partitioned. The agreement of April 18, 1908 which supplements that of
January 20, 1907 reveals that as of the signing of the 1908 agreement no actual partition of the
Island had as yet been done. The second and fourth paragraphs of the agreement speaks of a
survey yet to be conducted by a certain Amadeo and a plan and description yet to be made.
Virgilio Pansacola, a son of the surveyor named Amadeo who is referred to in the contract dated
April 18, 1908 as the surveyor to whom the task of surveying Cagbalite Island pursuant to said
agreement was entrusted, however, testified that said contracts were never implemented
because nobody defrayed the expenses for surveying the same (Record on Appeal, p. 225).
Petitioners invoke res judicata to bar this action for partition in view of the decision of the Court
in G.R. No. 21033, "Domingo Arce vs. Maria Villabona, et al.," 21034, "Domingo Arce vs.
Francisco Pansacola, et al.," and 21035, "Domingo Arce vs. Emiliano Pansacola, et
al." promulgated on February 20, 1958 (Rollo, p. 141) and Brief for Defendants-Appellees, p. 87
Appendix 1), wherein the Court said:

Considering the facts that he waited for a period of nearly 23 years after the
return from his deportation before taking any positive action to recover his
pretended right in the property in question, gives great credit, in our opinion, to
the declaration of the witnesses for the defense (a) that the original parcel of land
was partitioned as they claim, and (b) that the plaintiff had disposed of all the
right and interest which he had in the portion which had been given to him.

The issue in the aforementioned case which were tried together is not whether there has
already been a partition of the Cagbalite Island. The actions were brought by the plaintiff to
recover possession of three distinct parcels of land, together with damages. In fact the word
partition was used in the metaphysical or Ideal sense (not in its physical sense).

Commenting on the above ruling of the Court in connection with the instant case, the
respondent Court said:

Concededly, the Supreme Court decision in G.R. Nos. 21033-35 (Exh. X) did use
or employ the word "partition." A careful reading of the said decision will,
however, reveal, and we so hold, that the employment or use of the word
"partition" therein was made not in its technical and legal meaning or sense
adverted to above, but, rather in its Ideal, abstract and spiritual sense, this is (at)
once evident from the bare statement in said decision to the effect that the
property was divided into four parts, without any reference to the specific parts of
the property that may have been adjudicated to each owner. There being no
such reference in the decision and in the judgment affirmed therein to the
adjudication of specific and definite portions of the property to each co-owner,
there is a clear and logical inference that there was indeed no adjudication of
specific and definite portions of the property made to each co-owner.

It must be admitted that the word "partition" is not infrequently used both in popular and
technical parlance (Fule vs. Fule, 52 Phil. 750 [1929]). For purposes of the aforementioned
case, evidently the Court used the word "partition" to refer to the distribution of the Cagbalite
Island agreed upon by the original owners and in the later agreements, by the heirs and their
subsequent successors-in-interest. There need not be a physical partition; a distribution of the
Island even in a state of indiviso or was sufficient in order that a co-owner may validly sell his
portion of the co-owned property. The sale of part of a particular lot thus co-owned by one co-
owner was within his right pro-indivisois valid in its entirety (Pamplona vs. Moreto, 96 SCRA 775
[1980]) but he may not convey a physical portion with boundaries of the land owned in common
(Mercado vs. Liwanag, 5 SCRA 472 [1962]). Definitely, there was no physical partition of the
Island in 1859. Neither could there have been one in 1894 because the manner of subdividing
the Island was only provided for in the later agreements entered into by the heirs in 1907 and
1908. There was a distribution of the Island in 1868 as agreed upon by the original co-owners in
their agreement of April 11, 1868. Any agreement entered into by the parties in 1894 could be
no more than another agreement as to the distribution of the Island among the heirs of the
original co-owners and the preparation of a tentative plan by a practical surveyor, a Mr. Jose
Garcia, mentioned in the first paragraph of the 1907 agreement, preparatory to the preparation
of the real plan to be prepared by the surveyor Amadeo, mentioned in the agreement of April
18, 1908.

What is important in the Court's ruling in the three aforementioned cases is that, the fact that
there was a distribution of the Island among the co-owners made the sale of Domingo Arce of
the portion allocated to him though pro-indiviso, valid. He thus disposed of all his rights and
interests in the portion given to him.

It is not disputed that some of the private respondents and some of the petitioners at the time
the action for partition was filed in the trial court have been in actual possession and enjoyment
of several portions of the property in question (Rollo, p. 148). This does not provide any proof
that the Island in question has already been actually partitioned and co-ownership terminated. A
co-owner cannot, without the conformity of the other co-owners or a judicial decree of partition
issued pursuant to the provision of Rule 69 of the Rules of Court (Rule 71 of the Old Rules),
adjudicate to himself in fee simple a determinate portion of the lot owned in common, as his
share therein, to the exclusion of other co-owners (Santos, Jr. vs. Buenconsejo, 14 SCRA 407
[1965]; Carvajal vs. Court of Appeals, 112 SCRA 237 [1982]). It is a basic principle in the law of
co-ownership both under the present Civil Code as in the Code of 1889 that no individual co-
owner can claim any definite portion thereof (Diversified Credit Corporation vs. Rosada 26
SCRA 470 [1968]). lt is therefore of no moment that some of the co-owners have succeeded in
securing cadastral titles in their names to some portions of the Island occupied by them (Rollo,
p. 10).

It is not enough that the co-owners agree to subdivide the property. They must have a
subdivision plan drawn in accordance with which they take actual and exclusive possession of
their respective portions in the plan and titles issued to each of them accordingly (Caro vs. Court
of Appeals, 113 SCRA 10 [1982]). The mechanics of actual partition should follow the procedure
laid down in Rule 69 of the Rules of Court. Maganon vs. Montejo, 146 SCRA 282 [1986]).

Neither can such actual possession and enjoyment of some portions of the Island by some of
the petitioners herein be considered a repudiation of the co-ownership. It is undisputed that the
Cagbalite Island was purchased by the original co-owners as a common property and it has not
been proven that the Island had been partitioned among them or among their heirs. While there
is co-ownership, a co-owner's possession of his share is co-possession which is linked to the
possession of the other co-owners (Gatchalian vs. Arlegui, 75 SCRA 234 [1977]).

Furthermore, no prescription shall run in favor of a co-owner against his co-owners or co-heirs
so long as he expressly or impliedly recognizes the co-ownership (Valdez vs. Olonga, 51 SCRA
71 [1973], Tero vs. Tero, 131 SCRA 100 [1984]). Co-owners cannot acquire by prescription the
share of the other co-owners, absent a clear repudiation of the co-ownership clearly
communicated to the other co-owners (Mariano vs. De Vega, 148 SCRA 342 [1987]).

An action for partition does not prescribe. Article 403 of the Old Civil Code, now Article 497,
provides that the assignees of the co-owners may take part in the partition of the common
property, and Article 400 of the Old Code, now Article 494 provides that each co-owner may
demand at any time the partition of the common property, a provision which implies that the
action to demand partition is imprescriptible or cannot be barred by laches (Budlong vs. Pondoc,
79 SCRA 24 [1977]). An action for partition does not lie except when the co-ownership is
properly repudiated by the co- owner (Jardin vs. Hollasco, 117 SCRA 532 [1982]).

On July 23, 1986, the Court through its Second Division denied the petition for the review of
G.R. No. 72620, the petition for review on certiorari separately filed by Josefina Pansacola
(Rollo, p. 151).

PREMISES CONSIDERED, the instant petition is likewise DENIED for lack of merit.

SO ORDERED.
G.R. No. L-9989 March 13, 1918

EDUARDO CUAYCONG, ET AL., plaintiffs-appellees,

vs.
RAMONA BENEDICTO, ET AL., defendants-appellants.

Ruperto Montinola and Aurelio Montinola for appellants.

No appearance for appellees.

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 Dacuman — 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 Seravia, and that the appellees Silverio Ginoo, Gervasio Ascalon, and Juan
Ledesma, are the lessees of part of said haciendas; that 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 continiously, 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 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 embarkation, 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 impending 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 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 'Toreno' 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 on 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 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 in conclusion upon the fact,
which he deems to have been proven, that the road has been in existence "from time
immemorial," and had been "continiously 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 Seravia, 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, Alcaigan, 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 away." (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 used 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 establishing the 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.

It is true in the opening statement made to the court, counsel for plaintiffs, who was not the
same attorney by whom the complaint was signed, stated that plaintiffs contend that the road in
question is public, but as no evidence was introduced tending to establish this contention
concerning the Nanca — Victorias road, counsel for defendants had no occasion to object upon
the ground that such testimony was not relevant to the averments of the complaint. No evidence
was taken to indicate that at any time since the road in question has been in existence any part
of the expense of its upkeep has been defrayed by the general government, the province, or the
municipality. The trial judge said upon this subject:

It is true that whatever repairs were made on the road were made irregularly. The
municipality of Victorias had no funds to devote to the construction and repair of roads,
and the upkeep of the road depending entirely therefore on the initiative of the persons
who used it, was attended to only at such times as repairs were absolutely necessary.
(Bill of Exceptions, p. 49.)

The court also held that it appears from the government grant issued in 1885 to the original
owner of the hacienda adjacent to the Hacienda Toreno on its western boundary, that the
Nanca-Victorias road at that time separated that estate from the Jalbuena Hacienda, and that
these facts constitute "circumstantial evidence that the road was in existence in 1885." We have
examined the document to which the court refers, and we agree that the road in question
existed in 1885; but we do not believe that the document in question proves that the road
was public highway.

Another circumstance established by the evidence, and which is some importance in the
determination of this issue, is that although the defendants closed the Nanca-Victorias road in
the month of February, 1911, and since that time have collected toll from persons passing over
it with carts loaded with sugar, including those belonging to several of the plaintiffs, nothing was
done by them to prevent the continuation of this restriction until December, 1912, when this
action was commenced. It is natural to assume that if plaintiffs had considered that the road in
question was public, they would have protested immediately against the action of the
defendants, and would have either commenced a civil action, as they subsequently did, or
would have brought about a prosecution under section 16 of Act No. 1511.

Upon the evidence taken and admissions contained in the pleadings and those made during the
course of the trial we consider that the following findings are warranted:
1. The town of Victorias has always been the shipping point of the products of the Hacienda
Toreno, and of the haciendas of appellees, as well as the place from which supplies were
brought to those properties.

2. For thirty or forty years before the commencement of the suit a wagon road, herein called the
Nanca-Victorias road, has been in existence, connecting the haciendas of appellees with the
town of Victorias, and this road traverses the property of defendants. Since the removal of the
town of Victorias to a new site the Nanca-Victorias road has been used by appellees in
travelling between their properties and the provincial road which crosses the Hacienda Toreno
from east to west.

3. No public funds have at any time been expended on the construction or upkeep of the Nanca-
Victorias road, but from time to time work has been done on it by the laborers employed by the
present and former owners of the Hacienda Toreno and the haciendas owned by the appellees
and their predecessors in title.

4. The Nanca-Victorias wagon road, including that part of it which crosses the Hacienda Toreno,
has for thirty-five or forty years been used by the appellees and their predecessors in title for the
transportation, by the usual means, of the products of their estates to their shipping points in or
near the town of Victorias, and the transportation to their estates of all supplies required by
them, and has been used by all persons having occasion to travel to and from all or any of the
estates now owned by the appellees.

5. The use of the Nanca-Victorias road in the manner and by the person above mentioned was
permitted without objection by the owners of the Hacienda Toreno until the year 1911, when
they closed it, and began charging a toll of 5 centavos for each cart which passed over the road,
including carts belonging to the appellants, until restrained from continuing to do so by the
preliminary injunction granted in this case.

6. The Nanca-Victorias road constitutes the only outlet from the estates of appellants to the
nearest public road which is the provincial road which crosses the Hacienda Toreno from east to
west.

Upon these facts the questions of law to be decided are:

(a) Is the Nanca-Victorias road a public highway?

(b) If the Nanca-Victoria road, or that part of it which crosses the Hacienda Toreno, is 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 case of
Fabie vs. Lichauco and the children of Francisco L. Roxas (11 Phil. Rep., 14):

It is settled 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 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 to 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 Decree and the Regulations for its enforcement (Berriz, vol. 11, 258) the
greater part of the work on the public road 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. note, 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 pure 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 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 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 of 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 the 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 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 ere 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 supreme court of Spain has decided that under the
law in force before the enactment of the Civil Code, the easement of way was discontinous, and
that while such an easement might be acquired by prescription, it must be used in good faith, in
the belief of the existence of the right, and such user must have been continuous from time
immemorial. (Judgment of December 15, 1882.) In the appealed decision the court below says
that the plaintiffs and their predecessors made use of the road in question "from time
immemorial," but there is no evidence whatever in the record to sup[port this finding, although it
is true that the evidence shows the existence of the road and its use by the plaintiffs and their
predecessors for thirty-five or forty years. Speaking of the evidence required under the present
Code of Civil Procedure to show immemorial use of an easement, this court said in the case of
Ayal de Roxas vs. Case (8 Phil. Rep., 197, 198):

Third Partida in title 31, law 15 . . . says that discontinues servitudes . . . must be proved
by usage or a term so long that men can not remember its commencement. . . . In many
judgments the supreme court of Spain has refused to accept proof of any definite
number of years as a satisfaction of this requirement of the law. . . . We are of the
opinion that in order to establish a right of prescription [title of prescription based upon
use from time immemorial] something more required than memory of living witnesses.
Whether this something should be the declaration of persons long dead, repeated by
those who testify, as exacted by the Spanish law, or should be the common reputation of
ownership recognized by the Code of Procedure, it is unnecessary for us to decide. On
either theory the appellant has failed in his proof . . . .

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
required 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
rights in real estate is fixed by the Code (sec. 41) at ten years. The evidence shows that in
February, 1911, before the expiration of the term of ten years since the time the Code of Civil
Procedure took effect, the defendants interrupted the use of the road by the plaintiffs by
constructing and maintaining a toll gate on it and collecting toll from persons making use of it
with carts and continued to do so until they were enjoined by the granting of the preliminary
injunction by the trial court in December, 1912. Our conclusion is, therefore, that the plaintiffs
have not acquired by prescription a right to an easement of way over the defendant's property;
that their use of the Nanca-Victorias road across the Hacienda Toreno was due merely to the
tacit license and tolerance of the defendants and their predecessors in title; that license was
essentially revokable; and that, therefore, the defendants were within their rights when they
closed the road in 1911.

While in the allegations from the plaintiffs' complaint it might be inferred that it was their purpose
to seek to impose upon the defendants the easement to which arts. 564 et seq. of the Civil
Code relate, that purpose was evidently abandoned, and the case was tried upon a wholly
different theory. Proof was offered to show that the right of passage across defendants' land is
necessary to enable plaintiffs to get their products to market, but there was no offer on their part
to pay defendants the indemnity required by section 564.

For the reasons stated the judgment of the court below is reversed, the injunction issued against
defendants is allowed on this appeal. So ordered.

Arellano, C.J., Torres, Araullo, Street, Malcolm, and Avanceña, JJ., concur.

Separate Opinions

JOHNSON, J., concur.

Judgment reversed; injunction dissolved, and action dismissed.

G.R. No. 108558 June 21, 2001

ANDREA TABUSO and RENATO BISMORTE, petitioners,

vs.
COURT OF APPEALS and the HEIRS OF ESTEBAN ABAD represented by Nemesio Abad
and Ana Abad Paghubasan, respondents.

PANGANIBAN, J.:

It is settled that great weight, and even finality, is accorded to the factual conclusions of the
Court of Appeals which affirm those of the trial courts. Only when it is clearly shown that such
findings are whimsical, capricious, and arbitrary can they be overturned.

Statement of the Case

Before us is an appeal under Rule 45 of the Rules of Court, assailing the July 29, 1992
Decision 1 of the Court of Appeals 2 (CA) in CA-GR CV No. 26047 and its January 14,
1993 Resolution 3 denying reconsideration. The CA affirmed in toto the Decision of the
Regional Trial Court, which had found abundant proof of appellees' ownership of the
land, as opposed to the scanty evidence offered by appellants. The dispositive portion of
the assailed Decision reads as follows:

"WHEREFORE, [there being] no reversible error in the decision appealed from[,] the
same is hereby affirmed in toto. Costs against appellants." 4

The Facts

The undisputed facts of the case are summarized by the Court of Appeals as follows:

"This case involves declaration of ownership filed before the Regional Trial Court of
Naval, Leyte, [in] Biliran, Leyte, of an unregistered parcel of land at Antipolo, Naval,
Leyte with an area of 3,267 square meters.

"The plaintiffs' evidence consists of the following:

"a) A tax declaration No. 3705 (Exh. A) in the name of Ignacio Montes for the
year 1912. However, the land taxes thereon for the years 1944 to 1947 were paid
only in 1981 (Exh. F and series).

"b) Plaintiff Andrea Tabuso claims to be the owner as successor in interest

(granddaughter) of one Andrea Elaba, daughter of Maria Montes and Borja
Elaba, Maria Montes appears to be a sister of Ignacio Montes, in whose name
the tax declaration for the property in question was issued for the year 1912
(Exh. A).

"c) The property in question has been in the possession of the defendants (heirs
of Esteban Abad), although the house standing thereon appears to have been
constructed by Marcelo Tabuso, father of plaintiff Andrea Tabuso.

"On the other hand, evidence for the defendants tends to establish the following:

"a) The land in question originally owned by Maria Montes was donated to Isabel
Elaba through an ancient document executed on September 24, 1923 (Exh. F).
Isabel in turn sold the land to Esteban Abad on May 5, 1948 (Exh. 4).

"b) The original tax declaration in the name of Ignacio Montes (Exh. A) was
superseded by Tax Declaration Nos. 6422 and 1450 both in the name of Isabel
Elaba (Exh. 6-D; 6-E)[;] Declaration No. 1450 for the year 1948 was superseded
by Tax Declaration No. 6959 for 1960 (Exh. 6-C) in the name of Esteban Abad;
and the latter was superseded in 1969 by Tax Declaration No. 1661 (Exh. 6-B) in
 the name of Esteban Abad. In 1974 a new tax declaration No. 19 (Exh. 6-A) was
issued in the name of Esteban Abad with Nemesio Abad and his co-heirs as
administrators. The last tax declaration No. 22 (Exh. 6) for 1982 was in the name
of Esteban Abad. The land taxes due thereon for the years 1947 to 1982 were
paid by Isabel Elaba[,] Esteban Abad and Nemesio Abad (Exhs. 7 to 7-W).

"c) The land in question is tenanted by one Valentin Poblete in accordance with a
lease contract executed by defendant Nemesio [Abad], one of the heirs and co-
owners of the land.

"On the basis of the foregoing evidence, the court dismissed the complaint and declared
the defendant the lawful owners of the land in question." 5

The trial court 6 concluded that there was abundant proof of private respondents' ownership of
the lot in question as against the scanty evidence offered by petitioners. And even if the latter
had built a house thereon, such action was only tolerated by private respondents, who had
originally allowed one Marcelo Tabuso (father of Petitioner Andrea Tabuso), to construct a
house on the same lot. Besides, Petitioner Tabuso is not a compulsory heir of Ignacio Montes,
from whom she claims to have inherited the lot, subject of this litigation. In addition, the tax
declaration in his name has long been revised.

The trial court likewise gave credit to the testimony of Atty. Jose Gonzales, private respondents'
counsel who had been presented by petitioners as their own witness. He testified that the land
in question, which was adjacent to the land he himself possessed, had been in the possession
of Esteban Abad's heirs, herein private respondents. The trial court also took note of the various
tax declarations covering the property, indicating that it was owned by private respondents.

Ruling of the Court of Appeals

The Court of Appeals upheld the findings of the trial court. It ruled as follows:

"The only issue presented to [u]s for resolution is the question of ownership. After a
careful review of the records, [w]e agree with the trial court that the preponderance of
evidence supports the claim of ownership of defendants-appellees.

"As regards the first assigned error, [the] trial court cannot be faulted for giving weight to
the testimony of Atty. Jose Gonzales. He testified that the land in question had been in
he possession of appellees; that he personally [knew] this as he own[ed] the land
adjacent to the land in question at the northern point; that he inherited said land from his
late father; and that he frequently visit[ed] his land and passe[d] by the land in question.
Thus, he testified of his own personal knowledge regarding the fact of possession.
Moreover, Atty. Gonzales, although a counsel for appellees, was presented by
appellants ad their own witness; hence, they are bound by his testimony.

"As to the validity of the document of donation executed by appellants' predecessor in

interest, Maria Montes in 1923, or more than sixty (60) years ago, it is too late in the day
to raise the question of the validity of said document. Appellants are barred by laches to
raise the same. Moreover, the issue is being raised for the first time on appeal, which is
not allowed.

"It also appears that since 1923 to the present, or for more than 60 years, appellees
have been able to establish by the tax declarations in their name and that of their
predecessors in interest that they have been in open, continuous, uninterrupted and
adverse possession of the land in question.

"x x x xxx xxx

"Finally, the area of the land appears to be immaterial. Whether it is only 3,267 square
meters as contained in the tax declaration, or 11,927 square meters, as found by the
court-appointed commissioner, the important thing to consider is that appellants have
 not substantiated their claim by a preponderance of evidence adverse to the claim of
ownership and possession of appellees." 7

Issues

In their Memorandum,8 petitioners raise the following issues:

"I

The findings and conclusion of the Honorable Court of Appeals that private respondents
are in possession and owners of the land in dispute are contradicted by the evidence on
record.

"II

The Honorable Court of Appeals committed grave abuse of discretion amounting to lack
of jurisdiction when it upheld the validity of the Deed of Donation dated September 23,
1923 which is [a] spurious document as it was executed by Maria Montes who was
already dead as early as 1919.

"III

The Honorable Court of Appeals gravely erred in holding private respondents as owners
of the land notwithstanding the undisputed fact that they (private respondents) admitted
the facts set forth by appellants[,] now petitioners in their appellants brief[,] as the former
(private respondents[)] did not file their appellees brief[.]

"IV

The Order of the respondent Court of Appeals to deliver the entire 11,927 sq. meters to
private respondent is illegal and unsupported by evidence.

"V

The Court of Appeals gravely erred in concluding that private respondents are the
owners of the land merely on the basis of their tax declarations without evidence of
actual physical possession." 9

In sum, the main issue that needs to be resolved in the case at bar is the ownership of the land
in question. The other issues presented by petitioners are merely ancillary and will be discussed
in conjunction with this main issue.

The Court's Ruling</P>

The Petition is devoid of merit.10

Main Issue:
Ownership of the Property

After a careful examination of the issues involved, the evidence adduced, and the arguments or
issues raised by both parties, this Court rules that the totality of the evidence presented leans
heavily in favor of herein private respondents.

"It is settled that great weight, and even finality, is given to the factual conclusions of the Court
of Appeals which affirm those of the trial courts. Only where it is shown that such findings are
whimsical, capricious, and arbitrary can they be overturned." 11

We agree with the findings of the Court of Appeals that for a period of more than 60 years,
private respondents have been able to establish that they are the owners of the lot; and that for
said period, they have been in open, continuous and uninterrupted possession of the same.
Both the trial and the appellate courts were likewise correct in giving weight to the testimony of
Atty. Jose Gonzales. He testified that being, the owner of the adjacent land, he had personal
knowledge of the simple fact that the land in question was owned by private respondents, who
were in actual, open and continuous possession thereof. Significantly, while he was private
respondents' counsel, he was presented by petitioners themselves. Having done so, they are
bound by his testimony, even if it is hostile.

The only substantial argument of petitioners supporting their claim of ownership is their
construction of a small house (barong-barong) on the property, as acknowledged in private
respondents' letter, which reads:

"Notice to Vacate

Naval, Leyte
September 24, 1981

To: Mr. & Mrs. Renato Bismorte

Barangay Calumpang
Naval, Leyte

Greetings:

You are advised to vacate the area/lot where your 'Barong-Barong House' [was]
temporarily constructed for we, the lawful owners, shall have to use it. You are given
three (3) months grace period upon receipt thereof within which to transfer or completely
vacate the area/lot.

[Should there be f]ailure to comply [with] this notice or advise [,] an ejectment proceeding
shall be instituted or filed against you before the proper court. Hence, compliance is
hereby desired.

(Signed) Mr. NEMESIO E. ABAD

Co-Owner

(Signed) ANA A. PAGHUBASAN

Co-Owner

(Signed) NESTORA DELA CUALA" 12

Obviously, the claim of private respondents that they are the owners of the land is supported by
the above letter, in which they were asking petitioners to vacate the property. Moreover,
considering its size, which is 11,927 square meters as found by the court-appointed
commissioner, the fact that petitioners' house is only a barong-barong or make-shift shanty
lends support to private respondents' claim that the former's presence on the property was
merely tolerated.

It must be stressed "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. Ownership confers certain rights to the
owner, one of which is the right to dispose of the thing by way of sale. xxx. On the other hand,
possession is defined as the holding of a thing or the enjoyment of a right. Literally, to possess
means to actually and physically occupy a thing with or without right. Possession may be had in
one of two ways: possession in the concept of an owner and possession of a holder.
Possessors in the concept of owners may be the owners themselves or those who claim to be
so. On the other hand, those who possess as mere holders acknowledge in another a superior
right which he believes to be ownership, whether his belief be right or wrong." 13
In this case, the evidence shows that the occupation of the property by petitioners is not in the
concept of owners, because their stay is merely tolerated. This finding is bolstered by the fact
that Petitioner Andrea Tabuso is the daughter of Marcelo Tabuso, who was merely allowed by
the previous owner, Esteban Abad, to construct a small house on the lot. As held in Caniza v.
Court of Appeals, 14 "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." 15

Lastly, the claim of petitioners that private respondents are not in actual possession of the land
is unsubstantiated. Besides, it is not necessary that the latter actually stay on the property in
order to prove ownership of the same. As found by both the trial and the appellate courts, since
the acquisition of the subject property by private respondents, they had religiously paid the
taxes due thereon. Further, one of the co-owners executed a lease contract over it in favor of a
tenant. These acts are clearly consistent with ownership.

Deed of Donation Not Proven to Be Invalid

Petitioners point out that the Deed of Donation executed by Maria Montes to Isabel Elaba, who
in turn sold the lot to private respondents, is spurious since the Deed was executed on
September 23, 1923; whereas the death certificate issued by the Holy Rosary Cathedral Parish
of Naval, Leyte, shows that Maria Montes was buried on February 21, 1919.

However, the Court of Appeals was correct in stating that petitioners were barred by laches from
questioning the validity of the Deed. "Laches has been defined as the failure or neglect, for an
unreasonable and unexplained length of time, to do that which by exercising due diligence could
or should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting [the] presumption that the party entitled to it either has abandoned
it or declined to assert it." 16 It is too late for private respondents to raise this issue now,
considering that the Deed of Donation was executed more than 60 years ago. Moreover, they
are precluded from raising this argument, because it is being raised for the first time on
appeal. 17

In addition, private respondents have not proven that the Maria Montes mentioned in the Death
Certificate is the same Maria Montes who executed the Deed of Donation. The two have been
shown to have different sets of parents, thus raising serious doubts on the identity of the person
mentioned in the Death Certificate. Lastly, the Death Certificate was not marked in evidence,
nor was it subjected to cross-examination. It is thus inadmissible in evidence.

Size of Lot Immaterial To Private Respondents' Claim of Ownership

Lastly, petitioners argue that private respondents own only 3,267 square meters of the
questioned lot. This is the area that appears on their Tax Declarations. On the other hand, the
entire lot that was adjudicated measures 11,927 square meters. Petitioners' contention
deserves scant consideration, because they have not substantiated, by any means whatsoever,
their claim to any part of the disputed land. Hence, they are not entitled to ownership thereof.
Besides, what defines a piece of land is not the numerical data indicated as its area, but the
boundaries or "metes and bounds" specified in its description as enclosing the land and
indicating its limits. 18

WHEREFORE, the petition is hereby DISMISSED and the assailed Decision and Resolution
AFFIRMED. Costs against petitioners.

SO ORDERED.
G.R. No. 112519 November 14, 1996

CATHOLIC BISHOP OF BALANGA, respresented by CRISPULO TORRICO, petitioner,

vs.
THE HON. COURT OF APPEALS and AMANDO DE LEON, respondents.

HERMOSISIMA, JR., J.:

It is the cardinal principle in Land Registration that a torrens title is indefeasible and
inprescriptible. Considering that private respondent in this case, by himself and through
his predecessor-in-interest, had been in uninterrupted, open and adverse possession of
a portion of the land covered by said title for 49 years, by virtue of a duly accepted
donation, although unregistered, will private respondent, under this circumstance, prevail
over the titled owner?

Thus, we have before us this petition for review of a decision1 of the Court of
Appeals2 reversing the Regional Trial Court (RTC)3 which rendered judgment4 in favor of
petitioner and ordered private respondent to vacate the subject property and surrender
possession thereof to petitioner and to pay rent from the finality of the RTC judgment
until the said property is actually vacated.

We quote, as the herein parties have done so in their pleadings, the following narration
of facts rendered by the respondent appellate court:

The parties do not dispute that the Roman Catholic Archbishop [sic] of Manila
was the owner of a parcel of land (Lot No. 1272, Balanga Cadastre) situated in
the Barrio of Puerto Rivas, Municipality of Balanga, Bataan, having an area of
3,368 sq. m., more or less covered by OCT No. 14379 of de Registry of Deeds
for the province of Bataan. With respect to its rights over its properties in Bataan
(inclusive of Lot No. 1272), the said church was succeeded by the Roman
Catholic Bishop of San Fernando, Pampanga which was, likewise, succeeded by
. . . Catholic Bishop of Balanga — registered as a corporation on 15 December
1975.

Prior thereto, or on 23 August 1936, by virtue of the authority given him by the
Roman Catholic Archbishop of Manila to donate a portion of Lot No. 1272, the
then parish priest and administrator of all the properties of the said church in the
Municipality of Balanga Bataan, Rev. Fr. Mariano Sarili, executed an Escritura
De Donacion donating an area of 12.40 meters by 21.40 meters or 265.36 sq. m
(the subject property) of Lot No. 1272 to Ana de los Reyes and her heirs, as a
reward for her long and satisfactory service to the church. Her acceptance of the
donation, as well as her possession of the subject property, is indicated in the
deed of donation, which deed, for unknown reasons, was refused registration by
the Register of Deeds. Six (6) years later, or in 1939, Ana de los Reyes died
without issue.

Nevertheless, before her death, she had given the subject property to her
nephew who had been living with her, the herein defendant-appellant [private
respondent]. The latter immediately took possession of the property in the
concept of owner, built his house thereon and, through the years, declared the
land for taxation purposes as well as paid the taxes due thereon.

His possession of the subject property was never disturbed by anybody until
plaintiff-appellee [petitioner] filed the instant complaint against him on 5
November 1985, or more than 49 years after the deed of donation was executed,
alleging, among others, that: (1) during the Japanese occupation of the country,
defendant-appellant [private respondent], without the knowledge and prior
consent of the plaintiff-appellee [petitioner], and its predecessors-in-interest,
entered and occupied the subject property, and (2) despite requests by plaintiff-
 appellee [petitioner], defendant-appellant [private respondent] refused to vacate
the property in question. In support of the above contention, Crispulo Torrico, the
sole witness and authorized representative of plaintiff-appellee [petitioner]
testified, among others, that: the subject property is situated at the corner of Lot
No. 1272, and defendant-appellant [private respondent] has, on the strength of
the deed of donation, publicly claimed ownership and occupied the same as early
as before the 2nd World War and has built his store thereon.

As his defense, defendant-appellant [private respondent] maintains that by virtue

of the deed of donation of 23 August 1936 executed in favor of his predecessor-
in-interest, he is the lawful owner of the subject property and the complaint states
no cause of action as it was filed only to harass him.

xxx xxx xxx

On 27 and 30 October 1986, 10 months after he filed his answer on 10

December 1985 and almost 3 months after plaintiff-appellee [petitioner] rested its
case . . . defendant-appellant [private respondent] filed his motions [sic] to
dismiss the complaint on the ground that . . . the instant action is barred by the
statute of limitations. Plaintiff-appellee [petitioner] filed on 3 November 1986 its
opposition to the motion alleging that the defense of prescription was not raised
in a timely filed motion to dismiss, and as an affirmative defense in the answer . .
.

On 13 November 1989 the lower court rendered the judgment . . . It opined that,
since: (1) defendant-appellant [private respondent] failed to present the
necessary power of attorney executed by the Roman Catholic Archbishop of
Manila giving Rev. Fr. Mariano Sarili the authority to execute the deed of
donation; (2) the first 2 paragraphs of the Excritura de Donacion indicates that
the parish priest . . . was only the administrator of all, hence, had no authority to
dispose in whatever manner any of the properties of the Roman Catholic Church
of Balanga, Bataan; (3) the parish priest was not a corporation sole and
registered owner of Lot No. 1272; and, (4) he did not, in his own behalf or that of
the Roman Catholic Archbishop of Manila, secure any prior leave of court to
donate a portion of Lot No. 1272 in consonance with Sec. 159 of the old
Corporation
Code . . . Rev. Fr. Mariano Sarili was not authorized to, and could not validly,
donate the subject lot. Thus, the deed of donation he executed is unenforceable
under Art. 1403 of the New Civil Code and defendant-appellant [private
respondent], as well as his predecessor-in-interest, never acquired ownership
over the subject property.5

The court a quo having rendered judgment against private respondent, the latter lost no
time in bringing the case to the respondent Court of Appeals for review.

In his appeal, defendant-appellant [private respondent] contend[ed] that the lower

court erred in not ruling on the issue of prescription which he raised in his
amended answer and motion to dismiss. The thrust of his argument [was] that,
since the instant case [was] basically and fundamentally a suit for the recovery of
possession of a real property and the complaint was filed . . . more than 49 years
after the deed of donation was executed . . . the instant action should have been
dismissed on the ground of prescription . . .6

Respondent court is in agreement with private respondent's insistence that the defense
of prescription is not deemed waived when prescription is apparent from the allegations
in the complaint, citing this court's ruling in the cases of Gicano vs. Gegato,7 Garcia
vs. Mathis,8 and PNB vs. Pacific Commission House.9 But respondent court also stated
that private respondent could not have acquired ownership over the subject property
through acquisitive prescription because the same having been duly registered under
the Torrens system, title thereto was indefeasible.
Nonetheless, respondent Court of Appeals ultimately ruled that under the doctrine of
laches, the consequence of petitioner's inaction for 49 years since the execution of the
deed of donation, despite its apparently undeniable knowledge of private respondent's
adverse, peaceful and continuous possession of the subject property in the concept of
an owner from 1936 to the institution of the recovery suit in 1985, is that it has lost its
rights to the subject property and can no longer recover the same due to its own
inexcusable negligence and grave lack of vigilance in protecting its rights over a
tremendously long period of time. In the words of the respondent court:

. . . He (private respondent] and his predecessor-in-interest have been in

adverse, peaceful and continuous possession of the subject property in the
concept of owners since the execution of the deed of donation on 23 August
1936 and were never ousted therefrom by plaintiff-appellee's [petitioner's]
predecessors-in-interest. It was not until almost 5 decades later or on 5
November 1985 that plaintiff-appellee [petitioner] instituted the instant action. The
inaction for almost half a century now bars plaintiff-appellee [petitioner] from
recovering the land in question on the equitable principles of laches, which is
defined as "such neglect or omission to assert a right taken in conjunction with
the lapse of time and other circumstances causing prejudice to the adverse party
as will operate as a bar in equity." Registered lands may not be acquired by
prescription but the same can be lost or acquired by Laches, [citing Lola vs. CA,
145 SCRA 439] Plaintiff-appellee [petitioner] has lost, while defendant-appellant
[private respondent] has acquired, the subject property by laches.10

Now aggrieved by the aforecited decision of the respondent Court of Appeals, petitioner
comes before us mainly claiming that it was contrary to the law and settled jurisprudence
for the respondent court to have applied the doctrine of laches in the instant case and to
have considered a mere administrator as authorized to donate one of the properties
under administration.

Petitioner's asseverations are devoid of merit.

First, petitioner postulates that the respondent Court of Appeals should not have, in the
first place, applied the doctrine of laches in the instant controversy because private
respondent did not assign the same as an error on appeal.

True, the appealing party is legally required to indicate in his brief an assignment of
errors,11 and only those assigned shall be considered by the appellate court in deciding
the case.12 However, equally settled in jurisprudence is the exception to this general
rule.

. . . Roscoe Pound states that "according to Ulpian in Justinian's Digest, appeals

are necessary to correct the unfairness or unskillfulness of those who judge."
Pound comments that "the purpose of review is prevention quite as much as
correction of mistakes. The possibility of review by another tribunal, especially a
bench of judges . . . is an important check upon tribunals of first instance. It is a
preventive of unfairness. It is also a stimulus to care and thoroughness as not to
make mistakes." Pound adds that "review involves matters of concern both to the
parties to the case and to the public . . . It is of public concern that full justice be
done to [e]very one." This judicial injunction would best be fulfilled and
the interest of full justice would best be served if it should be maintained that . . .
appeal brings before the reviewing court the totality of the controversy resolved in
the questioned judgment and order apart from the fact that such full-scale review
by appeal is expressly granted as a matter of right and therefore of due process
by the Rules of Court.13

Guided by the foregoing precepts, we have ruled in a number of cases that the appellate
court is accorded a broad discretionary power to waive the lack of proper assignment of
errors and to consider errors not assigned.14 It is clothed with ample authority to review
rulings even if they are not assigned as errors in the appeal.15 Inasmuch as the Court of
Appeals may consider grounds other than those touched upon in the decision of the trial
court and uphold the same on the basis of such other grounds,16 the Court of Appeals
may, with no less authority, reverse the decision of the trial court on the basis of grounds
other than those raised as errors on appeal. We have applied this rule, as a matter of
exception, in the following instances:

(1) Grounds not assigned as errors but affecting jurisdiction over the subject matter;17

(2) Matters not assigned as errors on appeal but are evidently plain or clerical errors
within contemplation of law; 18

(3) Matters not assigned as errors on appeal but consideration of which is necessary in
arriving at a just decision and complete resolution of the case19 or to serve the interests
of justice20 or to avoid dispensing piecemeal justice;21

(4) Matters not specifically assigned as errors on appeal but raised in the trial court and
are matters of record having some bearing on the issue submitted which the parties
failed to raise or which the lower court ignored;22

(5) Matters not assigned as errors on appeal but closely related to an error
assigned;23 and

(6) Matters not assigned as errors on appeal but upon which the determination of a
question properly assigned, is dependent.24

The instant controversy falls squarely under the exception to the general rule that only
assigned errors may be passed upon by the appellate court. A just, fair and complete
resolution of the present case necessitates the consideration and the application of the
doctrine of laches which is not the same as but is undoubtedly closely related to, the
issue of prescription which was properly raised by private respondent before the
respondent Court of Appeals.

Laches means the failure or neglect for an unreasonable and unexplained length of time,
to do that which, by exercising due diligence, could or should have been done earlier; it
is negligence or omission to assert a right within a reasonable time, warranting the
presumption that the party entitled to assert it either has abandoned or declined to assert
it.25 It has also been defined as such neglect or omission to assert a right taken in
conjunction with the lapse of time and other circumstances causing prejudice to an
adverse party, as will operate as a bar in equity.26

The principle of laches is a creation of equity which, as such, is applied not really to
penalize neglect or sleeping upon one's right, but rather to avoid recognizing a right
when to do so would result in a clearly inequitable
situation.27 As an equitable defense, laches does not concern itself with the character of
the defendant's title, but only with whether or not by reason of the plaintiff's long in action
or inexcusable neglect, he should be barred from asserting this claim at all, because to
allow him to do so would be inequitable and unjust to the defendant.28

The doctrine of laches or of stale demands is based upon grounds of public

policy which requires, for the peace of society, the discouragement of stale
claims and . . . is principally a question of the inequity or unfairness of permitting
a right or claim to be enforced or asserted.29

The time-honored rule anchored on public policy is that relief will be denied to a litigant
whose claim or demand has become "stale", or who has acquiesced for an
unreasonable length of time, or who has not been vigilant or who has slept on his rights
either by negligence, folly or inattention.30 In other words, public policy requires, for the
peace of society, the discouragement of claims grown stale for non-assertion; thus
laches is an impediment to the assertion or enforcement of a right which has become,
under the circumstances, inequitable or unfair to permit.31

The following are the essential elements of laches:

(1) Conduct on the part of the defendant, or of one under whom he claims, giving rise to
the situation complained of;

(2) Delay in asserting complainant's right after he had knowledge of the defendant's
conduct and after he has an opportunity to sue;

(3) Lack of knowledge or notice on the part of the defendant that the complainant would
assert the right on which he bases his suit; and

(4) Injury or prejudice to the defendant in the event relief is accorded to the
complainant.32

Under the present circumstances, all of the aforegoing elements are attendant in this
case.

On or some time before August 23, 1936, Rev. Fr. Mariano Sarili, the parish priest and
administrator of the church property in the Municipality of Balanga, Bataan, executed a
deed of donation over a 265-square meter church lot in favor of Ana de los Reyes and
her heirs in recognition of her long and satisfactory service to the church of Balanga,
Bataan. For some reason or another, the said deed was refused registration by the
Register of Deeds. However, she accepted the donation, indicated such acceptance in
the said deed, occupied the donated property, and exercised acts of ownership
thereupon.

In 1945, the donee, Ana de los Reyes, died without issue. She had, however, given the
subject property to her nephew who is the private respondent in the instant case. Upon
acceptance of the gift, private respondent immediately took possession of the subject
property in the concept of owner, built his house thereon, and thenceforth paid land
taxes therefor after declaring the subject property for that purpose.

The act of petitioner-defendant that culminated in the filing of the present action is thus
clearly his occupation since 1945 of the subject property in the concept of owner in
continuation of the occupation of the same nature regarding the same property by the
donee Ana de los Reyes starting in 1936. Undoubtedly, the first element of laches exists.

The second element also exists in this case. The second element is three-tiered: (a)
knowledge of defendant's action; (b) opportunity to sue defendant after obtaining such
knowledge; and (c) delay in the filing of such suit. Petitioner, in his complaint filed in the
trial court, alleged that without its consent, private respondent entered and occupied the
subject property during the Second World War. By its own admission, therefore,
petitioner was clearly aware of private respondent's possession of the subject property in
the concept of owner. Petitioner did not also rebut the testimony of its own authorized
representative and sole witness, one Crispulo Torrico, that the subject property was so
proximately located to the rest of petitioner's church property as to foreclose assertion of
ignorance of private respondent's possession of the subject property, on the part of
petitioner.

From that time during the Second World War to 1985 when petitioner actually
commenced suit against private respondent, there was doubtlessly all the opportunity to
file the appropriate action to have the donation of the subject property to Ana de los
Reyes and her heirs, declared null and void and to demand reconveyance of said
property from its present occupants.

Notwithstanding such opportunity available to petitioner, however, forty (40) years had to
first pass by for petitioner to finally institute the appropriate court proceedings. As such,
the second element of knowledge, opportunity to file suit, and delay in filing such suit, is
undoubtedly present in the instant controversy.

The third element of laches is likewise present. There is nothing on the record that
impresses us as clear evidence of at least an inkling on the part of private respondent as
to petitioner's serious intention to revoke the donated property. There was neither a
demand letter nor positive testimony of any person who actually informed private
respondent of petitioner's intentions. In other words, private respondent manifestly had
every reason to believe that, with the passing of almost half a century since his
predecessor-in-interest accepted the donated property and without unambiguous
intimation of petitioner's non-recognition of such donation, he was secure in his
possession of the subject property in the concept of owner.

In the light of all the above, it goes without saying that private respondent will suffer
irreparable injury under the most unfair circumstances, were we to disregard petitioner's
inaction for more than forty (40) years in asserting its rights.

In applying the doctrine of laches, we had ruled that where a party allows the following
number of years to lapse from the emergence of his cause of action, before instituting
court action to enforce his claim, such action would be barred by the equitable defense
of laches: 36 years;33 12 years;34 50 years;35 34 years;36 37 years;37 32 years;38 20
years;39 47 years;40 11 years;41 25
years;42 40 years;43 19 years;44 27 years;45 7 years;46 44 years;47 4 years48 and 67
years49.

In this case, petitioner filed its complaint in court only after forty nine (49) years had
lapsed since the donation in its behalf of the subject property to private respondent's
predecessor-in-interest. There is nary an explanation for the long delay in the filing by
petitioner of the complaint in the case at bench, and that inaction for an unreasonable
and unexplained length of time constitutes laches. As such, petitioner cannot claim
nullity of the donation as an excuse to avoid the consequences of its own unjustified
inaction and as a basis for the assertion of a right on which they had slept for so
long.50 Courts cannot look with favor at parties who, by their silence, delay and inaction,
knowingly induce another to spend time, effort, and expense in cultivating the land,
paying taxes and making improvements thereon for an unreasonable period only to
spring an ambush and claim title when the possessor's efforts and the rise of land values
offer an opportunity to make easy profit at their own expense.51 Considerable delay in
asserting one's right before a court of justice is strongly persuasive of the lack of merit of
his claim, since it is human nature for a person to enforce his right when same is
threatened or invaded; thus, it can also be said that petitioner is estopped by laches from
questioning private respondent's ownership of the subject property.52 At any rate,
petitioner's right to recover the possession of the subject property from private
respondent has, by the latter's long period of possession and by petitioner's inaction and
neglect, been converted into a stale demand. Such passivity in the face of what might
have given rise to an action in court is visited with the loss of such right, and ignorance
resulting from inexcusable negligence does not suffice to explain such failure to file
seasonably the necessary suit.53

Finally, we agree with the respondent Court of Appeals that, while petitioner is
admittedly still the registered owner of the donated property, and jurisprudence is settled
as to the imprescriptibility and indefeasibility of a Torrens Title, there is equally an
abundance of cases in the annals of our jurisprudence where we categorically ruled that
a registered landowner may lose his right to recover the possession of his registered
property by reason of leaches.54

WHEREFORE, the instant petition is DISMISSED with costs against petitioner.

SO ORDERED.
G.R. No. 57092 January 21, 1993

EDGARDO DE JESUS, REMEDIOS DE JESUS, JUANITO DE JESUS, JULIANA DE JESUS,

JOSE DE JESUS, FLORDELIZA DE JESUS, REYNALDO DE JESUS, ERNESTO DE JESUS,
PRISCILO DE JESUS, CORAZON DE JESUS, petitioners,
vs.
COURT OF APPEALS and PRIMITIVA FELIPE DE JESUS, respondents.

Jose B. Soriano for petitioners.

Jose A. Aguiling and Paquito C. Ochoa for private respondent.

MELO, J.:

This has reference to a petition for review on certiorari seeking the reversal of the decision of
the Court of Appeals in CA-G.R. No. 59613 (December 24, 1980, Sison, P.V., Cenzon.
Asuncion [P], JJ) which reversed the decision dated September 7, 1975 of the then Court of
First Instance of Bulacan. In consequence, the appellate court dismissed herein petitioners'
complaint and declared private respondent Primitive Felipe de Jesus to be the absolute owner
entitled to the possession of the land in question to the exclusion of petitioners.

The property in dispute is a parcel of residential land situated in Dampol 2nd, Pulilan, Bulacan,
bounded on the North by a Vereda: on the South, by the Provincial Road; on the East, by
Catalino Tayag (Tayao); on the West, by Macario de Leon, containing an area of 2565 square
meters (Brief for the Petitioners, p. 3), and covered by Tax Declaration No. 2383 of the Office of
the Provincial Assessor of Bulacan, in the name of Victoriano Felipe (Exh. "5-C").

Respondent appellate court found the above-described parcel of land to be the same parcel of
land which was —

. . . the subject of the Kasulatang-Biling-Mabibiling-Muli (Exh. 1) executed on

November 25, 1932, by Emilia Camacho (surviving widow of Catalino Esguerra),
Jose C. Esguerra and Socorro Esguerra, conveying or selling this land to the
spouses, Victoriano Felipe and Guillerma de la Cruz, with right to repurchase the
same within a period of five years, but that the vendors-a-retro failed to
repurchase the land. The vendors-a-retro were the heirs of the deceased
Catalino Esguerra. Since the date of the sale the spouses Victoriano Felipe and
Guillerma de la Cruz, possessed and lived on this land. The appellant [herein
private respondent] was living with her parents on the land, and upon their
deaths, she continued to live on and possess the same. (pp. 33-34, Rollo.)

On November 29, 1961 private respondent executed a sworn statement declaring herself the
only heir of the deceased Victoriano Felipe and adjudicating to herself the ownership of the land
in question (Exh. "4").

More than twelve years later or on April 27, 1973, petitioners herein filed in the Court of First
Instance of Bulacan, an action for recovery of ownership and possession and quieting of title to
the abovementioned piece of land covered by Tax Declaration No. 2383, alleging among others:
"that their grandfather, Santiago de Jesus during his lifetime owned the residential lot; that
Santiago de Jesus died before the outbreak of World War II, leaving three (3) sons, namely:
Mariano, Exequiel, and Jose, all surnamed de Jesus; that Mariano de Jesus died on September
3, 1956 leaving eight (8) surviving children, namely: Edgardo, Remedios, Juanita, Juliano, Jose,
Flordeliza, Reynaldo, and Ernesto, all surnamed de Jesus and all of them plaintiffs; that
Exequiel de Jesus died on April 3, 1948, survived by two (2) children — Priscilo and Corazon,
both surnamed de Jesus, also plaintiffs in this case; while Jose de Jesus died before the
outbreak of World War II without any issue . . . "(p. 35, Record on Appeal).

The trial court found for the plaintiffs, petitioners herein. The dispositive portion of the decision
dated September 7, 1975 reads:
 FOR ALL OF THE FOREGOING, judgment is hereby rendered:

(1) Declaring the plaintiffs as having the better right to ownership and possession
of the residential lot in question by virtue of hereditary succession;

(2) Ordering the defendant to surrender the ownership and possession of the
said property to the herein plaintiffs;

(3) Ordering the defendant to pay to the plaintiffs the sum of P500.00 for and as
attorney's fees, and the costs of suit.

SO ORDERED. (pp. 56-57, Record, on Appeal.)

As earlier intimated, on appeal, the Court of Appeals set aside the judgment of the trial court in
a decision promulgated on December 24, 1980
(pp. 32-38, Rollo), the dispositive portion of which reads:

IN VIEW OF THE FOREGOING CONSIDERATION, finding serious errors to

have been committed by the trial court in its judgment, the same is hereby set
aside and another one entered, dismissing the complaint, and declaring the
appellant to be the absolute owner, and entitled to the possession of this land in
question, to the exclusion of plaintiffs-appellees. (p. 38, Rollo.)

Thus, the instant petition for review on certiorari which was filed with this Court on August 13,
1981 (p. 9, Rollo) with the following assigned errors:

THE COURT OF APPEALS ERRED IN SETTING ASIDE THE JUDGMENT OF

THE TRIAL COURT WHICH AWARDED THE RESIDENTIAL LOT IN
QUESTION TO THE PETITIONERS BY VIRTUE OF HEREDITARY
SUCCESSION AND ORDERED THE PRIVATE RESPONDENT TO
SURRENDER THE OWNERSHIP AND POSSESSION OF THE SAME TO
THEM.

II

THE COURT OF APPEALS ERRED IN RULING THAT THE LAND DESCRIBED

IN THE PETITIONERS' COMPLAINT IS THE SAME LAND WHICH IS THE
SUBJECT OF THE SALE WITH RIGHT TO REPURCHASE (Exh. 1) EXECUTED
ON NOVEMBER 5, 1932 BY THE ESGUERRAS IN FAVOR OF THE PARENTS
OF THE PRIVATE RESPONDENT.

III

THE COURT OF APPEALS ERRED IN DECLARING THE PRIVATE

RESPONDENT TO BE THE ABSOLUTE OWNER AND ENTITLED TO THE
POSSESSION OF THE LAND IN QUESTION TO THE EXCLUSION OF THE
PETITIONERS.

IV

THE COURT OF APPEALS ERRED IN HOLDING THAT THIS LAND WAS

PURCHASED BY THE PARENTS OF THE PRIVATE RESPONDENT FROM
THE HEIRS OF THE LATE CATALINO ESGUERRA ON NOVEMBER 5, 1932
AND THE PRIVATE RESPONDENT AND HER PARENTS HAD BEEN IN
OPEN, CONTINUOUS, ADVERSE, PUBLIC AND NOTORIOUS POSSESSION
OF THE SAME SINCE 1932 UP TO THE PRESENT, IN THE CONCEPT OF
OWNER.
In effect, the sole issue in this petition boils down to this question: Who has the right to the
ownership and possession of the residential lot subject matter of the case, petitioners by virtue
of hereditary succession, or private respondent who claims ownership through purchase of the
property by her parents?

According to the trial court, petitioners have the better right but according to the appellate court,
the property rightly belongs to private respondent. In view of the fact that the findings of the trial
court and the appellate court are contrary to each other, this Court shall exercise its authority of
reviewing the evidence in order to arrive at the correct facts based on the record (Director of
Lands vs. Court of Appeals, 117 SCRA 346 [1982]; Quality Tobacco Corporation vs.
Intermediate Appellate Court, 187 SCRA 210 [1990]; Valenzuela vs. Court of Appeals, 191
SCRA 1 [1990]; Shauf vs. Court of Appeals, 191 SCRA 713 [1990] ; Bustamante vs. Court of
Appeals, 194 SCRA 645 [1991).

It is not disputed that petitioners are the heirs of their late grandfather, Santiago de Jesus; what
is in dispute is their claim that the residential lot in question belonged to their grandfather and
therefore theirs by hereditary succession (Brief for the Respondent, pp. 8-9). Neither is it
contradicted that Santiago de Jesus was married to Maria Reyes, a widow with three children by
a prior marriage, namely: Basilio, Violeta, and Guillerma, the last having been the mother of
herein private respondent (tsn, August 15, 1974, pp. 14-15; September 16, 1974, pp. 14-15, 39-
41).

The only documentary evidence of Santiago de Jesus' alleged ownership of the residential lot in
question is Tax Declaration No. 2384 (Exh. "A") in the name of Victoriano Felipe. Therein,
Felipe claimed ownership for tax purposes of a house of mixed materials and a nipa roof, valued
at P190.00 and constructed on the lot or "solar" belonging to Santiago de Jesus. The statement
therein regarding Santiago de Jesus' ownership of the lot is supported by the testimony of
petitioners Edgardo de Jesus and Corazon de Jesus-Masiglat, and three other witnesses. They
asserted personal knowledge of said fact which, they swore, was also common knowledge in
Dampol 2nd, Pulilan, Bulacan (tsn, August 15, 1974, p. 16; September 16, 1974, pp. 18, 39). As
a child, for instance, witness Antonio Roxas was frequently in the house of his aunt, Maria
Reyes, a sister of his mother. When his aunt was still alive, she told him and his mother, in the
presence of Victoriano Felipe, that she had no right at all over the property, including the old
house, as it really belonged to Santiago de Jesus (tsn, September 16, 1974, pp. 39, 46-49).

On the other hand, private respondent presented a contract of sale with right of repurchase,
"Kasulatang-Biling-Mabibiling-Muli" (Exh. "1"), entered into in 1932 between her parents,
Victoriano Felipe and Guillerma de la Cruz, and the vendors-a-retro Emilia Camacho, Socorro
Esguerra, and Jose Esguerra; a "Sinumpaang Salaysay"; or an affidavit of adjudication which
private respondent executed in 1961 (Exh. "4"); and tax declarations and official receipts.

On the evidentiary value of these documents, it should be recalled that the notarization of a
private document converts it into a public one and renders it admissible in court without further
proof of its authenticity (Joson vs. Baltazar, 194 SCRA 114 [1991]). This is so because a public
document duly executed and entered in the proper registry is presumed to be Valid and genuine
until the contrary is shown by clear and convincing proof (Asido vs. Guzman, 37 Phil. 652
[1918]; U.S. vs. Enriquez, 1 Phil. 241 [1902]; Favor vs. Court of Appeals, 194 SCRA 308
[1991]). As such, the party challenging the recital of the document must prove his claim with
clear and convincing evidence (Diaz vs. Court of Appeals, 145 SCRA 346 [1986]).

There is no doubt that the pacto de retro deed of sale has assumed the character of a public
document, having been notarized by then Justice of the Peace Francisco Makapugay, Jr. in his
capacity as Notary Public Ex-Oficio. Hence, it is presumed valid and authentic until proven
otherwise. Petitioners, however, challenge this presumption of validity and authenticity. They
contend that private respondent's non-production of Tax Declaration No. 5096, specifically
mentioned in Exh. "1" as containing the description of the piece of land subject of the
"Kasulatang-Biling-Mabibiling-Muli" shattered such presumption and rendered suspect the latter
document (Brief for the Petitioners, pp. 9, 19-22).

While both Socorro Olarte, a signatory to the "Kasulatang-Biling-Mabibiling-Muli" as one of the

vendors-a-retro, and private respondent testified that the land subject of the sale was covered
by Tax Declaration No. 5096 in the name of the original owner Catalino Esguerra (tsn, October
21, 1974, p. 6 and December 18, 1974, pp. 3-5), they could not produce a copy of said tax
declaration. Capitalizing on said omission, petitioners presented a certified true copy of said Tax
Declaration No. 5096 (Exh. "G") covering the year 1948 and which, however, concerns a piece
of lot owned by a certain Teodoro Sinson. Further, petitioners also produced certified true
copies of Tax Declarations Nos. 2214 (Exh. "H"), 2215 (Exh "I") and 2216 (Exh. "J"), all in the
name of Catalino Esguerra as owner, and all for the year 1967.

Pablo H. Domingo, Senior Deputy Assessor, who was subpoenaed to present in court Tax
Declaration No. 5096 in the name of Catalino Esguerra identified the above-mentioned certified
true copies of tax declarations as having been issued by the Office of the Provincial Assessor of
Bulacan (tsn, March 12, 1975, pp. 13-14). However, he said he could not bring with him a copy
of Tax Declaration No. 5096 in the name of Catalino Esguerra as the records of the Office of the
Provincial Assessor only started with the year 1948 because the old Assessor's Office was
burned down during the early part of the liberation (Transcript, March 12, 1975, pp. 5-6, 12).

It is significant to note that the land covered by Tax Declaration No. 5096 (Exh. "G") described
therein as bamboo land, was previously covered by Tax Declaration No. 233 for the same
owner, while Tax Declaration No. 2383 (Exh. "5-C") beginning with the year 1948 and covering
the residential lot in question declared in the name of Victoriano Felipe, cancelled Tax
Declaration No. 5326 (Exh. "5-C-1"). An uncertified copy of said Tax Declaration No. 5326 for
Victoriano Felipe purporting to commence with the year 1939 allegedly superseded Tax
Declaration No. 252 in the name of Catalino Esguerra
(Exh. "3").

In other words, the piece of residential lot covered by Tax Declaration No. 2383 (Exh. "5"), or by
Tax Declaration No. 252 (Exh. "3") at around the time of the alleged sale, until superseded by
Tax Declaration No. 5326 (Exh. "5-C-1") beginning with the year 1939, is not the piece of land
covered by Tax Declaration No. 5096 specifically referred to in Exh. "1" as the subject of the
"Kasulatang-Biling-Mabibiling-Muli". Thus, the fact that Guillerma de la Cruz, mother of private
respondent, made real property tax payments purportedly on Tax Declaration No. 5096 for the
years 1935 (Exh. "2-d" and "2-e") and 1936 (Exh. "2-b") and probably for the years 1933, 1934,
1937 and 1938, in the name of Catalino Esguerra neither alters the fact that the piece of land
covered by Tax Declaration No. 2383 (Exh. "5") is not the subject of the "Kasulatang-Biling-
Mabibiling-Muli" (Exh. "1") nor demonstrates that the payments were made for the residential lot
under litigation.

It is, therefore, evident that Tax Declaration No. 5096 was inexistent at the time of the alleged
sale. By a simply analysis of the different tax declarations presented as evidence in this case, it
is likewise clear that when by virtue of the alleged sale, a new tax declaration numbered 5326,
was made in 1938 in the name of Victoriano Felipe (Exh. "5-C-1"), what was cancelled was Tax
Declaration No. 252 (Exh. "3"), not Tax Declaration No. 5096 which supposedly covered the
property subject of the "Kasulatang-Biling-Mabibiling-Muli". It should be noted that the property
under Tax Declaration No. 5326 bears an identical description to the property under litigation.
Thus, the inevitable conclusion is that, without any legal basis, Victoriano Felipe had declared
himself the owner of the disputed property for tax purposes. Tax Declaration No. 5326 thereafter
became the basis for Tax Declaration
No. 2383 in 1948 (Exh. "5-C") until it was cancelled and new tax declarations were made in the
name of private respondent, viz., Tax Declaration No. 9453 in 1962 (Exh. "5-b"), then Tax
Declaration No. 2657 in 1967 (Exh. "5") and finally Tax Declaration No. 2962 in 1974 (Exh. "5-
A").

As earlier stated, Guillerma de la Cruz had also been paying real property tax on the house
described as located in Dampol 2nd in the name of Victoriano Felipe under Tax Declaration No.
14984 since 1933 (Exh. "2-C"), and then under Tax Declaration No. 3975 since 1941 (Exh. "2-
4") until 1947, and under Tax Declaration No. 2384 in 1948. By a twist of fate, however, Tax
Declaration No. 2384 describes the house, among others, as located in the residential lot
belonging to Santiago de Jesus or "solar de Santiago de Jesus" (Exh. "A-1"). While real
property tax continued to be paid under the latter declaration until 1958 (Exh. "2-y"), by stating
in said tax declaration that his house was located in the land of Santiago de Jesus. Victoriano
Felipe recognized and admitted the ownership of Santiago de Jesus over the residential lot
involved herein. Such admission puts to naught the claim of private respondent for when one
derives title to property from another, the act, declaration or omission of the latter in relation to
the property is evidence against the former (Rolleza vs. Court of Appeals, 174 SCRA 354
(1989]).

The authenticity of the signature of Victoriano Felipe in the deed of sale with right to repurchase
is also in question. Both Moises de Jesus and Antonio Roxas testified that Victoriano Felipe
could not even vote as he did not know how to read and write (tsn, September 16, 1974, pp. 30,
42). Although Socorro Esguerra Olarte identified the signature of Victoriano Felipe on the
"Kasulatang-Biling-Mabibiling-Muli" as his (tsn, October 21, 1974, p. 13), she also testified that
Victoriano Felipe has a brother who looked exactly like Victoriano (tsn, October 21, 1974, p. 36).
On the issue, all that private respondent could say was that her father studied the cartilla (tsn,
January 24, 1975, p. 8).

Under the circumstances, there is strong, convincing, and conclusive proof of the nullity and
falsity of Exhibit "1". Its evidentiary nature cannot, therefore, be sustained (Legaspi vs. Court of
Appeals, 142 SCRA 82 [1986]). Even if the document were to be considered simply as a private
document, it would still need evidence of its due execution and authenticity even if it is already
more than 30 years old as it cannot be considered unblemished by any circumstance of
suspicion (Heirs of Demetria Lacsa vs. Court of Appeals, 197 SCRA 234 [1991]).

Consequently, the affidavit of adjudication executed by private respondent on May 21, 1961
(Exh. "4"), has no evidentiary value as it has become baseless. Furthermore, private respondent
falsely stated therein that she is the only heir of Victoriano Felipe for, at the time of its execution,
her mother, Guillerma de la Cruz, was still living. Guillerma de la Cruz died on April 23, 1964
(Exh. "B"), three years after the "Sinumpaang Salaysay" (Exh. "4") was executed. Moreover, the
tax receipts and declarations of ownership for tax purposes upon which private respondent
basically anchors her claim, are not incontrovertible evidence of ownership; they only become
evidence of ownership acquired by prescription when accompanied by proof of actual
possession of the property (Tabuena vs. Court of Appeals, 196 SCRA 650 [1991]; Rojas vs.
Court of Appeals, 192 SCRA 709 [1992]).

On the issue of ownership by acquisitive prescription, private respondent contends: "Granting

that it was formerly owned by their late grandfather, they (petitioners) have lost whatever right
they may have over the land by extinctive prescription" for the reason that she, private
respondent has acquired the same by acquisitive prescription (Brief for the Respondents, p. 9),
citing Section 41 of the old Code of Civil Procedure which states:

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,
or otherwise, in whatever way such occupancy may have commenced or
continued, shall vest in every actual possessor of such land, a full and complete
title . . . .

Corazon de Jesus Masiglat testified that from 1930 to 1952, the period of time she was living in
the house her grandfather erected on the contested property, her grandmother, Victoriano
Felipe, Guillerma de la Cruz, and private respondent also lived there (tsn, July 16, 1974, p. 23).
She was corroborated by petitioner Edgardo de Jesus who also testified that in 1932 up to the
time of his death in 1948, Exequiel de Jesus was taking charge of the property and that while
the parents of private respondent were the ones paying the real property taxes the money
therefor came from Exequiel (tsn, July 16, 1974, pp. 11-14). Witness Salvador Esguerra testified
that Victoriano Felipe began to reside in the house when he married Guillerma de la Cruz and
that Corazon and her father, Exequiel, also resided there after the death of Santiago de Jesus
(tsn, August 15, 1974, pp. 14, 21, 22). Moises de Jesus, for his part, testified that while
Victoriano Felipe started staying in the property only when the children of Santiago de Jesus
had died, Corazon de Jesus continued to reside there (tsn, September 16, 1974, p. 27).

In her own defense private respondent first testified that Corazon de Jesus never lived with
them and that Exequiel de Jesus never went to their place (tsn., October 11, 1974, pp. 35-36).
She did not contradict, however, the testimony of Edgardo de Jesus on rebuttal that he himself
at the age of 12 used to stay in the house and was witness to the occasion when Corazon fell in
a ditch going towards their place, that as a result of such accident, Corazon sustained a
permanent deformity on one hand; and that Corazon left the place only in 1952 when she got
married (tsn, April 23, 1975, pp. 23-24). Neither did private respondent or her witnesses
traverse the testimony of Corazon de
Jesus-Masiglat, also on rebuttal, that since childhood she had been residing in the house owned
by her grandfather Santiago de Jesus, together with private respondent and the latter's parents,
and actually left the place only in 1952: that her parents as well as her child died in that house;
and that private respondent was, in fact, the one who caused the registration of her child's death
(tsn, April 23, 1975, p. 25). Even Socorro Esguerra Olarte, witness for private respondent,
testified that she remembers Exequiel de Jesus as he was always around whenever she visited
the place and he was the one who got santol fruits for her sometimes (tsn, September 23, 1974,
p. 17).

It thus appears that Victoriano Felipe was residing in the house of Santiago de Jesus simply
because he was married to Guillerma de la Cruz, daughter of Maria Reyes by a first marriage,
who, obviously, was living with her mother who had taken Santiago de Jesus for her second
husband. In effect, their possession of the contested lot was neither exclusive nor in the concept
of owner. Possession, to constitute the foundation of a prescriptive right, must be possession
under a claim of title or it must be adverse or in the concept of owner or concepto de
dueño(Ordoñez vs. Court of Appeals, 188 SCRA 109 [1990]; Coronado vs. Court of Appeals,
191 SCRA 814 [1990]; Manila Electric Company vs. Intermediate Appelate Court, 174 SCRA
313 [1989]).

In this case, Victoriano Felipe and his family were residing in the land by mere tolerance. There
is no way of knowing how the house on the lot was described in Tax Declaration Nos. 14984
and 3975, but, to repeat, in Tax Declaration No. 2384 which commenced with the year 1948
(Exh. "A"), the house was described as constructed on the lot or solar of Santiago de Jesus up
to the year 1961 when private respondent was still paying property tax (Exh.
"2-x").

Significantly, the "Kasulatang-Biling-Mabibiling-Muli" was not even given to private respondent

by her parents; she admitted having found it in the house although they mentioned its existence
to her when they were still alive (tsn, December 18, 1974, pp. 18-19). Under the circumstances,
the prescriptive period cannot be considered to have accrued during the lifetime of Victoriano
Felipe.

It is interesting to note that when private respondent executed her "Sinumpaang Salaysay"
(Exh. "4") adjudicating the disputed lot to herself on the basis of the contract of sale as no
repurchase had been made by the vendors of retro, Exequiel de Jesus was already dead and
Corazon de Jesus-Masiglat was no longer residing in the property in question. As she was in
possession of the property, private respondent then had it declared in her name for real property
tax purposes under Tax Declaration No. 9453 (Exh. "5-b") thereby cancelling Tax Declaration
No. 2383 (Exh. "5-b-1") which was in the name of Victoriano Felipe.

As to Tax Declaration No. 2384, the last vestige of Santiago de Jesus' ownership of the property
in question, there is no evidence on record as to whether private respondent had it cancelled,
had a new declaration made on the property in her name, or whether she continued paying tax
after her payment for the year 1961. It was established, however, through the testimony of
Salvador Esguerra, that the old house was demolished and a new bungalow was constructed
on the lot (tsn, August 15, 1974, pp. 23-24).

To create a fundamental basis for her claim of ownership by acquisitive prescription, private
respondent mortgaged the questioned property to the Rural Bank of Pulilan (Exh. "5-b") not as a
mere possessor but as an owner thereof. She also registered both the mortgage and the
"Sinumpaang Salaysay" (tsn, December 18, 1974, p. 23). However, she never attempted to
obtain a certificate of title over the property. This omission indicates, to say the least, that
private respondent realizes her lack of any lawful claim of ownership over the property for while
registration is not a mode of acquiring ownership, it is evidence of such title over the particular
property (Avila v. Tapucar, 201 SCRA 148 [1991]).
Private respondent's pretensions to acquisitive prescription may not succeed even under Act
No. 190, the Code of Civil Procedure. Under Section 41 thereof, good faith and just title are not
required for purposes of acquisitive prescription; adverse possession in either character ripens
into ownership after the lapse of ten years (Cruz vs. Court of Appeals, 93 SCRA 619 [1979];
Quilisado vs, Court of Appeals, 182 SCRA 401 [1990]; Ongsiaco vs. Dallo, 27 SCRA 161
[1969]; Miraflor vs. Court of Appeals, 142 SCRA 18 [1986]). The just title required for acquisitive
prescription to set in is not "titulo verdadero y valido" — such title which by itself is sufficient to
transfer ownership without the necessity of letting the prescriptive period elapse, but only "titulo
colorado" — or such title where, although there was a mode of transferring ownership, still
something is wrong because the grantor is not the owner (Doliendo vs. Biannesa, 7 Phil. 232
[1906] cited in Solis vs. Court of Appeals, 176 SCRA 678 [1989]), and incidentally, it may
perhaps be mentioned that prescription running even after the effectivity of the New Civil Code
on August 30, 1950, continued to be governed by Section 41 of the Old Civil Code (Solis vs.
Court of Appeals, supra).

Under the present Civil Code, the prescriptive period required for acquisition of immovable
property is ten years if the possession is in good faith, and thirty years if in bad faith (South City
Homes, Inc. vs. Republic, 185 SCRA 693 [1990]). Such open, continuous, exclusive and
notorious occupation of the disputed property for thirty years must be conclusively established
(San Miguel Corporation vs. Court of Appeals, 185 SCRA 722 [1990]).

Reckoned from the time she executed the affidavit of adjudication in 1961, eleven years after
the New Civil Code had taken effect, private respondent's possession of the contested lot is far
too short of the prescriptive period of thirty years considering that her possession is in bad faith.
The filing of the petition for recovery of ownership and possession and quieting of title by
petitioners on April 27, 1973 was well below the acquisitive prescriptive period for private
respondent, which is thirty years under Article 1141 of the present Civil Code. In this case, the
statutory period of prescription is deemed to have commenced when petitioners were made
aware of a claim adverse to them (Coronel vs. Intermediate Appellate Court, 155 SCRA 270
[1987]), that is, when the affidavit of adjudication was duly registered with the Registry of Deeds
which, at the earliest may be considered to be in 1974, when private respondent was able to
secure a tax declaration in her name.

WHEREFORE, the decision of the Court of Appeals under review is hereby SET ASIDE and the
decision of the trial court, dated September 7, 1975, REINSTATED.

SO ORDERED.
G.R. No. 77976 November 24, 1988

MAXIMO GABRITO, ROGER LIBUT, CARMELITA UY, LIZA DE VERA, thru her Attorney-in-
Fact, JESUS DE LOS SANTOS, petitioners,
vs.
THE HON. NINTH DIVISION, COURT OF APPEALS, THE HON. NICIAS O. MENDOZA,
Presiding Judge Branch 74, Regional Trial Court, Olongapo City, ET AL., respondents.

Cornelio C. Cardenas and Valeriano S. Peralta for petitioners.

Estanislao L. Cesa, Jr. for respondents.

BIDIN, J.:

This is a petition for review on certiorari with preliminary injunction and restraining order of the
decision of the Court of Appeals * dated March 4, 1987 in CA-G.R. No. SP No. 08710, "Maximo
Gabrito et al. vs. Hon. Nicias O. Mendoza and Roberto Tan et al.," affirming the April 2, 1986
decision of the Regional Trial Court of Olongapo City ** which also affirmed the decision of
MTCC, Branch V, Olongapo City, and the Resolution of respondent court dated March 30, 1987
denying herein petitioners' motion for reconsideration.

The appeal originated as an unlawful detainer complaint filed by herein private respondents with
the Municipal Trial Court, Branch V, Olongapo City.

The antecedent facts as summarized by the Court of Appeals are as follows:

The spouses Roberto Tan and Benita Ching-Tan filed a complaint in the
Municipal Trial Court against defendants Maximo Gabrito, et al., alleging that
they are the possessors and legal owners of the property situated at No. 107
Gordon Ave., New Kalalake, Olongapo City as evidenced by Tax Declaration No.
4-2046. The defendants are leasing portions of this parcel of land, each paying
the corresponding monthly rentals due thereon.

On the leased portion, the defendants constructed buildings and have allowed
other persons to sublease the same for commercial purposes.

As the spouses Tan have no other property where they could construct their
residential house, the spouses Tan notified the defendants (in January 1984) that
they intend to personally use the land to build their house thereon and gave
defendants three (3) months to vacate the premises and remove the structures
and improvements which defendants had constructed thereon.

In April 1984, defendants requested for an extension of time within which to

vacate, which was granted by the spouses Tan. However, from that time on,
defendants also stopped paying monthly rentals due on the land they leased.

In view of this, in July 1984, defendants were told to leave the premises and to
pay rentals in arrears. As defendants refused to comply with both demands, the
matter was brought to the Barangay Council for settlement. As no agreement
was reached, a certification to file action was issued to the spouses Tan. Hence,
the Tans filed an action for unlawful detainer with damages against Gabrito, et al.

In answer to the complaint, defendants Gabrito, et al. denied the material

allegations of the complaint and alleged that: they are builders in good faith over
the land as provided in Article 448 of the Civil Code; the land where the houses
of defendants were built is a public land, not yet awarded nor titled to anybody;
plaintiffs's alleged predecessor-in-interest not being the owner thereof could not
have passed nor transferred ownership thereof to them (plaintiffs) considering
that Gloria Carillo's Miscellaneous Sales Application No. (X-4-4320) has not yet
 been acted upon by the Bureau of Lands; plaintiffs and their predessors-in-
interest are absentee applicants over the land, hence, are disqualified to own the
same; plaintiffs have never been in possession of the land while the defendants
are in actual physical possession thereof; the sale of plaintiffs' alleged
predecessor-in-interest in favor of plaintiffs is null and void for being in violation
of P.D. No. 1517 as defendants being lessees of the land have the right of first
refusal thereof.

Defendants brought a counterclaim for damages against the plaintiffs. (Rollo,

Annex "C", pp. 39-40).

Respondent Municipal Trial Judge applied the rule on summary procedure in this case,
rendered its decision dated November 22, 1985, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered for all the defendants to vacate the
parcel of land described in par. 3 of the complaint, removing therefrom the
buildings and any other improvements respectively owned by them; and to pay
plaintiffs the following as reasonable compensation for the use of the premises:

Maximo Gabrito—at
P250.00 per month from April 1984 until he vacates the premises;
Roger Libut—at
P150.00 per month from May 1984 until he vacates the premises;
Liza de Vera—at:
P150.00 per month from April 1984, until she vacates the premises; Carmelita
Uy—at
Pl 70.00 per month from April 1984, until she vacates the premises.

for all defendants to pay, in equal shares, damages by way of attorney's fees in
the amount of ONE THOUSAND PESOS ( P1,000.00 ) as well as costs.

SO ORDERED. (Rollo, p. 35).

On appeal to the Regional Trial Court (Civil Case No. 450-08-5), the decision of the Municipal
Trial Court was affirmed in its decision dated April 2, 1986, the dispositive portion of which
reads:

WHEREFORE, premised on all the foregoing consideration and finding no

prejudicial and reversible error was ever committed by the lower Court, the Court
affirms in toto the decision being appealed, with costs against the defendants-
appellants.

SO ORDERED. (Rollo, Annex 'B' p. 38).

On review, herein respondent Court of Appeals sustained the decision rendered by the Regional
Trial Court Branch LXXIV, and ruled;

WHEREFORE, the Petition for Review herein is DISMISSED for lack of merit.
(Rollo, Annex "C", p. 44).

On March 16, 1987, the petitioner filed their "Motion for Reconsideration and Opposition to the
Motion for Immediate Execution Pending Further Proceedings" which was denied by the Ninth
Division of respondent Court of Appeals in its Resolution dated March 30, 1987 and granted the
Motion for Immediate Issuance of a Writ of Execution filed by private respondents (Annex "F",
Rollo, pp. 57-58).

Hence, this petition for review on certiorari filed on April 13, 1987.

On April 21, 1987, Acting Chief Justice Andres Narvasa, authorized the grant of Temporary
Restraining Order in this case which was confirmed by the Second Division of this Court in its
Resolution dated April 27, 1987 (Rollo, pp. 86, 87, 88).
In a Resolution dated June 8, 1987, petitioners were required to comment on the motion dated
April 26, 1987 (Rollo, p. 94) of counsel for respondents, praying to set aside the temporary
restraining order issued on April 21, 1987 and to issue a writ of execution pending appeal or to
allow the Court of Appeals to proceed with the execution of the decision pending appeal (Rollo,
p. 115), which was complied with by petitioners on July 22, 1987 (Rollo, p. 143).

In the resolution of October 5, 1987 (Rollo, p. 187) the petition was given due course and the
parties were required to submit their respective memoranda within twenty (20) days from notice.
Petitioners' memorandum was submitted on December 3, 1987 (Rollo, p. 196). Respondents
submitted their memorandum on April 12, 1988 (Rollo, p. 235). Petitioners raised the following
issues:

1. That a Municipal Trial Court has no jurisdiction to take cognizance of a case

for Unlawful Detainer under Sec. 1 of Rule 70 of the Rules of Court, where the
plaintiffs are merely the legal possessors and recent transferees of a public land,
and the defendants are the absolute owners of the building existing on the same
land, for a number of years already.

2. That the respondent Regional Trial Court, Branch LXXIV, Olongapo City,
ought to have dismissed the action for Unlawful Detainer and as the same was
also heard on appeal by the said Court on this jurisdictional challenge.

3. The market value of the residential houses or buildings of the defendants on

the said land is approximately P170,000.00, and it was with plaintiffs'
predecessor-in-interest, one Gloria Carillo-Potente that defendants caused said
structures to be erected on said land plaintiffs having only acquired from said
predecessor, by means of a Deed of Sale of such rights sometime on January 5,
1984.

4. Upon this frame of facts which are admitted in the Decision of both Courts,
only a Court of General Jurisdiction, a Regional Trial Court, can have the
competence to try and decide the same: the Court of Special Limited Jurisdiction,
cannot take cognizance of such facts as an action for Unlawful Detainer.

5. Arguendo, that the Court of Origin has jurisdiction to take cognizance of the
cause of action for Unlawful Detainer, it should have not heard the case in
accordance with the Rules of Summary Proceedings, and based its Decision on
an Affidavit hearing, as the question of ownership was being contested between
plaintiffs and defendants, with respect to whom was the preferred grantee to the
same land, and which falls under the complete administration and control of the
Bureau of Lands.

6. In fact, the Court of Origin, Branch V, Municipal Trial Court in Cities, Olongapo,
should have suspended the proceedings, as there was an Administrative Protest
being heard by the District Land Office of Olongapo City.

7. On the question of suspension of proceedings denied by the Court of Origin,

Municipal Trial Court in Cities, Branch V, Olongapo City, an action for certiorari
was filed before Branch LXXIII of Regional Trial Court, Olongapo City, Civil Case
No. 399-0-85, and although a Restraining Order against Municipal Trial Court in
Cities, Branch V, City of Olongapo, was issued, the same was already academic
as by that time said Municipal Trial Court, Branch V, Olongapo City, has already
rendered its Decision in favor of private respondent hereat, plaintiff therein.

8. Branch LXXIV, Regional Trial Court, Olongapo, in its Decision rendered on

appeal, did not pass upon such matters, specified supra, so as to reverse the
Decision of the Court of Origin: the subject Decisions, have not considered the
due process rights of petitioners toward their residences and structures, the
same are facing the risk of condemnation and destruction without fair hearing,
and such improvements have an aggregate value of Pl70,000.00, more or less.
 9. Respondent Honorable Judge Mendoza of Branch LXXIV, Regional Trial
Court, Olongapo, may have been misled by the citation of authority, case of Vda.
de Bocaling vs. Laguna, et al., 54 SCRA, 243, relied upon by appellees, said
case being totally inapplicable to the facts of this case.

10. Respondent Deputy Sheriff Rogelio Lumanlan, without regard to the fif'teen
(15) days period finality of the Order and/or Writ of Demolition, harrassed herein
petitioners, notwithstanding the pendency of matters involved to their extreme
discomfort and anxiety.

11. The Decision of the Honorable Court of Appeals, Annex "C", sustained the
Decision of the Regional Trial Court and ignored the vital issues posed for
resolution: A Motion For Reconsideration, copy is hereto attached as Annex "D",
was presented, precisely to stress the same but, a pointed or precise ruling upon
such issues was avoided in the Resolution dated 30th of March, 1987, true copy
attached herein as Annex "E".

12. On the other (sic) upon Motion of private respondents, the Tans, despite
Opposition thereto, Writ of Execution pending appeal was issued and respondent
Deputy Sheriff Lumanlan enforced the same, copy of which is hereto attached as
Annex "F": true copy of Notice to Vacate served by said respondent Deputy
Sheriff to petitioners is attached as Annex "G" herein.

13. Per Annex "D" Motion For Reconsideration a constitutional point, was reared
forth, on first impression, per proviso of Sec. 10, Art. XIII-new, 1986 Constitution,
relevant to demolition and resettlement, and, Resolution, dated 30th March,
1987, Annex "E", of the Honorable Appellate Authority, avoided said
constitutional question, without passing upon the same.

14. Of Jurisdictional matters: Decision dated March 4, 1987, of the Honorable

Court of Appeals was, received on March 6, 1987, Motion For Reconsideration
was filed on March 16, 1987, and Resolution dated 30th of March, 1987, denying
Motion for Reconsideration was received on April 1, 1987: thus, this Petition is
filed within the 15 day period. (Rollo, pp. 4-8).

All of which boil down to the main issue of whether or not an action for unlawful detainer is the
proper action to oust petitioners from their occupation of the land in dispute.

There is no question as to the ownership of the land in litigation as both petitioners and private
respondents admit that the same is a public land and owned by the government. The bone of
contention is, who has a better right to possess the land which definitely falls under the
jurisdiction of the Municipal Trial Court and the rule of summary procedure may properly be
applied.

In a preliminary conference held pursuant to Section 6 of the Rule on Summary Procedure,

defendants admitted that they entered the premises as lessees and had been paying rentals for
the use of the land to Gloria Carillo, private respondents' predecessor-in-interest (Order dated
May 15, 1985 in Civil Case No. 2511, MTC, Olongapo City, Branch V; Rollo, pp. 72-
73).<äre||anº•1àw> When requested to vacate the premises, petitioners asked for an extension
of time which request was granted. However, petitioners failed to vacate the premises and also
stopped paying rentals. In view of said admissions, petitioners had unquestionably recognized
private respondents' prior right of possession over the questioned property.

Petitioners' allegation in their answer that they are builders in good faith over the land as
provided for in Article 448 of the Civil Code is untenable. As ruled by this Court, Article 448 of
the Civil Code, applies only where one builds on land in the belief that he is the owner of the
land, but does not apply where one's interest in the land is that of a lessee under a rental
contract (Balucanag v. Francisco, 122 SCRA 498 [1983]). More than that, it has been settled
that the mere fact that, in his answer, defendant claims to be the exclusive owner of the property
from which plaintiff seeks to eject him is not sufficient to divest the Municipal Trial Court of
jurisdiction (Vivar v. Vivar, 8 SCRA 847, 849 [1963]; De Santa vs. Court of Appeals, 140 SCRA
52 [1985]).

In addition, this Court held in Bocaling v. Laguna, et al (54 SCRA 243, 250 [1973]) that:

The rule is well-settled that lessees, like petitioner, are not possessors in good
faith because he knew that their occupancy of the premises continues only
during the life of the lease, and they cannot as a matter of right, recover the value
of their improvements from the lessor, much less retain the premises until they
are reimbursed. Their rights are governed by Article 1678 of the Civil Code which
allows reimbursement of lessees up to one-half of the value of their
improvements if the lessor so elects.

Petitioners contend that the above cited case is "completely inapplicable to the case at bar,
because the genesis case of Ejectment therein was subjected to a compromise Agreement"
(Rollo, p. 18). Such contention is, however, untenable. One of the issues raised in the above-
cited case was whether or not lessees are builders and/or possessors in good faith entitled to
reimbursement for the value of their improvements. The Court categorically resolved the issue
in the negative without qualification nor even a reference to the compromise agreement alluded
to by the petitioner.

In a later development, petitioners filed a supplemental memorandum submitting the decision of

the Bureau of Lands dated June 7, 1987, the dispositive portion of which reads:

IN VIEW OF ALL THE FOREGOING, the Miscellaneous Sales Application No.

4320 of Benita Ching Tan should be, as hereby as it is rejected forfeiting to the
government whatever amount had been paid on account thereof. The
miscellaneous sales application of Maximo Gabrito, Carmelita Uy, Roger Libut
and Liza de Vera shall continue to be given due course after a subdivision survey
of the portion occupied by them shall have been made at their pro-rata expense.

SO ORDERED.

In view thereof, petitioners maintain that they are the lawful owners of the buildings and the
legal possessors of subject land and that the records of the court proceedings show the
pendency of the administrative protest before the Bureau of Lands between the same litigating
parties (Rollo, pp. 166-167).

Respondents countered that the decision of the Bureau of Lands granting preferential right to
the petitioners to apply for the subject parcel of land is still on appeal before the Department of
Natural Resources.1 Hence, said decision which is not yet final, cannot affect the outcome of
this case because the authority given to the land department over the disposition of public land
does not exclude the courts from their jurisdiction over possessory actions, the character of the
land notwithstanding (Rollo, pp. 246-247).

The contention of private respondents is well taken.

This issue has long been laid to rest by this Court. As early as the case of Pitarque v. Sorilla (92
Phil. 55 [1952]), this Court ruled that:

The vesting of the Lands Department with authority to administer, dispose of, and
alienate public lands must not be understood as depriving the other branches of
the Government of the exercise of their respective functions of powers thereon,
such as the authority to stop disorders and quell breaches of peace by the police
and the authority on the part of the courts to take jurisdiction over possessory
actions arising therefrom not involving, directly or indirectly, alienation and
disposition.

Said ruling was reiterated in Bahayang v. Maceren, 96 Phil 390 (1955); in Molina v. De Bacud,
19 SCRA 56 (1967) and in Rallon v. Ruiz, Jr., 28 SCRA 331 (1969). In the latter case, the Court
specifically ruled on the jurisdictional question, as follows:
 Courts have jurisdiction over possessory actions involving public lands to
determine the issue of physical possession (in forcible entry cases before the
inferior court) on the better right of possession (in accion publiciana cases before
court of first instance). And this is because the issue of physical possession
raised before the courts is independent of the question of disposition and
alienation of public lands which should be threshed out in the Bureau of Lands.

The above ruling was further reiterated in Francisco v. Secretary of Agriculture and Natural
Resources (121 SCRA 380 [1983]) and in a recent case of National Development Co., et al. v.
Hervilla, G.R. No. 65718, June 30, 1987 (151 SCRA 520), where it was held that:

It is now well settled that the administration and disposition of public lands are
committed by law to the Director of Lands primarily, and ultimately to the
Secretary of Agriculture and Natural Resources. The jurisdiction of the Bureau of
Lands is confined to the determination of the respective rights of rival claimants
of public lands or to cases which involve disposition and alienation of public
lands. The jurisdiction of courts is limited to the determination of who has the
actual, physical possession or occupation of the land in question (in forcible entry
cases, before municipal courts) or, the better right of possession (in accion
publiciana, in cases before the Court of First Instance, now Regional Trial Court).

And even more recently in the case of Guerrero v. Amores, et al., G.R. No.
L-34492 promulgated on March 28, 1988, the Court clearly stated that "pending final
adjudication of ownership by the Bureau of Lands, the Court has jurisdiction to determine in the
meantime the right of possession over the land." Corollary thereto, the power to order the sheriff
to remove improvements and turn over the possession of the land to the party adjudged entitled
thereto, belongs only to the courts of justice and not to the Bureau of Lands.

In the same case, the application of the principle of exhaustion of administrative remedies with
reference to public lands, was further clarified by this Court as follows:

On the other hand, the application of the principle of exhaustion of administrative

remedies as a condition precedent to the filing of a juridical action is confined to
controversies arising out of the disposition of public lands (Geukoko vs. Araneta,
102 Phil. 706 (1957); Marukot vs. Jacinto, 98 Phil. 128 (1957), alienation of
public lands (Rallos vs. Ruiz, Jr., supra) or to the determination of the respective
rights of rival claimants to public lands (Pitarque vs. Sorilla, supra) and not to
possessory actions involving public lands which are limited to the determination
of who has the actual, physical possession or occupation of the land in question
(Rallos vs. Ruiz, Jr., supra).<äre||anº•1àw>

In fact, the Bureau of Lands in its decision of June 7, 1987, admitted the jurisdiction of the
courts to decide the case on the question of physical possession, although not on the question
of ownership (Rollo, p. 179).

Under the circumstances, a careful study of the records failed to show any cogent reason to
disturb the findings of the Municipal Trial Court in Cities and of the Regional Trial Court, both of
Olongapo City, and finally of the Court of Appeals.

WHEREFORE, the decision of respondent Court of Appeals is AFFIRMED and the temporary
restraining order is lifted. Costs against petitioners.

SO ORDERED.
 [G.R. NO. 166854 : December 6, 2006]

SEMIRARA COAL CORPORATION (now SEMIRARA MINING

CORPORATION),Petitioner, v. HGL DEVELOPMENT CORPORATION and HON. ANTONIO
BANTOLO, Presiding Judge, Branch 13, Regional Trial Court, 6th Judicial Region, Culasi,
Antique, Respondents.

DECISION

QUISUMBING, J.:

Before us is a Petition for Review on Certiorariassailing the Decision1 dated January 31, 2005,
of the Court of Appeals in CA G.R. CEB SP No. 00035 which affirmed the Resolution2 dated
September 16, 2004 of the Regional Trial Court of Culasi, Antique, Branch 13.

The facts are as follows:

Petitioner Semirara Mining Corporation is a grantee by the Department of Energy (DOE) of a

Coal Operating Contract under Presidential Decree No. 9723 over the entire Island of Semirara,
Antique, which contains an area of 5,500 hectares more or less.4

Private respondent HGL Development Corporation is a grantee of Forest Land Grazing Lease
Agreement (FLGLA) No. 184 by the then Ministry of Environment and Natural Resources,5 over
367 hectares of land located at the barrios of Bobog and Pontod, Semirara, Caluya, Antique.
The FLGLA No. 184 was issued on September 28, 19846 for a term of 25 years, to end on
December 31, 2009. Since its grant, HGL has been grazing cattle on the subject property.

Sometime in 1999, petitioner's representatives approached HGL and requested for permission
to allow petitioner's trucks and other equipment to pass through the property covered by the
FLGLA. HGL granted the request on condition that petitioner's use would not violate the FLGLA
in any way. Subsequently, however, petitioner erected several buildings for petitioner's
administrative offices and employees' residences without HGL's permission. Petitioner also
conducted blasting and excavation; constructed an access road to petitioner's minesite in the
Panaan Coal Reserve, Semirara; and maintained a stockyard for the coal it extracted from its
mines. Thus, the land which had been used for cattle grazing was greatly damaged, causing the
decimation of HGL's cattle.

On September 22, 1999, HGL wrote petitioner demanding full disclosure of petitioner's activities
on the subject land as well as prohibiting petitioner from constructing any improvements without
HGL's permission. Petitioner ignored the demand and continued with its activities.

On December 6, 2000, the Department of Environment and Natural Resources (DENR)

unilaterally cancelled FLGLA No. 184 and ordered HGL to vacate the premises. The DENR
found that HGL failed to pay the annual rental and surcharges from 1986 to 1999 and to submit
the required Grazing Reports from 1985 to 1999 or pay the corresponding penalty for non-
submission thereof.7

HGL contested the findings and filed a letter of reconsideration on January 12, 2001, which was
denied by DENR Secretary Heherson Alvarez in a letter-order dated December 9, 2002. The
DENR stated that it had coordinated with the DOE, which had jurisdiction over coal or coal
deposits and coal-bearing lands, and was informed that coal deposits were very likely to exist in
Sitios Bobog and Pontod. Hence, unless it could be proved that coal deposits were not present,
HGL's request had to be denied.8

HGL sent a letter dated March 6, 2003 to DENR Secretary Alvarez seeking reconsideration. The
DENR did not act on the letter and HGL later withdrew this second letter of reconsideration in its
letter of August 4, 2003.

On November 17, 2003, HGL filed a complaint against the DENR for specific performance and
damages with prayer for a temporary restraining order and/or writ of preliminary injunction,
docketed as Civil Case No. 20675 (2003) with the Regional Trial Court of Caloocan City. A writ
of preliminary injunction was issued by the Caloocan City RTC on December 22, 2003,
enjoining the DENR from enforcing its December 6, 2000 Order of Cancellation.

Meanwhile, HGL had also filed on November 17, 2003, a complaint against petitioner for
Recovery of Possession and Damages with Prayer for TRO and/or Writ of Preliminary
Mandatory Injunction, docketed as Civil Case No. C-146 with the Regional Trial Court of Culasi,
Antique, Branch 13.9

On December 1, 2003, the Antique trial court heard the application for Writ of Preliminary
Mandatory Injunction in Civil Case No. C-146. Only HGL presented its evidence. Reception for
petitioner's evidence was set to March 23-24, 2004. Petitioner was notified. But, on March 19,
2004, petitioner's President wrote the court asking for postponement since its counsel had
suddenly resigned. The trial court refused to take cognizance of the letter and treated it as a
mere scrap of paper since it failed to comply with the requisites for the filing of motions and
since it was not shown that petitioner's President was authorized to represent petitioner.
Because of petitioner's failure to attend the two scheduled hearings, the trial court, in an Order
dated March 24, 2004, deemed the application for issuance of a Writ of Preliminary Mandatory
Injunction submitted for decision. Meanwhile, petitioner had filed its Answer dated February 26,
2004, raising among others the affirmative defense that HGL no longer had any right to possess
the subject property since its FLGLA has already been cancelled and said cancellation had
already become final.

On April 14, 2004, petitioner filed a verified Omnibus Motion praying that the trial court
reconsider its Order of March 24, 2004, since petitioner's failure to attend the hearing was due
to an accident. Petitioner also prayed that the trial court admit as part of petitioner's evidence in
opposition to the application for injunction, certified copies of the DENR Order of Cancellation
dated December 6, 2000; HGL's letter of reconsideration dated January 12, 2001; letter of
DENR Secretary Alvarez dated December 9, 2002 denying reconsideration of the order; and
registry return receipt showing HGL's receipt of the denial of reconsideration. In the alternative,
petitioner prayed that the case be set for preliminary hearing on its affirmative defense of lack of
cause of action and forum-shopping.10 Public respondent denied the Omnibus Motion in a
Resolution dated June 21, 2004.

Petitioner filed a motion for reconsideration of the said resolution. Upon HGL's opposition, the
motion was declared submitted for resolution in accordance with the trial court's Order of August
5, 2004.11

On September 16, 2004, the trial court granted the prayer for issuance of a Writ of Preliminary
Mandatory Injunction.12 Petitioner did not move for reconsideration of the order. The Writ of
Preliminary Mandatory Injunction was accordingly issued by the trial court on October 6,
2004.13The writ restrained petitioner or its agents from encroaching on the subject land or
conducting any activities in it, and commanded petitioner to restore possession of the subject
land to HGL or its agents.

Petitioner questioned the Resolution dated September 16, 2004, and the Writ of Preliminary
Mandatory Injunction dated October 6, 2004 before the Court of Appeals in a petition
for certiorari, raising eight issues. On January 31, 2005, however, the appellate court dismissed
the petition. The Court of Appeals in its decision by Justice Magpale ruled on the issues posed
before the appellate court:

1. PRIVATE RESPONDENT HAS NO LEGAL RIGHT OR CAUSE OF ACTION UNDER THE

PRINCIPAL ACTION OR COMPLAINT, MUCH LESS, TO THE ANCILLARY REMEDY OF
INJUNCTION;

2. PRIVATE RESPONDENT DID NOT COME TO COURT WITH "CLEAN HANDS";

3. RESPONDENT JUDGE UNJUSTIFIABLY AND ARBITRARILY DEPRIVED PETITIONER OF

ITS FUNDAMENTAL RIGHT TO DUE PROCESS BY NOT GIVING IT AN OPPORTUNITY TO
PRESENT EVIDENCE IN OPPOSITION TO THE MANDATORY INJUNCTION;
4. RESPONDENT JUDGE IMMEDIATELY GRANTED THE APPLICATION FOR THE
ISSUANCE OF A WRIT OF MANDATORY INJUNCTION WITHOUT FIRST RESOLVING THE
PENDING MOTION FOR RECONSIDERATION DATED JULY 12, 2004 OF PETITIONER;

5. RESPONDENT JUDGE DID NOT CONSIDER OR ADMIT THE CERTIFIED TRUE COPIES
OF THE OFFICIAL RECORDS OF THE DENR CANCELLING PRIVATE RESPONDENT'S
FLGLA AS EVIDENCE AGAINST THE MANDATORY INJUNCTION PRAYED FOR;

6. RESPONDENT JUDGE SHOULD HAVE GRANTED PETITIONER'S MOTION FOR

PRELIMINARY HEARING ON ITS AFFIRMATIVE DEFENSE THAT PRIVATE RESPONDENT
UNDER ITS COMPLAINT HAS NO CAUSE OF ACTION AGAINST PETITIONER;

7. RESPONDENT JUDGE SHOULD HAVE DISMISSED THE COMPLAINT OUTRIGHT FOR

VIOLATION OF THE RULES ON FORUM SHOPPING BY PRIVATE RESPONDENT;

8. THE MANDATORY INJUNCTION ISSUED IN THE INSTANT CASE IS VIOLATIVE OF THE

PROVISIONS OF PRESIDENTIAL DECREE 605.14

The Court of Appeals in the assailed Decision dated January 31, 2005, opined and ruled as
follows (which we quote verbatim):

Anent the first issue, WE rule against the petitioner.

Perusal of the allegations in the Complaint filed by the private respondent with the court a quo
show that its cause of action is mainly anchored on the Forest Land Grazing Lease Agreement
("FLGLA") executed by and between said private respondent and the Department of
Environment and Natural Resources (DENR) which became effective on August 28, 1984 and
to expire on December 31, 2009.

Under the said lease agreement, the private respondent was granted permission to use and
possess the subject land comprising of 367-hectares located at the barrios of Bobog and
Pontod, Semirara Island, Antique for cattle-grazing purposes.

However, petitioner avers that the "FLGLA" on which private respondent's cause of action is
based was already cancelled by the DENR by virtue of its Orders dated December 6, 2000 and
December 9, 2002.

While it is true that the DENR issued the said Orders cancelling the "FLGLA", the same is not
yet FINAL since it is presently the subject of Civil Case No. 20675 pending in the Regional Trial
Court (RTC) of Caloocan City. Thus, for all intents and purposes, the "FLGLA" is still subsisting.

The construction of numerous buildings and the blasting activities thereon by the petitioner
undertaken without the consent of the private respondent blatantly violates the rights of the
latter because it reduced the area being used for cattle-grazing pursuant to the "FLGLA".

From the foregoing it is clear that the three (3) indispensable requisites of a cause of action, to
wit: (a) the right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (b) an obligation on the part of the named defendant to respect or not to violate such
right; (c) an act or omission on the part of such defendant is violative of the right of plaintiff or
constituting a breach of the obligation of defendant to the plaintiff for which the latter may
maintain an action for recovery of damages, are PRESENT.

Hence, having established that private respondent herein has a cause of action under the
principal action in Civil Case No. C-146, necessarily it also has a cause of action under the
ancillary remedy of injunction.

Anent the third issue, WE rule against the petitioner.

This Court finds that the petitioner was not deprived of due process.
It appears from the records of the instant case that the petitioner was given two (2) settings for
the reception of its evidence in support of its opposition to the prayer of herein private
respondent for the issuance of a writ of preliminary mandatory injunction. Unfortunately, on both
occasions, petitioner did not present its evidence.

Petitioner claims that its failure to attend the hearings for the reception of its evidence was
excusable due to the sudden resignation of its lawyer and as such, nobody can attend the
hearings of the case.

WE are not persuaded.

Scrutiny of the pleadings submitted by both parties shows that petitioner's lawyer, Atty. Mary
Catherine P. Hilario, affiliates herself with the law firm of BERNAS SAN JUAN & ASSOCIATE
LAW OFFICES with address at 2nd Floor, DMCI Plaza 2281 Pasong Tamo Extension, Makati
City, by signing on and in behalf of the said law office. This Court takes judicial notice of the fact
that law offices employ more than one (1) associate attorney aside from the name partners. As
such, it can easily assign the instant case to its other lawyers who are more than capable to
prepare the necessary "motion for postponement" or personally appear to the court a quo to
explain the situation.

Even assuming arguendo that Atty. Hilario is the only one who is knowledgeable of the facts of
the case, still, petitioners cannot claim that there was violation of due process because the
"ESSENCE of due process is reasonable opportunity to be heard x x x. What the law proscribed
is lack of opportunity to be heard." In the case at bar, petitioner was given two (2) settings to
present its evidence but it opted not to.

Lastly, a prayer for the issuance of a writ of preliminary mandatory injunction demands urgent
attention from the court and as such, delay/s is/are frowned upon due to the irreparable
damage/s that can be sustained by the movant.

Anent the fourth issue, WE rule against the petitioner.

Petitioner claims that the court a quo gravely erred when it issued the writ of preliminary
injunction without first resolving its Motion for Reconsideration dated July 12, 2004.

WE rule that the public respondent cannot be faulted for not resolving the Motion for
Reconsideration dated July 12, 2004 because the same partakes of the nature of a second
motion for reconsideration of the Order dated March 24, 2004.

Records readily disclose that a prior motion for reconsideration was filed by the petitioner herein
assailing the Order dated March 24, 2004. Although captioned as "Omnibus Motion" the same
was really a motion for reconsideration. Said "Omnibus Motion" was resolved by the court a
quo in its Order dated June 21, 2004.

Hence, the public respondent is no longer duty bound to resolve the subsequent, reiterative and
second motion for reconsideration.

Anent the fifth issue, WE rule against the petitioner.

The court a quo was correct in disregarding the documentary evidence submitted by the
petitioner in support of its opposition to the prayer for the issuance of a writ of preliminary
mandatory injunction.

The documentary evidence submitted by the petitioner herein with the court a quo were merely
attached to an "Omnibus Motion" and was not properly identified, marked and formally offered
as evidence which is a blatant disregard and violation of the Rules on Evidence.

Considering the above discussions, this Court finds that the public respondent did not abuse his
discretion in issuing the assailed resolution.

Anent the eighth issue, WE likewise rule against the petitioner.

Presidential Decree (PD) 605 is the law "Banning the Issuance by Courts of Preliminary
Injunctions in Cases Involving Concessions, Licenses, and Other Permits Issued by Public
Administrative Officials or Bodies for the Exploitation of Natural Resources."

Section 1 thereof provides that "No court of the Philippines shall have jurisdiction to issue any
restraining order, preliminary injunction or preliminary mandatory injunction in any case
involving or growing out of the issuance, suspension, revocation, approval or disapproval of any
concession, license, permit, patent or public grant of any kind for the disposition, exploitation,
utilization, exploration and development of the natural resources of the country."

The instant case is not within the purview of the above-cited law because the issue/s raised
herein does not involve or arise out of petitioner's coal operation contract.

The case filed with the court a quo is principally based on the alleged encroachment by the
petitioner of the subject land over which private respondent claims it has authority to occupy or
possess until December 31, 2009 pursuant to FLGLA No. 184.

As such, the preliminary mandatory injunction issued by the court a quo did not in any way
affect the efficacy of the petitioner's coal concession or license.

WHEREFORE, the instant petition for certiorari is DENIED and consequently, the assailed
Resolution is hereby AFFIRMED.

SO ORDERED.15

Hence, this instant petition. On February 23, 2005, this Court issued a TRO enjoining the
implementation and enforcement of the Court of Appeals Decision dated January 31, 2005.16

Petitioner submits in the petition now the following grounds:

THE RESOLUTION DATED 16 SEPTEMBER 2004 AND THE WRIT OF PRELIMINARY

MANDATORY INJUNCTION DATED 6 OCTOBER 2004 ISSUED BY PUBLIC RESPONDENT
ARE A PATENT NULLITY AS PRIVATE RESPONDENT CLEARLY HAS NO LEGAL RIGHT
OR CAUSE OF ACTION UNDER ITS PRINCIPAL ACTION OR COMPLAINT, MUCH LESS, TO
THE ANCILLARY REMEDY OF PRELIMINARY MANDATORY INJUNCTION;

II

A WRIT OF PRELIMINARY MANDATORY INJUNCTION CANNOT BE USED TO TAKE

PROPERTY OUT OF THE POSSESSION OF ONE PARTY AND PLACE IT INTO THAT OF
ANOTHER WHO HAS NO CLEAR LEGAL RIGHT THERETO;

III

PRIVATE RESPONDENT'S COMPLAINT IN CIVIL CASE NO. C-146 IS IN THE NATURE OF

AN ACCION PUBLICIANA, NOT FORCIBLE ENTRY; HENCE, A WRIT OF PRELIMINARY
MANDATORY INJUNCTION IS NOT A PROPER REMEDY;

IV

PETITIONER WAS UNJUSTIFIABLY AND ARBITRARILY DEPRIVED OF ITS FUNDAMENTAL

RIGHT TO DUE PROCESS WHEN IT WAS DENIED THE RIGHT TO PRESENT EVIDENCE IN
OPPOSITION TO THE APPLICATION FOR PRELIMINARY MANDATORY INJUNCTION;

THE PUBLIC RESPONDENT DELIBERATELY WITHHELD THE RESOLUTION OF

PETITIONER'S MOTION FOR RECONSIDERATION DATED 12 JULY 2004 AND
PROCEEDED TO PREMATURELY ISSUE THE PRELIMINARY MANDATORY INJUNCTION
IN VIOLATION OF PETITIONER'S RIGHT TO FAIR PLAY AND JUSTICE;

VI

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN:

1) HE REFUSED OR FAILED TO ADMIT AND/OR CONSIDER THE CERTIFIED DENR

RECORDS OF THE DENR ORDER CANCELLING PRIVATE RESPONDENT'S FLGLA;

2) HE REFUSED OR FAILED TO CONDUCT A HEARING ON THESE CERTIFIED PUBLIC

DOCUMENTS WHICH CONCLUSIVELY PROVE PRIVATE RESPONDENT'S LACK OF
CAUSE OF ACTION UNDER THE PRINCIPAL ACTION; AND

3) HE REFUSED OR FAILED TO DISMISS THE COMPLAINT OUTRIGHT FOR VIOLATING

THE RULES ON FORUM SHOPPING BY PRIVATE RESPONDENT.17

Before this Court decides the substantive issues raised herein, certain procedural issues that
were raised by the parties must first be addressed.

Petitioner contends that it was improper for the Regional Trial Court of Antique to issue the writ
of preliminary mandatory injunction (and for the Court of Appeals to affirm the same) without
giving it an opportunity to present evidence and without first resolving the Motion for
Reconsideration dated July 12, 2004. But as borne by the records of the case, it is evident that
petitioner had the opportunity to present evidence in its favor during the hearing for the
application of the writ of preliminary mandatory injunction before the lower court. However,
petitioner's failure to present its evidence was brought by its own failure to appear on the
hearing dates scheduled by the trial court. Thus, petitioner cannot complain of denial of due
process when it was its own doing that prevented it from presenting its evidence in opposition to
the application for a writ of preliminary mandatory injunction. It must be pointed out that the trial
court correctly refused to take cognizance of the letter of petitioner's President which prayed for
the postponement of the scheduled hearings. Said letter was not a proper motion that must be
filed before the lower court for the stated purpose by its counsel of record. Moreover, there was
absolutely no proof given that the sender of the letter was the duly authorized representative of
petitioner.

Second, the filing of the motion for reconsideration dated July 12, 2004, which essentially
reproduced the arguments contained in the previously filed and denied Omnibus Motion dated
April 14, 2004, renders the said motion for reconsideration dated July 12, 2004, a mere pro
forma motion. Moreover, the motion for reconsideration dated June 12, 2004, being a second
motion for reconsideration, the trial court correctly denied it for being a prohibited motion.18

Third, it must be stated that the petition for certiorari before the Court of Appeals should not
have prospered because petitioner failed to file a motion for reconsideration from the assailed
resolution of the Regional Trial Court of Antique, granting the writ of preliminary mandatory
injunction. Well settled is the rule that before a party may resort to the extraordinary writ
of certiorari, it must be shown that there is no other plain, speedy and adequate remedy in the
ordinary course of law. Thus, it has been held by this Court that a motion for reconsideration is a
condition sine qua non for the grant of the extraordinary writ of certiorari .19 Here, a motion for
reconsideration was an available plain, speedy and adequate remedy in the ordinary course of
law, designed to give the trial court the opportunity to correct itself.

Now on the merits of the instant petition.

The pivotal issue confronting this Court is whether the Court of Appeals seriously erred or
committed grave abuse of discretion in affirming the September 16, 2004 Resolution of the
Regional Trial Court of Antique granting the writ of preliminary mandatory injunction.

Under Article 539 of the New Civil Code, a lawful possessor is entitled to be respected in his
possession and any disturbance of possession is a ground for the issuance of a writ of
preliminary mandatory injunction to restore the possession.20Thus, petitioner's claim that the
issuance of a writ of preliminary mandatory injunction is improper because the instant case is
allegedly one for accion publiciana deserves no consideration. This Court has already ruled
in Torre, et al. v. Hon. J. Querubin, et al.21 that prior to the promulgation of the New Civil Code, it
was deemed improper to issue a writ of preliminary injunction where the party to be enjoined
had already taken complete material possession of the property involved. However, with the
enactment of Article 539, the plaintiff is now allowed to avail of a writ of preliminary mandatory
injunction to restore him in his possession during the pendency of his action to recover
possession.22

It is likewise established that a writ of mandatory injunction is granted upon a showing that (a)
the invasion of the right is material and substantial; (b) the right of complainant is clear and
unmistakable; and (c) there is an urgent and permanent necessity for the writ to prevent serious
damage.23

In the instant case, it is clear that as holder of a pasture lease agreement under FLGLA No.
184, HGL has a clear and unmistakable right to the possession of the subject property. Recall
that under the FLGLA, HGL has the right to the lawful possession of the subject property for a
period of 25 years or until 2009. As lawful possessor, HGL is therefore entitled to protection of
its possession of the subject property and any disturbance of its possession is a valid ground for
the issuance of a writ of preliminary mandatory injunction in its favor. The right of HGL to the
possession of the property is confirmed by petitioner itself when it sought permission from HGL
to use the subject property in 1999. In contrast to HGL's clear legal right to use and possess the
subject property, petitioner's possession was merely by tolerance of HGL and only because
HGL permitted petitioner to use a portion of the subject property so that the latter could gain
easier access to its mining area in the Panaan Coal Reserve.

The urgency and necessity for the issuance of a writ of mandatory injunction also cannot be
denied, considering that HGL stands to suffer material and substantial injury as a result of
petitioner's continuous intrusion into the subject property. Petitioner's continued occupation of
the property not only results in the deprivation of HGL of the use and possession of the subject
property but likewise affects HGL's business operations. It must be noted that petitioner
occupied the property and prevented HGL from conducting its business way back in 1999 when
HGL still had the right to the use and possession of the property for another 10 years or until
2009. At the very least, the failure of HGL to operate its cattle-grazing business is perceived as
an inability by HGL to comply with the demands of its customers and sows doubts in HGL's
capacity to continue doing business. This damage to HGL's business standing is irreparable
injury because no fair and reasonable redress can be had by HGL insofar as the damage to its
goodwill and business reputation is concerned.

Petitioner posits that FLGLA No. 184 had already been cancelled by the DENR in its order
dated December 6, 2000. But as rightly held by the Court of Appeals, the alleged cancellation of
FLGLA No. 184 through a unilateral act of the DENR does not automatically render the FLGLA
invalid since the unilateral cancellation is subject of a separate case which is still pending before
the Regional Trial Court of Caloocan City. Notably, said court has issued a writ of preliminary
injunction enjoining the DENR from enforcing its order of cancellation of FLGLA No. 184.

The Court of Appeals found that the construction of numerous buildings and blasting activities
by petitioner were done without the consent of HGL, but in blatant violation of its rights as the
lessee of the subject property. It was likewise found that these unauthorized activities effectively
deprived HGL of its right to use the subject property for cattle-grazing pursuant to the FLGLA. It
cannot be denied that the continuance of petitioner's possession during the pendency of the
case for recovery of possession will not only be unfair but will undeniably work injustice to HGL.
It would also cause continuing damage and material injury to HGL. Thus, the Court of Appeals
correctly upheld the issuance of the writ of preliminary mandatory injunction in favor of HGL.

WHEREFORE, the instant petition is DENIED. The Decision dated January 31, 2005, of the
Court of Appeals in CA G.R. CEB SP No. 00035, which affirmed the Resolution dated
September 16, 2004 of the Regional Trial Court of Culasi, Antique, Branch 13, as well as the
Writ of Preliminary Mandatory Injunction dated October 6, 2004 issued pursuant to said
Resolution, is AFFIRMED. The temporary restraining order issued by this Court is hereby lifted.
No pronouncement as to costs.
SO ORDERED.
G.R. No. L-30817 September 29, 1972

DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador
Dizon", petitioner,
vs.
LOURDES G. SUNTAY, respondent.

Andres T. Velarde for petitioner.

Rafael G. Suntay for respondent.

FERNANDO, J.:p

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 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 use, 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
Gracia v. 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 in 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 v. 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 v. 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 Court6 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 v. 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 v. Pitargue, 12 promulgated in 1912, "allowed to gainsay [his] own acts or deny rights
which [he had] previously recognized." 13Some 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 wherever and whenever the special circumstances of a case so demand." 18

How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of
estoppel? Neither the promptings of equity nor the mandates of moral right and natural justice
come to his rescue. He is engaged in a business where presumably ordinary prudence would
manifest itself to ascertain whether or not an individual who is offering a jewelry by way of a
pledge is entitled to do so. If no such care be taken, perhaps because of the difficulty of
resisting opportunity for profit, he should be the last to complain if 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 v.
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 by extreme
poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly
invoked.

WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with costs
against petitioner.

Concepcion, C.J., Zaldivar, Makasiar, Antonio and Esguerra, JJ., concur.

Makalintal and Barredo, JJ., took no part.

Castro, J., reserves his vote.

Separate Opinions

TEEHANKEE, J., concurring:

I concur in the main opinion of Mr. Justice Fernando, tracing and confirming the long settled and
uniform jurisprudence since 1905 based on the express statutory provision of article 559 of our
Civil Code (formerly article 464 of the old Civil Code) that the owner "who has lost any movable
or has been unlawfully deprived thereof may recover it from the person in possession of the
same," the only exception expressly provided in the codal article being that "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."1

Senator Tolentino's submittal in his commentaries on the Civil Code "that the better view is to
consider 'unlawfully deprived' as limited to unlawful taking, such as theft or robbery, and should
not include disposition through abuse of confidence. Thus, if the owner has entrusted personal
property to a bailee, such as for transportation, pledge, loan or deposit, without transmitting
ownership, and the latter alienates it to a third person who acquires it in good faith, the owner
cannot recover it from such third person, "is, as he himself admits, based on the express
provision of the French Code which allows the true owner of personal property to recover it from
the possessor in good faith without reimbursement only "if it has been stolen from him." He
concedes likewise that "our Code, following the Spanish code, uses broader language than that
used in the French code" — since our Code provides that the owner who has been "unlawfully
deprived" of personal property may recover it from the possessor without reimbursement, with
the sole exception where the possessor acquired the article in good faith at a public sale.2

He thus concedes finally that "(T)here are writers who believe that the phrase 'unlawfully
deprived' in our Code does not have the same meaning as stolen in the French code; that it is
used in the general sense, and is not used in the specific sense of deprivation by robbery or
theft. Under this view, it extends to all cases where there has been no valid transmission of
ownership, including the case where the proprietor has entrusted the thing to a borrower,
depositary, or lessee who has sold the same. It is believed that the owner in such case is
undoubtedly unlawfully deprived of his property, and may recover the same from a possessor in
good faith" (citing De Buen: 2-II Colin & Capitant 1008; 1 Bonet
234)3 and cites the long unbroken line of decisions of the Court of Appeals and of this Court
upholding the import of the broader language of the codal article in question.

Indeed, if our legislature had intended to narrow the scope of the term "unlawfully deprived" to
"stolen" as advocated by Tolentino, it certainly would have adopted and used such a narrower
term rather than the broad language of article 464 of the old Spanish Civil Code with its long-
established and accepted meaning in accordance with our jurisprudence.

Petitioner's contentions at bar had long been disposed of in the Court's 1911 decision of Arenas
vs. Raymundo,4 per Mr. Justice Florentino Torres, reiterating the doctrine of the earlier cases
and holding that

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.

xxx xxx xxx

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.

By the same token, the contention that the owner may recover the lost article of which he has
been unlawfully deprived without reimbursement of the sum received by the embezzler from the
pawnshop only after a criminal conviction of the embezzler, is to add a requirement that is not in
the codal article and to unduly prejudice the victim of embezzlement, as pointed out by the
Court in Arenas, supra.

The civil action that the owner must resort to for the recovery of his personal property of which
he has been unlawfully deprived as against the possessor (where the latter refuses to honor the
claim, presumably on same valid doubts as to the genuineness of the claim) gives the
possessor every adequate protection and opportunity to contest the owner's claim of recovery.
The owner must therein establish by competent evidence his lawful claim, and show to the
court's satisfaction his lawful ownership of the article claimed and that he had been unlawfully
deprived thereof.

I therefore find no reason to set aside the long settled interpretation given by our jurisprudence
to article 559 (formerly article 464) of our Civil Code in accordance with its clear and
unambiguous language, as reaffirmed in the case at bar.

Separate Opinions

TEEHANKEE, J., concurring:

I concur in the main opinion of Mr. Justice Fernando, tracing and confirming the long settled and
uniform jurisprudence since 1905 based on the express statutory provision of article 559 of our
Civil Code (formerly article 464 of the old Civil Code) that the owner "who has lost any movable
or has been unlawfully deprived thereof may recover it from the person in possession of the
same," the only exception expressly provided in the codal article being that "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."1

Senator Tolentino's submittal in his commentaries on the Civil Code "that the better view is to
consider 'unlawfully deprived' as limited to unlawful taking, such as theft or robbery, and should
not include disposition through abuse of confidence. Thus, if the owner has entrusted personal
property to a bailee, such as for transportation, pledge, loan or deposit, without transmitting
ownership, and the latter alienates it to a third person who acquires it in good faith, the owner
cannot recover it from such third person, "is, as he himself admits, based on the express
provision of the French Code which allows the true owner of personal property to recover it from
the possessor in good faith without reimbursement only "if it has been stolen from him." He
concedes likewise that "our Code, following the Spanish code, uses broader language than that
used in the French code" — since our Code provides that the owner who has been "unlawfully
deprived" of personal property may recover it from the possessor without reimbursement, with
the sole exception where the possessor acquired the article in good faith at a public sale.2

He thus concedes finally that "(T)here are writers who believe that the phrase 'unlawfully
deprived' in our Code does not have the same meaning as stolen in the French code; that it is
used in the general sense, and is not used in the specific sense of deprivation by robbery or
theft. Under this view, it extends to all cases where there has been no valid transmission of
ownership, including the case where the proprietor has entrusted the thing to a borrower,
depositary, or lessee who has sold the same. It is believed that the owner in such case is
undoubtedly unlawfully deprived of his property, and may recover the same from a possessor in
good faith" (citing De Buen: 2-II Colin & Capitant 1008; 1 Bonet
234)3 and cites the long unbroken line of decisions of the Court of Appeals and of this Court
upholding the import of the broader language of the codal article in question.

Indeed, if our legislature had intended to narrow the scope of the term "unlawfully deprived" to
"stolen" as advocated by Tolentino, it certainly would have adopted and used such a narrower
term rather than the broad language of article 464 of the old Spanish Civil Code with its long-
established and accepted meaning in accordance with our jurisprudence.

Petitioner's contentions at bar had long been disposed of in the Court's 1911 decision of Arenas
vs. Raymundo,4 per Mr. Justice Florentino Torres, reiterating the doctrine of the earlier cases
and holding that

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.

xxx xxx xxx

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.

By the same token, the contention that the owner may recover the lost article of which he has
been unlawfully deprived without reimbursement of the sum received by the embezzler from the
pawnshop only after a criminal conviction of the embezzler, is to add a requirement that is not in
the codal article and to unduly prejudice the victim of embezzlement, as pointed out by the
Court in Arenas, supra.

The civil action that the owner must resort to for the recovery of his personal property of which
he has been unlawfully deprived as against the possessor (where the latter refuses to honor the
claim, presumably on same valid doubts as to the genuineness of the claim) gives the
possessor every adequate protection and opportunity to contest the owner's claim of recovery.
The owner must therein establish by competent evidence his lawful claim, and show to the
court's satisfaction his lawful ownership of the article claimed and that he had been unlawfully
deprived thereof.

I therefore find no reason to set aside the long settled interpretation given by our jurisprudence
to article 559 (formerly article 464) of our Civil Code in accordance with its clear and
unambiguous language, as reaffirmed in the case at bar.
ARNELITO ADLAWAN, G.R. No. 161916
Petitioner,
Present:
Panganiban, C.J. (Chairman),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
EMETERIO M. ADLAWAN and
NARCISA M. ADLAWAN, Promulgated:
Respondents.
January 20, 2006

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

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review is the September 23, 2003 Decision[1] of the Court of Appeals
in CA-G.R. SP No. 74921 which set aside the September 13, 2002 Decision[2] of the Regional
Trial Court (RTC) of Cebu City, Branch 7, in Civil Case No. CEB-27806, and reinstated the
February 12, 2002 Judgment[3] of the Municipal Trial Court (MTC) of Minglanilla, Metro Cebu, in
Civil Case No. 392, dismissing petitioner Arnelito Adlawan's unlawful detainer suit against
respondents Emeterio and Narcisa Adlawan. Likewise questioned is the January 8, 2004
Resolution[4] of the Court of Appeals which denied petitioner's motion for reconsideration.

The instant ejectment suit stemmed from the parties' dispute over Lot 7226 and the house built
thereon, covered by Transfer Certificate of Title No. 8842,[5]registered in the name of the late
Dominador Adlawan and located at Barrio Lipata, Municipality of Minglanilla, Cebu. In his
complaint, petitioner claimed that he is an acknowledged illegitimate child[6] of Dominador who
died on May 28, 1987 without any other issue. Claiming to be the sole heir of Dominador, he
executed an affidavit adjudicating to himself Lot 7226 and the house built thereon.[7] Out of
respect and generosity to respondents who are the siblings of his father, he granted their plea to
occupy the subject property provided they would vacate the same should his need for the property
arise. Sometime in January 1999, he verbally requested respondents to vacate the house and lot,
but they refused and filed instead an action for quieting of title[8] with the RTC. Finally, upon
respondents' refusal to heed the last demand letter to vacate dated August 2, 2000, petitioner
filed the instant case on August 9, 2000.[9]

On the other hand, respondents Narcisa and Emeterio, 70 and 59 years of age,
respectively,[10]denied that they begged petitioner to allow them to stay on the questioned
property and stressed that they have been occupying Lot 7226 and the house standing thereon
since birth. They alleged that Lot 7226 was originally registered in the name of their deceased
father, Ramon Adlawan[11] and the ancestral house standing thereon was owned by Ramon and
their mother, Oligia Maacap Adlawan. The spouses had nine[12] children including the late
Dominador and herein surviving respondents Emeterio and Narcisa. During the lifetime of their
parents and deceased siblings, all of them lived on the said property. Dominador and his wife,
Graciana Ramas Adlawan, who died without issue, also occupied the same.[13] Petitioner, on the
other hand, is a stranger who never had possession of Lot 7226.
Sometime in 1961, spouses Ramon and Oligia needed money to finance the renovation of their
house. Since they were not qualified to obtain a loan, they transferred ownership of Lot 7226 in
the name of their son Dominador who was the only one in the family who had a college education.
By virtue of a January 31, 1962 simulated deed of sale,[14] a title was issued to Dominador which
enabled him to secure a loan with Lot 7226 as collateral. Notwithstanding the execution of the
simulated deed, Dominador, then single, never disputed his parents' ownership of the lot. He and
his wife, Graciana, did not disturb respondents' possession of the property until they died on May
28, 1987 and May 6, 1997, respectively.

Respondents also contended that Dominador's signature at the back of petitioner's birth certificate
was forged, hence, the latter is not an heir of Dominador and has no right to claim ownership of
Lot 7226.[15] They argued that even if petitioner is indeed Dominador's acknowledged illegitimate
son, his right to succeed is doubtful because Dominador was survived by his wife, Graciana.[16]
On February 12, 2002, the MTC dismissed the complaint holding that the establishment of
petitioner's filiation and the settlement of the estate of Dominador are conditions precedent to the
accrual of petitioner's action for ejectment. It added that since Dominador was survived by his
wife, Graciana, who died 10 years thereafter, her legal heirs are also entitled to their share in Lot
7226. The dispositive portion thereof, reads:

In View of the foregoing, for failure to prove by preponderance of evidence, the

plaintiff's cause of action, the above-entitled case is hereby Ordered DISMISSED.

SO ORDERED.[17]

On appeal by petitioner, the RTC reversed the decision of the MTC holding that the title of
Dominador over Lot 7226 cannot be collaterally attacked. It thus ordered respondents to turn over
possession of the controverted lot to petitioner and to pay compensation for the use and
occupation of the premises. The decretal portion thereof, provides:

Wherefore, the Judgment, dated February 12, 2002, of the Municipal Trial Court
of Minglanilla, Cebu, in Civil Case No. 392, is reversed. Defendants-appellees are
directed to restore to plaintiff-appellant possession of Lot 7226 and the house
thereon, and to pay plaintiff-appellant, beginning in August 2000, compensation
for their use and occupation of the property in the amount of P500.00 a month.

So ordered.[18]

Meanwhile, the RTC granted petitioner's motion for execution pending appeal[19] which was
opposed by the alleged nephew and nieces of Graciana in their motion for leave to intervene and
to file an answer in intervention.[20] They contended that as heirs of Graciana, they have a share
in Lot 7226 and that intervention is necessary to protect their right over the property. In addition,
they declared that as co-owners of the property, they are allowing respondents to stay in Lot 7226
until a formal partition of the property is made.

The RTC denied the motion for leave to intervene.[21]It, however, recalled the order granting the
execution pending appeal having lost jurisdiction over the case in view of the petition filed by
respondents with the Court of Appeals.[22]
On September 23, 2003, the Court of Appeals set aside the decision of the RTC and reinstated
the judgment of the MTC. It ratiocinated that petitioner and the heirs of Graciana are co-owners
of Lot 7226. As such, petitioner cannot eject respondents from the property via an unlawful
detainer suit filed in his own name and as the sole owner of the property. Thus '

WHEEFORE, premises considered, the appealed Decision dated September 13,

2002 of the Regional Trial Court of Cebu City, Branch 7, in Civil Case No. CEB-
27806 is REVERSED and SET ASIDE, and the Judgment dated February 12, 2002
of the Municipal Trial Court of Minglanilla, Metro Cebu, in Civil Case No. 392 is
REINSTATED. Costs against the respondent.

SO ORDERED.[23]

Petitioner's motion for reconsideration was denied. Hence, the instant petition.

The decisive issue to be resolved is whether or not petitioner can validly maintain the instant case
for ejectment.

Petitioner averred that he is an acknowledged illegitimate son and the sole heir of Dominador. He
in fact executed an affidavit adjudicating to himself the controverted property. In ruling for the
petitioner, the RTC held that the questioned January 31, 1962 deed of sale validly transferred title
to Dominador and that petitioner is his acknowledged illegitimate son who inherited ownership of
the questioned lot. The Court notes, however, that the RTC lost sight of the fact that the theory of
succession invoked by petitioner would end up proving that he is not the sole owner of Lot 7226.
This is so because Dominador was survived not only by petitioner but also by his legal wife,
Graciana, who died 10 years after the demise of Dominador on May 28, 1987.[24] By intestate
succession, Graciana and petitioner became co-owners of Lot 7226.[25] The death of Graciana
on May 6, 1997, did not make petitioner the absolute owner of Lot 7226 because the share of
Graciana passed to her relatives by consanguinity and not to petitioner with whom she had no
blood relations. The Court of Appeals thus correctly held that petitioner has no authority to institute
the instant action as the sole owner of Lot 7226.

Petitioner contends that even granting that he has co-owners over Lot 7226, he can on his own
file the instant case pursuant to Article 487 of the Civil Code which provides:

ART. 487. Any one of the co-owners may bring an action in ejectment.

This article covers all kinds of actions for the recovery of possession. Article 487 includes forcible
entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and
recovery of ownership (accion de reivindicacion).[26] A co-owner may bring such an action
without the necessity of joining all the other co-owners as co-plaintiffs because the suit is
presumed to have been filed to benefit his co-owners. It should be stressed, however, that where
the suit is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the
possession of the litigated property, the action should be dismissed.[27]

The renowned civilist, Professor Arturo M. Tolentino, explained '

A co-owner may bring such an action, without the necessity of joining all the other
co-owners as co-plaintiffs, because the suit is deemed to be instituted for the
benefit of all. If the action is for the benefit of the plaintiff alone, such that he
 claims possession for himself and not for the co-ownership, the action will
not prosper. (Emphasis added)[28]

In Baloloy v. Hular,[29] respondent filed a complaint for quieting of title claiming exclusive
ownership of the property, but the evidence showed that respondent has co-owners over the
property. In dismissing the complaint for want of respondent's authority to file the case, the Court
held that '
Under Article 487 of the New Civil Code, any of the co-owners may bring an action
in ejectment. This article covers all kinds of actions for the recovery of possession,
including an accion publiciana and a reinvidicatory action. A co-owner may bring
such an action without the necessity of joining all the other co-owners as co-
plaintiffs because the suit is deemed to be instituted for the benefit of all. Any
judgment of the court in favor of the co-owner will benefit the others but if such
judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-
owners. If the action is for the benefit of the plaintiff alone who claims to be the
sole owner and entitled to the possession thereof, the action will not prosper unless
he impleads the other co-owners who are indispensable parties.

In this case, the respondent alone filed the complaint, claiming sole ownership over
the subject property and praying that he be declared the sole owner thereof. There
is no proof that the other co-owners had waived their rights over the subject
property or conveyed the same to the respondent or such co-owners were aware
of the case in the trial court. The trial court rendered judgment declaring the
respondent as the sole owner of the property and entitled to its possession, to the
prejudice of the latter's siblings. Patently then, the decision of the trial court is
erroneous.

Under Section 7, Rule 3 of the Rules of Court, the respondent was mandated to
implead his siblings, being co-owners of the property, as parties. The respondent
failed to comply with the rule. It must, likewise, be stressed that the Republic of the
Philippines is also an indispensable party as defendant because the respondent
sought the nullification of OCT No. P-16540 which was issued based on Free
Patent No. 384019. Unless the State is impleaded as party-defendant, any
decision of the Court would not be binding on it. It has been held that the absence
of an indispensable party in a case renders ineffective all the proceedings
subsequent to the filing of the complaint including the judgment. The absence of
the respondent's siblings, as parties, rendered all proceedings subsequent to the
filing thereof, including the judgment of the court, ineffective for want of authority
to act, not only as to the absent parties but even as to those present.[30]

In the instant case, it is not disputed that petitioner brought the suit for unlawful detainer in his
name alone and for his own benefit to the exclusion of the heirs of Graciana as he even executed
an affidavit of self- adjudication over the disputed property. It is clear therefore that petitioner
cannot validly maintain the instant action considering that he does not recognize the co-ownership
that necessarily flows from his theory of succession to the property of his father, Dominador.

In the same vein, there is no merit in petitioner's claim that he has the legal personality to file the
present unlawful detainer suit because the ejectment of respondents would benefit not only him
but also his alleged co-owners. However, petitioner forgets that he filed the instant case to acquire
possession of the property and to recover damages. If granted, he alone will gain possession of
the lot and benefit from the proceeds of the award of damages to the exclusion of the heirs of
Graciana. Hence, petitioner cannot successfully capitalize on the alleged benefit to his co-owners.
Incidentally, it should be pointed out that in default of the said heirs of Graciana, whom petitioner
labeled as 'fictitious heirs, the State will inherit her share[31] and will thus be petitioner's co-owner
entitled to possession and enjoyment of the property.
The present controversy should be differentiated from the cases where the Court upheld the right
of a co-owner to file a suit pursuant to Article 487 of the Civil Code. In Resuena v. Court of
Appeals,[32] and Sering v. Plazo,[33] the co-owners who filed the ejectment case did not
represent themselves as the exclusive owner of the property. In Celino v. Heirs of Alejo and
Teresa Santiago,[34] the complaint for quieting of title was brought in behalf of the co-owners
precisely to recover lots owned in common.[35] Similarly in Vencilao v. Camarenta,[36] the
amended complaint specified that the plaintiff is one of the heirs who co-owns the controverted
properties.

In the foregoing cases, the plaintiff never disputed the existence of a co-ownership nor claimed
to be the sole or exclusive owner of the litigated lot. A favorable decision therein would of course
inure to the benefit not only of the plaintiff but to his co-owners as well. The instant case, however,
presents an entirely different backdrop as petitioner vigorously asserted absolute and sole
ownership of the questioned lot. In his complaint, petitioner made the following allegations, to wit:

3. The plaintiff was the only son (illegitimate) and sole heir of the late
DOMINADOR ADLAWAN who died intestate on 28 May 1987 without any other
descendant nor ascendant x x x.

xxxx

5. Being the only child/descendant and, therefore, sole heir of the deceased
Dominador Adlawan, the plaintiff became the absolute owner, and
automatically took POSSESSION, of the aforementioned house and lot x x x.
(Emphasis added)[37]

Clearly, the said cases find no application here because petitioner's action operates as a complete
repudiation of the existence of co-ownership and not in representation or recognition thereof.
Dismissal of the complaint is therefore proper. As noted by Former Supreme Court Associate
Justice Edgrado L. Paras '[i]t is understood, of course, that the action [under Article 487 of the
Civil Code] is being instituted for all. Hence, if the co-owner expressly states that he is bringing
the case only for himself, the action should not be allowed to prosper.[38]

Indeed, respondents' not less than four decade actual physical possession of the questioned
ancestral house and lot deserves to be respected especially so that petitioner failed to show that
he has the requisite personality and authority as co-owner to file the instant case. Justice dictates
that respondents who are now in the twilight years of their life be granted possession of their
ancestral property where their parents and siblings lived during their lifetime, and where they, will
probably spend the remaining days of their life.

WHEREFORE, the petition is DENIED. The September 23, 2003 Decision of the Court of Appeals
in CA-G.R. SP No. 74921 which reinstated the February 12, 2002 Judgment of the Municipal Trial
Court of Minglanilla, Metro Cebu, dismissing petitioner's complaint in Civil Case No. 392, and its
January 8, 2004 Resolution, are AFFIRMED.

SO ORDERED.
G.R. No. 157767 September 9, 2004

REYNALDO BALOLOY and ADELINA BALOLOY-HIJE, petitioners,

vs.
ALFREDO HULAR, respondent.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court, as
amended, of the Decision1 of the Court of Appeals in CA-G.R. CV No. 51081, which affirmed the
Decision2 of the Regional Trial Court of Sorsogon, Branch 51, in Civil Case No. 93-5871.

The antecedents are as follows:

On May 11, 1993, respondent Alfredo Hular filed a complaint for quieting of title of real
property with damages against the children and heirs of Iluminado Baloloy, namely,
Anacorita, Antonio, and petitioners Reynaldo and Adelina, all surnamed Baloloy. The
respondent alleged, inter alia, in his complaint that his father, Astrologo Hular, was the
owner of a parcel of residential land located in Sitio Pagñe, Biriran, Juban, Sorsogon,
with an area of 287 square meters, and that such lot was part of Lot No. 3347 of the
Juban Cadastre. The respondent alleged that Iluminado Baloloy, the petitioners’
predecessor-in-interest, was able to secure a Free Patent over the property through
fraud on March 1, 1968, on the basis of which the Register of Deeds issued Original
Certificate of Title (OCT) No. P-16540 in his name. The respondent later discovered that
in the cadastral survey of lands in Juban, the property of his father, which actually
consisted of 1,405 square meters was made to form part of Lot No. 3353, the property of
Iluminado Baloloy. According to the respondent, even if the residential land was made to
form part of Lot No. 3353 registered under the name of Iluminado Baloloy, he had
acquired ownership of the property by acquisitive prescription, as he and his
predecessors had been in continuous, uninterrupted and open possession of the
property in the concept of owners for more than 60 years.

The respondent prayed for alternative reliefs that, after due hearing, judgment be
rendered in his favor, thus:

a) Declaring the plaintiff as the absolute owner of the land in question;

b) Ordering the defendants to perpetually refrain from disturbing plaintiff in his

peaceful possession in the land in question;

c) Ordering the defendants to remove their houses in the land in question, and to
declare OCT No. P-16540, and whatever paper, form, document or proceeding
the defendants may have, as null and void and without any effect whatsoever as
far as the land in question is concerned as they cast cloud upon the title of the
plaintiff;

d) In the alternative, defendants be ordered to reconvey the title in favor of the

plaintiff as far as the land in question is concerned;

e) Ordering the defendants to jointly and severally pay the plaintiff the amount of
₱50,000.00 as moral damages; ₱5,000.00 as attorney’s fee plus ₱500.00 for
every appearance or hearing of his lawyer in court; ₱1,500.00 as consultation
fee; ₱5,000.00 as incidental litigation expenses; ₱20,000.00 as exemplary
damages; and to pay the costs.

Plaintiff further prays for such other relief [as are] just and equitable in the premises. 3

The Evidence of the Respondent

The respondent adduced evidence that the Spouses Lino and Victoriana Estopin were the
original owners of a parcel of land located in Barangay Biriran, Juban, Sorsogon, designated as
Lot No. 3347 of the Juban Cadastre. A major portion of the property, where a house of strong
materials was constructed, was agricultural, while the rest was residential. The respondent also
averred that the Spouses Estopin declared the property in their names under Tax Declaration
No. 4790. On the north of the agricultural portion of the property was the road leading to Biriran,
while north of the residential portion was a creek (canal) and the property of Iluminado.

When Lino Estopin died intestate, his widow, Victoriana Lagata, executed a Deed of Absolute
Sale4 on November 11, 1961 over the agricultural portion of Lot No. 3347, which had an area of
15,906 square meters, more or less, in favor of Astrologo Hular, married to Lorenza Hular.
Shortly thereafter, on November 25, 1961, Lagata executed a Deed of Absolute Sale5 over the
residential portion of the property with an area of 287 square meters, including the house
constructed thereon, in favor of Hular. Hular and his family, including his son, the respondent,
then resided in the property. In 1961 or thereabouts, Iluminado asked Hular’s permission to
construct a house on a portion of Lot No. 3347 near the road, and the latter agreed. In l977,
Lorenza Hular, wife of Astrologo, declared the residential land in the latter’s name under Tax
Declaration No. 6841.6

Earlier, or on August 14, 1945, Irene Griarte had executed a Deed of Absolute Sale over a
coconut land located in Barangay Biriran, Juban, with an area of 6,666 square meters in favor of
Martiniano Balbedina, with the following boundaries: North, Alejandro Gruta; South, Lino
Estopin; East, River Pagñe; West, Pedro Grepal and Esteban Grepal.7 Subsequently, after a
cadastral survey was conducted on lands in Juban, the property of Balbedina was designated
as Lot No. 3353, with the following boundaries: North: Lot No. 3353 (portion), Alejandro Gruta;
South: Lino Estopin; West: Lot No. 3349; East: creek. A trail was then established between Lot
No. 3353 and Lot No. 3347 resulting in the decrease of Lot No. 3353 owned by Balbedina to
4,651 square meters. He declared the property under his name under Tax Declaration No. 191
with the following boundaries: North: Lot No. 3353 (portion) Alejandro Gruta; South: trail; East:
creek; West: Lot No. 3349.8

On June 4, 1951, Balbedina executed a Deed of Absolute Sale over Lot No. 3353 with an area
of only 4,651 square meters in favor of Iluminado.9 The latter declared the property in his name
under Tax Declaration No. 5359.10Iluminado filed an application with the Bureau of Lands for a
free patent over the entirety of Lot No. 3353 on January 5, 1960.11 He indicated in his
application that the property was not occupied by any person and was disposable or alienable
public land. In support thereof, he executed an affidavit wherein he declared that he purchased
about one-half portion of the property in 1951 based on a deed of absolute sale attached to said
affidavit; that in 1957, he purchased the other one-half portion, but "for economic reasons," no
deed of sale was executed by the parties. He also alleged that the improvements on the land
consisted of coconut trees.12 The Bureau of Lands processed the application in due course.

In the meantime, Iluminado constructed his house on a portion of Lot No. 3353 near the trail
(road) leading to Biriran. He and his family, including his children, forthwith resided in said
house.

On March 1, 1968, the Secretary of Agricultural and Natural Resources approved Iluminado’s
application and issued Free Patent No. 384019 covering Lot No. 3353 with an area of 9,302
square meters, on the basis of which OCT No. P-16540 was thereafter issued by the Register of
Deeds on March 1, 1968.13

On August 2, 1975, Alejandro Gruta had executed a deed of absolute sale over a portion of Lot
No. 3353 with an area of 4,651 square meters in favor of Estelito Hije, the husband of petitioner
Adelina Baloloy, one of Iluminado’s children.14

Before he left for employment in Saudi Arabia in 1979, respondent Hular had his house
constructed near the trail (road) on Lot No. 3347, which, however, occupied a big portion of Lot
No. 3353.15

Iluminado died intestate on November 29, 1985. His widow and their children continued residing
in the property, while petitioner Reynaldo Baloloy, one of Iluminado’s children, later constructed
his house near that of his deceased father. When Astrologo died intestate on December 25,
1989, he was survived by his children, Jose, Romeo, Anacleto, Elena, Leo, Teresita, and the
respondent, among others,16 who continued to reside in their house.17

Sometime in l991, the respondent’s house helper was cleaning the backyard, but was prevented
from doing so by petitioner Adelina Baloloy who claimed that their father Iluminado owned the
land where the respondent’s house was located. To determine the veracity of the claim, the
respondent had Lot No. 3353 surveyed by Geodetic Engineer Rodolfo Cunanan on February
16, 1993, in the presence of Balbedina, Antonio Baloloy and petitioner Reynaldo Baloloy.
Cunanan prepared a Special Sketch Plan of Lot No. 335318 showing that the house of Iluminado
was constructed on Lot No. 335319 near the road behind the houses owned by Astrologo and
Alfredo.20 The engineer discovered that the residential area deeded by Lagata to Hular had an
area of 1,405 square meters, instead of 287 square meters only.21

In their Answer to the complaint, the heirs of Iluminado Baloloy averred that Iluminado’s house
was built in 1962 on a portion of Lot No. 3353, which the latter purchased from Balbedina, and
not on a portion of Lot No. 3347 which Hular purchased from Lagata. They alleged that Hular
constructed his house on a portion of Lot No. 3353 after securing the permission of their father
Iluminado, and that the respondent had no cause of action for the nullification of Free Patent
No. 384019 and OCT No. P-16540 because only the State, through the Office of the Solicitor
General, may file a direct action to annul the said patent and title; and even if the respondent
was the real party in interest to file the action, such actions had long since prescribed. The heirs
of Baloloy prayed that judgment be rendered in their favor, thus:

WHEREFORE, it is most respectfully prayed of the Honorable Court to DISMISS this

case pursuant to paragraph 15, et seq., hereof, and/or DECIDE it in favor of the
defendants by UPHOLDING the sanctity of OCT No. P-16540 and ordering plaintiff to:

1. RESPECT defendants’ proprietary rights and interests on the property in

question covered by OCT No. P-16540;

2. VACATE it at his sole and exclusive expense, and never to set foot on it ever
again;

3. PAY defendants:

a) MORAL DAMAGES at ₱50,000.00 EACH;

b) ACTUAL DAMAGES and UNREALIZED PROFITS at

₱1,000.00/MONTH COMPUTED UP TO THE TIME OF PAYMENT PLUS
LEGAL RATE OF INTEREST;

c) EXEMPLARY DAMAGES of ₱50,000.00

d) ATTY’S FEES and LITIGATION EXPENSES of ₱100,000.00; and

e) THE COSTS OF THIS SUIT.

DEFENDANTS pray for all other reliefs and remedies consistent with law and equity.22

The Evidence for the Petitioners

Sometime in 1982, Hular asked permission from Iluminado to construct his house on Lot No.
3353 near the road leading to Biriran. Iluminado agreed, in the presence of his daughter,
petitioner Adelina Baloloy. As per the plan of Lot No. 3353 certified by a Director of the Bureau
of Lands on November 6, 1961, Lot No. 3353 had an area of 9,302 square meters. 23

As gleaned from the Sketch Plan of Lot Nos. 3347 and 3353 prepared on February 7, 1991 by
Geodetic Engineer Salvador Balilo, the houses of the Baloloy siblings and those of Astrologo
and Alfredo were located in Lot No. 3353.24 In the said sketch plan, Lot No. 3353 had an area of
9,302 square meters, while Lot No. 3347 had an area of 15,905 square meters. When apprised
of Hular’s claim over the property, the petitioners and their co-heirs filed a complaint for unlawful
detainer with the Municipal Trial Court of Juban, docketed as Civil Case No. 331. The case was,
however, dismissed for lack of jurisdiction.

On December 4, 1995, the trial court rendered judgment in favor of the respondent. The fallo of
the decision reads:

a/ Declaring plaintiff the absolute owner of the land in question, consisting of

1,405 square meters, more or less, and entitled to the peaceful possession
thereof;

b/ Ordering the defendants to reconvey the title to the plaintiff as far as the land
in question is concerned within fifteen (15) days counted from the finality of the
decision, failing in which, the Clerk of Court is hereby ordered to execute the
necessary document of reconveyance of the title in favor of the plaintiff after an
approved survey plan is made;

c/ Ordering defendants to remove their houses from the land in question at their
own expense within fifteen (15) days after the decision has become final;

d/ Ordering the defendants to pay jointly and severally plaintiff the amount of
₱5,000.00 as attorney’s fees. ₱5,000.00 as incidental litigation expenses;

e/ To pay the costs.

SO ORDERED.25

The trial court ruled that the property subject of the complaint, with an area of 1,405 square
meters, was part of Lot No. 3347 which the Spouses Estopin owned, and which they later sold
to Astrologo Hular. The trial court also held that Iluminado committed fraud in securing the free
patent and the title for the property in question, and that when Victoriana Lagata executed the
deed of absolute sale on the residential portion of Lot No. 3347, she did not know that it formed
part of Lot No. 3353. It further held that the action of the plaintiff to nullify the title and patent
was imprescriptible.

The petitioners filed on December 8, 1995 a motion to reopen the case to admit Tax Declaration
Nos. 6957 and 4790 covering Lot No. 3347, under the names of Astrologo Hular and Victoriana
Lagata, respectively, in which it was declared that Lot No. 3347 was coconut land. The trial
court ruled that the motion had been mooted by its decision.

On appeal, the Court of Appeals rendered judgment affirming the decision of the trial court, and
thereafter denied the motion for reconsideration thereof.

The Present Petition

The petitioners, who are still residing on the subject property, filed their petition for review on
certiorari for the reversal of the decision and resolution of the Court of Appeals.

The issues for resolution are:

(1) whether all the indispensable parties had been impleaded by the respondent in the
trial court;

(2) whether the said respondent had a cause of action against the petitioners for the
nullification of Free Patent No. 384019 and OCT No. P-16540; for reconveyance and for
possession of the subject property; and for damages; and

(3) whether the respondent had acquired ownership over the property through
acquisitive prescription.
The first issue, while not raised by the parties in the trial court and in the Court of Appeals, is so
interwoven with the other issues raised therein and is even decisive of the outcome of this case;
hence, such issue must be delved into and resolved by this Court.26

We note that the action of the respondent in the trial court is for: (a) reinvidicatoria, to declare
the respondent the absolute owner of the subject property and its reconveyance to him as a
consequence of the nullification of Free Patent No. 384019 and OCT No. P-16540; (b)
publiciana, to order the petitioners and the other heirs of Iluminado Baloloy to vacate the
property and deliver possession thereof to him; and (c) damages and attorney’s fees.

It is the contention of the respondent that the subject property was sold by Lagata to his father,
Astrologo Hular, in 1961. He adduced evidence that when his parents died intestate, they were
survived by their children, the respondent and his siblings Elena, Jose, Romeo, Anacleto, Leo,
and Teresita. Article 1078 of the Civil Code provides that where there are two or more heirs, the
whole estate of the decedent is, before partition, owned in common by such heirs, subject to the
payment of the debts of the deceased. Until a division is made, the respective share of each
cannot be determined and every co-owner exercises, together with his co-participants, joint
ownership over the pro indiviso property, in addition to the use and enjoyment of the same.

Under Article 487 of the New Civil Code, any of the co-owners may bring an action in ejectment.
This article covers all kinds of actions for the recovery of possession, including an accion
publiciana and a reinvidicatory action. A co-owner may bring such an action without the
necessity of joining all the other co-owners as co-plaintiffs because the suit is deemed to be
instituted for the benefit of all.27 Any judgment of the court in favor of the co-owner will benefit
the others but if such judgment is adverse, the same cannot prejudice the rights of the
unimpleaded co-owners. If the action is for the benefit of the plaintiff alone who claims to be the
sole owner and entitled to the possession thereof, the action will not prosper unless he impleads
the other co-owners who are indispensable parties.

In this case, the respondent alone filed the complaint, claiming sole ownership over the subject
property and praying that he be declared the sole owner thereof. There is no proof that the other
co-owners had waived their rights over the subject property or conveyed the same to the
respondent or such co-owners were aware of the case in the trial court. The trial court rendered
judgment declaring the respondent as the sole owner of the property and entitled to its
possession, to the prejudice of the latter’s siblings. Patently then, the decision of the trial court is
erroneous.

Under Section 7, Rule 3 of the Rules of Court, the respondent was mandated to implead his
siblings, being co-owners of the property, as parties. The respondent failed to comply with the
rule. It must, likewise, be stressed that the Republic of the Philippines is also an indispensable
party as defendant because the respondent sought the nullification of OCT No. P-16540 which
was issued based on Free Patent No. 384019. Unless the State is impleaded as party-
defendant, any decision of the Court would not be binding on it. It has been held that the
absence of an indispensable party in a case renders ineffective all the proceedings subsequent
to the filing of the complaint including the judgment.28 The absence of the respondent’s siblings,
as parties, rendered all proceedings subsequent to the filing thereof, including the judgment of
the court, ineffective for want of authority to act, not only as to the absent parties but even as to
those present.29

Even if we glossed over the procedural lapses of the respondent, we rule that he failed to prove
the material allegations of his complaint against the petitioners; and that he is not entitled to the
reliefs prayed for.

The burden of proof is on the plaintiff to establish his case by the requisite quantum of evidence.
If he claims a right granted as created by law or under a contract of sale, he must prove his
claim by competent evidence. He must rely on the strength of his own evidence and not on the
weakness or absence of the evidence of that of his opponent.30He who claims a better right to
real estate property must prove not only his ownership of the same but also the identity
thereof.31 In Huy v. Huy,32 we held that where a property subject of controversy is duly
registered under the Torrens system, the presumptive conclusiveness of such title should be
given weight and in the absence of strong and compelling evidence to the contrary, the holder
thereof should be considered as the owner of the property until his title is nullified or modified in
an appropriate ordinary action. A Torrens Certificate is evidence of an indefeasible title to
property in favor of the person in whose name appears therein.33 Such holder is entitled to the
possession of the property until his title is nullified.

The petitioners aver that Lot No. 3347 owned by the Spouses Estopin was coconut, and not
residential, land. The petitioners contend that, under the deed of absolute sale, Victoriana
Lagata executed on November 25, 1961 in favor of Astrologo Hular, she sold the residential
portion of Lot No. 3347; however, the latter constructed his house on a portion of Lot No. 3353
which Iluminado had purchased from Balbedina, now covered by OCT No. P-16540. The
petitioners assert that along with their mother Anacorita and their brother Antonio Baloloy, they
constructed their houses on a part of Lot No. 3353, titled in the name of their father Iluminado;
hence, they could not be dispossessed of the said property. The petitioners posit that, whether
the house of Hular was constructed on a portion of Lot No. 3353 of the property of Balbedina or
Gruta is irrelevant because both properties are now covered by OCT No. P-16540 under the
name of Iluminado, their predecessor-in-interest.

The Court of Appeals ruled that Victoriana Lagata owned the subject property, which turned out
to be 1,405 square meters, and sold the same to Hular. In contrast, the RTC declared in its
decision that while under the deed of absolute sale executed by Irene Griarte in favor of
Balbedina, Lot No. 3353 had an area of 6,666 square meters, Griarte actually owned only 4,651
square meters; a portion of the lot was actually owned by Lino Estopin. Hence, Balbedina sold
only 4,651 square meters to Iluminado34 because he was aware that he owned only 4,651
square meters of the land. It also held that, unknown to Lagata, a portion of Lot No. 3347 was
declared as part of Lot No. 3353 when the lands in Juban were surveyed. The trial court
concluded that Lagata erroneously declared, under the deed of absolute sale executed on
November 25, 1961 in favor of Hular, that the property was part of Lot No. 3347.

The trial and appellate courts erred in their decisions.

The evidence on record shows that Irene Griarte owned a parcel of land with an area of 6,666
square meters, more or less.35 When she sold the property to Martiniano Balbedina on August
14, 1945, it was bounded on the south by the property of Lino Estopin. There was no trail yet
between the property of Griarte on the south and of Lino Estopin on the north. In the meantime,
however, a road (trail) leading to Biriran was established between the property of Balbedina on
the south and that of Lino Estopin on the north. Thereafter, a cadastral survey of the lands in
Juban was conducted by the Bureau of Lands. The property of Balbedina was designated as a
portion of Lot No. 3353, while that of Estopin was designated as Lot No. 3347. The other portion
of Lot No. 3353, with an area of 4,561 square meters, belonged to Alejandro Gruta. Because of
the construction of the road, the property of Balbedina, which was a part of Lot No. 3353, was
reduced to 4,651 square meters. Balbedina declared, under Tax Declaration No. 391, that Lot
No. 3353 had an area of 4,651 square meters and was coconut land36 and that his property was
bounded on the south by a trail (road). Lino Estopin declared Lot No. 3347 under his name for
taxation purposes, in which he stated that his property was bounded on the north by the trail
going to Biriran.37 Clearly, then, Lot No. 3353 and Lot No. 3347 had a common boundary – the
trail (road) going to Biriran.

Balbedina sold his property, which was a portion of Lot No. 3353, with an area of 4,651 square
meters to Iluminado Baloloy on June 4, 1951.38 Under the deed of absolute sale, the property
was bounded on the south by the trail (road) owned by Lino Estopin.39 The English translation of
the deed of sale attached as page 85 to the RTC Records, which both the trial court and the
appellate court relied upon, is incorrect.

The original deed of absolute sale, which is in Spanish, states that the boundary of the property
on the south is "con camino, Lino Estopin," while the English version of the deed, indicates that
the property is bounded "on the south by Lino Estopin." Being an earlier document, the deed in
Spanish signed by the parties therefore should prevail. Conformably to such deed, Iluminado
Baloloy declared in Tax Declaration No. 5359 under his name that the property is bounded on
the south by a trail,40 and not by Lot No. 3347 owned by Lino Estopin.
The respondent failed to adduce any documentary evidence to prove how the Spouses Estopin
acquired the disputed property. The respondent’s reliance on the testimonies of Melissa
Estopin, the daughter of the Spouses Estopin, and on Porfirio Guamos as well as the May 8,
1993 Affidavit of Martiniano Balbedina, and the deed of sale executed by Victoriana Lagata on
November 27, 1961 in favor of Astrologo Hular to corroborate his claim over the lot in question,
is misplaced.

First. Per the testimony of Porfirio Guamos, the witness of the respondent, Lino Estopin
purchased the disputed property in 1941 from Irene Griarte and insisted that there was a deed
of sale evidencing the sale:

Atty. Dealca:

Q The area of the land in question is 1,405 sq. m., you claim that way back in 1944 the
owner of the land was Lino Estopin; ’41 to ’44?

A 1941.

Q And you said that Lino Estopin was able to acquire the land by purchase?

A That was very long time when Lino Estopin sold the property.

Q My question is whether you know because you testified earlier that Lino Estopin was
able to acquire the land by purchase; do you confirm that?

A Yes, Sir.

Q From whom?

A From Irene Griarte.

Q Were you present when that sale was consummated?

A I was not there.

Q So you do not know how much was it bought by Lino Estopin from Irene Griarte?

A No, Sir.

Q You do not know whether a document to that effect was actually drafted and
executed?

A There was.

Q Have you seen the document?

A I did not see but there was a document.

Q You maintain there was a document but you did not see a document, is that it?

A In my belief there was a document.

Q In your belief, how did you organize that belief when you did not see a document?

A I insist there was a document.

Q That is why, why are you insisting when you did not see a document?

A Well, during the sale that document was used.

 Q How was it used when you did not see that document?

A When the deed of sale was executed I did not see the document, but I insist there was
a document.

Q That’s why, how were you able to say before the court that there was a document
when you contend that you did not see any?

A There was basis in the sale … the sale was based on a document. You cannot sell a
property without document? (sic)

Q Is that your belief?

A Yes, Sir.

Q But you did not see any document?

Atty. Diesta:

Already answered.

Witness:

A I did not see.

Atty. Dealca:

Q You said that that document was used when the property was sold by Lino Estopin to
Alfredo Hular. . .

A In 1961. Yes.41

However, the respondent failed to adduce in evidence the said deed or even an authentic copy
thereof. The respondent did not offer any justification for his failure to adduce the same in
evidence. As against the respondent’s verbal claim that his father acquired the property from
Lagata, the Torrens title of Iluminado Baloloy must prevail.42

Second. The respondent even failed to adduce in evidence any tax declarations over the
disputed property under the name of Irene Griarte and/or Lino Estopin, or realty tax payment
receipts in their names from 1941 to November 1961. The documents are circumstantial
evidence to prove that Irene Griarte claimed ownership over the disputed property and that Lino
Estopin acquired the same from her. After all, such tax declarations and tax receipts can be
strong evidence of ownership of land when accompanied by possession for a period sufficient
for acquisitive prescription.43

Third. The respondent even failed to adduce in evidence Tax Declaration No. 4790 covering the
two parcels of land under the name of Lino Estopin to prove his claim that Lot No. 3347
consisted of agricultural and residential lands. We note that the petitioners appended a certified
true copy of Tax Declaration No. 4790 under the name of Victoriana Lagata over Lot No. 3347
to their Motion to Reopen the Case. In the said declaration, Lot No. 3347 was described as
coconut land; this is contrary to the respondent’s claim that the said lot was then residential, and
that the boundary of the property on the north was the road to Biriran which, in turn, is
consistent with the petitioners’ claim.44 Unfortunately, the trial court denied the said motion on
the ground that it was mooted by its decision.

Fourth. During the cadastral survey of lands in Juban, the lot of Gruta and that of Balbedina,
inclusive of the subject property, were designated as Lot No. 3353 with a total area of 9,302
square meters under their names, while that of Lino Estopin was designated as Lot No. 3347
with an area of 15,906 square meters. Iluminado Baloloy applied for a free patent over Lot No.
3353, including the disputed property, under his name. The respondent failed to adduce any
evidence that the Spouses Estopin and/or Astrologo Hular opposed Balbedina and/or
Iluminado’s claim of ownership of Lot No. 3353 during the survey and after the filing of the
application. A propos is our ruling in Urquiaga v. Court of Appeals:45

As succinctly observed by respondent Court of Appeals in assessing the totality of the evidence
–

We do not agree with defendants that they are also the occupants and possessors of the
subject lot just because it "is adjacent to their titled property." Precisely, the boundaries
of defendants’ titled property were determined, delineated and surveyed during the
cadastral survey of Dipolog and thereafter indicated in their certificate of title in order that
the extent of their property will be known and fixed. Since the subject lot was already
found to be outside their titled property, defendants have no basis in claiming it or other
adjacent lots for that matter. Otherwise, the very purpose of the cadastral survey as a
process of determining the exact boundaries of adjoining properties will be defeated.

Defendants’ own title, O.C.T. No. 0-357 (in the names of Jose Aguirre and Cristina
Gonzales), in fact belies their claim of occupation and possession over the adjacent
subject lot. Examining said title, we note that: (1) the cadastral survey of Dipolog was
conducted from January, 1923 to November 1925; (2) defendants’ titled property was
one of those lots surveyed and this was designated as Lot No. 2623; (3) during the
survey, it was already determined and known that Lot No. 2623 is bounded on the
northeast, southeast, southwest and west by Lot No. 4443 (as we have seen in our
narration of facts, the subject lot is a subdivision lot of Lot No. 6552 which was originally
identified as Lot No. 4443-B-1, Dipolog Cadastre 85 Ext.: hence, the subject lot is a
portion of Lot No. 4443); and (4) O.C.T. No. 0-357 was issued on October 11, 1965 on
the strength of the judgment rendered on July 31 (sic), 1941 by the then Court of First
Instance of Zamboanga del Norte in Cadastral Case No. 6, LRC Cadastral Record No.
756.

From the foregoing facts, we find that as early as January, 1923 when the cadastral
survey was started, the boundaries of Lot Nos. 2623 and 4443 were already determined
and delineated. Since the subject lot was surveyed to be part of Lot No. 4443, it means
that during that time defendants’ predecessors-in-interest never claimed ownership or
possession over the subject lot. Otherwise, they would have complained so that the
subject lot could be excluded from Lot No. 4443 and included in Lot No. 2623, they
being adjacent lots. It is obvious then that defendants’ predecessors only claimed Lot
No. 2623 and they pursued their claim in Cadastral Case No. 6, LRC Cadastral Record
No. 756 until O.C.T. No. 0-357 was issued to them. The contention of defendants that
they and their predecessors-in-interest occupied and possessed the subject lot since
time immemorial therefore is not true.46

Fifth. Under the deed of absolute sale dated November 25, 1961, Lagata sold to Astrologo
Hular Lot No. 3347, and not Lot No. 3353. In Veterans Federation of the Philippines v. Court of
Appeals,47 we ruled that:

Petitioner VFP maintains that the deed of sale was valid and enforceable and that it was
perfected at the very moment that the parties agreed upon the thing which was the
object of the sale and upon the price. The parties herein had agreed on the parcel of
land that petitioner would purchase from respondent PNR, and the same was described
therein; thus, petitioner VFP cannot conveniently set aside the technical description in
this agreement and insist that it is the legal owner of the property erroneously described
in the certificate of title. Petitioner can only claim right of ownership over the parcel of
land that was the object of the deed of sale and nothing else.48

Sixth. Under the said deed of sale dated November 11, 1961, Victoriana Lagata sold Lot No.
3347 which had an area of 15,906 square meters and covered by Tax Declaration No. 4790.
The deed does not state that what was sold was only a portion of Lot No. 3347, excluding
therefrom the disputed property. This is understandable, since the subject property is a portion
of Lot No. 3353 owned by Alejandro Gruta and Iluminado Baloloy, and not of Lino Estopin
and/or Victoriana Lagata. Lagata could not have sold a portion of Lot No. 3353 which she does
not own. As the Latin adage goes: "NEMO DAT QUOD NON HABET."

Seventh. The Balbedina’s Affidavit dated May 8, 1993 offered by the respondent to prove the
contents thereof is inadmissible in evidence against the petitioners. Balbedina did not testify; as
such, the petitioners were deprived of their right to cross-examine him. The said affidavit is thus
hearsay and barren of probative weight. The affidavit varies the contents of the deed of absolute
sale which he (Balbedina) executed in favor of Iluminado more than forty years earlier. In the
said affidavit, it was made to appear that Balbedina sold to Iluminado on June 4, 1951 only a
portion of Lot 3353 with an area of 3,333 square meters, when under the said deed of absolute
sale, the property that was sold consisted of 4,651 square meters. The affidavit is proscribed by
Section 9, Rule 130 of the Rules of Court, which provides:

Section 9. Evidence of written agreements. - When the terms of an agreement have

been reduced to writing, it is considered as containing all the terms agreed upon and
there can be, between the parties and their successors in interest, no evidence of such
terms other than the contents of the written agreement.

...

It bears stressing that the deed of absolute sale executed by Balbedina in favor of
Baloloy was notarized by the Justice of the Peace who was an Ex-Officio Notary Public;
hence, entitled to full probative weight.

Eighth. The Special Sketch Plan of Lot No. 3353 prepared by Geodetic Engineer Rodolfo P.
Cunanan49 cannot prevail over OCT No. P-16540. In fact, the plan even buttressed the case for
the petitioners because it shows that the subject property is a portion of Lot No. 3353, and not of
Lot No. 3347, covered by OCT No. P-16540 under the name of Iluminado Baloloy, the
deceased father of the petitioners.

Ninth. The conclusion of the RTC that Lagata in fact sold a portion of Lot No. 3347 under the
deed of absolute sale dated November 25, 1961, unaware that the property was a part of Lot
No. 3353, is based on mere speculations and surmises.

Iluminado Baloloy included in his application for a free patent the property of Alejandro Gruta,
and was able to secure a free patent over said property in addition to his own. As such, Gruta,
not the respondent, is the proper party to assail such free patent, as well as OCT No. P-16540
which was issued based thereon.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The decisions of the Regional
Trial Court and the Court of Appeals are REVERSED and SET ASIDE. The complaint of the
respondent is DISMISSED. No costs.

SO ORDERED.
 G.R. No. 175990 : October 11, 2012

HEIRS OF ALBINA G. AMPIL, namely PRECIOUS A. ZAVALLA, EDUARDO AMPIL,

PENAFRANCIA A. OLANO, VICENTE G. AMPIL, JR., FROILAN G. AMPIL and EXEQUIEL
G. AMPIL, represented by EXEQUIEL G. AMPIL, Petitioners, v. TERESA MANAHAN and
MARIO MANAHAN, Respondents.

DECISION

MENDOZA, J.:

Before the Court is a Petition for Review under Rule 45 of the Rules of Court questioning the
.July 11, 2006 Decision1ςrνll and the December 13, :2006 Resolution2ςrνll of the Court of
Appeals (CA), in CA-G.R. SP No. 91568, which reversed and set aside the October 14, 2004
Decision3ςrνll of the Regional Trial Court, Malolos, Bulacan, Branch 16 (RTC) in Civil Case No.
165-M-04, entitled "h-xequiel G. Ampil v. Teresita A1anahan" for Unlawful Detainer.

The Facts:chanroblesvirtuallawlibrary

On February 14, 2003, Exequiel G. Ampil (Exequiel), as representative of the heirs of the late
Albina G. Ampil (Albina), filed a complaint4ςrνll for ejectment, which was amended on July 11,
2003,5ςrνll against spouses Perfecto Manahan (Perfecto) and Virginia Manahan, Teresita
Manahan,6ςrνll Almario Manahan,7ςrνllIrene Manahan and all persons claiming rights under
them. In the complaint, it was alleged that Albina was the owner of two (2) adjoining residential
lots, situated in Sto. Ni, Paombong, Bulacan, and identified as Lot No. 1186,8ςrνll with an area
of sixteen (16) square meters,9ςrνll as evidenced by Tax Declaration No. 020-17-013-0007-
00001-L;10ςrνll and Lot 74211ςrνll with an area of three hundred eighty-two (382) square
meters, as evidenced by Tax Declaration No. 020-17-013-0007-00002-L.12ςrνll They asserted
that during her lifetime, Albina allowed Perfecto and his family to occupy a portion of the said
properties on the condition that they would vacate the same should the need to use it arise.

After the death of Albina in 1986, her heirs, represented by Exequiel, requested Perfecto and
family to vacate the property in question but the latter refused. The matter was then brought
before the Lupong Tagapamayapa in Barangay Sto. Ni, Paombong, Bulacan, which issued a
Certification to File an Action for failure of the parties to amicably settle their dispute. 13ςrνll

On December 12, 2002, petitioners, through counsel, sent a demand letter14ςrνll to the
respondents to surrender possession of the lands in question but to no avail. Consequently,
petitioners filed a complaint for ejectment before the Municipal Trial Court, Paombong, Bulacan
(MTC).

On February 28, 2003, the respondents filed their answer with counterclaim15ςrνll averring that
the lots they had been occupying belonged to them, their predecessor-in-interest having been in
peaceful and continuous possession thereof in the concept of an owner since time immemorial
and that Albina was never the owner of the property. Accordingly, they prayed for the payment
of attorneys fees by way of counterclaim.

On February 23, 2004, the MTC rendered judgment16ςrνll in favor of the petitioners. The MTC
relied on the two (2) tax declarations and the certification from the Municipal Treasurer showing
that Albina had been paying the real property taxes on the lands in question. It stressed that the
issue in ejectment cases is not the ownership of the property, but the material possession
thereof. The dispositive portion reads:chanroblesvirtuallawlibrary

WHEREFORE, judgment is hereby rendered declaring the Plaintiff to be entitled to the physical
or material possession of Lot No. 186 located at Sto. Ni, Paombong, Bulacan covered by Tax
Declaration No. (Property Index) 020-17-013-0007-00001-L consisting of more or less seventy-
five (75) square meters and Lot 742 also at Sto. Ni, Paombong, Bulacan covered by Tax
Declaration No. (Property Index) 020-17-013-0007-00002-L consisting of more or less three
hundred eighty-two (382) square meters and this Court orders:
(1) The Defendants, their heirs, assigns or any other persons claiming any right or interest over
the subject premises under or in their names to surrender peaceful possession thereof to the
Plaintiff;

(2) The Defendants to pay the Plaintiff the amount of Two Thousand Pesos (P2,000.00) a
month from the date of the filing of this amended complaint (July 11, 2003) until they finally
vacate the premises; as fair rental value for the use and occupation thereof; and

(3) The award of Twenty Thousand Pesos (P20,000.00) as attorneys fees in favor of the Plaintiff
and against the Defendants.

No pronouncement as to costs.

SO ORDERED.17ςrνll

The respondents appealed the MTC decision to the RTC, which affirmed it in toto in its October
14, 2004 Decision.18ςrνll

Aggrieved, respondents Teresa Manahan and Mario Manahan (respondents) appealed their
case before the CA. In a Decision, dated July 11, 2006, the CA reversed and set aside the RTC
Decision and dismissed the case for unlawful detainer. It ruled that tax declarations and receipts
are not conclusive proof of ownership or right of possession over a piece of land and it only
becomes strong evidence of ownership when accompanied by proof of actual possession.

Petitioners filed a motion for reconsideration but it was denied by the CA in its December 13,
2006 Resolution.19ςrνll

Consequently, on January 16, 2007, petitioners filed this petition for review anchored on the
following assignment of errors:

1. The court a quo gravely erred in not dismissing the petition despite its apparent lack of legal
leg to stand on.

2. The court a quo gravely erred in finding that petitioners solely anchored their claim of
ownership over the contested properties on mere tax declarations.

3. The court a quo gravely erred in finding that petitioners failed to establish tolerance.

4. The court a quo gravely erred in giving more weight to bare assertions of the respondents.

5. The court a quo gravely erred in not finding against the respondents despite their failure to
prove their affirmative allegations.

6. The court a quo gravely erred in finding for the respondents despite petitioners
preponderance of evidence.20ςrνll

Petitioners aver that their claim of ownership over the disputed lots was not solely based on tax
declarations but also anchored on the Sinumpaang Salaysay, 21ςrνll dated May 25, 1983,
executed by Perfecto, in connection with a criminal case filed against him for violation of
Presidential Decree (P.D.) No. 772 (Anti-Squatting Law). In the said document, Perfecto
categorically admitted that the said lots were owned by Albina Ampil; and that on December 14,
2006, the Registry of Deeds of the Province of Bulacan issued Original Certificate of Title No.
13627 covering Lot 742, in the names of the Heirs of Albina.22ςrνll

Respondents, on the other hand, move for the dismissal of the petition for being defective in
form. They question the special power of attorney submitted by Exequiel because it neither
shows that the persons who executed the said affidavit were the real heirs of Albina nor does it
authorize him to institute the petition. The document does not clearly state either whether the
real properties mentioned therein are the same properties subject of the petition.
Respondents also contend that the petition raises factual issues which are not allowed in a
petition for review under the Rules of Court. According to respondents, under Rule 45, only
questions of law may be raised as issues and, thereafter, resolved by the Court.

As to the merit of the case, respondents echoed the position of the CA that tax declarations are
not conclusive proof of ownership.

The lone issue to be resolved here is who, between petitioners and respondents, have the
better right to the physical possession of the disputed property. But before delving into the
issue, the Court shall first discuss the question raised by respondents regarding the authority of
Exequiel to file the complaint on behalf of his co-heirs.

Article 487 of the Civil Code provides that anyone of the co-owners may bring an action for
ejectment without joining the others. The action is not limited to ejectment cases but includes all
kinds of suits for recovery of possession because the suit is presumed to have been instituted
for the benefit of all.23ςrνll In the case of Celino v. Heirs of Alejo and Teresa
Santiago,24ςrνll the Court held that:chanroblesvirtuallawlibrary

Respondents herein are co-owners of two parcels of land owned by their deceased mother. The
properties were allegedly encroached upon by the petitioner. As co-owner of the properties,
each of the heirs may properly bring an action for ejectment, forcible entry, or any kind of action
for the recovery of possession of the subject properties. Thus, a co-owner may bring such an
action,

even without joining all the other co-owners as co-plaintiffs, because the suit is deemed to be
instituted for the benefit of all. However, if the action is for the benefit of the plaintiff alone, such
that he claims the possession for himself and not for the co-ownership, the action will not
prosper.

Also, in the case of Carandang v. Heirs of De Guzman,25ςrνll this Court ruled that a co-owner
was not even a necessary party to an action for ejectment, for complete relief could be afforded
even in his absence, thus:chanroblesvirtuallawlibrary

In sum, in suits to recover properties, all co-owners are real parties in interest. However,
pursuant to Article 487 of the Civil Code and the relevant jurisprudence, any one of them may
bring an action, any kind of action for the recovery of co-owned properties. Therefore, only one
of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned
property, is an indispensable party thereto. The other co-owners are not indispensable parties.
They are not even necessary parties, for a complete relief can be afforded in the suit even
without their participation, since the suit is presumed to have been filed for the benefit of all co-
owners.

In the case at bench, the complaint clearly stated that the disputed property was held in
common by the petitioners; and that the action was brought to recover possession of the lots
from respondents for the benefit of all the heirs of Albina. Hence, Exequiel, a co-owner, may
bring the action for unlawful detainer even without the special power of attorney of his co-
heirs,26ςrνll for a complete relief can be accorded in the suit even without their participation
because the suit is deemed to be instituted for the benefit of all the co-owners.

With respect to the main issue, the Court finds merit in the petition.

Indeed, as a rule, petitions for review on certiorari under Rule 45 of the Rules Court are limited
only to questions of law and not of fact.27ςrνll The rule, however, admits of several exceptions,
to wit: "(1) the factual findings of the Court of Appeals and the trial court are contradictory; (2)
the findings are grounded entirely on speculation, surmises or conjectures; (3) the inference
made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd or
impossible; (4) there is grave abuse of discretion in the appreciation of facts; (5) the appellate
court, in making its findings, goes beyond the issues of the case and such findings are contrary
to the admissions of both appellant and appellee; (6) the judgment of the Court of Appeals is
premised on a misapprehension of facts; (7) the Court of Appeals fails to notice certain relevant
facts which, if properly considered, will justify a different conclusion; and (8) the findings of fact
of the Court of

Appeals are contrary to those of the trial court or are mere conclusions without citation of
specific evidence, or where the facts set forth by the petitioner are not disputed by respondent,
or where the findings of fact of the Court of Appeals are premised on the absence of evidence
but are contradicted by the evidence on record."28ςrνll

In this case, the factual findings of the CA are contrary to those of the MTC and the RTC.
Hence, a review of the case is imperative.

In an unlawful detainer case, the physical or material possession of the property involved,
independent of any claim of ownership by any of the parties, is the sole issue for resolution. But
where the issue of ownership is raised, the courts may pass upon said issue in order to
determine who has the right to possess the property. This adjudication, however, is only an
initial determination of ownership for the purpose of settling the issue of possession, the issue of
ownership being inseparably linked thereto. As such, the lower courts adjudication of ownership
in the ejectment case is merely provisional and would not bar or prejudice an action between
the same parties involving title to the property.29ςrνll

In the case at bench, the Court sustains the findings of both the MTC and the RTC. The bare
allegation of respondents, that they had been in peaceful and continuous possession of the lot
in question because their predecessor-in-interest had been in possession thereof in the concept
of an owner from time immemorial, cannot prevail over the tax declarations and other
documentary evidence presented by petitioners. In the absence of any supporting evidence,
that of the petitioners deserves more probative value.

A perusal of the records shows that respondents occupation of the lot in question was by mere
tolerance. To prove ownership over the property, the petitioners presented the tax declarations
covering the properties and a certification issued by the Municipality of Paombong, Bulacan,
showing that their mother, Albina, had been paying the corresponding real property taxes
thereon. Petitioners also submitted a survey plan,30ςrνll dated August 5, 1968, prepared by
Geodetic Engineer Roberto H. Dimailig, in support of Albinas application for land registration
over the disputed lots. In fact, on December 14, 2006, the Registry of Deeds of Bulacan issued
Katibayan ng Orihinal na Titulo Blg. P-13627,31ςrνll conferring title over Lot 742 in the names
of the heirs of Albina.

Also, in 1982, one of the petitioners verbally demanded that the respondents vacate the
property and when the latter refused, they filed a complaint before the Barangay Lupon. From
the minutes of the meeting in the Barangay Lupon,32ςrνll Perfecto admitted that in 1952, Albina
allowed them temporary use of the lots and that they could not leave the premises because they
had nowhere else to go. When the parties failed to reach a settlement, petitioners, in order to
protect their rights to the lot in question, filed a case for violation of P.D. No. 772, an Act
Penalizing Squatting and other Similar Acts against Perfecto, docketed as Criminal Case No.
6448-M, before the Regional Trial Court, Branch XII, Malolos, Bulacan. In the said case,
Perfecto executed a Sinumpaang Salaysay, wherein he admitted that Albina was the owner of
the lots in question and that he was merely allowed by her to use the property on condition that
they would vacate it on demand. As a result, the court dismissed the complaint because it found
out that Perfecto and his familys stay in the questioned lots was lawful because Albina permitted
them to use the lots on the condition that they would vacate the same should Albina need it.

On the other hand, respondents could not present proof that they and their predecessors-in-
interest had openly and continuously possessed the subject land since time immemorial.
Granting that respondents or their predecessors-in-interests had been in possession in the
concept of an owner since time immemorial, none of them declared the disputed lots for taxation
purposes and, thus, never paid taxes thereon. Respondents' allegation that they were in
peaceful, continuous and adverse possession of the lots in question, unsupported by any
evidence, is not substantial to establish their interest over the property.

Well established is the rule that ownership over the land cannot be acquired by mere
occupation.33ςrνllWhile it is true that tax declarations are not conclusive evidence of
ownership, they, nevertheless, constitute at least proof that the holder has a claim of title over
the property. It strengthens one's bona fide claim of acquisition of ownership.34ςrνll

WHEREFORE, the petition is GRANTED. The .July 11, 2006 Decision and the December 13,
2006 Resolution of the Court of Appeals, in CA-G.R. SP No. 91568, are REVERSED and SET
ASIDE. The February 23, 2004 Decision of the Municipal Trial Court, affirmed in toto by the
Regional Trial Court, is ordered REINSTATED.ςrαlαωlιbrαr

SO ORDERED.
G.R. No. 148830. April 13, 2005

NATIONAL HOUSING AUTHORITY, Petitioners,

vs.
COURT OF APPEALS, BULACAN GARDEN CORPORATION and MANILA SEEDLING
BANK FOUNDATION, INC., Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 seeking to set aside the Decision2 dated 30 March 2001 of the Court
of Appeals ("appellate court") in CA-G.R. CV No. 48382, as well as its Resolution dated 25 June
2001 denying the motion for reconsideration. The appellate court reversed the Decision3 of
Branch 87 of the Regional Trial Court of Quezon City ("trial court") dated 8 March 1994 in Civil
Case No. Q-53464. The trial court dismissed the complaint for injunction filed by Bulacan
Garden Corporation ("BGC") against the National Housing Authority ("NHA"). BGC wanted to
enjoin the NHA from demolishing BGC’s facilities on a lot leased from Manila Seedling Bank
Foundation, Inc. ("MSBF"). MSBF allegedly has usufructuary rights over the lot leased to BGC.

Antecedent Facts

On 24 October 1968, Proclamation No. 481 issued by then President Ferdinand Marcos set
aside a 120-hectare portion of land in Quezon City owned by the NHA4 as reserved property for
the site of the National Government Center ("NGC"). On 19 September 1977, President Marcos
issued Proclamation No. 1670, which removed a seven-hectare portion from the coverage of the
NGC. Proclamation No. 1670 gave MSBF usufructuary rights over this segregated portion, as
follows:

Pursuant to the powers vested in me by the Constitution and the laws of the Philippines, I,
FERDINAND E. MARCOS, President of the Republic of the Philippines, do hereby exclude from
the operation of Proclamation No. 481, dated October 24, 1968, which established the National
Government Center Site, certain parcels of land embraced therein and reserving the same for
the Manila Seedling Bank Foundation, Inc., for use in its operation and projects, subject to
private rights if any there be, and to future survey, under the administration of the
Foundation.

This parcel of land, which shall embrace 7 hectares, shall be determined by the
future survey based on the technical descriptions found in Proclamation No. 481, and most
particularly on the original survey of the area, dated July 1910 to June 1911, and on the
subdivision survey dated April 19-25, 1968. (Emphasis added)

MSBF occupied the area granted by Proclamation No. 1670. Over the years, MSBF’s
occupancy exceeded the seven-hectare area subject to its usufructuary rights. By 1987, MSBF
occupied approximately 16 hectares. By then the land occupied by MSBF was bounded by
Epifanio de los Santos Avenue ("EDSA") to the west, Agham Road to the east, Quezon Avenue
to the south and a creek to the north.

On 18 August 1987, MSBF leased a portion of the area it occupied to BGC and other
stallholders. BGC leased the portion facing EDSA, which occupies 4,590 square meters of the
16-hectare area.

On 11 November 1987, President Corazon Aquino issued Memorandum Order No. 127 ("MO
127") which revoked the reserved status of "the 50 hectares, more or less, remaining out of the
120 hectares of the NHA property reserved as site of the National Government Center." MO 127
also authorized the NHA to commercialize the area and to sell it to the public.
On 15 August 1988, acting on the power granted under MO 127, the NHA gave BGC ten days
to vacate its occupied area. Any structure left behind after the expiration of the ten-day period
will be demolished by NHA.

BGC then filed a complaint for injunction on 21 April 1988 before the trial court. On 26 May
1988, BGC amended its complaint to include MSBF as its co-plaintiff.

The Trial Court’s Ruling

The trial court agreed with BGC and MSBF that Proclamation No. 1670 gave MSBF the right to
conduct the survey, which would establish the seven-hectare area covered by MSBF’s
usufructuary rights. However, the trial court held that MSBF failed to act seasonably on this right
to conduct the survey. The trial court ruled that the previous surveys conducted by MSBF
covered 16 hectares, and were thus inappropriate to determine the seven-hectare area. The
trial court concluded that to allow MSBF to determine the seven-hectare area now would be
grossly unfair to the grantor of the usufruct.

On 8 March 1994, the trial court dismissed BGC’s complaint for injunction. Thus:

Premises considered, the complaint praying to enjoin the National Housing Authority from
carrying out the demolition of the plaintiff’s structure, improvements and facilities in the premises
in question is hereby DISMISSED, but the suggestion for the Court to rule that Memorandum
Order 127 has repealed Proclamation No. 1670 is DENIED. No costs.

SO ORDERED.5

The NHA demolished BGC’s facilities soon thereafter.

The Appellate Court’s Ruling

Not content with the trial court’s ruling, BGC appealed the trial court’s Decision to the appellate
court. Initially, the appellate court agreed with the trial court that Proclamation No. 1670 granted
MSBF the right to determine the location of the seven-hectare area covered by its usufructuary
rights. However, the appellate court ruled that MSBF did in fact assert this right by conducting
two surveys and erecting its main structures in the area of its choice.

On 30 March 2001, the appellate court reversed the trial court’s ruling. Thus:

WHEREFORE, premises considered, the Decision dated March 8, 1994 of the Regional Trial
Court of Quezon City, Branch 87, is hereby REVERSED and SET ASIDE. The National Housing
Authority is enjoined from demolishing the structures, facilities and improvements of the plaintiff-
appellant Bulacan Garden Corporation at its leased premises located in Quezon City which
premises were covered by Proclamation No. 1670, during the existence of the contract of lease
it (Bulacan Garden) had entered with the plaintiff-appellant Manila Seedling Bank Foundation,
Inc.

No costs.

SO ORDERED.6

The NHA filed a motion for reconsideration, which was denied by the appellate court on 25 June
2001.

Hence, this petition.

The Issues

The following issues are considered by this Court for resolution:

WHETHER THE PETITION IS NOW MOOT BECAUSE OF THE DEMOLITION OF THE
STRUCTURES OF BGC; and

WHETHER THE PREMISES LEASED BY BGC FROM MSBF IS WITHIN THE SEVEN-
HECTARE AREA THAT PROCLAMATION NO. 1670 GRANTED TO MSBF BY WAY OF
USUFRUCT.

The Ruling of the Court

We remand this petition to the trial court for a joint survey to determine finally the metes and
bounds of the seven-hectare area subject to MSBF’s usufructuary rights.

Whether the Petition is Moot because of the

Demolition of BGC’s Facilities

BGC claims that the issue is now moot due to NHA’s demolition of BGC’s facilities after the trial
court dismissed BGC’s complaint for injunction. BGC argues that there is nothing more to enjoin
and that there are no longer any rights left for adjudication.

We disagree.

BGC may have lost interest in this case due to the demolition of its premises, but its co-
plaintiff, MSBF, has not. The issue for resolution has a direct effect on MSBF’s usufructuary
rights. There is yet the central question of the exact location of the seven-hectare area granted
by Proclamation No. 1670 to MSBF. This issue is squarely raised in this petition. There is a
need to settle this issue to forestall future disputes and to put this 20-year litigation to rest.

On the Location of the Seven-Hectare Area Granted by

Proclamation No. 1670 to MSBF as Usufructuary

Rule 45 of the 1997 Rules of Civil Procedure limits the jurisdiction of this Court to the review of
errors of law.7 Absent any of the established grounds for exception,8 this Court will not disturb
findings of fact of lower courts. Though the matter raised in this petition is factual, it deserves
resolution because the findings of the trial court and the appellate court conflict on several
points.

The entire area bounded by Agham Road to the east, EDSA to the west, Quezon Avenue to the
south and by a creek to the north measures approximately 16 hectares. Proclamation No. 1670
gave MSBF a usufruct over only a seven-hectare area. The BGC’s leased portion is located
along EDSA.

A usufruct may be constituted for a specified term and under such conditions as the parties may
deem convenient subject to the legal provisions on usufruct.9 A usufructuary may lease the
object held in usufruct.10 Thus, the NHA may not evict BGC if the 4,590 square meter portion
MSBF leased to BGC is within the seven-hectare area held in usufruct by MSBF. The owner of
the property must respect the lease entered into by the usufructuary so long as the usufruct
exists.11 However, the NHA has the right to evict BGC if BGC occupied a portion outside of the
seven-hectare area covered by MSBF’s usufructuary rights.

MSBF’s survey shows that BGC’s stall is within the seven-hectare area. On the other hand,
NHA’s survey shows otherwise. The entire controversy revolves on the question of whose land
survey should prevail.

MSBF’s survey plots the location of the seven-hectare portion by starting its measurement from
Quezon Avenue going northward along EDSA up until the creek, which serves as the northern
boundary of the land in question. Mr. Ben Malto ("Malto"), surveyor for MSBF, based his survey
method on the fact that MSBF’s main facilities are located within this area.
On the other hand, NHA’s survey determines the seven-hectare portion by starting its
measurement from Quezon Avenue going towards Agham Road. Mr. Rogelio Inobaya
("Inobaya"), surveyor for NHA, based his survey method on the fact that he saw MSBF’s gate
fronting Agham Road.

BGC presented the testimony of Mr. Lucito M. Bertol ("Bertol"), General Manager of MSBF.
Bertol presented a map,12 which detailed the area presently occupied by MSBF. The map had a
yellow-shaded portion, which was supposed to indicate the seven-hectare area. It was clear
from both the map and Bertol’s testimony that MSBF knew that it had occupied an area in
excess of the seven-hectare area granted by Proclamation No. 1670.13 Upon cross-examination,
Bertol admitted that he personally did not know the exact boundaries of the seven-hectare
area.14 Bertol also admitted that MSBF prepared the map without consulting NHA, the owner of
the property.15

BGC also presented the testimony of Malto, a registered forester and the Assistant Vice-
President of Planning, Research and Marketing of MSBF. Malto testified that he conducted the
land survey, which was used to construct the map presented by Bertol.16 Bertol clarified that he
authorized two surveys, one in 1984 when he first joined MSBF, and the other in 1986.17 In both
instances, Mr. Malto testified that he was asked to survey a total of 16 hectares, not just seven
hectares. Malto testified that he conducted the second survey in 1986 on the instruction of
MSBF’s general manager. According to Malto, it was only in the second survey that he was told
to determine the seven-hectare portion. Malto further clarified that he based the technical
descriptions of both surveys on a previously existing survey of the property.18

The NHA presented the testimony of Inobaya, a geodetic engineer employed by the NHA.
Inobaya testified that as part of the NHA’s Survey Division, his duties included conducting
surveys of properties administered by the NHA.19Inobaya conducted his survey in May 1988 to
determine whether BGC was occupying an area outside the seven-hectare area MSBF held in
usufruct.20 Inobaya surveyed the area occupied by MSBF following the same technical
descriptions used by Malto. Inobaya also came to the same conclusion that the area occupied
by MSBF, as indicated by the boundaries in the technical descriptions, covered a total of 16
hectares. He further testified that the seven-hectare portion in the map presented by
BGC,21 which was constructed by Malto, does not tally with the boundaries BGC and MSBF
indicated in their complaint.

Article 565 of the Civil Code states:

ART. 565. The rights and obligations of the usufructuary shall be those provided in the title
constituting the usufruct; in default of such title, or in case it is deficient, the provisions contained
in the two following Chapters shall be observed.

In the present case, Proclamation No. 1670 is the title constituting the usufruct. Proclamation
No. 1670 categorically states that the seven-hectare area shall be determined "by future survey
under the administration of the Foundation subject to private rights if there be any." The
appellate court and the trial court agree that MSBF has the latitude to determine the location of
its seven-hectare usufruct portion within the 16-hectare area. The appellate court and the trial
court disagree, however, whether MSBF seasonably exercised this right.

It is clear that MSBF conducted at least two surveys. Although both surveys covered a total of
16 hectares, the second survey specifically indicated a seven-hectare area shaded in yellow.
MSBF made the first survey in 1984 and the second in 1986, way before the present
controversy started. MSBF conducted the two surveys before the lease to BGC. The trial court
ruled that MSBF did not act seasonably in exercising its right to conduct the survey. Confronted
with evidence that MSBF did in fact conduct two surveys, the trial court dismissed the two
surveys as self-serving. This is clearly an error on the part of the trial court. Proclamation No.
1670 authorized MSBF to determine the location of the seven-hectare area. This authority,
coupled with the fact that Proclamation No. 1670 did not state the location of the seven-hectare
area, leaves no room for doubt that Proclamation No. 1670 left it to MSBF to choose the
location of the seven-hectare area under its usufruct.
More evidence supports MSBF’s stand on the location of the seven-hectare area. The main
structures of MSBF are found in the area indicated by MSBF’s survey. These structures are the
main office, the three green houses, the warehouse and the composting area. On the other
hand, the NHA’s delineation of the seven-hectare area would cover only the four hardening
bays and the display area. It is easy to distinguish between these two groups of structures. The
first group covers buildings and facilities that MSBF needs for its operations. MSBF built these
structures before the present controversy started. The second group covers facilities less
essential to MSBF’s existence. This distinction is decisive as to which survey should prevail. It is
clear that the MSBF intended to use the yellow-shaded area primarily because it erected its
main structures there.

Inobaya testified that his main consideration in using Agham Road as the starting point for his
survey was the presence of a gate there. The location of the gate is not a sufficient basis to
determine the starting point. MSBF’s right as a usufructuary as granted by Proclamation No.
1670 should rest on something more substantial than where MSBF chose to place a gate.

To prefer the NHA’s survey to MSBF’s survey will strip MSBF of most of its main facilities. Only
the main building of MSBF will remain with MSBF since the main building is near the corner of
EDSA and Quezon Avenue. The rest of MSBF’s main facilities will be outside the seven-hectare
area.

On the other hand, this Court cannot countenance MSBF’s act of exceeding the seven-hectare
portion granted to it by Proclamation No. 1670. A usufruct is not simply about rights and
privileges. A usufructuary has the duty to protect the owner’s interests. One such duty is found
in Article 601 of the Civil Code which states:

ART. 601. The usufructuary shall be obliged to notify the owner of any act of a third person, of
which he may have knowledge, that may be prejudicial to the rights of ownership, and he shall
be liable should he not do so, for damages, as if they had been caused through his own fault.

A usufruct gives a right to enjoy the property of another with the obligation of preserving its form
and substance, unless the title constituting it or the law otherwise provides.22 This controversy
would not have arisen had MSBF respected the limit of the beneficial use given to it. MSBF’s
encroachment of its benefactor’s property gave birth to the confusion that attended this case. To
put this matter entirely to rest, it is not enough to remind the NHA to respect MSBF’s choice of
the location of its seven-hectare area. MSBF, for its part, must vacate the area that is not part of
its usufruct. MSBF’s rights begin and end within the seven-hectare portion of its usufruct. This
Court agrees with the trial court that MSBF has abused the privilege given it under Proclamation
No. 1670. The direct corollary of enforcing MSBF’s rights within the seven-hectare area is the
negation of any of MSBF’s acts beyond it.

The seven-hectare portion of MSBF is no longer easily determinable considering the varied
structures erected within and surrounding the area. Both parties advance different reasons why
their own surveys should be preferred. At this point, the determination of the seven-hectare
portion cannot be made to rely on a choice between the NHA’s and MSBF’s survey. There is a
need for a new survey, one conducted jointly by the NHA and MSBF, to remove all doubts on
the exact location of the seven-hectare area and thus avoid future controversies. This new
survey should consider existing structures of MSBF. It should as much as possible include all of
the facilities of MSBF within the seven-hectare portion without sacrificing contiguity.

A final point. Article 605 of the Civil Code states:

ART. 605. Usufruct cannot be constituted in favor of a town, corporation, or association

for more than fifty years. If it has been constituted, and before the expiration of such period
the town is abandoned, or the corporation or association is dissolved, the usufruct shall be
extinguished by reason thereof. (Emphasis added)

The law clearly limits any usufruct constituted in favor of a corporation or association to 50
years. A usufruct is meant only as a lifetime grant. Unlike a natural person, a corporation or
association’s lifetime may be extended indefinitely. The usufruct would then be perpetual. This
is especially invidious in cases where the usufruct given to a corporation or association covers
public land. Proclamation No. 1670 was issued 19 September 1977, or 28 years ago. Hence,
under Article 605, the usufruct in favor of MSBF has 22 years left.

MO 127 released approximately 50 hectares of the NHA property as reserved site for the
National Government Center. However, MO 127 does not affect MSBF’s seven-hectare area
since under Proclamation No. 1670, MSBF’s seven-hectare area was already "exclude[d] from
the operation of Proclamation No. 481, dated October 24, 1968, which established the National
Government Center Site."

WHEREFORE, the Decision of the Court of Appeals dated 30 March 2001 and its Resolution
dated 25 June 2001 in CA-G.R. CV No. 48382 are SET ASIDE. This case is REMANDED to
Branch 87 of the Regional Trial Court of Quezon City, which shall order a joint survey by the
National Housing Authority and Manila Seedling Bank Foundation, Inc. to determine the metes
and bounds of the seven-hectare portion of Manila Seedling Bank Foundation, Inc. under
Proclamation No. 1670. The seven-hectare portion shall be contiguous and shall include as
much as possible all existing major improvements of Manila Seedling Bank Foundation, Inc. The
parties shall submit the joint survey to the Regional Trial Court for its approval within sixty days
from the date ordering the joint survey.

SO ORDERED.
G.R. No. L-44428 September 30, 1977

AVELINO BALURAN, petitioner,

vs.
HON. RICARDO Y. NAVARRO, Presiding Judge, Court of First Instance of Ilocos Norte,
Branch I and ANTONIO OBEDENCIO, respondents.

Alipio V. Flores for petitioner.

Rafael B. Ruiz for private respondent.

MUÑOZ PALMA, J.:

Spouses Domingo Paraiso and Fidela Q. Paraiso were the owners of a residential lot of around
480 square meters located in Sarrat, Ilocos Norte. On or about February 2, 1964, the Paraisos
executed an agreement entitled "BARTER" whereby as party of the first part they agreed to
"barter and exchange" with spouses Avelino and Benilda Baluran their residential lot with the
latter's unirrigated riceland situated in Sarrat, Ilocos Norte, of approximately 223 square meters
without any permanent improvements, under the following conditions:

1. That both the Party of the First Part and the Party of the Second Part shall
enjoy the material possession of their respective properties; the Party of the First
Part shall reap the fruits of the unirrigated riceland and the Party of the Second
Part shall have a right to build his own house in the residential lot.

2. Nevertheless, in the event any of the children of Natividad P. Obencio,

daughter of the First Part, shall choose to reside in this municipality and build his
own house in the residential lot, the Party of the Second Part shall be obliged to
return the lot such children with damages to be incurred.

3. That neither the Party of the First Part nor the Party of the Second Part shall
encumber, alienate or dispose of in any manner their respective properties as
bartered without the consent of the other.

4. That inasmuch as the bartered properties are not yet accordance with Act No.
496 or under the Spanish Mortgage Law, they finally agreed and covenant that
this deed be registered in the Office of the Register of Deeds of Ilocos Norte
pursuant to the provisions of Act No. 3344 as amended. (p. 28, rollo)

On May 6, 1975 Antonio Obendencio filed with the Court of First Instance of Ilocos Norte the
present complaint to recover the above-mentioned residential lot from Avelino Baluran claiming
that he is the rightful owner of said residential lot having acquired the same from his mother,
Natividad Paraiso Obedencio, and that he needed the property for Purposes Of constructing his
house thereon inasmuch as he had taken residence in his native town, Sarrat. Obedencio
accordingly prayed that he be declared owner of the residential lot and that defendant Baluran
be ordered to vacate the same forfeiting his (Obedencio) favor the improvements defendant
Baluran had built in bad faith.1

Answering the complaint, Avelino Baluran alleged inter alia (1) that the "barter agreement"
transferred to him the ownership of the residential lot in exchange for the unirrigated riceland
conveyed to plaintiff's Predecessor-in-interest, Natividad Obedencio, who in fact is still in On
thereof, and (2) that the plaintiff's cause of action if any had prescribed. 2

At the pre-trial, the parties agreed to submit the case for decision on the basis of their stipulation
of facts. It was likewise admitted that the aforementioned residential lot was donated on October
4, 1974 by Natividad Obedencio to her son Antonio Obedencio, and that since the execution of
the agreement of February 2, 1964 Avelino Baluran was in possession of the residential lot, paid
the taxes of the property, and constructed a house thereon with an value of P250.00. 3 On
November 8, 1975, the trial Judge Ricardo Y. Navarro rendered a decision the dispositive
portion of which reads as follows:

Consequently, the plaintiff is hereby declared owner of the question, the

defendant is hereby ordered to vacate the same with costs against defendant.

Avelino Baluran to whom We shall refer as petitioner, now seeks a review of that decision under
the following assignment of errors:

I — The lower Court erred in holding that the barter agreement did not transfer
ownership of the lot in suit to the petitioner.

II — The lower Court erred in not holding that the right to re-barter or re-
exchange of respondent Antonio Obedencio had been barred by the statute of
limitation. (p. 14, Ibid.)

The resolution of this appeal revolves on the nature of the undertaking contract of February 2,
1964 which is entitled "Barter Agreement."

It is a settled rule that to determine the nature of a contract courts are not bound by the name or
title given to it by the contracting parties. 4 This Court has held that contracts are not what the
parties may see fit to call them but what they really are as determined by the principles of
law. 5 Thus, in the instant case, the use of the, term "barter" in describing the agreement of
February 2, 1964, is not controlling. The stipulations in said document are clear enough to
indicate that there was no intention at all on the part of the signatories thereto to convey the
ownership of their respective properties; all that was intended, and it was so provided in the
agreement, was to transfer the material possession thereof. (condition No. 1, see page I of this
Decision) In fact, under condition No. 3 of the agreement, the parties retained the right to
alienate their respective properties which right is an element of ownership.

With the material ion being the only one transferred, all that the parties acquired was the right of
usufruct which in essence is the right to enjoy the Property of another. 6 Under the document in
question, spouses Paraiso would harvest the crop of the unirrigated riceland while the other
party, Avelino Baluran, could build a house on the residential lot, subject, however, to the
condition, that when any of the children of Natividad Paraiso Obedencio, daughter of spouses
Paraiso, shall choose to reside in the municipality and build his house on the residential lot,
Avelino Baluran shall be obliged to return the lot to said children "With damages to be incurred."
(Condition No. 2 of the Agreement) Thus, the mutual agreement — each party enjoying
"material possession" of the other's property — was subject to a resolutory condition the
happening of which would terminate the right of possession and use.

A resolutory condition is one which extinguishes rights and obligations already existing. 7 The
right of "material possession" granted in the agreement of February 2, 1964, ends if and when
any of the children of Natividad Paraiso, Obedencio (daughter of spouses Paraiso, Party of the
First Part) would reside in the municipality and build his house on the property. Inasmuch as the
condition opposed is not dependent solely on the will of one of the parties to the contract — the
spouses Paraiso — but is Part dependent on the will of third persons — Natividad Obedencio
and any of her children — the same is valid. 8

When there is nothing contrary to law, morals, and good customs Or Public Policy in the
stipulations of a contract, the agreement constitutes the law between the parties and the latter
are bound by the terms thereof. 9

Art. 1306 of the Civil Code states:

Art. 1306. The contracting parties may establish such stipulations, clauses, terms
and conditions as they may deem convenient, provided they are not contrary to
law, Morals, good customs, public order, or public policy.

Contracts which are the private laws of the contracting parties, should be fulfilled
according to the literal sense of their stipulations, if their terms are clear and
 leave no room for doubt as to the intention of the contracting parties, for
contracts are obligatory, no matter what their form may be, whenever the
essential requisites for their validity are present. (Philippine American General
Insurance Co., Inc. vs. Mutuc, 61 SCRA 22)

The trial court therefore correctly adjudged that Antonio Obedencio is entitled to recover the
possession of the residential lot Pursuant to the agreement of February 2, 1964.

Petitioner submits under the second assigned error that the causa, of action if any of
respondent Obedencio had Prescribed after the lapse of four years from the date of execution of
the document of February 2, 1964. It is argued that the remedy of plaintiff, now respondent,
Was to ask for re-barter or re-exchange of the properties subject of the agreement which could
be exercised only within four years from the date of the contract under Art. 1606 of the Civil
Code.

The submission of petitioner is untenable. Art. 1606 of the Civil Code refers to conventional
redemption which petitioner would want to apply to the present situation. However, as We
stated above, the agreement of the parties of February 2, 1964, is not one of barter, exchange
or even sale with right to repurchase, but is one of or akin the other is the use or material ion or
enjoyment of each other's real property.

Usufruct may be constituted by the parties for any period of time and under such conditions as
they may deem convenient and beneficial subject to the provisions of the Civil Code, Book II,
Title VI on Usufruct. The manner of terminating or extinguishing the right of usufruct is primarily
determined by the stipulations of the parties which in this case now before Us is the happening
of the event agreed upon. Necessarily, the plaintiff or respondent Obedencio could not demand
for the recovery of possession of the residential lot in question, not until he acquired that right
from his mother, Natividad Obedencio, and which he did acquire when his mother donated to
him the residential lot on October 4, 1974. Even if We were to go along with petitioner in his
argument that the fulfillment of the condition cannot be left to an indefinite, uncertain period,
nonetheless, in the case at bar, the respondent, in whose favor the resolutory condition was
constituted, took immediate steps to terminate the right of petitioner herein to the use of the lot.
Obedencio's present complaint was filed in May of 1975, barely several months after the
property was donated to him.

One last point raised by petitioner is his alleged right to recover damages under the agreement
of February 2, 1964. In the absence of evidence, considering that the parties agreed to submit
the case for decision on a stipulation of facts, We have no basis for awarding damages to
petitioner.

However, We apply Art. 579 of the Civil Code and hold that petitioner will not forfeit the
improvement he built on the lot but may remove the same without causing damage to the
property.

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

Finally, We cannot close this case without touching on the unirrigated riceland which admittedly
is in the possession of Natividad Obedencio.

In view of our ruling that the "barter agreement" of February 2, 1964, did not transfer the
ownership of the respective properties mentioned therein, it follows that petitioner Baluran
remains the owner of the unirrigated riceland and is now entitled to its Possession. With the
happening of the resolutory condition provided for in the agreement, the right of usufruct of the
parties is extinguished and each is entitled to a return of his property. it is true that Natividad
Obedencio who is now in possession of the property and who has been made a party to this
case cannot be ordered in this proceeding to surrender the riceland. But inasmuch as reciprocal
rights and obligations have arisen between the parties to the so-called "barter agreement", We
hold that the parties and for their successors-in-interest are duty bound to effect a simultaneous
transfer of the respective properties if substance at justice is to be effected.

WHEREFORE, Judgment is hereby rendered: 1) declaring the petitioner Avelino Baluran and
respondent Antonio Obedencio the respective owners the unirrigated riceland and residential lot
mentioned in the "Barter Agreement" of February 2, 1964; 2) ordering Avelino Baluran to vacate
the residential lot and removed improvements built by thereon, provided, however that he shall
not be compelled to do so unless the unirrigated riceland shall five been restored to his
possession either on volition of the party concerned or through judicial proceedings which he
may institute for the purpose.

Without pronouncement as to costs. So Ordered.

G.R. No. 152809 August 3, 2006

MERCEDES MORALIDAD, Petitioner,

vs.
SPS. DIOSDADO PERNES and ARLENE PERNES, Respondents.

DECISION

GARCIA, J.:

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

1. Decision dated September 27, 2001, 1 affirming an earlier decision of the Regional Trial Court
(RTC) of Davao City which reversed that of the Municipal Trial Court in Cities (MTCC), Davao
City, Branch 1, in an action for unlawful detainer thereat commenced by the petitioner against
the herein respondents; and

2. Resolution dated February 28, 2002, 2 denying petitioner’s motion for reconsideration.

At the heart of this controversy is a parcel of land located in Davao City and registered in the
name of petitioner Mercedes Moralidad under Transfer Certificate of Title (TCT) No. T-123125
of the Registry of Deeds of Davao City.

In her younger days, petitioner taught in Davao City, Quezon City and Manila. While teaching in
Manila, she had the good fortune of furthering her studies at the University of Pennsylvania,
U.S.A. While schooling, she was offered to teach at the Philadelphia Catholic Archdiocese,
which she did for seven (7) years. Thereafter, she worked at the Mental Health Department of
said University for the next seventeen (17) years.

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

Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug at the
outskirts of Davao City was infested by NPA rebels and many women and children were victims
of crossfire between government troops and the insurgents. Shocked and saddened about this
development, she immediately sent money to Araceli, Arlene’s older sister, with instructions to
look for a lot in Davao City where Arlene and her family could transfer and settle down. This was
why she bought the parcel of land covered by TCT No. T-123125.

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

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

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

2. That anybody of my kins who wishes to stay on the aforementioned real property should
maintain an atmosphere of cooperation, live in harmony and must avoid bickering with one
another;
3. That anyone of my kins may enjoy the privilege to stay therein and may avail the use thereof.
Provided, however, that the same is not inimical to the purpose thereof;

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

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

xxx xxx xxx

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

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

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

Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an unlawful detainer suit
against the respondent spouses. Petitioner alleged that she is the registered owner of the land
on which the respondents built their house; that through her counsel, she sent the respondent
spouses a letter demanding them to vacate the premises and to pay rentals therefor, which the
respondents refused to heed.

In their defense, the respondents alleged having entered the property in question, building their
house thereon and maintaining the same as their residence with petitioner’s full knowledge and
express consent. To prove their point, they invited attention to her written declaration of July 21,
1986, supra, wherein she expressly signified her desire for the spouses to build their house on
her property and stay thereat for as long as they like.

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

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

a) Directing the defendants, their agents and other persons acting on their behalf to vacate the
premises and to yield peaceful possession thereof to plaintiff;
b) Ordering defendants to pay P2,000.00 a month from the filing of this complaint until they
vacate premises;

c) Sentencing defendants to pay the sum of P120,000.00 5 as attorney’s fees and to pay the
cost of suit.

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

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

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

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

Since the defendants-appellees [respondents] are admittedly possessors of the property by

permission from plaintiff [petitioner], and builders in good faith, they have the right to retain
possession of the property subject of this case until they have been reimbursed the cost of the
improvements they have introduced on the property.

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

and accordingly dismissed petitioner’s appeal, as follows:

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

Counter-claims of moral and exemplary damages claimed by defendants are likewise

dismissed. However, attorney’s fees in the amount of fifteen thousand pesos is hereby awarded
in favor of defendants-appellants, and against plaintiffs.

SO ORDERED. 8

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

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

SO ORDERED.

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

I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING THE UNLAWFUL

DETAINER CASE FOR BEING PREMATURE WHICH DECISION IS NOT IN ACCORDANCE
WITH LAW AND JURISPRUDENCE.

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

The Court rules for the petitioner.

The Court is inclined to agree with the CA that what was constituted between the parties herein
is one of usufruct over a piece of land, with the petitioner being the owner of the property upon
whom the naked title thereto remained and the respondents being two (2) among other
unnamed usufructuaries who were simply referred to as petitioner’s kin. The Court, however,
cannot go along with the CA’s holding that the action for unlawful detainer must be dismissed on
ground of prematurity.

Usufruct is defined under Article 562 of the Civil Code in the following wise:

ART. 562. Usufruct gives a right to enjoy the property of another with the obligation of
preserving its form and substance, unless the title constituting it or the law otherwise provides.

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

It is undisputed that petitioner, in a document dated July 21, 1986, supra, made known her
intention to give respondents and her other kins the right to use and to enjoy the fruits of her
property. There can also be no quibbling about the respondents being given the right "to build
their own house" on the property and to stay thereat "as long as they like." Paragraph #5 of the
same document earmarks "proceeds or income derived from the aforementioned properties" for
the petitioner’s "nearest kins who have less in life in greater percentage and lesser percentage
to those who are better of (sic) in standing." The established facts undoubtedly gave
respondents not only the right to use the property but also granted them, among the petitioner’s
other kins, the right to enjoy the fruits thereof. We have no quarrel, therefore, with the CA’s
ruling that usufruct was constituted between petitioner and respondents. It is thus pointless to
discuss why there was no lease contract between the parties.

However, determinative of the outcome of the ejectment case is the resolution of the next issue,
i.e., whether the existing usufruct may be deemed to have been extinguished or terminated. If
the question is resolved in the affirmative, then the respondents’ right to possession, proceeding
as it did from their right of usufruct, likewise ceased. In that case, petitioner’s action for
ejectment in the unlawful detainer case could proceed and should prosper.

The CA disposed of this issue in this wise:

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

xxx xxx xxx

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

It is undisputed that petitioner expressly authorized respondents o occupy portion of her

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

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

ART. 603. Usufruct is extinguished:

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

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

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

(4) By renunciation of the usufructuary;

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

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

(7) By prescription. (Emphasis supplied.)

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

From the pleadings submitted by the parties, it is indubitable that there were indeed facts and
circumstances whereby the subject usufruct may be deemed terminated or extinguished by the
occurrence of the resolutory conditions provided for in the title creating the usufruct, namely, the
document adverted to which the petitioner executed on July 21, 1986.
As aptly pointed out by the petitioner in her Memorandum, respondents’ own evidence before
the MTCC indicated that the relations between the parties "have deteriorated to almost an
irretrievable level." 13 There is no doubt then that what impelled petitioner to file complaints
before the local barangay lupon, the Office of the Ombudsman for Mindanao, and this instant
complaint for unlawful detainer before the MTCC is that she could not live peacefully and
harmoniously with the Pernes family and vice versa.

Thus, the Court rules that the continuing animosity between the petitioner and the Pernes family
and the violence and humiliation she was made to endure, despite her advanced age and frail
condition, are enough factual bases to consider the usufruct as having been terminated.

To reiterate, the relationship between the petitioner and respondents respecting the property in
question is one of owner and usufructuary. Accordingly, respondents’ claim for reimbursement
of the improvements they introduced on the property during the effectivity of the usufruct should
be governed by applicable statutory provisions and principles on usufruct. In this regard, we cite
with approval what Justice Edgardo Paras wrote on the matter:

If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case like this,
the terms of the contract and the pertinent provisions of law should govern (3 Manresa 215-216;
se also Montinola vs. Bantug, 71 Phil. 449). 14 (Emphasis ours.)

By express provision of law, respondents, as usufructuary, do not have the right to

reimbursement for the improvements they may have introduced on the property. We quote
Articles 579 and 580 of the Civil Code:

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

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

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

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

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

No pronouncement as to costs.

SO ORDERED.
G.R. No. L-19614 March 27, 1971

JESUS M. GABOYA, as Administrator of the Estate of DON MARIANO CUI, plaintiff-

appellant,
vs.
ANTONIO MA. CUI, MERCEDES CUI-RAMAS and GIL RAMAS, defendants-appellees,
JESUS MA. CUI, JOSE MA. CUI, SERAFIN MA. CUI, JORGE MA. CUI, ROSARIO CUI DE
ENCARNACION, PRECILLA C. VELEZ, and LOURDES C. VELEZ, intervenors-appellants,
VICTORINO REYNES, defendant-in-counterclaim-appellee.

Vicente Jayme for plaintiff-appellant.

Hector L. Hofileña Candido Vasqueza and Jaime R. Nuevas for defendants-appellees.

Jose W. Diokno for intervenors-appellants.

REYES, J.B.L., J.:

Direct appeal (before Republic Act 5440) from a decision of the Court of First Instance of Cebu
(in its Civil Case No. R-1720) denying resolution of a contract of sale of lots 2312, 2313 and
2319 executed on 20 March 1946 by the late Don Mariano Cui in favor of three of his children
Antonio Ma. Cui, Mercedes Cui de Ramas and Rosario Cui de Encarnacion, but sentencing the
first two, Antonio Cui and Mercedes; Cui, to pay, jointly and severally (in solidum), to the Judicial
Administrator of the Estate of Mariano Cui (appellant Jesus M. Gaboya the amount of
P100,088.80, with legal interest from the interposition of the complaint (5 November 1951), plus
P5,000.00 attorney's fees and the costs.

The antecedents of the case are stated in the previous decision of this Supreme Court rendered
on 31 July 1952, in the case of Antonio and Mercedes Cui vs. Judge Piccio, et al., 91 Phil. 712.

Don Mariano Cui, widower, as owner of lots Nos. 2312, 2313 and 2319 situated
in the City of Cebu, with an area of 152 square meters, 144 square meters and
2,362 square meters, respectively, or a total extension of 2,658 square meters,
on March 8, 1946, sold said three lots to three of his children named Rosario C.
de Encarnacion, Mercedes C. de Ramas and Antonio Ma. Cui, pro indiviso for
the sum of P64,000. Because Rosario C. de Encarnacion for lack of funds was
unable to pay her corresponding share of the purchase price, the sale to her was
cancelled and the one-third of the property corresponding to her was returned to
the vendor. These three lots are commercial. The improvements thereon were
destroyed during the last Pacific War so that at the time of the sale in 1946, there
were no buildings or any other improvements on them. Because of the sale of
these lots pro indiviso and because of the cancellation of the sale to one of the
three original vendees, Don Mariano and his children Mercedes and Antonio
became co-owners of the whole mass in equal portions. In the deed of sale
vendor Don Mariano retained for himself the usufruct of the property in the
following words:

"...do hereby sell, transfer, and convey to Messrs. Rosario C. de

Encarnacion, Mercedes C. de Ramas and Antonio Ma. Cui, the
above-mentioned parcel of land in equal parts, ... and the further
consideration, that I, shall enjoy the fruits and rents of the same,
as long as my natural life shall last. Granting and conveying unto
the said buyers the full rights as owners to enjoy the constructive
possession of the same, improve, construct and erect a building in
the lot, or do whatever they believe to be proper and wise, ..."

Subsequently, a building was erected on a portion of this mass facing Calderon

street and was occupied by a Chinese businessman for which he paid Don
Mariano P600 a month as rental. The date when the building, was constructed
and by whom do not appear in the record.

Sometime after the sale to Mercedes and Antonio the two applied to the
Rehabilitation Finance Corporation (RFC) for a loan of P130,000 with which to
construct a 12-door commercial building presumably on a portion of the entire
parcel corresponding to their share. In order to facilitate the granting of the loan
and inasmuch as only two of the three co-owners applied for the loan, Don
Mariano on January 7, 1947, executed an authority to mortgage (Annex U)
authorizing his two children co-owners to mortgage his share, the pertinent
portion of said authority reading thus:

"That by virtue of these presents, I hereby agree, consent permit and authorize
my said co-owners to mortgage, pledge my share so that they may be able to
construct a house or building in the said property, provided however, that
the rents of the said land shall not be impaired and will always be received by
me."

The loan was eventually granted and was secured by a mortgage on the three
lots in question, Don Mariano being included as one of the three mortgagors and
signing the corresponding promissory note with his two co-owners. He did not
however, join in the construction of the 12-door commercial building as may be
gathered from the "Convenio de Asignacion de Parte' (Annex V) wherein it was
agreed among the three co-owners to assign to Don Mariano that one-third of the
whole mass facing Calderon street and on which was erected the building
already referred to as being occupied by a Chinese businessman and for which
he was paying Don Mariano P600 a month rental. The area of this one-third
portion was fixed at 900 square meters approximately one-third of the total area
of the three lots. The pertinent Portion of this Annex V reads as follows:

"Que como quiera que, la propiedad arriba descrita esta actualmente hipotecada
a la Rehabilitation Finance Corporation para garantizar la construccion que mis
condueños cnotruyeron en la parte que les correponde;

"Y que como quiera que, el Sr. Don Mariano Cui, uno de los condueños, no ha
querido unirse a la construccion de dicho edificio, y desea que la parte que le
corresponda sea la 1/3 que este dando frente a la Calle Calderon."

The 12-door commercial building was eventually constructed and the builder-
owners thereof Mercedes and Antonio received and continued to receive the
rents thereof amounting to P4,800 a month and paying therefrom the installments
due for payment on the loan to the Rehabilitation Finance Corporation.

On March 25, 1948, two other children of Don Mariano named Jesus and Jorge
brought an action (Civil case No. 599R) in the Court of First Instance of Cebu for
the purpose of annulling the deed of sale of the three lots in question on the
ground that they belonged to the conjugal partnership of Don Mariano and his
deceased wife Antonia Perales. Thereafter, plaintiffs Jesus and Jorge applied for
the appointment of a receiver to take charge of the lots and of the rentals of the
building. This petition was denied on November 8, 1948.

On March 19, 1949, Rosario C. Encarnacion, that daughter of Don Mariano who
was one of the original vendees, filed a petition to declare her father incompetent
and to have a guardian appointed for his property, in Special Proceeding No.
481-R of the Court of First Instance of Cebu. In May 1949 the petition was
granted and Don Mariano was declared incompetent and Victorino Reynes was
appointed guardian of his property.lâwphî1.ñèt Thereafter, the complaint in civil
case No. 599-R seeking to annul the deed of sale of the three lots in favor of
Mercedes and Antonio was amended so as to include as plaintiffs not only the
guardian Victorino Reynes but also all the other children of Don Mariano.
 On June 15, 1949, guardian Victorino Reynes filed a motion in the guardianship
proceedings seeking authority to collect the rentals from the three lots in question
and asking the Court to order Antonio and Mercedes to deliver to him as
guardian all the rentals they had previously collected from the 12-door
commercial building, together with all the papers belonging to his ward. This
motion was denied by Judge Piccio in his order of July 12, 1949. The guardian
did not appeal from this order.

On May 22, 1951, Judge Saguin rendered a decision in civil case No. 599-R and
found that the three lots in question were not conjugal property but belonged
exclusively to Don Mariano and so upheld the sale of two-thirds of said lots to
Antonio and Mercedes. The plaintiffs appealed to the Court of Appeals where the
case is now pending.

From the Court of Appeals the case was brought to the Supreme Court, and the decision of
Judge Saguin upholding the validity of the sale in favor of Antonio and Mercedes Cui was finally
affirmed on 21 February 1957, in Cui vs. Cui, 100 Phil, 914.

This third case now before Us was started by the erstwhile guardian of Don Mariano Cui (while
the latter was still alive) in order to recover P126,344.91 plus legal interest from Antonio Cui and
Mercedes Cui (Record on Appeal, pages 2-3) apparently as fruits due to his ward by virtue of
his usufruct. The guardian's complaint was supplemented and amplified by a 1957 complaint in
intervention (duly admitted) filed by the other compulsory heirs of Mariano Cui, who had died on
29 July 1952, some nine months after the present case was instituted in the court below
(Record on Appeal, pages 67-68).

In essence, the complaint alleges that the usufructuary right reserved in favor of Don Mariano
Cui extends to and includes the rentals of the building constructed by Antonio Cui and
Mercedes Cui on the land sold to them by their father; that the defendants retained those rentals
for themselves; that the usufructuary rights of the vendor were of the essence of the sale, and
their violation entitled him to rescind (or resolve) the sale. It prayed either for rescission with
accounting, or for delivery of the rentals of the building with interests, attorneys' fees and costs
(Record on Appeal, pages 12-38).

The amended answer, while admitting the reserved usufruct and the collection of rentals of the
building by the defendants, denied that the usufructuary rights included or extended to the said
rentals, or that such usufruct was of the essence of the sale; that the vendor (Don Mariano Cui )
had waived and renounced the usufruct and that the defendants vendees gave the vendor
P400.00 a month by way of aid; that the original complaint having sought fulfillment of the
contract, plaintiff can not thereafter seek rescission; that such action is barred by res
judicata (on account of the two previous decisions of the Supreme Court and by extinctive
prescription. Defendants counterclaimed for actual and moral damages and attorney's fees.

Plaintiffs denied the allegations in the counterclaim. .

From a consideration of the pleadings, the basic and pivotal issue appears to be whether the
usufruct reserved by the vendor in the deed of sale, over the lots in question that were at the
time vacant and unoccupied, gave the usufructuary the right to receive the rentals of the
commercial building constructed by the vendees with funds borrowed from the Rehabilitation
and Finance Corporation, the loan being secured by a mortgage over the lots sold. Similarly, if
the usufruct extended to the building, whether the failure of the vendees to pay over its rentals
to the usufructuary entitled the latter to rescind, or more properly, resolve the contract of sale. In
the third place, should the two preceding issues be resolved affirmatively, whether the action for
rescission due to breach of the contract could still be enforced and was not yet barred.

The court below declared that the reserved right of usufruct in favor of the vendor did not
include, nor was it intended to include, nor was it intended to include, the rentals of the building
subsequently constructed on the vacant lots, but that it did entitle the usufructuary to receive a
reasonable rental for the portion of the land occupied by the building, which the Court a
quo fixed at Pl,858.00 per month; and that the rentals for the land from November, 1947, when
the building was rented, to 29 July 1952, when Don Mariano died, amounted to P100,088.80. It
also found no preponderant evidence that the seller, Don Mariano Cui, had ever waived his right
of usufruct, as contended by the defendants; and that the Supreme Court, in denying
reconsideration of its second (1957) decision (100 Phil. 914), had, like the court of origin,
refused to pass upon the extent of the usufructuary rights of the seller, specially because the
present case, was already pending in the Court of First Instance, hence no res judicata existed.
No attorney's fees were awarded to the defendants, but they were sentenced to pay counsel
fees to plaintiffs.

Both parties appealed in the decision of the court a quo.

We find no the decision appealed from. As therein pointed out, the terms of the 1946 deed of
sale of the vacant lots in question made by the late Don Mariano Cui in favor of his three
children, Rosario, Mercedes and Antonio Cui, in consideration of the sum of P64,000.00 and the
reserved usufruct of the said lot in favor of the vendor, as amplified by the deed of 7 January
1947, authorizing Mercedes, and Antonio Cui to borrow money, with the security of a mortgage
over the entirety of the lots, in order to enable them to construct a house or building thereon —

provided, however, that the rents of said land shall not be impaired and will
always received by me.

clearly prove that the reserved usufruct in favor of the vendor, Mariano Cui, was limited to the
rentals of the land alone. Had it been designed to include also the rents of the buildings
intended to be raised on the land, an express provision would have been included to the effect,
since in both documents (heretofore quoted) the possibility of such construction was clearly
envisaged and mentioned.

Appellants, however, argue that the terms of the deed constituting the usufruct are not
determinative of the extent of the right conferred; and that by law, the enjoyment of the rents of
the building subsequently erected passed to the usufructuary, by virtue of Article 571 of the Civil
Code of the Philippines (Article 479 of the Spanish Civil Code of 1889) prescribing that:

Art. 571. The usufructuary shall have the right to enjoy any increase which the
thing in usufruct may acquire through accession, the servitudes established in its
favor, and, in general, all the benefits inherent therein,

inasmuch as (in the appellants' view) the building constructed by appellees was an accession to
the land.

This argument is not convincing. Under the articles of the Civil Code on industrial accession by
modification on the principal land (Articles 445 to 456 of the Civil Code) such accession is
limited either to buildings erected on the land of another, or buildings constructed by the owner
of the land with materials owned by someone else.

Thus, Article 445, establishing the basic rule of industrial accession, prescribes that —

Whatever is built, planted or sown on the land of another, and the improvements
or repairs made thereon, belong to the owner of the land subject to the provisions
of the following articles.

while Article 449 states:

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. (Emphasis supplied)

Articles 447 and 445, in turn, treat of accession produced by the landowner's building, planting
and sowing "with the materials of another" and when "the materials, plants or seeds belong to a
third person other than the landowner or the builder, planter or sower.

Nowhere in these articles on industrial accession is there any mention of the case of landowner
building on his own land with materials owned by himself (which is the case of appellees
Mercedes and Antonio Cui). The reason for the omission is readily apparent: recourse to the
rules of accession are totally unnecessary and inappropriate where the ownership of land and of
the, materials used to build thereon are concentrated on one and the same person. Even if the
law did not provide for accession the land-owner would necessarily own the building, because
he has paid for the materials and labor used in constructing it. We deem it unnecessary to
belabor this obvious point. .

There is nothing in the authorities (Manresa, Venezian, Santamaria, and Borrell cited by
appellants that specifically deals with constructions made by a party on his own land with his
own materials, and at his own expense. The authorities cited merely indicate the application in
general of the rules of accession. But as already stated above, the Civil Code itself limits the
cases of industrial accession to those involving land and materials belonging to different
owners. Anyway, commentators' opinions are not binding where not in harmony with the law
itself.

The author that specifically analyses the situation of the usufructuary vis-a-vis constructions
made by the landowner with his own materials is Scaevola (Codigo Civil, 2d Edition, pages 288
to 297) ; and his conclusion after elaborate discussion is that, at the most —

(b) El nudo propietario no podra, sin el consentimiento del usufructuario, hacer

construcciones, plantaciones y siembras en el predio objecto del usufructo; y en
el caso de que aquel lascosintiese, la utilizacion sera comun en los frutos y
productosde lo sembrado y plantado, y con respecto a las construcciones,el
usufructuario tendra derecho a la renta que de mutuo acuerdo se fije a las
mismas; en su defecto, por la autoridad judicial (Author cit., Emphasis supplied).

Scaevola's opinion is entirely in harmony with Article 595 of the Civil Code of the Philippines,
prescribing that —

The owner may construct any works and make any improvements of which the
immovable usufruct is susceptible, or make new plantings thereon if it be rural,
provided that such acts do not cause a diminuition in the value of the usufruct or
prejudice the right of the usufructuary.

Note that if the income from constructions made by the owner during the existence of the
usufruct should be held to accrue automatically to the usufructuary under Article 571, such
improvements could not diminish the value of the usufruct nor prejudice the right of the
usufructuary; and the qualifications by Article 595 on the owner's right to build would be
redundant. The limitations set by Article 595 to the construction rights of the naked owner of the
land are evidently premised upon the fact that such constructions would necessarily reduce
the area of the land under usufruct, for which the latter should be indemnified. This is precisely
what the court a quo has done in sentencing the appellee owners of the building to pay to the
usufructuary a monthly rent of P1,758.00 for the area occupied by their building, after mature
consideration of the rental values of lands in the neighborhood.

Additional considerations against the thesis sustained by appellants are (1) that the amount
invested in the building represents additional capital of the landowners not foresee" when the
usufruct was created; and (2) that no land-owner would be willing to build upon vacant lots
under usufruct if the gain therefrom were to go to the usufructuary while the depreciation of the
value of the building (as distinguished from the necessary repairs) and the amortization of its
cost would burden exclusively the owner of the land. The unproductive situation of barren lots
would thus be prolonged for an indefinite time, to the detriment of society. In other words, the
rule that appellants advocate would contradict the general interest and be against public policy.

Appellants urge, in support of their stand, that the loan .for the construction of the building was
obtained upon the security of a mortgage not only upon the share of appellees but also upon the
undivided interest of Don Mariano Cui in the lots in question. That factor is irrelevant to the
ownership of the building, because the money used for the building was loaned exclusively to
the appellees, and they were the ones primarily responsible for its repayment. Since the
proceeds of the loan was exclusively their property,1 the building constructed with the funds
loaned is likewise their own. A mortgagor does not become directly liable for the payment of the
loan secured by the mortgage, in the absence of stipulation to that effect; and his subsidiary role
as guarantor does not entitle him to the ownership of the money borrowed, for which the
mortgage is mere security.

We agree with the trial court that there was no adequate proof that the vendor, Don Mariano
Cui, ever renounced his usufruct. The alleged waiver was purely verbal, and is supported solely
by the testimony of Antonio Cui, one of the alleged beneficiaries thereof. As a gratuitous
renunciation of a real right over immovable property that as created by public document, the
least to be expected in the regular course of business is that the waiver should also appear in
writing. Moreover, as pointed out in the appealed decision (Record on Appeal, page 184, et
seq.), in previous pleadings sworn to by Antonio Cui himself, in Civil Case No. 599 and Special
Proceeding 481-R of the Cebu Court of First Instance (Exhibits "I", "J", and "20-A"), he and his
sister Mercedes had contended that Don Mariano Cui had been receiving from them P400.00
per month as the value of his usufruct, and never claimed that the real right had been
renounced or waived.lâwphî1.ñèt The testimony of Antonio Cui on the alleged waiver, given
after the usufructuary had been declared incompetent and could no longer contradict him, is
obviously of negligible probative value.

Turning now to the second issue tendered by herein appellants, that the non-compliance with
the provisions concerning the usufruct constituted sufficient ground for the rescission (or
resolution) of the sale under the tacit resolutory condition established by Article 1191 of the Civil
Code. What has been stated previously in discussing the import of Don Mariano's usufruct
shows that the alleged breach of contract by the appellees Antonio and Mercedes Cui could
only consist in their failure to pay to the usufructuary the rental value of the area occupied by the
building constructed by them. But as the rental value in question had not been ascertained or
fixed either by the parties or the court, prior to the decision of 31 October 1961, now under
appeal, nor had Don Mariano Cui, or anyone else in his behalf, made any previous demand for
its payment, the default, if any, can not be exclusively blamed upon the defendants-appellees.
Hence, the breach is not it "so substantial and fundamental as to defeat the object of the parties
in making the agreement"2 as to justify the radical remedy of rescission. This Court,
in Banahaw, Inc. vs. Dejarme 55 Phil. 338, ruled that —

...Under the third paragraph of article 11243 of the Civil Code, the court is given a
discretionary power to allow a period within which a person in default may be
permitted to perform the stipulation upon which the claim for resolution of the
contract is based. The right to resolve or rescind a contract for non-performance
of one of its stipulations is, therefore, not absolute.

We have stated "the default, if any," for the reason that without previous ascertainment of the
exact amount that the, defendants-appellees were obligated to turn over to the usufructuary by
way of reasonable rental value of the land occupied by their building, said parties can not be
considered as having been in default (mora) for failure to turn over such monies to the
usufructuary. "Ab illiquido non fit mora": this principle has been repeatedly declared by the
jurisprudence of Spanish Supreme Court (v. Manresa, Commentaries to the Spanish Civil Code
[5th Ed.], Vol. 8, No. 1, page 134) that is of high persuasive value in the absence of local
adjudications on the point .

No puede estimarse que incurre en mora el obligado al pago de cantidad

mientras esta no sea liquida, y tenga aquel conocimiento por virtud de
requirimiento o reclamacion judicial de lo que debe abonar (Sent. TS of Spain,
13 July 1904) .

Seguin tiene declarado esta sala con repeticion, no se puede establecer que hay
morosidad, ni condenar por tal razon al abono de intereses cuando no se conoce
la cantidad liquida reclamable" (Sent. TS of Spain, 29 November 1912)

... es visto que no existiendo obligacion de entregar cantidad hasta tanto que se
liquide no puede estimarse segun jurisprudencia, que los recurridos ineurran en
mora, por tanto que hayan de pagar intereses legales de la cantidad que en su
caso resulte (Sent, TS of Spain, 29 April 1914)
In the absence of default on the part of the defendants-vendees, Article 1592 of the Civil Code
of the Philippines that is invoked by appellants in, support of their all right to rescind the sale, is
not applicable: for said article (which is a mere variant of the general principle embodied in
Article 1191, of the same Code) presupposes default of the purchasers in the fulfilment of their
obligations. As already noted, no such default or breach could occur before liquidation of the
usufructuary's credit; and the time for paying such unliquidated claim can not be said to have
accrued until the decisions under appeal was rendered, fixing the rental value of the land
occupied by the building.

The filing of the initial complaint by Victoriano Reynes, then guardian of the late Don Mariano in
1951, seeking to recover P126,344.91 plus interest, did not place appellees in default, for that
complaint proceeded on the theory that the usufructuary was entitled to all the rentals of the
building constructed by the appellees on the lot under usufruct; and as We have ruled, that
theory was not legally tenable. And the 1957 complaint in intervention, seeking rescission of the
sale as alternative remedy, was only interposed after the death of the usufructuary in 1952, and
the consequent extinction of the usufruct, conformably to Article 603, paragraph (1), of the Civil
Code.

It is also urged by the appellants that the usufruct was a condition precedent to the conveyance
of ownership over the land in question to herein appellees, and their failure to comply with their
obligations under the usufruct prevented the vesting of title to the property in said appellees. We
need not consider this argument, since We have found that the usufruct over the land did not
entitle the usufructuary to either the gross or the net income of the building erected by the
vendees, but only to the rental value of the portion of the land occupied by the structure (in so
far as the usufructuary was prevented from utilizing said portion), and that rental value was not
liquidated when the complaints were filed in the court below, hence, there was no default in its
payment. Actually, this theory of appellants fails to take into account that Don Mariano could not
retain ownership of the land and, at the same time, be the usufructuary thereof. His intention of
the usufructuary rights in itself imports that he was no longer its owner. For usufruct is
essentially jus in re aliena; and to be a usufructuary of one's own property is in law a
contradiction in terms, and a conceptual absurdity.

The decision (Exhibit "30") as well as the resolution of this Court upon the motion to reconsider
filed in the previous case (100 Phil 914) refusing to adjudicate the usufructuary rights of Don
Mariano in view of the pendency of the present litigation (Exhibit "22") amply support the trial
court's overruling of the defense of res judicata.

Summing up, We find and hold:

(1) That the usufructuary rights of the late Don Mariano Cui, reserved in the deed of sale
(Exhibit "A" herein), was over the land alone and did not entitle him to the rents of the building
later constructed thereon by defendants Mercedes and Antonio Cui at their own expense.

(2) That said usufructuary was entitled only to the reasonable rental value of the land occupied
by the building aforementioned.

(3) That such rental value not having been liquidated until the judgment under appeal was
rendered, Antonio and Mercedes Cui were not in default prior thereto, and the deed of sale was
therefore, not subject to rescission.

(4) That as found by the court below, the reasonable rental value of the land occupied by the
defendants' building totalled P100,088.80 up to the time the usufructuary died and the usufruct
terminated.

(5) That pursuant to Articles 2208 (No. 11), 2210 and 2213 of the Civil Code,5 the trial court had
discretion to equitably award legal interest upon said sum of P100,088.80, as well as P5,000.00
attorney's fees, considering that defendants Cui have enjoyed the said rental value of the land
during all those years.
WHEREFORE, finding no reversible error in the appealed decision, the same is hereby
affirmed. Costs against appellant-intervenors, Jesus Ma. Cui, Jose Ma. Cui, Serafin Ma. Cui,
Jorge Ma. Cui, Rosario Cui de Encarnacion, Precilla C. Velez, and Lourdes C. Velez.
G.R. No. 86774 August 21, 1991

ENEDINA PRESLEY, petitioner,

vs.
BEL-AIR VILLAGE ASSOCIATION, INC., and THE HON. COURT OF
APPEALS, respondents.

Alejandro dela Rosa for petitioner.

J. Vicente G. Sison for private respondent.

GUTIERREZ, JR., J.:

This is a petition for review of the decision of the Court of Appeals promulgated on November
28, 1988 affirming the decision of the Regional Trial Court in toto. The dispositive portion of the
decision reads:

WHEREFORE, the defendants are enjoined permanently from using the property in
question as a pan de salstore or from using it for any other commercial purposes; the
defendants are ordered to pay, jointly and severally, the plaintiff the sum of P3,803.55
with legal interest from February 9, 1981 until the said sum is fully paid and the
defendants are further ordered to pay, jointly and severally, the sum of P4,500.00 as and
for attorney's fees. (Rollo, p. 30)

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

A complaint for specific performance and damages with preliminary injunction was filed
by plaintiff-appellee, Bel-Air Village Association, Inc. (BAVA for short) against Teofilo
Almendras and Rollo Almendras (now both deceased and substituted by defendant-
appellant Enedina Presley) for violation of the Deed Restrictions of Bel-Air Subdivision
that the subject house and lot shall be used only for residential and not for commercial
purposes and for non-payment of association dues to plaintiff BAVA amounting to
P3,803.55.

The Almendrases were at the time of the filing of the action the registered owners of a
house and lot located at 102 Jupiter Street, Bel-Air Village, Makati, Metro Manila. As
such registered owners, they were members of plaintiff BAVA pursuant to the Deed
Restrictions annotated in their title (TCT No. 73616) over the property in question and
defendant Presley, as lessee of the property, is the owner and operator of 'Hot Pan de
Sal Store' located in the same address.

At the time the Almendrases bought their property in question from Makati Development
Corporation, the Deed Restrictions (Exh. "C") was already annotated in their title (Exh.
"B") providing (among others) 'that the lot must be used only for residential purpose'
(Exh. "B-1" and "B-2").

When BAVA came to know of the existence of the 'Pan de sal' store, it sent a letter to
the defendants asking them to desist from operating the store (Exh. "D").

Under the existing Deed Restrictions aforesaid, the entire Bel-Air Subdivision is
classified as a purely residential area, particularly Jupiter Road which is owned by and
registered in the name of BAVA.

It has likewise been established that the Almendrases had not paid the BAVA
membership dues and assessments which amounted to P3,802.55 as of November 3,
1980. Teofilo Almendras contended that there was no written contract between him and
appellee BAVA. Only a consensual contract existed between the parties whereby
Almendras regularly pays his dues and assessments to BAVA for such services as
security, garbage collection and maintenance and repair of Jupiter Street. However,
 when the services were withdrawn by appellee BAVA, there was no more reason for the
latter to demand payment of such dues and assessments. (Rollo, pp. 30-31)

After due hearing on the merits, the trial court rendered the decision in favor of BAVA which was
affirmed by the respondent Court of Appeals.

On January 20, 1989, the Court of Appeals denied the Motion for Reconsideration.

Consequently, the petitioner filed the instant petition with this Court raising the following issues,
to wit:

THE RULING OF RESPONDENT COURT OF APPEALS IS NOT IN ACCORDANCE

WITH THE RECENT CONSOLIDATED DECISION EN BANC OF THIS HONORABLE
SUPREME COURT PROMULGATED DECEMBER 22,1988 IN RE SANGALANG, BEL-
AIR VILLAGE ASSOCIATION INC. v. INTERMEDIATE APPELLATE COURT AND
AYALA CORPORATION G.R. NO. 71169; BEL-AIR VILLAGE ASSOCIATION INC. v.
TENORIO, ET AL.-G.R. NO. 74376; BEL-AIR AIR VILLAGE ASSOCIATION, INC. v.
COURT OF APPEALS AND ROMUALDEZ, ET AL G.R. NO. 76394; BEL-AIR VILLAGE
ASSOCIATION INC. v. COURT OF APPEALS AND FILLEY, ET AL.-G.R. NO. 78182;
BEL-AIR VILLAGE ASSOCIATION, INC. v. COURT OF APPEALS AND MONCAL, ET
AL.-G.R. NO. 82281, WHICH CONSOLIDATED DECISION APPLIES ON ALL FOURS
IN THE CASE AT BAR IN FAVOR OF PETITIONER.

THE RULING OF RESPONDENT COURT OF APPEALS ADJUDGING PETITIONER

SOLIDARILY LIABLE TOGETHER WITH THE ALMENDRASES TO PAY THE
ALLEGED UNPAID ASSOCIATION DUES IS PATENTLY CONTRARY TO THE
EVIDENCE AND FACTS.

THE RULING OF RESPONDENT COURT OF APPEALS ADJUDGING PETITIONER

SOLIDARILY LIABLE TO PAY ATTORNEY'S FEES IS WITHOUT ANY LEGAL OR
FACTUAL BASIS. (Rollo, p. 11-12)

During the pendency of the case with this Court, petitioner Enedina Fox Presley died on
January 4, 1991. She was substituted by her two daughters as heirs, namely Olivia V. Pizzaro
and Consuelo V. Lacson.

The issues raised in the instant petition have already been dealt with in the consolidated cases
decided by this Court promulgated on December 22, 1988 entitled Sangalang, et al. vs.
Intermediate Appellate Court and Ayala Corporation, G.R. No. 71169; Bel-Air Village
Association, Inc. v. Intermediate Appellate Court and Rosario de Jesus Tenorio and Cecilia
Gonzalvez, G.R. No. 74376; Bel-Air v. Court of Appeals and Eduardo and Buena Romualdez,
G.R. No. 76394; BAVA v. Court of Appeals, Dolors Filley and J. Romero Associates, G.R. No.
78182; and BAVA v. Court of Appeals, Violeta Moncal and Majal Development Corp., G.R. No.
82281. (168 SCRA 634 [1988])

Apparently, when the respondent court promulgated the questioned decision on November 28,
1988 the Sangalang case had not yet been decided by this Court. It was however, aware of the
pending case as it made mention of the several cases brought to court by BAVA against the
aforesaid commercial establishments.

The petitioner in the instant case is similarly situated as the private respondents in G.R. Nos.
74376; 76394; 78182 and 82281 who converted their residential homes to commercial
establishments; hence, BAVA filed suits against them to enforce the Deeds of Restrictions
annotated in their titles which provide among others, "that the lot must be used only for
residential purposes."
The Court in the Sangalang case, however, held:

xxx xxx xxx

... In the Sangalang case, we absolve the Ayala Corporation primarily owing to our
finding that is not liable for the opening of Jupiter Street to the general public. Insofar as
these petitions are concerned, we likewise exculpate the private respondents, not only
because of the fact that Jupiter Street is not covered by the restrictive easements based
on the 'deed restrictions' but chiefly because the National Government itself, through
the Metro Manila Commission (MMC), had reclassified Jupiter Street into a 'high density
commercial (C-3) zone,' (See rollo, G.R. No. 71169, Id., 117) pursuant to its Ordinance
No. 81-01 Hence, the petitioners have no cause of action on the strength alone of the
said deed restrictions. (p. 667; Emphasis supplied)

In the instant petition, BAVA assails the Court's decision in the Sangalang case, more
specifically the Court's interpretation of Ordinance No. 81-01 passed by the Metro Manila
Commission (MMC) on March 14, 1981. It avers that due to the multitude of issues raised and
the numerous pleadings filed by the different contending parties, the Court was misled and
unfortunately erred in concluding that Jupiter Street was reclassified as a "high density
commercial (C-3) zone" when in fact, it is still considered as a "(R-1) residential zone."

If indeed private respondent's observations were accurate, the Court will certainly not hesitate to
correct the situation and the case at bar would be the proper occasion to do so. We have
carefully examined the pleadings but have found no reason to reconsider
the Sangalang doctrine. In assailing the Court's decision, the private respondent has come out
with mere assertions and allegations. It failed to present any proofs or convincing arguments to
substantiate its claim that Jupiter Street is still classified as a residential zone. (See Filinvest v.
Court of Appeals, 182 SCRA 664 [1990]) No new zoning re-classification, ordinance,
certification to the effect or jurisprudence for that matter was brought to the attention of this
Court which would necessarily compel us to take a second look at the Sangalang Case. The
Court can not reverse a precedent and rule favorably for the private respondent on the strength
of mere inferences.

The respondent court in the case at bar was not at all entirely wrong in upholding the Deed of
Restrictions annotated in the title of the petitioners. It held that the provisions of the Deed of
Restrictions are in the nature of contractual obligations freely entered into by the parties.
Undoubtedly, they are valid and can be enforced against the petitioner. However, these
contractual stipulations on the use of the land even if said conditions are annotated on the
torrens title can be impaired if necessary to reconcile with the legitimate exercise of police
power. (Ortigas & Co. Limited Partnership v. Feati Bank and Trust Co., 94 SCRA 533 [1979]).

We reiterate the Court's pronouncements in the Sangalang case which are quite clear:

It is not that we are saying that restrictive easements, especially the easements herein in
question, are invalid or ineffective. As far as the Bel-Air subdivision itself is concerned,
certainly, they are valid and enforceable. But they are, like all contracts, subject to the
overriding demands, needs, and interests of the greater number as the State may
determine in the legitimate exercise of police power. Our jurisdiction guarantees sanctity
of contract and is said to be the 'law between the contracting parties,' (Civil Code, supra,
art. 1159) but while it is so, it cannot contravene 'law, morals, good customs, public
order, or public policy.' (supra, art. 1306). Above all, it cannot be raised as a deterrent to
police power, designed precisely to promote health, safety, peace, and enhance the
common good, at the expense of contractual rights, whenever necessary. . . (p. 667)

Jupiter Street has been highly commercialized since the passage of Ordinance No. 81-
01.1âwphi1 The records indicate that commercial buildings, offices, restaurants, and stores
have already sprouted in this area. We, therefore, see no reason why the petitioner should be
singled out and prohibited from putting up her hot pan de sal store. Thus, in accordance with the
ruling in the Sangalang case, the respondent court's decision has to be reversed.
With respect to the demand for payment of association dues in the sum of P3,803.55, the
records reveal that this issue is now moot and academic after petitioner Presley purchased the
property subject of lease from the Almendrases and settled all association dues.

Likewise, the demand for payment of attorney's fees is now without legal or factual basis.

WHEREFORE, the petition is hereby GRANTED. The decision of the respondent court dated
November 28, 1988 is REVERSED and SET ASIDE. The complaint of the private respondent is
DISMISSED.

SO ORDERED.
G.R. No. 90596 April 8, 1991

SOLID MANILA CORPORATION, petitioner,

vs.
BIO HONG TRADING CO., INC. and COURT OF APPEALS, respondents.

Balgos & Perez for petitioner.

Alfredo G. de Guzman for private respondent.

SARMIENTO, J.:

This is an appeal filed by way of a petition for review on certiorari under Rule 45 of the Rules of
Court.

The petitioner raises two questions: (1) whether or not the Court of Appeals1 erred in reversing
the trial court which had rendered summary judgment; and (2) whether or not it erred in holding
that an easement had been extinguished by merger.

We rule for the petitioner on both counts.

It appears that the petitioner is the owner of a parcel of land located in Ermita, Manila, covered
by Transfer Certificate of Title No. 157750 of the Register of Deeds of Manila. The same lies in
the vicinity of another parcel, registered in the name of the private respondent corporation under
Transfer Certificate of Title No. 128784.

The private respondent's title came from a prior owner, and in their deed of sale, the parties
thereto reserved as an easement of way:

. . .a portion thereof measuring NINE HUNDRED FOURTEEN SQUARE METERS, more

or less, had been converted into a private alley for the benefit of neighboring estates,
this being duly annotated at the back of the covering transfer Certificate of title per
regulations of the Office of the City Engineer of Manila and that the three meterwide
portion of said parcel along the Pasig River, with an area of ONE HUNDRED SEVENTY
NINE (179) SQUARE METERS, more or less, had actually been expropriated by the City
Government, and developed pursuant to the beautification drive of the Metro Manila
Governor. (p. 3, Record).2

As a consequence, an annotation was entered in the private respondent's title, as follows:

Entry No. 7712/T-5000 –– CONSTRUCTION OF PRIVATE ALLEY –– It is hereby made

of record that a construction of private alley has been undertaken on the lot covered by
this title from Concepcion Street to the interior of the aforesaid property with the plan and
specification duly approved by the City Engineer subject to the following conditions to
wit: (1) That the private alley shall be at least three (3) meters in width; (2) That the alley
shall not be closed so long as there's a building exists thereon (sic); (3) That the alley
shall be open to the sky; (4) That the owner of the lot on which this private alley has
been constituted shall construct the said alley and provide same with concrete canals as
per specification of the City Engineer; (5) That the maintenance and upkeep of the alley
shall be at the expense of the registered owner; (6) That the alley shall remain open at
all times, and no obstructions whatsoever shall be placed thereon; (7) That the owner of
the lot on which the alley has been constructed shall allow the public to use the same,
and allow the City to lay pipes for sewer and drainage purposes, and shall not act (sic)
for any indemnity for the use thereof; and (8) That he shall impose upon the vendee or
new owner of the property the conditions abovementioned; other conditions set forth in
Doc. No. 4236, Page No. 11, Book No. 84 of Nicasio P. Misa, Not. Pub. of Manila.3

The petitioner claims that ever since, it had (as well as other residents of neighboring estates)
made use of the above private alley and maintained and contributed to its upkeep, until
sometime in 1983, when, and over its protests, the private respondent constructed steel gates
that precluded unhampered use.

On December 6, 1984, the petitioner commenced suit for injunction against the private
respondent, to have the gates removed and to allow full access to the easement.

The court a quo shortly issued ex parte an order directing the private respondent to open the
gates. Subsequently, the latter moved to have the order lifted, on the grounds that: (1) the
easement referred to has been extinguished by merger in the same person of the dominant and
servient estates upon the purchase of the property from its former owner; (2) the petitioner has
another adequate outlet; (3) the petitioner has not paid any indemnity therefor; and (4) the
petitioner has not shown that the right-of-way lies at the point least prejudicial to the servient
estate.

The private respondent's opposition notwithstanding, the trial court issued a "temporary writ of
preliminary injunction to continue up to the final termination of the case upon its merits upon the
posting of a P5,000.00 bond by the plaintiff.4 (the petitioner herein).

Thereafter, the respondent corporation answered and reiterated its above defenses.

On April 15, 1986, the petitioner moved for summary judgment and the court a quo ruled on the
same as follows:

In view of the foregoing, this Court finds it unnecessary to try this case on the merit (sic) and
hereby resolve (sic) to grant the plaintiffs motion for summary judgment. (pp. 15-107, Record).5

On January 19, 1987, the trial court rendered judgment against the private respondent, the
dispositive portion of which states:

WHEREFORE, judgment is hereby rendered making permanent the temporary

mandatory injunction, that had been issued against the defendant, and for the defendant
to pay the plaintiff the costs of this suit.

The defendant's counterclaim against the plaintiff is hereby dismissed, for lack of merit.
(Summary Judgment, p. 6).6

The private respondent appealed to the respondent Court of Appeals.

Meanwhile, the private respondent itself went to the Regional Trial Court on a petition for the
cancellation of the annotation in question. The court granted cancellation, for which the
petitioner instituted CA-G.R. SP No. 13421 of the respondent Court of Appeals which ordered
the restoration of the annotation "without prejudice [to] the final outcome of7 the private
respondent's own appeal (subject of this petition).

In reversing the trial court which had, as earlier mentioned, rendered summary judgment, the
respondent Court of Appeals held that the summary judgment was improper and that the lower
court erroneously ignored the defense set up by the private respondent that the easement in
question had been extinguished. According to the Appellate Court, an easement is a mere
limitation on ownership and that it does not impair the private respondent's title, and that since
the private respondent had acquired title to the property, "merger" brought about an
extinguishment of the easement.

The petitioner submits that the respondent Court of Appeals erred, because the very deed of
sale executed between the private respondent and the previous owner of the property
"excluded" the alley in question, and that in any event, the intent of the parties was to retain the
"alley" as an easement notwithstanding the sale.

As already stated at the outset, the Court finds merit in the petition.

There is no question that an easement, as described in the deed of sale executed between the
private respondent and the seller, had been constituted on the private respondent's property,
and has been in fact annotated at the back of Transfer Certificate of Title No. 128784.
Specifically, the same charged the private respondent as follows: "(6) That the alley shall remain
open at all times, and no obstructions whatsoever shall be placed thereon; (7) That the owner of
the lot on which the alley has been constructed shall allow the public to use the same, and allow
the City to lay pipes for sewer and drainage purposes, and shall not [ask] for any indemnity for
the use thereof. . ."8 Its act, therefore, of erecting steel gates across the alley was in defiance of
these conditions and a violation of the deed of sale, and, of course, the servitude of way.

The Court then is of the opinion that injunction was and is proper and in denying injunctive relief
on appeal, the respondent Appellate Court committed an error of judgment and law.

It is hardly the point, as the Court of Appeals held, that the private respondent is the owner of
the portion on which the right-of-way had been established and that an easement can not impair
ownership. The petitioner is not claiming the easement or any part of the property as its own,
but rather, it is seeking to have the private respondent respect the easement already existing
thereon. The petitioner is moreover agreed that the private respondent has ownership, but that
nonetheless, it has failed to observe the limitation or encumbrance imposed on the same

There is therefore no question as to ownership. The question is whether or not an easement

exists on the property, and as we indicated, we are convinced that an easement exists.

It is true that the sale did include the alley. On this score, the Court rejects the petitioner's
contention that the deed of sale "excluded" it, because as a mere right-of-way, it can not be
separated from the tenement and maintain an independent existence. Thus:

Art. 617. Easements are inseparable from the estate to which they actively or passively
belong.9

Servitudes are merely accessories to the tenements of which they form part.10 Although they are
possessed of a separate juridical existence, as mere accessories, they can not, however, be
alienated11 from the tenement, or mortgaged separately.12

The fact, however, that the alley in question, as an easement, is inseparable from the main lot is
no argument to defeat the petitioner's claims, because as an easement precisely, it operates as
a limitation on the title of the owner of the servient estate, specifically, his right to use (jus
utendi).

As the petitioner indeed hastens to point out, the deed itself stipulated that "a portion thereof [of
the tenement] measuring NINE HUNDRED FOURTEEN SQUARE METERS, more or less, had
been converted into a private alley for the benefit of the neighboring estates. . ."13 and precisely,
the former owner, in conveying the property, gave the private owner a discount on account of
the easement, thus:

WHEREAS, to compensate for the foregoing, the parties hereto agreed to adjust the
purchase price from THREE MILLION SEVEN HUNDRED NINETY THOUSAND FOUR
HUNDRED FORTY PESOS (P3,790,440.) to THREE MILLION FIVE HUNDRED THREE
THOUSAND TWO HUNDRED FORTY PESOS (P3,503,240.00)14

Hence, and so we reiterate, albeit the private respondent did acquire ownership over the
property –– including the disputed alley –– as a result of the conveyance, it did not acquire the
right to close that alley or otherwise put up obstructions thereon and thus prevent the public
from using it, because as a servitude, the alley is supposed to be open to the public.

The Court is furthermore of the opinion, contrary to that of the Court of Appeals, that no genuine
merger took place as a consequence of the sale in favor of the private respondent corporation.
According to the Civil Code, a merger exists when ownership of the dominant and servient
estates is consolidated in the same person.15 Merger then, as can be seen, requires full
ownership of both estates.
One thing ought to be noted here, however. The servitude in question is a personal servitude,
that is to say, one constituted not in favor of a particular tenement (a real servitude) but rather,
for the benefit of the general public.

Personal servitudes are referred to in the following article of the Civil Code:

Art. 614. Servitudes may also be established for the benefit of a community, or of one or
more persons to whom the encumbered estate does not belong.16

In a personal servitude, there is therefore no "owner of a dominant tenement" to speak of, and
the easement pertains to persons without a dominant estate,17 in this case, the public at large.

Merger, as we said, presupposes the existence of a prior servient-dominant owner relationship,

and the termination of that relation leaves the easement of no use. Unless the owner conveys
the property in favor of the public –– if that is possible –– no genuine merger can take place that
would terminate a personal easement.

For this reason, the trial court was not in error in rendering summary judgment, and insofar as
the respondent Court of Appeals held that it (the trial court) was in error, the Court of Appeals is
in error.

Summary judgments under Rule 34 of the Rules of Court are proper where there is no genuine
issue as to the existence of a material fact, and the facts appear undisputed based on the
pleadings, depositions, admissions, and affidavits of record.18 In one case, this Court upheld a
decision of the trial court rendered by summary judgment on a claim for money to which the
defendant interposed the defense of payment but which failed to produce receipts.19We held
that under the circumstances, the defense was not genuine but rather, sham, and which justified
a summary judgment. In another case, we rejected the claim of acquisitive prescription over
registered property and found it likewise to be sham, and sustained consequently, a summary
judgment rendered because the title challenged was covered by a Torrens Certificate and under
the law, Torrens titles are imprescriptible.20

We also denied reconveyance in one case and approved a summary judgment rendered
thereon, on the ground that from the records, the plaintiffs were clearly guilty of laches having
failed to act until after twenty-seven years.21 We likewise allowed summary judgment and
rejected contentions of economic hardship as an excuse for avoiding payment under a contract
for the reason that the contract imposed liability under any and all conditions.22

In the case at bar, the defense of merger is, clearly, not a valid defense, indeed, a sham one,
because as we said, merger is not possible, and secondly, the sale unequivocally preserved the
existing easement. In other words, the answer does not, in reality, tender any genuine issue on
a material fact and can not militate against the petitioner's clear cause of action.

As this Court has held, summary judgments are meant to rid a proceeding of the ritual of a trial
where, from existing records,23 the facts have been established, and trial would be futile.

What indeed, argues against the posturing of the private respondent –– and consequently, the
challenged holding of the respondent Court of Appeals as well –– is the fact that the Court of
Appeals itself had rendered judgment, in its CA-G.R. No. 13421, entitled Solid Manila
Corporation v. Ysrael, in which it nullified the cancellation of the easement annotated at the
back of the private respondent's certificate of title ordered by Judge Ysrael in LRC Case No.
273. As the petitioner now in fact insists, the Court of Appeals' judgment, which was affirmed by
this Court in its Resolution dated December 14, 1988, in G.R. No. 83540, is at least, the law of
the case between the parties, as "law of the case" is known in law, e.g.:

xxx xxx xxx

Law of the case has been defined as the opinion delivered on a former appeal. More
specifically, it means that whatever is once irrevocably established as the controlling
legal rule of decision between the same parties in the same case continues to be the law
of the case, whether correct on general principles or not, so long as the facts on which
 such decision was predicated continue to be the facts of the case before the court. (21
C.J.S. 330) (Emphasis supplied).

It may be stated as a rule of general application that, where the evidence on a second or
succeeding appeal is substantially the same as that on the first or preceding appeal, all
matters, questions, points, or issues adjudicated on the prior appeal are the law of the
case on all subsequent appeals and will not be considered or readjudicated therein. (5
C.J.S. 1267) (Emphasis supplied.)

In accordance with the general rule stated in Section 1821, where, after a definite
determination, the court has remanded the cause for further action below, it will refuse to
examine question other than those arising subsequently to such determination and
remand, or other than the propriety of the compliance with its mandate; and if the court
below has proceeded in substantial conformity to the directions of the appellate court, its
action will not be questioned on a second appeal.

As a general rule a decision on a prior appeal of the same case is held to be the law of
the case whether that decision is right or wrong, the remedy of the party deeming
himself aggrieved being to seek a rehearing. (5 C.J.S. 1276-77). (Emphasis supplied.)

Questions necessarily involved in the decision on a former appeal will be regarded as

the law of the case on a subsequent appeal, although the questions are not expressly
treated in the opinion of the court, as the presumption is that all the facts in the case
bearing on the point decided have received due consideration whether all or none of
them are mentioned in the opinion. (5 C.J.S. 1286-87). (Emphasis supplied.)24

CA-G.R. No. 13421 is the law of the case because clearly, it was brought to determine the rights
of the parties regarding the easement, subject of the controversy in this case, although as a
petition for "cancellation of annotation" it may have, at a glance, suggested a different cause of
action.

And for reasons of fair play, the private respondent can not validly reject CA-G.R. No. 13421 as
the law of the case, after all, it was the one that initiated the cancellation proceedings with the
Regional Trial Court in LRC No. 273 that precipitated that appeal. In the second place, the
proceedings for cancellation of annotation was in fact meant to preempt the injunction decreed
by the lower court in this case. Plainly and simply, the private respondent is guilty of forum-
shopping, as we have described the term:

xxx xxx xxx

There is forum-shopping whenever, as a result of an adverse opinion in one forum, a

party seeks a favorable opinion (other than by appeal or certiorari) in another. The
principle applies not only with respect to suits filed in the courts but also in connection
with litigations commenced in the courts while an administrative proceeding is pending,
as in this case, in order to defeat administrative processes and in anticipation of an
unfavorable administrative ruling and a favorable court ruling. This is specially so, as in
this case, where the court in which the second suit was brought, has no jurisdiction.25

to which contempt is a penalty.26

As it happened, in its effort to shop for a friendly forum, the private respondent found an
unfriendly court and it can not be made to profit from its act of malpractice by permitting it to
downgrade its finality and deny its applicability as the law of the case.

As a personal servitude, the right-of-way in question was established by the will of the owner.

In the interesting case of North Negros Sugar Co., Inc. v. Hidalgo,27 this Court, speaking
through Justice Claro Recto, declared that a personal servitude (also a right of way in that case)
is established by the mere "act"28 of the landowner, and is not "contractual in the nature,"29 and
a third party (as the petitioner herein is a third party) has the personality to claim its benefits. In
his separate opinion, however, Justice Jose Laurel maintained that a personal or voluntary
servitude does require a contract and that "[t]he act of the plaintiff in opening the private way
here involved did not constitute an offer . . . "30 and "[t]here being no offer, there could be no
acceptance; hence no contract."31

The Court sees no need to relive the animated exchanges between two legal titans (they would
contend even more spiritedly in the "larger" world of politics) to whom present scholars perhaps
owe their erudition and who, because of the paths they have taken, have shaped history itself;
after all, and coming back to the case at bar, it is not disputed that an easement has been
constituted, whereas it was disputed in North Negros' case. Rather, the question is whether it is
still existing or whether it has been extinguished. As we held, our findings is that it is in
existence and as a consequence, the private respondent can not bar the public, by erecting an
obstruction on the alley, from its use.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is SET ASIDE
and the decision of the Regional Trial Court is hereby REINSTATED. The petitioner and its
counsel are hereby required to SHOW CAUSE why they should not be punished for contempt of
court, and also administratively dealt with in the case of counsel, for forum shopping.

IT IS SO ORDERED.
G.R. No. L-17482 March 31, 1966

GENOVEVA R. JABONETE, ET AL., plaintiffs,

vs.
JULIANA MONTEVERDE, ET AL., defendants,
ANTONIO LEGASPI, respondent-appellant,
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner-appellee,
MRS. LUZ ARCILLA, petitioner-intervenor-appellee.

Zuño and Mojica for the respondents-appellants.

Jesus Avanceña for the plaintiffs.

REGALA, J.:

This is an appeal from an order of the Court of First Instance of Davao, dated March 11, 1960,
finding the respondent-appellant, Antonio Legaspi, guilty of contempt of court, and imposing
upon him a fine of P100.

On March 11, 1954, the Court of First Instance of Davao, in view of its finding in Case No. 824,
entitled Jabonete vs. Monteverde, et al., that Antonio Legaspi acquired the lot in question with
the knowledge that a "gravamen" or easement of right of way existed thereon, promulgated a
decision the dispositive portion of which reads:

Ordena al demandado Antonio Legaspi la demolicion de la parte del corral construido a

lo largo de su terreno que impide a lote demandantes tener acceso con la vereda que
communica con la carretera principal, Tomas Claudio.

Declara que los demandantes tienen derecho el uso de la vereda (Exh. A-3), de 3
metros de ancho, unico paso que disponen para communicarse con la Calle Tomas
Claudio, para el paso de sus jeeps, y los vehiculos, reparados que entran y salen del
taller de reparacion de aquellos.

The respondent-appellant received a copy of the decision on May 12, 1954. Two days later,
May 14, 1954 he filed his notice of appeal therefrom. On May 21, 1954 however, upon a
previous motion of the plaintiffs, the lower court issued an order granting discretionary execution
of the said decision. In view of this last mentioned order, the plaintiffs immediately proceeded to
the premises in question and opened in the fence of the defendant Antonio Legaspi a sufficient
opening for the passage of men and vehicles. Even then, however, the defendant filed with the
court below on that very same day, May 21, 1954, a motion for the reconsideration of the order
granting discretionary execution. Thereafter, and upon the lower court's suggestion, the parties
entered into an amicable agreement which was later embodied in an order or "auto" dated May
24, 1954, to wit:

A raiz de la mocion del demandado pidiendo antre otras cosas, la reconsideracion de la

orden de ejecucion de la decision dictada en esta causa, el 22 del Mayo de 1954, el
Juez que preside esta sala se constituyo para una inspeccion ocular en el lugar en
conflicto.

Durante la inspeccion ocular, los demandantes y demandado, Antonio Legaspi, llegaron

a un acuerdo:

1. Los demandantes no instalaran en su terreno su taller de reparacion de vehiculos de

motor.

2. Los demandantes pueden construir su garaje dentro de su terreno para su jeep (AC),
pero no los tendran parados en la calle privada del demandados construida por este en
su terreno a lo largo del terreno de los demandantes;

3. Los demandantes contribuiran a prorata con el demandado los gastos de reparacion

de la calle privada construida por el referido demandado en su terreno a lo largo del
terreno de los demandantes.1äwphï1.ñët
 4. El demandado, Antonio Legaspi, permitira el uso y paso en la calle privada construida
por el en su terreno a lo largo del terreno de los demandantes, a estos, su familia, sus
amigos, chofers, servidumbre y de sus jeeps.

5. Para los fines del uso de la calle, el demandado permitira a los demandantes, frente
de la casa de estos, abrir una puerta de 4 metros de ancho en el corral construido por el
demandado que separa la calle privada y el terreno de los demandantes, a su
(demandantes) costa; sus hojas tendran por dentro, que los demandantes tendran
cerradas para evitar que los niños, hijos de los inquilinos del demandado tengan acceso
a los jeeps de los demandantes, cuyo garaje tendran dentro de su (demandantes)
terreno.

El Juzgado ordena a las partes litigantes complan estrictamente con lo estipulado; de

los contrario, los mismos estaran sujetos a las ordenes de este Juzgado.

As a result of the above agreement and Order of May 24, 1954, the defendant abandoned the
prosecution of his appeal. At the same time, both parties complied with its terms until the
plaintiffs, unable to continue with their repair shop, transferred to another place in December
1959 whereupon the defendant reconstructed his fence and its footing, closing thereby the
opening previously made by the plaintiffs.

In the course of time, the plaintiffs' lot was foreclosed by the Development Bank of the
Philippines (DBP) which, later still, conveyed it under a conditional sale to Mrs. Luz Arcilla. On
her acquisition of the said lot, Mrs. Arcilla demanded of the defendant the re-opening of the
fence in question as it was her plan to construct her house in the said lot. When the defendant
refused, the Development Bank filed with the lower court a petition to hold the said defendant in
contempt. To this petition, Mrs. Luz Arcilla later intervened and was so allowed by the lower
court. The Development Bank of the Philippines and Mrs. Luz Arcilla contended that the refusal
of the defendant to cause or allow the making of an opening in his fence was a defiance of the
said court's decision of March 11, 1954 and was, therefore, contemptuous. After due hearing,
the lower court sustained the petitioners and found the defendant guilty of contempt with orders
"to pay a fine of One Hundred Pesos (P100.00) and to open the vereda or alley leading to the
lot owned by the Development Bank of the Philippines and conveyed to Mrs. Luz S. Arcilla
under a conditional deed of sale, otherwise he should be imprisoned until he does so." Thus,
the instant appeal.

The respondent-appellant maintains that the lower court erred in finding him guilty of contempt
because:

1. The decision of March 11, 1954 was novated by the order of May 24, 1954.
Consequently, he could not have violated the former decree since with its novation it
ceased to have any legal effect.

2. Even assuming that the said decision was not novated by the subsequent order of
May 24, 1954, still he could not be deemed to have violated the said decision because
the same never became final and executory. The respondent-appellant argued that
since the decision of March 11, 1954 ordered the opening of a right of way in his
property without providing for this corresponding compensation to him, contrary to Article
649 of the Civil Code,1 there was in the said decision "a void which ought to be filled or
to be done in order to completely dispose of the case. It was not clear, specific and
definitive," and consequently, a judgment that could not have acquired finality.

3. The right to file contempt proceedings against him, with respect to the decrees
contained in the decision of March 11, 1954, has prescribed. The respondent-appellant
conceded that there is no prescriptive period for the institution of contempt proceedings.
However, he contended that inasmuch as contempt under Rule 64 of the Rules of Court
is punishable by arresto mayor, it should prescribe in five years just as crimes for which
the said penalty is imposed prescribe, under the Penal Code, in five years.

Without passing on the merits or demerits of the foregoing arguments, this Court believes that
the order finding the respondent-appellant guilty of contempt should be reversed. It is clear that
the order of May 24, 1954 superseded and was fully intended by the lower court to modify or
stand in substitution of the decision of March 11, 1954. More than the expression of the parties
amicable agreement on the dispute, the said order was the lower court's resolution of the
respondent-appellant's motion for reconsideration of the decision of March 11, 1954. In the
determination, therefore, of the said appellant's obligation relative to the easement in question,
the latter and not the decision of March 11, 1954 is the proper point in reference.

Under the aforesaid order of May 24, 1954, the easement awarded or secured by the lower
court to the plaintiffs was strictly a personal one. The right of way granted was expressly limited
to the latter and their "family, friends, drivers, servants and jeeps." In the very language of the
agreement the following appears:

El demandado Antonio Legaspi, permitira el uso y paso en la calle privada construida

por el en su terreno a lo largo del terreno de los demandantes, a estos, su familia, sus
amigos, chofers, servidumbre y de sus jeeps.

The servitude established was clearly for the benefit alone of the plaintiffs and the persons
above enumerated and it is clear that the lower court, as well as the parties addressed by the
said order, did not intend the same to pass on to the plaintiffs'
successors-in-interest. In other words, the right acquired by the original plaintiffs was a personal
servitude under Article 614 of the Civil Code, and not a predial servitude that inures to the
benefit of whoever owns the dominant estate.

In resisting the extension of the aforementioned easement to the latter, the plaintiffs'
successors-in-interest, the respondent-appellant, therefore, was not defying the decision of
March 11, 1954 which was then no longer subsisting, nor the order of May 24, 1954 since the
said successors-in-interest had no right thereunder.

Another evidence that the servitude in question was personal to the plaintiffs is the fact that the
same was granted to the latter without any compensation to the respondent-appellant.

Wherefore, the order of the lower court dated March 11, 1960 finding the respondent-appellant
guilty of contempt is hereby reversed, without pronouncement as to costs.

Bengzon, C.J., Concepcion, Reyes, J.B.L., Barrera, Makalintal, Bengzon, J.P., Zaldivar and
Sanchez, JJ., concur.
Bautista Angelo and Dizon, JJ., took no part.
G.R. No. L-10619 February 28, 1958

LEOGARIO RONQUILLO, ET AL., plaintiffs-appellants,

vs.
JOSE ROCO, as Administrator of VICENTE, ROCO Y. DOMINGUEZ ET AL., defendants-
appellees.

Moises B. Cruz for appellants.

Vicente Roco, Jr. for appellees.

MONTEMAYOR, J.:

Involving as it does only a question of law, the present appeal from the order of the Court of
First Instance of Camarines Sur, dated March 6, 1955, dismissing the amended and
supplemental complaint of plaintiffs on motion of defendants that it did not state a cause of
action, was taken directly to this Court.

The facts and the issue involved in the appeal are well and correctly stated in the appealed
order, the pertinent portion of which we are reproducing and making our own:

The amended and supplemental complaint alleged that the plaintiffs have been in the
continuous and uninterrupted use of a road or passage way which traversed the land of
the defendants and their predecessors in interest, in going to Igualdad Street and the
market place of Naga City, from their residential land and back, for more than 20 years;
that the defendants and the tenants of Vicente Roco, the predecessors in interest of the
said defendants have long recognized and respected the private legal easement of road
right of way of said plaintiffs; that on May 12, 1953, the defendants Jose Roco thru his
co-defendants, Raymundo Martinez and their men with malice aforethought and with a
view to obstructing the plaintiffs' private legal easement over the property of the late
Vicente Roco, started constructing a chapel in the middle of the said right of way
construction actually impeded, obstructed and disturbed the continuous exercise of the
rights of the plaintiffs over said right of way; that on July 10, 1954 the new defendants
Natividad Roco and Gregorio Miras, Jr. with the approval of the defendant, Jose Roco
and with the help of their men and laborers, by means of force, intimidation, and threats,
illegally and violently planted wooden posts, fenced with barbed wire and closed
hermitically the road passage way and their right of way in question against their
protests and opposition, thereby preventing them from going to or coming from their
homes to Igualdad Street and the public market of the City of Naga.

It is very clear from the allegations of the plaintiffs in their amended and supplemental
complaint, that they claim to have acquired the easement of right of way over the land of
the defendants and the latter's predecessors in interest, Vicente Roco, thru prescription
by their continuous and uninterrupted use of a narrow strip of land of the defendants as
passage way or road in going to Igualdad Street and the public market of Naga City,
from their residential land or houses, and return.

The only question therefore to determine in this case, is whether an easement of right of
way can be acquired thru prescription.

The dismissal was based on the ground that an easement of right of way though it may be
apparent is, nevertheless, discontinuous or intermittent and, therefore, cannot be acquired
through prescription, but only by virtue of a title. Under old as well as the New Civil Code,
easements may be continuous discontinuous (intermittent), apparent or non-apparent,
discontinuous being those used at more or less long intervals and which depend upon acts of
man (Articles 532 and 615 of the Old and New Civil Codes, respectively). Continuous and
apparent easements are acquired either, by title or prescription, continuous non-apparent
easements and discentinuous ones whether apparent or not, may be acquired only by virtue of
a title (Articles 537 and 539, and 620 and 622 of the Old and New Civil Codes, respectively).

Both Manresa and Sanchez Roman are of the opinion the easement of right of way is a
discontinuous one:
 En cambio, las servidumbres discontinues se ejercitan por un hecho del hombre, y
precisamente por eso son y tienen que ser discontinuas, porque es imposible
fisicamente que su uso sea incesante. Asi, la servidumbre de paso es discontinua,
porque no es posible que el hombre este pasando continuamente por el camino, vereda
o senda de que se trate. (4 Manresa, Codigo Civil Español, 5th ed, p. 529).

. . . "5º Por razon de los modos de disfrutar las servidumbres, en

continuas y discontinuas (1). Las continuasson aquelles cuyo uso es o puede ser
incesante, sin la intervencion de ningun hecho del hombre, como son las de luces y
otras de la misma especie; y las discontinuas, las que se usan intervalos, mas o menos
largos, y dependen de actos del hombre, como las de sen senda, carrera y otras de esta
clase. (3 Sanchez Roman, Derecho Civil, p. 488).

Under the provisions of the Civil Code, old and new, particularly the articles thereof aforecited, it
would therefore appear that the easement of right of way may not be acquired through
prescription. Even Article 1959 of the Old Civil Code providing for prescription of ownership and
other real rights in real property, excludes therefrom the exception established by Article 539,
referring to discontinuous easements, such as, easement of right of way.
(Bargayo vs. Camumot, 40 Phil., 857, 867).

In the case of Cuayong vs. Benedicto, 37 Phil., 781 where the point in issue was whether or not
vested rights in a right of way can be acquired through user from time immemorial, this Court
said:

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 (Article 539)
ino discontinuous easement could be acquired by prescription in any event.

However, in the case of Municipality of Dumangas is Bishop of Jaro, 34 Phil., 545, this same
Tribunal held that the continued use by the public of a path over land adjoining the Catholic
church in going to and from said church through its side door, has given the church the right to
such use by prescription, and that because of said use by the public, an easement of right of
way over said land has been acquired by prescription, not only by the church, but also by the
public, which without objection or protest on the part of the owner of said land, had continually
availed itself of the easement.

The minority of which the writer of this opinion is a part, believes that the easement of right of
way may now be acquired through prescription, at least since the introduction into this
jurisdiction of the special law on prescription through the Old Code of Civil Procedure, Act No.
190. Said law, particularly, Section 41 thereof, makes no distinction as to the real rights which
are subject to prescription, and there would appear to be no valid reason, at least to the writer of
this opinion, why the continued use of a path or a road or right of way by the party, specially by
the public, for ten years or more, not by mere tolerance of the owner of the land, but through
adverse use of it, cannot give said party a vested right to such right of way through prescription.

The uninterrupted and continuous enjoyment of a right of way necessary to constitute

adverse possession does not require the use thereof every day for the statutory period,
but simply the exercise of the right more or less frequently according to the nature of the
use. (17 Am. Jur. 972)

Even under the case of Cuaycong vs. Benedicto (supra), this Tribunal insinuated the rule that
no discontinuous easement, like an easement of right of way, may, under Article 539 of the Old
Civil Code, be acquired, might possibly have been changed by the provisions of the Code of
Civil Procedure relative to prescription.

. . . 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 of acquired by prescription, it is clear that this would not by
avail plaintiffs. The Code of Civil Procedure went into effect on October 1, 1901. The
term of prescription for the acquisition of right in real estate is fixed by the Code (section
41) at ten years. The evidence shows that in February, 1911, before the expiration of the
 term of ten years since the time the Code of Civil Procedure took effect, the defendants
interrupted the use of the road by plaintiffs by constructing and maintaining a toll gate
on, it collecting toll from persons making use of it with carts and continued to do so until
they were enjoin by the granting of the preliminary injunction by the trial court in
December 1912. . . (Cuayong vs. Benedicto, 37 Phil., 781, 796).

Professor Tolentino in his Commentaries and Jurisprudence on the Civil Code, Vol. I, p. 340,
would appear to be of the opinion that under, the provision of the Code of Civil Procedure
relative to prescription, even discontinuous easements, like the easement right of way, may be
acquired through prescription:

. . . "It is submitted that under Act No. 190, even discontinuous servitudes can be
acquired by prescription, provided it can be shown that the servitude was actual, open,
public, continuous, under a claim of title exclusive of any other right and adverse to all
other claimants'."

However, the opinion of the majority must prevail, and it is held that under the present law,
particularly, the provisions of the Civil Code, old and new, unless and until the same is changed
or clarified, the easement of right of way may not be acquired through prescription.

In view of the foregoing, the order appealed from is hereby affirmed. No costs.

Bengzon, Bautista Angelo, Labrador, Concepcion, Endencia, and Felix, JJ., concur.
Padilla, J., concurs in the result.

Separate Opinions

REYES, J.B.L., J., concurring:

I would like to elaborate my reasons for concurring with the majority in declaring the easement
of right of way not acquirable by prescription.

The essence of this easement ("servidumbre de paso") lies in the power of the dominant owner
to cross or traverse the servient tenement without being prevented or disturbed by its owner. As
a servitude, it is a limitation on the servient owner's rights of ownership, because it restricts his
right to exclude others from his property. But such limitation exists only when the dominant
owner actually crosser, or passes over the servient estate; because when he does not, the
servient owner's right of exclusion is perfect and undisturbed. Since the dominant owner can not
be continually and uninterruptedly crossing the servient estate, but can do so only at intervals,
the easement is necessarily of an intermittent or discontinuous nature.

Because possession of a right consists in the enjoyment of that right (old Civil Code, Art. 430;
Art. 423, new Civil Code) and to enjoy a right is to exercise it, it follows that the possession
(enjoyment or exercise) of a right of way is intermittent and discontinuous. From this premise, it
is inevitable to conclude, with Manresa and Sanchez Roman, that such easement can not be
acquired by acquisitive prescription (adverse possession) because the latter requires that the
possession be continuous or uninterrupted (old Civil Code, Art. 1941; new Civil Code, Art.
1118).

The Code of Civil Procedure (Act 190) did not change the situation. Observe that its section 41,
in conferring prescriptive title upon "ten years adverse possession" qualifies it by the succeeding
words "uninterruptedly continued for ten years which is the same condition of continuity that is
exacted by the Civil Code.

SEC. 41. Title to Land by Prescription. — Ten years actual adverse possession by any
person claiming to be the owner for that time of any land or interest in land,
uninterruptedly continued for ten years by occupancy, descent, grants, or otherwise, in
whatever way such occupancy may have commenced or continued, shall vest in every
 actual occupant or possessor of such land a full and complete title, saving to the persons
under disabilities the rights secured the next section. In order to constitute such title by
prescription or adverse possession, the possession by the claimant or by the person
under or through whom he claims must have been actual, open, public, continous, under
a claim of title exclusive of any other right and adverse to all other claimants. But failure
to occupy or cultivate land solely by reason of war shall not be deemed to constitute an
interruption of possession of the claimant, and his title by prescription shall he complete,
if in other regrets perfect, notwithstanding such failure to occupy or cultivate the land
during the continuance of war.

The case of Municipality of Dumangas vs. Bishop of Jaro, 34 Phil. 541, does not, if properly
analyzed, constitute authority to hold that the easement of right of way is acquirable by
prescription or adverse possession. The Court there said:

The record shows that the church of the pueblo of Dumangas was constructed in or
about the year 1987; that wall on the southeast side adjoins the building lot in question;
and that since the construction of the church there has been a side door in this wall
through which the worshippers attending divine service enter and leave, they having to
pass over and cross the land in question. It is therefore to be presumed that the use of
said side door also carries with it the use by faithful Catholics of the municipal land over
which they have had to pass in order to gain access to said place of worship, and, as
this use of the land has been continuous, it is evident that the Church has acquired a
right to such use by prescription, in view of the time that has elapsed since the church
was built and dedicated to religious worship, during which period the municipality has not
prohibited the passage over the land by the persons who attend services customarily
held in said church.

The record does not disclose the date when the Government ceded to the Church the
land on which the church building was afterwards erected, nor the date of the laying out
of the adjacent square that is claimed by the municipality and on which the side door of
the church, which is used as an entrance by the people who frequent this building, gives.
There are good grounds for presuming that in apportioning lands at the time of the
establishment of the pueblo of Dumangas and in designating the land adjacent to the
church as a public square, this latter was impliedly encumbered with the easement of a
right of way to allow the public to enter and leave the church — a case provided for by
article 567 of the Civil Code — for the municipality has never erected any building or
executed any work which would have obstructed the passage and access to the side
door of the church, and the public has been enjoying the right of way over the land in
question for an almost immemorable length of time. Therefore an easement of right of
way over said land has been acquired by prescription, not only by the church, but also
by the public which, without objection or protest, has continually availed itself of the
easement in question. (34 Phil., pp. 545-546).

It will be seen that the ratio decidendi of that case lies in the application of Article 567 of the old
Civil Code that provides as follows:

ART. 567. When an estate acquired by purchase, exchange, or partition is enclosed by

other estates of the vendor, exchanger, or co-owner, the latter shall be obliged to grant a
right of way without indemnity, in the absence of an agreement to the contrary.

Bearing in mind the provisions of the article quoted in relation to the wording of the decision in
the Dumangas case, it can be seen that what the court had in mind is that when the Spanish
Crown apportioned the land occupied by the Church of Dumangas, it impliedly burdened the
neighboring public square (which was also Crown property at the time) with an easement of
right of way to allow the public to enter and leave the church, because without such easement
the grant in favor of ecclesiastical authorities would be irrisory: what would be the use of
constructing a church if no one could enter it? Now, if there was an implied grant of the right of
way by the Spanish Crown, it was clearly unnecessary to justify the existence of the easement
through prescriptive acquisition. Why then does the decision repeatedly speak of prescription?
Plainly, the word "prescription" was used in the decision not in the sense of adverse possession
for ten or thirty years, but in the sense of "immemorial usage" that under the law anterior to the
Civil Code of 1889, was one of the ways in which the servitude of right of way could be
acquired.1 This view is confirmed by the fact that throughout the passages hereinabove quoted,
the court's decision stresses that the people of Dumangas have been passing over the public
square to go to church since the town was founded and the church was built, an "almost
immemorable length of time." It would seem that the term "priscription" used in said case was
merely a loose expression that is apt to mislead unless the court's reasoning is carefully
analyzed.

Since 1889, however, the Civil Code repealed the prior legislation; and thereafter the right of
way could only be acquired by title and not by adverse possession (usucapio), saving those
servitudes already acquired before the Code came into effect (Decisions, Supreme Court of
Spain 27 Oct. 1900, 1st February 1912; 11 May 1927, and 7 January 1920).
G.R. No. L-33507 July 20, 1981

FE P. VELASCO, represented by ALFREDO GONZALES, petitioner,

vs.
HON. VICENTE N. CUSI, JR. and THE CITY OF DAVAO, respondents.

DE CASTRO, J.:

Petitioner filed in the Court of First Instance of Davao an action against Davao City to quiet title
to her lot known as Lot 77-B-2, a portion of which she claims to having been occupied illegally
as part of Bolton Street, Davao City. On a motion to dismiss filed by the defendant, on the
ground that the complaint states no cause of action, the Court, presided over by respondent
Judge Hon. Vicente Cusi Jr., dismissed the case. Hence, this petition for certiorari seeking a
review of the Order of dismissal dated July 11, 1970 (Annex D to tile Petition). 1

The dismissal being on the ground that the complaint does not state a cause of action, the
allegations of the complaint have to be closely examined, as the court a quo did in its Order
aforecited which quoted the material allegations of the complaint as follows:

The action is to quiet title and damages. But the complaint does not allege any
cloud or doubt on the title, 'Transfer Certificate of Title No. T-7000 of the Register
of Deeds of the City of Davao, of the plaintiff to Lot No. 77-B-2, subdivision plan
Psd-22295. According to the complaint, ' . . . when plaintiff bought the said lot 77-
B-2 from the original owner in 1956, the Bolton Street was already existing; that
without ascertaining the monuments along Bolton Street, she had her house
constructed on her said lot and built fence along said Bolton Street which she
believed to be the boundary between her lot and said street and in line with other
offences already existing when she bought said lot; 6. That plaintiff has just
discovered, after a relocation of the monuments of her lot, Lot No. 77-B-2, that
the Bolton Street of the defendant has encroached at least TWENTY-FIVE (25)
SQUARE METERS with dimension of 2.5 meters by 10 meters, making her
actual occupation of her lot 10 meters by 47.5 meters, as indicated in the plan
Annex "A" hereon enclosed thereon by red pencil lines; 7. That plaintiff has just
discovered also that the width of the Bolton Street is only NINE (9) METERS and
since the defendant is now asphalting the said Bolton Street, plaintiff has filed
this complaint in order to quiet her title to the said portion of 2.5 meters by 10
meters as shown in the plan enclosed in red pencil oil Annex "A" hereon because
the continued occupation of said portion by the defendant has cast a cloud of
doubt on the title of the plaintiff over the portion of plaintiff's Lot No. 77-B-2 now
being occupied by Bolton Street, valued at four hundred pesos per square
meters.

After quoting the material allegations of the complaint as above set forth, the court a
quo analyzed them carefully and scrutinizingly, and came up with the conclusion that the
allegations of the complaint state no cause of action. Thus —

The allegations in the complaint that the Bolton Street encroached on the lot of
the plaintiff and that the defendant had continuously occupied the portion so
encroached upon do not, contrary to the conclusion of the plaintiff found in the
complaint, cast ' . . a cloud of doubt on the title of the plaintiff over said portion
which would justify this action.

In her present petition, petitioner assigned as error of the court a quo the following:

1. THE LOWER COURT ERRED IN DECLARING THAT THE BOLTON STREET

AS AN EASEMENT MUST REMAIN A BURDEN ON LOT 77-B-2 (LOT IN
QUESTION) PURSUANT TO SECTION 39 OF ACT 496 ON THE GROUND
THAT IT IS SUBJECT TO EASEMENT OF PUBLIC HIGHWAY.
 2. THE LOWER COURT ERRED IN DECLARING THAT THE PORTION OF
THE LAND OF PETITIONER ENCROACHED UPON BY THE RESPONDENT
CITY OF DAVAO'S BOLTON STREET DOES NOT CAST A CLOUD OF DOUBT
IN THE TITLE OF PETITIONER.

3. THE LOWER COURT ERRED IN DECLARING THAT ASSUMING THE

FACTS ALLEGED IN THE COMPLAINT TO BE TRUE, A JUDGMENT UPON
THE SAME IN ACCORDANCE WITH THE PRAYER COULD NOT BE
RENDERED.

4. THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT FOR LACK

OF CAUSE OF ACTION.

As alleged by petitioner, the lot in question, Lot No. 77-B-2, which she bought in 1956, was part
of Lot No. 77-B, which was in turn originally a portion of Lot No. 77, covered by O.C.T. No. 683,
issued on July 21, 1911. For the lot she bought, she received Transfer Certificate of Title No. T-
7000.

In 1970, petitioner discovered that the Bolton Street of the City of Davao had encroached upon
her a lot of portion of 2.5 meters wide and 10 meters long, along said Street, or an area of 25
Square meters. She also discovered that Bolton Street was delimited to nine (9) meters wide,
but the proposed width was 15 meters, and in that same year 1970, the Bolton Street had
already encroached on her lot, on the northwestern part thereof, to the extent as above stated
(par. 7, Complaint, Annex A. to Petition).

From The allegations of the complaint as set forth above, as well as inhe questioned Order
quoted earlier, We agree with respondent judge that the complaint states no cause of action
upon which to render judgment in favor of petitioner, even assuming S the said allegations to be
true, indeed, in a motion to dismiss for lack of cause of action, the allegations of the complaint
must be hypothetically admitted. 2

It appears on the face of the complaint that Bolton Street has been where it is from time
immemorial. When the mother title of petitioner's Transfer Certificate of Title No. T- 7000, which
is O.C.T. No. 638, was issued in 1911, it was issued subject to the provisions of Section 39 of
Act 496 which reads:

Section 39. Every person receiving a certificate of title in pursuance of a decree

or registration, and every subsequent purchasers of registered land who takes a
certificate of title for value in good faith shall hold the same free of all
encumbrances, except those noted on said certificate, and any of the following
encumbrances which may be subsisting namely:

xxx xxx xxx

Third. Any public highway, way, private way, ... or any government irrigation,
canal, or lateral thereof ...

From the foregoing provision, Bolton Street which is a public highway, already subsisting when
O.C.T. No. 638 was issued, as this fact is apparent too from the face of the complaint itself, is
deemed to have attached as a legal encumbrance to the lot originally registered lot No. 77,
notwithstanding the lack of an annotation thereof on O.C.T. No. 638. petitioner, therefore,
cannot rely, as she almost entirely does for the relief she seeks, on the aforequoted provision,
which she had repeatedly cited but without making mention, perhaps conveniently, of the
exception as expressly provided in the later part of the legal provision invoked (Sec. 39, Act
496).

If from the undisputed fact Chat when Lot -77 was registered, Bolton Street had already been a
legal encumbrance on said lot, pursuant to Section 39 of Act 496, contrary to petitioner's theory
based on the same legal provision but o committing the portion pertinent to the instant case,
there can be no gainsaying the fact that petitioner's lot, Lot No. 77-B-2, which admittedly was
originally a part of Lot No. 77, must have to remain subject to the same legal encumbrance of a
public highway.

From her own allegations in her complaint, Bolton Street cannot be a discontinuous easement
as she claims it to be, which may not be acquired by prescription. Nonetheless, whether the
mode of acquisition of the easement that Bolton Street is, would be only by virtue of title, as
petitioner contends, this is not material or of any consequence, in the present proceedings, once
it indubitably appears as it does, from the allegations of the complaint itself, that Bolton Street
constituted an easement of public highway on Lot No. 77, from which petitioner's lot was taken,
when the said bigger lot was original registered. It remained as such legal encumbrance, as
effectively as if it had been duly noted on the certificate of title, by virtue of the clear and express
provision of Section 39 of Act 496, it being admitted that at the time of the registration of Lot 77,
the public highway was already in existence or subsisting. This fact erases whatever cause of
action petitioner may have to bring the complaint she filed in the court a quo for quieting of title
on a portion of the street which she claims to be part of her lot, free from encumbrance of any
kind. The Order complained of has only this legal postulate as its basis. Nothing has been
mentioned therein on the acquisition by the City of Davao of the lot in question by prescription,
and a discussion of this matter as is found in petitioner's brief 3 would be entirely irrelevant.

WHEREFORE, no reversible error having been found in the Order complained of, the same is
hereby affirmed, and the instant petition, dismissed. Costs against petitioner.
G.R. No. L-37409 May 23, 1988

NICOLAS VALISNO, plaintiff-appellant,

vs.
FELIPE ADRIANO, defendant-appellee.

Honorio Valisno Garcia I for plaintiff-appelant.

Felipe K Medina for defendant-appellee.

GRIÑO-AQUINO, J.:

This case was certified to this Court by the Court of Appeals in a resolution dated August 10,
1973, the sole issue being a question of law and beyond its jurisdiction. to decide.

Admitted by the parties in their pleading and established during the trial on the merits are the
following material facts:

On June 20, 1960, 'the plaintiff-appellant file against the defendant-appellee an action for
damages docketed as Civil Case No. 3472 in the Court of First Instance of Nueva Ecija. The
complaint alleged that the plaintiff is the absolute owner and actual possessor of a 557,949-
square-meter parcel of land in La Fuente, Santa Rosa, Nueva Ecija, and more particularly
described in his Transfer Certificate of Title No. NT-16281. The plaintiff-appellant Valisno
bought the land from the defendant-appellees sister, Honorata Adriano Francisco, on June
6,1959. (Deed of Absolute Sale, Exh. "A".) The land which is planted with watermelon, peanuts,
corn, tobacco, and other vegetables adjoins that of the appellee Felipe Adriano on the bank of
the Pampanga River. Both parcels of land had been inherited by Honorata Adriano Francisco
and her brother, Felipe Adriano, from their father, Eladio Adriano. At the time of the sale of the
land to Valisno, the land was irrigated by water from the Pampanga River through a canal about
seventy (70) meters long, traversing the appellee's land.

On December 16, 1959, the appellee levelled a portion of the irrigation canal so that the
appellant was deprived of the irrigation water and prevented from cultivating his 57-hectare
land.

The appellant filed in the Bureau of Public Works and Communications a complaint for
deprivation of water rights. A decision was rendered on March 22, 1960 ordering Adriano to
reconstruct the irrigation canal, "otherwise judicial action shall be taken against him under the
provisions of Section 47 of Act 2152 (the Irrigation Act), as amended." Instead of restoring the
irrigation canal, the appellee asked for a reinvestigation of the case by the Bureau of Public
Works and Communications. A reinvestigation was granted.

In the meantime, plaintiff Valisno rebuilt the irrigation canal at his own expense because his
need for water to irrigate his watermelon fields was urgent.

On June 20, 1960, he filed a complaint for damages in the Court of First Instance (now Regional
Trial Court) of Nueva Ecija (Civil Case No. 3472) claiming that he suffered damages amounting
to P8,000 when he failed to plant his fields that year (1960) for lack of irrigation water, P800 to
reconstruct the canal on defendant Adriano's land, and P1,500 for attorney's fees and the costs
of suit.

On October 25, 1961, the Secretary of Public Works and Communications reversed the
Bureau's decision by issuing a final resolution dismissing Valisno's complaint. The Secretary
held that Eladio Adriano's water rights which had been granted in 1923 ceased to be enjoyed by
him in 1936 or 1937, when his irrigation canal collapsed. His non-use of the water right since
then for a period of more than five years extinguished the grant by operation of law, hence the
water rights did not form part of his hereditary estate which his heirs partitioned among
themselves. Valisno, as vendee of the land which Honorata received from her father's estate did
not acquire any water rights with the land purchased.
In his answer to the damage suit (Civil Case No. 3472), the defendant Felipe Adriano admitted
that he levelled the irrigation canal on his land, but he averred: that neither his late father nor his
sister Honorata possessed water rights for the land which she sold to the appellant; that he (the
appellee) applied for water rights for his land in 1956 and obtained the same in 1958; and that
he had a perfect right to level his land for his own use because he merely allowed his sister to
use his water rights when she still owned the adjacent land. He set up a counterclaim for P3,000
as damages incurred by him in levelling the land on which the appellant dug an irrigation canal,
P2,000 as actual damages, P3,000 as attorney's fees, and expenses of litigation.

In a decision dated April 21, 1966, the trial court held that the plaintiff had no right to pass
through the defendant's land to draw water from the Pampanga River. It pointed out that under
Section 4 of the Irrigation Law, controversies between persons claiming a right to water from a
stream are within the jurisdiction of the Secretary of Public Works and his decision on the matter
is final, unless an appeal is taken to the proper court within thirty days. The court may not pass
upon the validity of the decision of the Public Works Secretary collaterally. Furthermore, there
was nothing in the plaintiff 's evidence to show that the resolution was not valid. It dismissed the
complaint and counterclaim.

The plaintiff's motion for reconsideration of the decision was denied by the trial court. The
plaintiff appealed to the Court of Appeals which certified the case to Us upon the legal question
of whether the provisions of the Irrigation Act (Act No. 2152) or those of the Civil Code should
apply to this case.

The plaintiff-appellant argues that while the trial court correctly held that the Secretary of Public
Works may legally decide who between the parties is entitled to apply for water rights under the
Irrigation Act, it erred in ruling that the Secretary has authority to hear and decide the plaintiff 's
claim for damages for the defendant's violation of his (plaintiff's) right to continue to enjoy the
easement of aqueduct or water through the defendant's land under Articles 642, 643, and 646
of the Civil Code, which provide:

Article 642. Any person who may wish to use upon his own estate any water of
which he can dispose shall have the right to make it flow through the intervening
estates, with the obligation to indemnify their owners, as well as the owners of
the lower estates upon which the waters may filter or descend.

Article 643. One desiring to make use of the right granted inthe preceding article
is obliged:

(1) To prove that he can dispose of the water and that it is sufficient for the use
for which it is intended;

(2) To show that the proposed right of way is the most convenient and the least
onerous to third persons;

(3) To indemnify the owner of the servient estate in the manner determined by
the laws and regulations.

Article 646. For legal purposes, the easement of aqueduct shall be considered as
continuous and apparent, even though the flow of the water may not be
continuous, or its use depends upon the needs of the dominant estate, or upon a
schedule of alternate days or hours.

The existence of the irrigation canal on defendant's land for the passage of water from the
Pampanga River to Honorata's land prior to and at the time of the sale of Honorata's land to the
plaintiff was equivalent to a title for the vendee of the land to continue using it as provided in
Article 624 of the Civil Code:

Article 624. The existence of an apparent sign of easement between two estates,
established or maintained by the owner of both shall be considered, should either
of them be alienated, as a title in order that he easement may continue actively
and passively, unless at the time, theownership of the two estates is divided, the
 contrary should be provided in the title of conveyance of either of them, or the
sign aforesaid should be removed before the execution of the deed.

This provision shall also apply in case of the division of a thing owned in common on by two or
more persons (Civil Code)

This provision was lifted from Article 122 of the Spanish Law of Waters which
provided:

Article 122. Whenever a tract of irrigated land which previously received its
waters from a single point is divided through inheritance, sale or by virtue of
some other title, between two or more owners, the owners of the higher estates
are under obligation to give free passage to the water as an easement of conduit
for the irrigation of the lower estates, and without right to any compensation
therefore unless otherwise stipulated in the deed of conveyance. (Art. 122,
Spanish Law of Waters of August 3, 1866.)

No enlightened concept of ownership can shut out the Idea of restrictions thereon, such as
easements. Absolute and unlimited dominion is unthinkable, inasmuch as the proper enjoyment
of property requires mutual service and forbearance among adjoining estates (Amor vs.
Florentino, 74 Phil. 403).

As indicated in the decision dated March 22, 1960 of the Bureau of Works "the principal issue
involved in this case falls under the subject of servitude of waters which are governed by Article
648 of the new Civil Code and the suppletory laws mentioned in the cases of Lunod vs.
Meneses 11 Phil. 128) and Osmena vs. Camara (C.A. 380 62773) which are the irrigation law
and the Spanish Law of Waters of August 3, 1866, specifically Article 122 thereof.

The deed of sale in favor of Valisno included the "conveyance and transfer of the water rights
and improvements" appurtenant to Honorata Adriano's property. By the terms of the Deed of
Absolute Sale, the vendor Honorata Adriano Francisco sold, ceded, conveyed and transferred
to Dr. Nicolas Valisno all "rights, title, interest and participations over the parcel of land above-
described, together with one Berkely Model 6 YRF Centrifugal Pump G" suction, 6" discharge
500-1500 GPM, with Serial No. 5415812 and one (1) set of suction pipe and discharge of pipe
with elbow, nipples, flanges and footvalves," and the water rights and such other improvements
appertaining to the property subject of this sale. According to the appellant, the water right was
the primary consideration for his purchase of Honorata's property, for without it the property
would be unproductive.

Water rights, such as the right to use a drainage ditch for irrigation purposes, which are
appurtenant to a parcel of land, pass with the conveyance of the land, although not specifically
mentioned in the conveyance. The purchaser's easement of necessity in a water ditch running
across the grantor's land cannot be defeated even if the water is supplied by a third person
(Watson vs. French, 112 Me 371 19 C.J. 868-897). The fact that an easement by grant may
also have qualified as an easement of necessity does detract from its permanency as property
right, which survives the determination of the necessity (Benedicto vs. CA, 25 SCRA
145).<äre||anº•1àw>

As an easement of waters in favor of the appellant has been established, he is entitled to enjoy
it free from obstruction, disturbance or wrongful interference (19 CJ 984), such as the appellee's
act of levelling the irrigation canal to deprive him of the use of water from the Pampanga River.

WHEREFORE, the appealed decision is set aside, and a new one is entered ordering the
appellee to grant the appellant continued and unimpeded use of the irrigation ditch traversing
his land in order to obtain water from the Pampanga River to irrigate appellant's land. Let the
records of this case be remanded to the court a quo for the reception of evidence on the
appellant's claim for damages.
G.R. No. 95252 September 5, 1997

LA VISTA ASSOCIATION, INC., petitioner,

vs.
COURT OF APPEALS, SOLID HOMES, INC., ATENEO DE MANILA UNIVERSITY, ROMULO
VILLA, LORENZO TIMBOL, EMDEN ENCARNACION, VICENTE CASIÑO, JR., DOMINGO
REYES, PEDRO C. MERCADO, MARIO AQUINO, RAFAEL GOSECO, PORFIRIO CABALU,
JR., and ANTONIO ADRIANO, in their behalf and in behalf of the residents of LOYOLA
GRAND VILLAS, INC., PHASES I AND II, respondents.

BELLOSILLO, J.:

MANGYAN ROAD is a 15-meter wide thoroughfare in Quezon City abutting Katipunan Avenue
on the west, traversing the edges of La Vista Subdivision on the north and of the Ateneo de
Manila University and Maryknoll (now Miriam) College on the south. Mangyan Road serves as
the boundary between LA VISTA on one side and ATENEO and MARYKNOLL on the other. It
bends towards the east and ends at the gate of Loyola Grand Villas Subdivision. The road has
been the subject of an endless dispute, the disagreements always stemming from this
unresolved issue: Is there an easement of right-of-way over Mangyan Road?

In resolving this controversy, the Court would wish to write finis to this seemingly interminable
debate which has dragged on for more than twenty years.

The area comprising the 15-meter wide roadway was originally part of a vast tract of land owned
by the Tuasons in Quezon City and Marikina. On 1 July 1949 the Tuasons sold to Philippine
Building Corporation a portion of their landholdings amounting to 1,330,556 square meters by
virtue of a Deed of Sale with Mortgage. Paragraph three (3) of the deed provides that ". . . the
boundary line between the property herein sold and the adjoining property of the VENDORS
shall be a road fifteen (15) meters wide, one-half of which shall be taken from the property
herein sold to the VENDEE and the other half from the portion adjoining belonging to the
VENDORS."

On 7 December 1951 the Philippine Building Corporation, which was then acting for and in
behalf of Ateneo de Manila University (ATENEO) in buying the properties from the Tuasons,
sold, assigned and formally transferred in a Deed of Assignment with Assumption of Mortgage,
with the consent of the Tuasons, the subject parcel of land to ATENEO which assumed the
mortgage. The deed of assignment states —

The ASSIGNEE hereby agrees and assumes to pay the mortgage obligation on
the above-described land in favor of the MORTGAGOR and to perform any and
all terms and conditions as set forth in the Deed of Sale with Mortgage dated July
1, 1949, hereinabove referred to, which said document is incorporated herein
and made an integral part of this contract by reference . . . .

On their part, the Tuasons developed a part of the estate adjoining the portion sold to Philippine
Building Corporation into a residential village known as La Vista Subdivision. Thus the boundary
between LA VISTA and the portion sold to Philippine Building Corporation was the 15-meter
wide roadway known as the Mangyan Road.

On 6 June 1952 ATENEO sold to MARYKNOLL the western portion of the land adjacent to
Mangyan Road. MARYKNOLL then constructed a wall in the middle of the 15-meter wide
roadway making one-half of Mangyan Road part of its school campus. The Tuasons objected
and later filed a complaint before the then Court of First Instance of Rizal for the demolition of
the wall. Subsequently, in an amicable settlement, MARYKNOLL agreed to remove the wall and
restore Mangyan Road to its original width of 15 meters.

Meanwhile, the Tuasons developed its 7.5-meter share of the 15-meter wide boundary.
ATENEO deferred improvement on its share and erected instead an adobe wall on the entire
length of the boundary of its property parallel to the 15-meter wide roadway.
On 30 January 1976 ATENEO informed LA VISTA of the former's intention to develop some 16
hectares of its property along Mangyan Road into a subdivision. In response, LA VISTA
President Manuel J. Gonzales clarified certain aspects with regard to the use of Mangyan Road.
Thus —

. . . The Mangyan Road is a road fifteen meters wide, one-half of which is taken
from your property and the other half from the La Vista Subdivision. So that the
easement of a right-of-way on your 71/2 m. portion was created in our favor and
likewise an easement of right-of-way was created on our 7 1/2 portion of the road
in your favor (paragraph 3 of the Deed of Sale between the Tuasons and the
Philippine Building Corporation and Ateneo de Manila dated 1 July 1949 . . . .

On 28 April 1976 LA VISTA President Manuel J. Gonzales, in a letter to ATENEO President Fr.
Jose A. Cruz, S. J., offered to buy under specified conditions the property ATENEO was
intending to develop. One of the conditions stipulated by the LA VISTA President was that "[i]t is
the essence of the offer that the mutuaI right of way between the Ateneo de Manila University
and La Vista Homeowners' Association will be extinguished." The offer of LA VISTA to buy was
not accepted by ATENEO. Instead, on 10 May 1976 ATENEO offered to sell the property to the
public subject to the condition that the right to use the 15-meter roadway will be transferred to
the vendee who will negotiate with the legally involved parties regarding the use of such right as
well as the development costs for improving the access road.

LA VISTA became one of the bidders. However it lost to Solid Homes, Inc., in the bidding. Thus
on 29 October 1976 ATENEO executed a Deed of Sale in favor of Solid Homes, Inc., over
parcels of land covering a total area of 124,424 square meters subject, among others, to the
condition that —

7. The VENDOR hereby passes unto the VENDEE, its assigns and successors-
in-interest the privileges of such right of way which the VENDOR acquired, and
still has, by virtue of the Deeds mentioned in the immediately preceeding
paragraph hereof; provided, that the VENDOR shall nonetheless continue to
enjoy said right of way privileges with the VENDEE, which right of way in favor of
the VENDOR shall be annotated on the pertinent road lot titles. However it is
hereby agreed that the implementation of such right of way shall be for the
VENDEE's sole responsibility and liability, and likewise any development of such
right of way shall be for the full account of the VENDEE. In the future, if needed,
the VENDOR is therefore free to make use of the aforesaid right of way, and/or
Mangyan Road access, but in such a case the VENDOR shall contribute a pro-
rata share in the maintenance of the area.

Subsequently, Solid Homes, Inc., developed a subdivision now known as Loyola Grand Villas
and together they now claim to have an easement of right-of-way along Mangyan Road through
which they could have access to Katipunan Avenue.

LA VISTA President Manuel J. Gonzales however informed Solid Homes, Inc., that LA VISTA
could not recognize the right-of-way over Mangyan Road because, first, Philippine Building
Corporation and its assignee ATENEO never complied with their obligation of providing the
Tuasons with a right-of-way on their 7.5-meter portion of the road and, second, since the
property was purchased for commercial purposes, Solid Homes, Inc., was no longer entitled to
the right-of-way as Mangyan Road was established exclusively for ATENEO in whose favor the
right-of-way was originally constituted. LA VISTA, after instructing its security guards to prohibit
agents and assignees of Solid Homes, Inc., from traversing Mangyan Road, then constructed
one-meter high cylindrical concrete posts chained together at the middle of and along the entire
length of Mangyan Road thus preventing the residents of LOYOLA from passing through.

Solid Homes, Inc., complained to LA VISTA but the concrete posts were not removed. To gain
access to LOYOLA through Mangyan Road an opening through the adobe wall of ATENEO was
made and some six (6) cylindrical concrete posts of LA VISTA were destroyed. LA VISTA then
stationed security guards in the area to prevent entry to LOYOLA through Mangyan Road.
On 17 December 1976, to avert violence, Solid Homes, Inc., instituted the instant case,
docketed as Civil Case No. Q-22450, before the then Court of First Instance of Rizal and prayed
that LA VISTA been joined from preventing and obstructing the use and passage of LOYOLA
residents through Mangyan Road. LA VISTA in turn filed a third-party complaint against
ATENEO. On 14 September 1983 the trial court issued a preliminary injunction in favor of Solid
Homes, Inc. (affirming an earlier order of 22 November 1977), directing LA VISTA to desist from
blocking and preventing the use of Mangyan Road. The injunction order of 14 September 1983
was however nullified and set aside on 31 May 1985 by the then Intermediate Appellate
Court1 in AC-G.R. SP No. 02534. Thus in a petition for review on certiorari, docketed as G.R.
No. 71150, Solid Homes, Inc., assailed the nullification and setting aside of the preliminary
injunction issued by the trial court.

Meanwhile, on 20 November 1987 the Regional Trial Court of Quezon City rendered a decision
on the merits2 in Civil Case No. Q-22450 affirming and recognizing the easement of right-of-way
along Mangyan Road in favor of Solid Homes, Inc., and ordering LA VISTA to pay damages
thus —

ACCORDINGLY, judgment is hereby rendered declaring that an easement of a

right-of-way exists in favor of the plaintiff over Mangyan Road, and,
consequently, the injunction prayed for by the plaintiff is granted, enjoining
thereby the defendant, its successors-in-interest, its/their agents and all persons
acting for and on its/their behalf, from closing, obstructing, preventing or
otherwise refusing to the plaintiff, its successors-in-interest, its/their agents and
all persons acting for and on its/their behalf, and to the public in general, the
unobstructed ingress and egress on Mangyan Road, which is the boundary road
between the La Vista Subdivision on one hand, and the Ateneo de Manila
University, Quezon City, and the Loyola Grand Villas Subdivision, Marikina,
Metro Manila, on the other; and, in addition the defendant is ordered to pay the
plaintiff reasonable attorney's fees in the amount of P30,000.00. The defendant-
third-party plaintiff is also ordered to pay the third-party defendant reasonable
attorney's fees for another amount of P15,000.00. The counter-claim of
defendant against the plaintiff is dismissed for lack of merit. With costs against
the defendant.

Quite expectedly, LA VISTA appealed to the Court of Appeals, docketed as CA-G.R. CV No.
19929. On 20 April 1988 this Court, taking into consideration the 20 November 1987 Decision of
the trial court, dismissed the petition docketed as G.R. No. 71150 wherein Solid Homes, Inc.,
sought reversal of the 31 May 1985 Decision in AC-G.R. SP No. 02534 which nullified and
set aside the 14 September 1983 injunction order of the trial court. There we said —

Considering that preliminary injunction is a provisional remedy which may be

granted at any time after the commencement of the action and before judgment
when it is established that the plaintiff is entitled to the relief demanded and only
when his complaint shows facts entitling such reliefs (Section 3(a), Rule 58) and
it appearing that the trial court had already granted the issuance of a final
injunction in favor of petitioner in its decision rendered after trial on the merits
(Sections 7 & 10, Rule 58, Rules of Court), the Court resolved to Dismiss the
instant petition having been rendered moot and academic. An injunction issued
by the trial court after it has already made a clear pronouncement as to the
plaintiff's right thereto, that is, after the same issue has been decided on the
merits, the trial court having appreciated the evidence presented, is proper,
notwithstanding the fact that the decision rendered is not yet final (II Moran, pp.
81-82, 1980 ed.). Being an ancillary remedy, the proceedings for preliminary
injunction cannot stand separately or proceed independently of the decision
rendered on the merit of the main case for injunction. The merit of the main case
having been already determined in favor of the applicant, the preliminary
determination of its non-existence ceases to have any force and effect.3

On the other hand, in CA-G.R. CV No. 19929, several incidents were presented for resolution:
two (2) motions filed by Solid Homes, Inc., to cite certain officers of LA VISTA for contempt for
alleged violation of the injunction ordaining free access to and egress from Mangyan Road, to
which LA VISTA responded with its own motion to cite Solid Homes, Inc., for contempt; a motion
for leave to intervene and to re-open Mangyan Road filed by residents of LOYOLA; and, a
petition praying for the issuance of a restraining order to enjoin the closing of Mangyan Road.
On 21 September 1989 the incidents were resolved by the Court of Appeals4 thus —

1. Defendant-appellant La Vista Association, Inc., its Board of Directors and other

officials and all persons acting under their orders and in their behalf are ordered
to allow all residents of Phase I and II of Loyola Grand Villas unobstructed right-
of-way or passage through the Mangyan Road which is the boundary between
the La Vista Subdivision and the Loyola Grand Villas Subdivision;

2. The motion to intervene as plaintiffs filed by the residents of Loyola Grand

Villas Subdivision is GRANTED; and

3. The motions for contempt filed by both plaintiff-appellee and defendant-

appellant are DENIED.

This resolution is immediately executory.5

On 15 December 1989 both motions for reconsideration of Solid Homes, Inc., and LA VISTA
were denied. In separate petitions, both elevated the 21 September 1989 and 15 December
1989 Resolutions of the Court of Appeals to this Court. The petition of Solid Homes, Inc.,
docketed as G.R. No. 91433, prayed for an order directing the appellate court to take
cognizance of and hear the motions for contempt, while that of LA VISTA in G.R. No. 91502
sought the issuance of a preliminary injunction to order Solid Homes, Inc., ATENEO and
LOYOLA residents to desist from intruding into Mangyan Road.

On 22 May 1990, pending resolution of G.R. Nos. 91433 and 91502, the Second Division of the
Court of Appeals6 in CA-G.R. CV No. 19929 affirmed in toto the Decision of the trial court in Civil
Case No. Q-22450. On 6 September 1990 the motions for reconsideration and/or re-raffle and
to set the case for oral argument were denied. In view of the affirmance of the Decision by the
Court of Appeals in CA-G.R. CV No. 19929 this Court dismissed the petition in G.R. No. 91502
for being moot as its main concern was merely the validity of a provisional or preliminary
injunction earlier issued. We also denied the petition in G.R. No. 91433 in the absence of a
discernible grave abuse of discretion in the ruling of the appellate court that it could not entertain
the motions to cite the parties for contempt "because a charge of contempt committed against a
superior court may be filed only before the court against whom the contempt has been
committed" (Sec. 4, Rule 71, Rules of Court).7

Consequently we are left with the instant case where petitioner LA VISTA assails the Decision
of respondent Court of Appeals affirming in toto the Decision of the trial court which rendered a
judgment on the merits and recognized an easement of right-of-way along Mangyan Road,
permanently enjoining LA VISTA from closing to Solid Homes, Inc., and its successors-in-
interest the ingress and egress on Mangyan Road.

In its first assigned error, petitioner LA VISTA argues that respondent appellate court erred in
disregarding the decisions in (a) La Vista Association, Inc., v. Hon. Ortiz, 8 affirmed by this Court
in Tecson v. Court of Appeals;9 (b) La Vista Association, Inc., v. Hon. Leviste, 10 affirmed by this
Court in Rivera v. Hon. Intermediate Appellate Court; 11and, (c) La Vista
v. Hon. Mendoza, 12 and in holding that an easement of right-of-way over Mangyan Road
exists. 13

We do not agree with petitioner. The reliance of petitioner on the cited cases is out of place as
they involve the issuance of a preliminary injunction pending resolution of a case on the merits.
In the instant case, however, the subject of inquiry is not merely the issuance of a preliminary
injunction but the final injunctive writ which was issued after trial on the merits. A writ of
preliminary injunction is generally based solely on initial and incomplete evidence. The opinion
and findings of fact of a court when issuing a writ of preliminary injunction are interlocutory in
nature and made even before the trial on the merits is terminated. Consequently there may be
vital facts subsequently presented during the trial which were not obtaining when the writ of
preliminary injunction was issued. Hence, to equate the basis for the issuance of a preliminary
injunction with that for the issuance of a final injunctive writ is erroneous. And it does not
necessarily mean that when a writ of preliminary injunction issues a final injunction follows.
Accordingly, respondent Court of Appeals in its assailed Decision rightly held that —

We are unswayed by appellant's theory that the cases cited by them in their Brief
(pagers 17 and 32) and in their motion for early resolution (page 11, Rollo) to
buttress the first assigned error, are final judgments on the merits of, and
therefore res judicata to the instant query. It is quite strange that appellant was
extremely cautious in not mentioning this doctrine but the vague disquisition
nevertheless points to this same tenet, which upon closer examination negates
the very proposition. Generally, it is axiomatic that res judicata will attach in favor
of La Vista if and when the case under review was disposed of on the merits and
with Finality (Manila Electric Co., vs. Artiaga. 50 Phil. 144; 147; S. Diego
vs. Carmona, 70 Phil. 281; 283; cited in Comments on the Rules of Court,
by Moran. Volume II, 1970 edition, page 365; Roman Catholic Archbishop
vs. Director of Lands. 35 Phil. 339; 350-351, cited in Remedial Law
Compendium, by Regalado, Volume I, 1986 Fourth revised Edition, page 40).
Appellants suffer from the mistaken notion that the "merits" of
the certiorari petitions impugning the preliminary injunction in the cases cited by it
are tantamount to the merits of the main case, subject of the instant appeal.
Quite the contrary, the so-called "final judgments" adverted to dealt only with the
propriety of the issuance or non-issuance of the writ of preliminary injunction,
unlike the present recourse which is directed against a final injunctive writ under
Section 10, Rule 58. Thus the invocation of the disputed matter herein is
misplaced.14

We thus repeat what we said in Solid Homes, Inc., v. La Vista 15 which respondent Court of
Appeals quoted in its assailed Decision 16 —

Being an ancillary remedy, the proceedings for preliminary injunction cannot

stand separately or proceed independently of the decision rendered on the merits
of the main case for injunction. The merits of the main case having been already
determined in favor of the applicant, the preliminary determination of its non-
existence ceases to have any force and effect.

Petitioner LA VISTA in its lengthy Memorandum also quotes our ruling

in Ramos, Sr., v. Gatchalian Realty, Inc., 17no less than five (5) times 18 —

To allow the petitioner access to Sucat Road through Gatchalian Avenue inspite
of a road right-of-way provided by the petitioner's subdivision for its buyers simply
because Gatchalian Avenue allows petitioner a much greater ease in going to
and coming from the main thoroughfare is to completely ignore what
jurisprudence has consistently maintained through the years regarding an
easement of a right-of-way, that "mere convenience for the dominant estate is
not enough to serve as its basis. To justify the imposition of this servitude, there
must be a real, not a fictitious or artificial, necessity for it" (See Tolentino, Civil
Code of the Philippines, Vol. II, 2nd ed., 1972, p. 371)

Again this is misplaced. Ramos, Sr., v. Gatchalian Realty, Inc., 19 concerns a legal or
compulsory easement of right-of-way —

Since there is no agreement between the contending parties in this case granting
a right-of-way by one in favor of the other, the establishment of a voluntary
easement between the petitioner and the respondent company and/or the other
private respondents is ruled out. What is left to examine is whether or not
petitioner is entitled to a legal or compulsory easement of a right-of-way —

which should be distinguished from a voluntary easement. A legal or compulsory

easement is that which is constituted by law for public use or for private interest. By
express provisions of Arts. 649 and 650 of the New Civil Code, the owner of an estate
may claim a legal or compulsory right-of-way only after he has established the existence
of four (4) requisites, namely, (a) the estate is surrounded by other immovables and is
 without adequate outlet to a public highway; (b) after payment of the proper indemnity;
(c) the isolation was not due to the proprietor's own acts; and, (d) the right-of-way
claimed is at a point least prejudicial to the servient estate, and insofar as consistent with
this rule, where the distance from the dominant estate to a public highway may be the
shortest. 20 A voluntary easement on the other hand is constituted simply by will or
agreement of the parties.

From the facts of the instant case it is very apparent that the parties and their respective
predecessors-in-interest intended to establish an easement of right-of-way over Mangyan Road
for their mutual benefit, both as dominant and servient estates. This is quite evident when: (a)
the Tuasons and the Philippine Building Corporation in 1949 stipulated in par. 3 of their Deed of
Sale with Mortgage that the "boundary line between the property herein sold and the adjoining
property of the VENDORS shall be a road fifteen (15) meters wide, one-half of which shall be
taken from the property herein sold to the VENDEE and the other half from the portion adjoining
belonging to the vendors;" (b) the Tuasons in 1951 expressly agreed and consented to the
assignment of the land to, and the assumption of all the rights and obligations by ATENEO,
including the obligation to contribute seven and one-half meters of the property sold to form part
of the 15-meter wide roadway; (c) the Tuasons in 1958 filed a complaint against MARYKNOLL
and ATENEO for breach of contract and the enforcement of the reciprocal easement on
Mangyan Road, and demanded that MARYKNOLL set back its wall to restore Mangyan Road to
its original width of 15 meters, after MARYKNOLL constructed a wall in the middle of the 15-
meter wide roadway; (d) LA VISTA President Manuel J. Gonzales admitted and clarified in
1976, in a letter to ATENEO President Fr. Jose A. Cruz, S.J., that "Mangyan Road is a road
fifteen meters wide, one-half of which is taken from your property and the other half from the La
Vista Subdivision. So that the easement of a right-of-way on your 7 1/2 m. portion was created
in our favor and likewise an easement of right-of-way was created on our 7 1/2 m. portion of the
road in your favor;" (e) LA VISTA, in its offer to buy the hillside portion of the ATENEO property
in 1976, acknowledged the existence of the contractual right-of-way as it manifested that the
mutual right-of-way between the Ateneo de Manila University and La Vista Homeowners'
Association would be extinguished if it bought the adjacent ATENEO property and would thus
become the owner of both the dominant and servient estates; and, (f) LA VISTA President Luis
G. Quimson, in a letter addressed to the Chief Justice, received by this Court on 26 March
1997, acknowledged that "one-half of the whole length of (Mangyan Road) belongs to La Vista
Assn., Inc. The other half is owned by Miriam (Maryknoll) and the Ateneo in equal portions;"

These certainly are indubitable proofs that the parties concerned had indeed constituted a
voluntary easement of right-of-way over Mangyan Road and, like any other contract, the same
could be extinguished only by mutual agreement or by renunciation of the owner of the
dominant estate. Thus respondent Court of Appeals did not commit a reversible error when it
ruled
that —

Concerning the pivotal question posed herein on the existence of an easement,

we are of the belief, and thus hereby hold that a right-of-way was properly
appreciated along the entire route of Mangyan Road. Incidentally, the pretense
that the court a quo erred in holding that Mangyan Road is the boundary road
between La Vista and Ateneo (page 31, Appellant's Brief) does not raise any
critical eyebrow since the same is wholly irrelevant to the existence of a servitude
thereon from their express admission to the contrary (paragraph 1, Answer).

One's attention should rather be focused on the contractual stipulations in the

deed of sale between the Tuason Family and the Philippine Building Corporation
(paragraph 3, thereof) which were incorporated in the deed of assignment with
assumption of mortgage by the Philippine Building Corporation in favor of Ateneo
(first paragraph, page 4 of the deed) as well as in the deed of sale dated October
24, 1976 when the property was ultimately transferred by Ateneo to plaintiff-
appellee. Like any other contractual stipulation, the same cannot be extinguished
except by voluntary rescission of the contract establishing the servitude or
renunciation by the owner of the dominant lots (Chuanico vs. Ibañez, 7 CA
Reports, 2nd Series, 1965 edition, pages 582; 589, cited in Civil Law Annotated,
by Padilla, Volume II, 1972 Edition, pages 602-603), more so when the easement
 was implicitly recognized by the letters of the La Vista President to Ateneo dated
February 11 and April 28, 1976 (page 22, Decision; 19 Ruling Case Law 745).

The free ingress and egress along Mangyan Road created by the voluntary
agreement between Ateneo and Solid Homes, Inc., is thus legally demandable
(Articles 619 and 625, New Civil Code) with the corresponding duty on the
servient estate not to obstruct the same so much so that —

When the owner of the servient tenement performs acts or

constructs works impairing the use of the servitude, the owner of
the dominant tenement may ask for the destruction of such works
and the restoration of the things to their condition before the
impairment was committed, with indemnity for damages suffered
(3 Sanchez Roman 609). An injunction may also be obtained in
order to restrain the owner of the servient tenement from
obstructing or impairing in any manner the lawful use of the
servitude (Resolme v. Lazo, 27 Phil. 416; 417; 418)."
(Commentaries and Jurisprudence on the Civil Code of the
Philippines, by Tolentino, Volume 2, 1963 edition, page 320) 21

Resultantly, when the court says that an easement exists, it is not creating one. For, even an
injunction cannot be used to create one as there is no such thing as a judicial easement. As in
the instant case, the court merely declares the existence of an easement created by the parties.
Respondent court could not have said it any better —

It must be emphasized, however, that We are not constituting an easement along

Mangyan Road, but merely declaring the existence of one created by the
manifest will of the parties herein in recognition of autonomy of contracts (Articles
1306 and 619, New Civil Code; Tolentino, supra, page 308; Civil Code of the
Philippines, by Paras, Volume II, 1984 edition, page 549). 22

The argument of petitioner LA VISTA that there are other routes to LOYOLA from Mangyan
Road is likewise meritless, to say the least. The opening of an adequate outlet to a highway can
extinguish only legal or compulsory easements, not voluntary easements like in the case at bar.
The fact that an easement by grant may have also qualified as an easement of necessity does
not detract from its permanency as a property right, which survives the termination of the
necessity. 23

That there is no contract between LA VISTA and Solid Homes, Inc., and thus the court could not
have declared the existence of an easement created by the manifest will of the parties, is devoid
of merit. The predecessors-in-interest of both LA VISTA and Solid Homes, Inc., i.e., the
Tuasons and the Philippine Building Corporation, respectively, clearly established a contractual
easement of right-of-way over Mangyan Road. When the Philippine Building Corporation
transferred its rights and obligations to ATENEO the Tuasons expressly consented and agreed
thereto. Meanwhile, the Tuasons themselves developed their property into what is now known
as LA VISTA. On the other hand, ATENEO sold the hillside portions of its property to Solid
Homes, Inc., including the right over the easement of right-of-way. In sum, when the easement
in this case was established by contract, the parties unequivocally made provisions for its
observance by all who in the future might succeed them in dominion.

The contractual easement of right-of-way having been confirmed, we find no reason to delve on
the issue concerning P.D. No. 957 which supposedly grants free access to any subdivision
street to government or public offices within the subdivision. In the instant case, the rights under
the law have already been superseded by the voluntary easement of right-of-way.

Finally, petitioner questions the intervention of some LOYOLA residents at a time when the case
was already on appeal, and submits that intervention is no longer permissible after trial has
been concluded. Suffice it to say that in Director of Lands v. Court of Appeals, 24 we said —

It is quite clear and patent that the motions for intervention filed by the movants
at this stage of the proceedings where trial has already been concluded, a
 judgment thereon had been promulgated in favor of private respondent and on
appeal by the losing party . . . the same was affirmed by the Court of Appeals
and the instant petition for certiorari to review said judgment is already submitted
for decision by the Supreme Court, are obviously and manifestly late, beyond the
period prescribed under . . . Section 2, Rule 12 of the Rules of Court (now Sec. 2,
Rule 19, 1997 Rules of Civil Procedure).

But Rule 12 of the Rules of Court, like all other Rules therein promulgated, is
simply a rule of procedure, the whole purpose and object of which is to make the
powers of the Court fully and completely available for justice. The purpose of
procedure is not to thwart justice. Its proper aim is to facilitate the application of
justice to the rival claims of contending parties. It was created not to hinder and
delay but to facilitate and promote the administration of justice. It does not
constitute the thing itself which courts are always striving to secure to litigants. It
is designed as the means best adopted to obtain that thing. In other words, it is a
means to an end.

The denial of the motions for intervention arising from the strict application of the
Rule due to alleged lack of notice to, or the alleged failure of, movants to act
seasonably will lead the Court to commit an act of injustice to the movants, to
their successors-in-interest and to all purchasers for value and in good faith and
thereby open the door to fraud, falsehood and misrepresentation, should
intervenors' claims be proven to be true.

After all, the intervention does not appear to have been filed to delay the proceedings. On the
contrary, it seems to have expedited the resolution of the case as the incidents brought forth by
the intervention, which could have been raised in another case, were resolved together with the
issues herein resulting in a more thorough disposal of this case.

WHEREFORE, the Decision of respondent Court of Appeals dated 22 May 1990 and its
Resolution dated 6 September 1990, which affirmed the Decision of the RTC-Br. 89, Quezon
City, dated 20 November 1987, are AFFIRMED.

SO ORDERED.
G.R. No. L-14116 June 30, 1960

LAUREANA A. CID, petitioner,

vs.
IRENE P. JAVIER, MANUEL P. JAVIER, JOSEFINA P. JAVIER, FERNANDO P. JAVIER,
JOSE P. JAVIER, GUILLERMO P. JAVIER, ISIDORA P. JAVIER, BENJAMIN P. JAVIER, and
LEONOR CRISOLOGO, respondents.

Antonio V. Raquiza for petitioner.

Cesar D. Javier for respondents.

BARRERA, J.:

The legal issue presented in this petition to review by certiorari a decision of the Court of
appeals, is whether the respondents Irene P. Javier, et al., owners of a building standing on
their lot with windows overlooking the adjacent lot, had acquired by prescription an enforceable
easement of light and view arising from a verbal prohibition to obstruct such view and light,
alleged to have been made upon petitioner's
predecessor-in-interest as owner of the adjoining lot, both of which lots being covered by
Torrens titles. Both the trial court and the Court of Appeals are of the view and so declared that
respondents Javier et al., did acquire such easement and gave judgment accordingly. Hence,
petitioner has come to us seeking review, alleging that both courts are in error.

The windows in question are admittedly in respondents' own building erected on their own lot.
The easement, if there is any, is therefore a negative one.1 The alleged prohibition having been
avowedly made in 1913 or 1914, before the present Civil Code took effect, the applicable legal
provision is Article 538 of the Spanish Civil Code which provides:

Art. 538. In order to acquire by prescription the easements referred to in the next
preceding article, the time of the possession shall be computed, ... in negative
easements, from the day on which the owner of the dominant estate has, by a formal
act, forbidden the owner of the servient estate to perform any act which would be lawful
without the easement. (Emphasis supplied.)

As may be seen, the only question hinges on the interpretation of the phrase "a formal act". The
lower court and the Court of Appeals considered any prohibition made by the owner of the
dominant estate, be it oral or written, sufficient compliance with the law. The Court of Appeals
declared:

In the light of the foregoing decisions, (Cortes vs. Yu Tibo, 2 Phil., 26 and the decisions
of the Supreme Court of Spain therein cited), we agree with the trial court that the
"formal act" of prohibition contemplated by Art. 538 of the old Civil Code may be either a
written or verbal act. The decisions of the Supreme Court of Spain above-quoted do not
at all mention written but merely some act of prohibition. . . . .

We are inclined to take the contrary view. The law is explicit. It requires not any form of
prohibition, but exacts, in a parenthetical expression, for emphasis, the doing not only of a
specific, particular act, but a formal act. The following definitions are pertinent:

Formal—or pertaining to form, characterized by one due form or order, done in due form
with a solemnity regular; relating to matters of form. (C. J. S. vol. 37, p. 115.)

Act—In civil law, a writing which states in legal form that a thing has been done, said or
agreed. (1 Bouvier's Law Dictionary, p. 150, citing Marlin Report.)

From these definitions, it would appear that the phrase "formal act" would require not merely
any writing, but one executed in due form and/or with solemnity. That this is the intendment of
the law although not expressed in exact language is the reason for the clarification2 made in
Article 621 of the new Civil Code which specifically requires the prohibition to be in "an
instrument acknowledged before a notary public". This is as it should be. Easements are in the
nature of an encumbrance on the servient estate. They constitute a limitation of the dominical
right of the owner of the subjected property. Hence, they can be acquired only by title and by
prescription, in the case of positive easement, only as a result of some sort of invasion,
apparent and continuous, of the servient estate. By the same token, negative easements can
not be acquired by less formal means. Hence, the requirement that the prohibition (the
equivalent of the act of invasion) should be by "a formal act", "an instrument acknowledged
before a notary public."

The Court of Appeals found as undisputed the fact 'that plaintiffs' lot (dominant) as well as
defendant's lot (servient) are covered by Original Certificates of Title Nos. 7225 and 7545,
respectively", both issued by the Register of Deeds of Ilocos Norte, in pursuance of the decrees
of registration issued on December 27, 1937, in Cadastral Case No. 51, G.L.R.O. Cadastral
Record No. 1212 of Laoag, Ilocos Norte. Certified copies of these certificates of title are found
as Annexes "A" and "B", pages 77 to 80 inclusive of the Record on Appeal. In both of them, it
does not appear any annotation in respect to the easement supposedly acquired by prescription
which, counting the twenty (20) years from 1913 or 1914, would have already ripened by 1937,
date of the decrees of registration. Consequently, even conceding arguendo that such an
easement has been acquired, it had been cut off or extinguished by the registration of the
servient estate under the Torrens System without the easement being annotated on the
corresponding certificate of title, pursuant to Section 39 of the Land Registration Act.3

Wherefore, the decision of the Court of Appeals appealed from is hereby reversed; the
injunction issued herein dissolved; and the case remanded to the court of origin for adjudication
of the damages, if any, occasioned by the issuance of the injunction. Without pronouncement as
to costs. So ordered.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L.,
and Gutierrez David, JJ., concur.

RESOLUTION

January 20, 1961

BARRERA, J.:

The Decision in this case, promulgated on June 30, 1960, provided, among others, for the lifting
of the preliminary injunction issued by the lower court directed against petitioner's construction
of a building allegedly being made in violation of Municipal Ordinance No. 3, series of 1909 of
the municipality of Laoag, and in disregard of respondents' right to light and view.

In their motion for reconsideration timely presented, respondents claim that the findings of the
lower court, affirmed by the Court of Appeals, that the building under construction violated the
aforementioned ordinance (from which no appeal was interposed) having become final, justify
the issuance of and making permanent the injunction already issued.

There is no question that respondents' house, as well as that of petitioner, are within their
respective properties; that respondents' wall stands only 50 centimeters from the boundary of
the 2 lots, whereas, the wall of the petitioner's building was constructed 1 meter from the
boundary or 1 meter and 50 centimeters from the wall of the house of respondents. As a result,
the lower court found that the eaves of the two houses overlap each other by 24 centimeters.
This, the Court of Appeals declared to be violative of Ordinance No. 3, series of 1903, amending
Sections 1, 5, 6, and 13 of the Municipal Ordinance of June 3, 1903, which requires a distance
of 2 meters, measured from eaves to eaves of adjoining buildings of strong materials.

It must be noted, however, that the Ordinance in question was adopted since 1909 and was,
therefore, already in force at the time the house of respondents was reconstructed in 1946 after
the building originally erected thereon was burned in 1942. If respondents constructed their
house at least one meter from the boundary line, as petitioner has constructed hers, there would
be no overlapping of the eaves and there would not be any violation of the ordinance. As things
now stand, in view of such construction by the respondents, the overlapping of the eaves and
the consequential violation of the ordinance can not entirely be attributed to petitioner, as to
require her alone to make the adjustments necessary for the observance of the 2-meter eaves-
to-eaves distance from her neighbors. If any compliance with the ordinance would be made not
only by petitioner, but also by the respondents. There is, therefore, no reason for the
continuation of the injunction.

In view of the foregoing, and as the other grounds respondents' motion for reconsideration had
been already duly considered in the Decision, the said motion is hereby denied, for lack of merit.
So ordered.
G.R. No. L-48384 October 11, 1943

SEVERO AMOR, petitioner,

vs.
GABRIEL FLORENTINO, ET AL., respondents.

BOCOBO, J.:

The petitioner asks for the setting aside of the decision of the Court of Appeals which affirmed
the judgment of the Court of First Instance of Ilocos Sur. The trial court declared that an
easement of light and view had been established in favor of the property of the plaintiffs
(respondents herein) and ordered the petitioner to remove within 30 days all obstruction to the
windows of respondents' house, to abstain from constructing within three meters from the
boundary line, and to pay P200.00 damages.

It appears that over 50 years ago, Maria Florentino owned a house and a camarin or warehouse
in Vigan, Ilocos Sur. The house had and still has, on the north side, three windows on the upper
story, and a fourth one on the ground floor. Through these windows the house receives light and
air from the lot where the camarin stands. On September 6, 1885, Maria Florentino made a will,
devising the house and the land on which it is situated to Gabriel Florentino, one of the
respondents herein, and to Jose Florentino, father of the other respondents. In said will, the
testatrix also devised the warehouse and the lot where it is situated to Maria Encarnancion
Florentino. Upon the death of the testatrix in 1882, nothing was said or done by the devisees in
regard to the windows in question. On July 14, 1911, Maria Encarnacion Florentino sold her lot
and the warehouse thereon to the petitioner, Severo Amor, the deed of sale stating that the
vendor had inherited the property from her aunt, Maria Florentino. In January, 1938, petitioner
destroyed the old warehouse and started to build instead a two-story house. On March 1st of
that year, respondents filed an action to prohibit petitioner herein from building higher than the
original structure and from executing any work which would shut off the light and air that had for
many years been received through the four windows referred to. The Court of First Instance
found on the 15th of the same month that the construction of the new house had almost been
completed, so the court denied the writ of preliminary injunction.

I.

Inasmuch as Maria Florentino died in 1892, according to the finding of fact of the Court of
Appeals, Articles 541 of the Civil Code governs this case. The facts above recited created the
very situation provided for in said article, which reads as follows:

(Spanish - page 406)

Art. 551. La existencia de un signo aparente de servidumbre entre dos fincas,

establecido por el propietario de ambas, se considerara, si se enjenare una, como titulo
para que la servidumbre continue activa y pasivamente, a no ser que, al tiempo de
separarse la propiedad de las dos fincas, se exprese lo contrario en el titulo de
enajenacion de cualquiera de ellas, o se haga desaparecer acquel signo antes del
otorgamiento de la escritura.

Art. 541. The existence of an apparent sign of easement between two estates,
established by the proprietor of both, shall be considered, if one of them is alienated, as
a title so that the easement will continue actively and passively, unless at the time the
ownership of the two estates is divided, the contrary is stated in the deed of alienation of
either of them, or the sign is made to disappear before the instrument is executed.

When the original owner, Maria Florentino, died in 1892, the ownership of the house and its lot
passed to respondents while the dominion over the camarin and its lot was vested in Maria
Encarnancion Florentino, from whom said property was later bought by petitioner. At the time
the devisees took possession of their respective portions of the inheritance, neither the
respondents nor Maria Encarnacion Florentino said or did anything with respect to the four
windows of the respondents' house. The respondents did not renounce the use of the windows,
either by stipulation or by actually closing them permanently. On the contrary, they exercised
the right of receiving light and air through those windows. Neither did the petitioner's
predecessor in interest, Maria Encarnacion Florentino, object to them or demand that they be
close. The easement was therefore created from the time of the death of the original owner of
both estates, so when petitioner bought the land and the camarin thereon from Maria
Encarnancion Florentino, the burden of this easement continued on the real property so
acquired because according to Article 534, "easements are inseparable from the estate to which
they actively or passively pertain."

An incidental question that arises at this juncture is whether or not Article 541 applies to a
division of property by succession. The affirmative has been authoritatively declared. (Manresa,
"Comentarios al Codigo Civil Espanol," vol. 4, p. 619; Sentence of the Supreme Tribunal of
Spain, November 17, 1911).

Petitioner assigns as an error of the Court of Appeals the supposed failure of that tribunal to
pass upon his motion to consider certain allegedly new evidence to prove that Maria Florentino,
the original owner of the properties, died in 1885. Petitioner alleges that Maria Florentino died in
1885 and, therefore, the Law of the Partidas should be followed in this case and not the Civil
Code. However, the petitioner's contention cannot be upheld without rejecting the finding of fact
made by the Court of Appeals, as follows:

Hebiendo pasado la propiedad de la casa de manposteria a los demandantes, a la

muerte de Maria Florentino, ocurrida en 1892, (el demandado sostiene que fue con
anterioridad a 1889) no hay duda ninguna de que los demandantes adquirieron la
servidumbre mediante titulo y por prescripcion (Art. 537).

We cannot review the above finding of fact by the Court of Appeals that Maria Florentino die in
1892. The evidentiary fact from which the Court of Appeals drew the above finding is that
Gregorio Florentino during the trial in 1938 testified to facts of his own personal knowledge, and
he was then 58 years old, having been born in 1880. If Maria Florentino, as claimed by
petitioner, had died in 1885, Gregorio Florentino would have been only 5 years of age at the
time of Maria Florentino's death. The Court of Appeals therefore concluded that Maria
Florentino died in 1892, when Gregorio Florentino was ten 12 years of age. We do not believe
we can disturb the finding of the Court of Appeals, because its deductions as to the date of
Maria Florentino's death may be right or wrong, according to one's own reasoning. In other
words, its conclusion of fact from Gregorio Florentino's testimony is not necessarily and
unavoidably mistaken. On the contrary, it is reasonable to believe that a person 58 years old
cannot remember facts of inheritance as far back as when he was only 5 years of age.

Furthermore, the burial certificate and the gravestone, whose copy and photograph,
respectively, were offered by petitioner in a motion for new trial filed in the Court of Appeals,
could have been discovered by petitioner before the trial in the Court of First Instance by the
exercise of due diligence. There is no reason why this evidence could be found when the case
was already before the Court of Appeals, but could not be found before the trial in the Court of
First Instance. It was easy, before such trial, for the petitioner to inquire from the relatives of
Maria Florentino as to when she died. And having ascertained the date, it was also easy to
secure the burial certificate and a photograph of the gravestone, supposing them to be really of
Maria Florentino. The fact is, petitioner never tried to find out such date and never tried to
secure the additional evidence till his counsel raised this issue for the first time before the Court
of Appeals. That Court was therefore died in 1885. (Sec. 497, Act. 190). The petitioner's
statement in his brief (p. 11) that the Court of Appeals neither passed upon his motion nor took
the burial certificate and the gravestone into account is not true, because the very words of the
Court of Appeals clearly show that the Court had in mind said motion and evidence when the
decision was signed. The decision said: "a la muerte de Maria Florentino ocurrida en 1892 (el
demandado sostiene que fue con anteriodad a 1889)" (Emphasis supplied).

Lastly, the issue as to the date of Maria Florentino's death cannot be raised for the first time on
appeal. Petitioner did not in the trial court allege or prove this point. He presented this issue for
the first time in the Court of Appeals. (Sec. 497, Act. 190).
Let us now consider Article 541 more closely in its application to the easement of light and view
and to the easement not to build higher (altius non tollendi). These two easements necessarily
go together because an easement of light and view requires that the owner of the servient
estate shall not build to a height that will obstruct the window. They are, as it were, the two sides
of the same coin. While an easement of light and view is positive, that of altius non tollendi is
negative. Clemente de Diego states that when article 538 speaks of the time for the
commencement of prescription for negative easements, "it refers to those negative easements
which are the result and consequence of others that are positive, such as the easement not to
build higher, or not to construct, which is indispensable to the easement of light." (Se refiere a
aquellas servidumbres negativas que son sucuela y consecuencia de otras positivaas, como la
de no levantar mas alto, o de no edificar, que es imprescindible para la servidumbre de luces.")
("Curso Elemental de Derecho Civil Españos, Comun y Foral," vol. 3, p. 450). This relation of
these two easements should be borned in mind in connection with the following discussion of
(1) the modes of establishing and acquiring easements; (2) the meaning of article 541; and (3)
the doctrine in the case of Cortes vs. Yu-Tibo.

First, as to the modes of establishing and acquiring easements. According to Article 536,
easements are established by law or by will of th owners. Acquisition of easements is first by
title or its equivalent and seconly by prescription. What acts take the place of title? They are
mentioned in Articles 540 and 541, namely, (1) a deed of recognition by the owner of the
servient estate; (2) a final judgment; and (3) an apparent sign between two estates, established
by the owner of both, which is the case of article 541. Sanchez Roman calls cuh apparent sign
under article 541 "supletoria del titulo constitutivo de la servidumbre (Derecho Civil, vol. 3, p.
656). The same jurist says in regard to the ways of constituting easements:

(Spanish word - page 410)

In the Sentence of the Supreme Tribunal of Spain dated November 7, 1911, it was held that
under article 541 of the Civil Code, the visible and permanent sign of an easement "is the title
that characterizes its existence" ("es el titulo caracteristico de su existencia.")

It will thus be seen that under article 541 the existence of the apparent sign in the instance
case, to wit, the four windows under consideration, had for all legal purposes the same
character and effect as a title of acquisition of the easement of light and view by the
respondents upon the death of the original owner, Maria Florentino. Upon the establishment of
that easement of light and view, the con-comitant and concurrent easement of altius non
tollendi was also constituted, the heir of the camarin and its lot, Maria Encarnacion Florention,
not having objected to the existence of the windows. The theory of article 541, of making the
existence of the apparent sign equivalent to a title, when nothing to the contrary is said or done
by the two owners, is sound and correct, because as it happens in this case, there is an implied
contract between them that the easements in question should be constituted.

Analyzing article 541 further, it sees that its wording is not quite felicitous when it says that the
easement should continue. Sound juridical thinking rejects such an idea because, properly
speaking, the easement is not created till the division of the property, inasmuch as a predial or
real easement is one of the rights in another's property, or jura in re aliena and nobdy can have
an easement over his own property, nimini sua res servit. In the instant case, therefore, when
the original owner, Maria Florentino, opened the windows which received light and air from
another lot belonging to her, she was merely exercising her right of dominion. Consequently, the
moment of the constitution of the easement of light and view, together with that of altius non
tollendi, as the time of the death of the original owner of both properties. At that point, the
requisite that there must be two proprietors — one of the dominant estate and another of the
servient estate — was fulfilled. (Article 530, Civil Code.)

Upon the question of the time when the easement in article 541 is created, Manresa presents a
highly interesting theory, whether one may agree with it or not. He says:

La servidumbre encubierta, digamoslo asi, por la unidad de dueño, se hace ostensible,

se revela con toda su verdadera importancia al separarse la propiedad de las fincas o
porciones de finca que respectivamente deben representar el papel de predios sirviente
y dominante.
 The concealed easement, as it were by the oneness of the owner, becomes visible, and
is revealed in all its importance when the ownership of the estate or portions of the
estate which respectively should play the role of servient and dominant estates is
divided.

Such a view cannot be fully accepted because before the division of the estate there is only a
service in fact but not an easement in the strictly juridical sense between the two buildings or
parcels of land.

We come now to the case of Cortes vs. Yu-Tibo, 2 Phil., 24 decided in 1903, Mr. Justice, later
Chief Justice, Mapa speaking for the Court. Counsel for petitioner contends that the doctrine in
that case is controlling in the present one. If the essential facts of the two cases were the same,
there is not doubt but that the early opinion would be decisive inasmuch as it is by its cogent
reasoning one of the landmarks in Philippine jurisprudence. However, the facts and theories of
both cases are fundamentally dissimilar. What is more, as will presently be explained, that every
decision makes a distinction between that case and the situation provided for in article 541. In
that case, Cortes sought an injunction to restrain Yu-Tibo from continuing the construction of
certain buildings. Cortes' wife owned a house in Manila which had windows that had been in
existence since 1843. The defendant, who occupied a house on the adjoining lot, commenced
to raise the roof of the house in such a manner that one-half of the windows in the house owned
by plaintiff's wife had been covered. This Court, in affirming the judgment of the lower court
which dissolved the preliminary injunction, held that the opening of windows through one's own
wall does not in itself create an easement, because it is merely tolerated by the owner of the
adjoining lot, who may freely build upon his land to the extent of covering the windows, under
article 581, and that his kind of easement is negative which can be acquired through
prescription by counting the time from the date when the owner of the dominant estate in a
formal manner forbids the owner of the servient estate from obstructing the light, which had not
been done by the plaintiff in this case.

It will thus be clear that one of the essential differences between that case and the present is
that while the Yu-Tibo case involved acquisition of easement by prescription, in the present
action the question is the acquisition of easement by title, or its equivalent, under article 541.
Therefore, while a formal prohibition was necessary in the former case in order to start the
period of prescription, no such act is necessary here because the existence of the apparent sign
when Maria Florentino died was sufficient title in itself to created the easement.

Another difference is that while in the Yu-Tibo case, there were tow different owners of two
separate houses from the beginning, in the present case there was only one original owner of
the two structures. Each proprietor in the Yu-Tibo case was merely exercising his rights of
dominion, while in the instant case, the existence of the apparent sign upon the death of the
original owner ipso facto burdened the land belonging to petitioner's predecessor in interest,
with the easements of light and view and altius non tollendi in virtue of article 541.

The very decision in Cortes vs. Yu-Tibo distinguishes that case from the situation foreseen in
article 541. Said this Court in that case:

It is true that the Supreme Court of Spain, in its decisions of February 7 and May 5,
1986, has classified as positive easements of light which were the object of the suits in
which these decisions were rendered in cassation, and from these it might be believed at
first glance, that the former holdings of the supreme court upon this subject had been
overruled. But this is not so, as a matter of fact, inasmuch as there is no conflict between
these decisions and the former decisions above cited.

In the first of the suits referred to, the question turned upon two houses which had
formerly belonged to the same owner, who established a service of light on one of them
for the benefit of the other. These properties were subsequently conveyed to two
different persons, but at the time of the separation of the property noting was said as to
the discontinuance of the easement, nor were the windows which constituted the visible
sign thereof removed. The new owner of the house subject to the easement endeavored
to free it from the incumbrance, notwithstanding the fact that the easement had been in
existence for thirty-five years, and alleged that the owner of the dominant estate had not
 performed any act of opposition which might serve as a starting point for the acquisition
of a prescriptive title. The supreme court, in deciding this case, on the 7th of February,
1896, held that the easement in this particular case was positive, because it consisted in
the active enjoyment of the light. This doctrine is doubtless based upon article 541 of the
Code, which is of the following tenor: "The existence of apparent sign of an easement
between two tenements, established by the owner of both of them, shall be considered,
should one be sold, as a title for the active and passive continuance of the easement,
unless, at the time of the division of the ownership of both tenements, the contrary
should be expressed in the deed of conveyance of either of them, or such sign is taken
away before the execution of such deed.'

The word "active" used in the decision quoted in classifying the particular enjoyment of
light referred to therein, presuposes on the part of the owner of the dominant estate a
right to such enjoyment arising, in the particular cases passed upon by that decision,
from the voluntary act of the original owner of the two houses, by which he imposed
upon one of them an easement for the benefit of the other. It is well known that
easements are established, among other cases, by the will of the owners. (Article 536 of
the Code.) It was an act which was, in fact, respected and acquiesced in by the new
owner of the servient estate, since he purchased it without making any stipulation
against the easement existing thereon, but, on the contrary, acquiesced in the
continuance of the apparent sign thereof. As is stated in the decision itself, "It is a
principle of law that upon a division of a tenement among various persons — in the
absence of any mention in the contract of a mode of enjoyment different from that to
which the former owner was accustomed — such easements as may be necessary for
the continuation of such enjoyment are understood to subsist." It will be seen, then, that
the phrase "active enjoyment" involves an idea directly opposed to the enjoyment which
is the result of a mere tolerance on the part of the adjacent owner, and which, as it is not
based upon an absolute, enforceable right, may be considered as of a merely passive
character. (2 Phil., 29-31).

Finally, the Yu-Tibo case was decided upon the theory if the negative easement of altius non
tollendi, while the instant case is predicated on the idea of the positive easement of light and
view under article 541. On this point, suffice it to quote from Manresa's work. He says:

Que en las servidumbres cuyo aspecto positivo aparece enlazado al negativo, asi como
al efecto de la precripcion ha de considerarse prefente el aspecto negativo, al efecto del
art. 541 basta atender al aspecto positivo, y asi la exitencia de huecos o ventanas entre
dos fincas que fueron de un mismo dueño es bastante para considerar establecidas, al
separarse la propiedad de esas fincas, las servidumbres de luces o vista, y con ellas las
de no edificar on no levantar mas ato, porque sin estas no prodrian existir aquellas.

That in easements whose positive aspect appears tied up with the negative aspect, just
as for the purposes of prescription the negative aspect has to be considered preferential,
so for the purposes of Article 541 it is sufficient to view the positive aspect, and therefore
the existence of openings or windows between two estates which belonged to the same
owner is sufficient to establish, when the ownership of these estates is divided, the
easement of light or view, and with them the easements of altius non tollendi because
without the latter, the former cannot exists.

There are several decisions of the Supreme Court of Spain which have applied Article 541.
Some of them are those of February 7, 1986; February 6, 1904; May 29, 1911; and November
17, 1911.

The sentence of February 7, 1896, dealt with windows established in one house by the original
of two houses. When he died, the two houses were adjudicated to different heirs. The court held
that there was an easement of light.

Considerando que, segun lo establecido por este Supremo Tribunal en repetidas

sentencias, y consignado, muy principalmente, en la dictada en 21 de Octubre de 1892,
lo preceptuado en la ley 14, titulo 31 de la Partida 3.a, al tratar del mode de constituirse
las servidumbres, no esta en oposicion con el pricipio mediante el que, dividida una
 finca entre diversas personas, sin que en el contrato se mencione cosa alguna acerca
de un modo de aprovenchamiento distinto del que usaba el primitivo dueño de ella, se
entieden subsistentes las servidumbres ncesarias para que aquel pueda tener lugar.

Considerando que ese principio y jurisprudencia han obtenido nueva sancion, puesto
que a ellos obedece el concepto claro y concreto del articulo 541 del Codigo Civil,
aplicable al caso, . . . (Ruiz, Codigo Civil, Vol. V, pp. 349-350).

Considering that, according to what has been established by this Supreme Tribunal in
repeated sentences, and principally declared in the sentence promulgated on October
21, 1892, the provision of law 14, title 31 of Partida 3 in treating of the mode of
constituting easements, is not contrary to the principle that when an estate is divided
between different persons, and in the contract nothing is said out a mode of enjoyment
different from that used by the original owner thereof, the necessary easements for said
mode of enjoyment are understood to be subsisting;

Considering that such principle and jurisprudence have obtained a new santion, for due
to them is the clear and concrete concept of Article 541 applicable to the case . . . .

Therefore, considering that Maria Florentino died in 1892, according to a finding of fact by the
Court of Appeals, there is an easement of light and view in favor of the respondents' property
under article 541 of the Civil Code.

But granting, arguendo, that Maria Florentino died in 1885, as contended by petitioner,
nevertheless the same principle enunciated in article 541 of the Spanish Civil Code was already
an integral part of the Spanish law prior to the Civil Code, the easement in question would also
have to be upheld. That the law before the Civil Code was the same as at present is shown by
the following:

1. Under Law 14, Title 31, Partida 3, this easement was constituted by an implied
contract among the heirs of Maria Florentino.

2. Granting for the sake of argument that this easement was not created through an
implied contract according to Law 14, Title 31, Partida 3, yet that provision of
the Partidas was not inconsistent with the principle in question, so that there was a gap
in the Partidas which the Supreme Court of Spain filled up from the Roman Law and
modern civil codes, by recognizing the existence of this kind of easement.

3. Law 17, Title 31, Partida 3 regarding the extinguishment of an easement did not
prohibit the easement in the instant case, Therefore, we should adhere to the decisions
of the Supreme Court of Spain which maintain this easement under the Spanish law
prior to Civil Code.

4. Other considerations show that the principle of apparent sign as announced by the
Supreme Tribunal of Spain is not incompatible with the Partidas.

First, as to the implied contract. Law 14, Title 31, Partida 3 provided that easements were
acquired by contract, by will and by prescription. Upon the death of the original owner, Maria
Florentino, the four windows under consideration already existed and were visible. One of the
heirs, Maria Encarnacion Florentino, to whom the camarin and its lot had been devised, having
failed to object to the same, knowingly consented to their continuance. Nor did Gabriel and Jose
Florentino (devisees of the house that had the four windows) permanently close the windows.
There was consequently an implied agreement between her and the devisees of the house with
the four windows to the effect that the service of these windows would continue, thus creating
the easement of light and view and the concomitant easement of altius non tollendi. Hence, the
easement in question was acquired by Gabriel and Jose Florentino through contract under Law
14, Title 31, Partida 3.

Secondly, with respect to the doctrine of the Supreme Tribunal of Spain. In a series of decisions
of that court, it was held that Law 14, Title 31, Partida 3 was not opposed to the easement under
review. One of those decisions is that of November 7, 1883, which held:
(Spanish word - page 418)

Other decisions of the Supreme Tribunal of Spain to the same effect are those of September 14,
1867 and June 7, 1883. (See Scaevola, "Codigo Civil Comentado" vol. 10, pp. 272-274.)

So that, granting for the sake of argument, that the easement was not created through an
implied contract according to Law 14, Title 31, Partida 3, yet that provision of the Partidas,
according to decisions of the Supreme Tribunal of Spain, was not inconsistent with the principle
in question. The problem in this case not having been foreseen in Law 14, Title 31, Partida 3,
there was a gap in the old legislation, which the Supreme Tribunal of Spain filled up from the
Roman Law and from modern Civil Codes.

The principle in question was deeply rooted in the Roman Law. It is from the Roman Law that
the Supreme Tribunal of Spain obtained this principle, in order to solve a question not provided
for by the Partidas, whose main source was also the Roman law. In other words, the Partidas
being silent on the point under consideration, the Supreme Tribunal of Spain resorted to the
authoritative voice of the Roman law from which the Law of the Partidas had derived its
inspiration.

The following quotations from the Spanish version the Roman Law Digest will prove the
assertions just made:

(Spanish word - page 419)

Among the modern civil codes which contain the rule in question are those of France, Belgium,
Holland, Portugal, Mexico and Chile. It is presumed that the Supreme Tribunal of Spain had
also in mind at least one of them when it decided cases involving this principle before the
promulgation of the Spanish Civil Code.

When, therefore, Maria Florentino died (supposing she died in 1885), the status of the Spanish
law was in favor of the doctrine in question. We cannot change it because it was in full force at
the time of the alleged date of Maria Florentino's death. We cannot reject a doctrine established
by the Spanish Supreme Tribunal as an integral part of the Spanish law before the promulgation
of the Civil Code in 1889. And we know that jurisprudence — in the sense of court decisions —
is one of the sources of the law.

Thirdly, concerning Law 17, Title 31, Partida 3. It is true that the eminent jurist, Manresa, is of
the opinion that "el precepto del art. 541 no solo no existia en nuestra antigua legislacion, sino
que podia deducirse claramente lo contrario de la ley 17, tit. 31, Partida 3.a . . . ." However, a
careful reading of this provision of the Partidas reveals that the same did not militate against the
creation of an easement by an apparent sign if nothing was said or done when the property is
divided. Law 17, Title 31, Partida 3, read as follows:

(spanish word - page 420-21)

This law regulates the extinguishment of an easement by merger of the dominant and the
servient estates. Speaking of this law of the Partidas and of article 546, par. 1, of the Civil Code,
both of which refer to merger of the two estates, Acaevola says: (p. 319, vol. 10)

But there is a world of difference between extinguishment of an easement by merger of the two
estates and the constitution of an easement by an apparent sign when nothing is done or said
upon the division of the property. Law 17, title 31, Partida 3, having in mind only the modes
of extinguishment, the legislator did not intend to cover the question involved in the present
case, which refers to the creation of an easement.

What, then, are the differences between the extinguishment of an easement by merger under
Law 17, title 31, Partida 3, and the constitution of an easement in this case, both before and
after the Civil Code went into effect?
First, in merger under Law 17, Title 31, Partida 3, there were from the very beginning, already
two separate estates, the dominant and the servient estates, whereas in this case, there was
only one estate.

Second, in merger under said Law 17, there were already two owners, whereas in this case,
there was only one owner, Maria Florentino.

Third, in merger under Law 17, there was already an easement in the legal sense, whereas in
the instant case, there was only a service between the two lots, (while Maria Florentino was
living) but there was as yet no easement from the juridical viewpoint.

4. Other considerations prove that the principle of apparent sign as enunciated by the Supreme
Tribunal of Spain is not inconsistent with the Partidas. These considerations are:

1. Article 537, Civil Code, provides that continuous and apparent easements are
acquired by title, or by prescription. However, side by side with that article is article 541
which contemplates an easement upon division of an estate, unless a stipulation to the
contrary is agreed upon, or the sign is destroyed. Bearing in mind that "title" includes
a contract, our view is that if Article 537 and 541 of the Civil Code can stand together,
there is no reason why Law 14, title 31, Partida 3, whereby easements are acquired by
contract, by will and by prescription should be considered incompatible with the
easement under review.

2. Article 546, par. 1 of the Civil Code ordains that by merger of the two estates in the
same owner an easement is extinguished. Yet, coexistent with such provision is that of
article 541 regarding the apparent sign which is a title for the easement. If these two
principles can and do stand together under the Civil Code, the doctrine laid down by the
Supreme Tribunal of Spain — before the Civil Code was in force — about the effect of
an apparent sign can also stand together with Law 17, title 31, Partida 3 declaring the
extinguishment of an easement by merger.

3. Under article 546, par. 1 of the Civil Code, merger extinguishes an easement. So in
case the estate is again divided by purchase, etc., the easement is not, under the Civil
Code automatically revived. That is the same provision of law 17, title 31, Partida 3,
which does not reject the principle in question, just as article 546, par. 1 of the Civil Code
does not reject article 541 about an apparent sign.

III.

Aside from the foregoing reasons that support the easement under consideration, the same has
been acquired by respondents through prescriptions.

The easement involved in this case is of two aspects: light and view and altius non tollendi.
These two aspects necessarily go together because an easement of light and view prevents the
owner of the sevient estate from building to a height that will obstruct the windows. This court
in Cortes vs. Yu-Tibo, supra, held that the easement concerned when there is an apparent sign
established by the owner of two estates is positive. Manresa is of the same opinion, supra. This
being so, and inasmuch as the original heirs of Maria Florentino succeeded to these two estates
either in 1885 or in 1892 and as petitioner bought one of the lots in 1911, the prescriptive period
under any legislation that may be applied — the Partidas, Civil Code or Code of Civil Procedure
— has elapsed without the necessity of formal prohibition on the owner of the servient estate.
The respondent's action was brought in 1938. The persons who were present, and 20 years
between absentees. (4 Manresa, 605). According to article 537 of the Civil Code, continous and
apparent easements may be acquired by prescription for 20 years. Under sections 40 and 41 of
the Code of Civil Procedure, the period is 10 years.

IV.

The petitioner maintains that he is an innocent purchaser for value of the lot
and camarin thereon, and that he was not bound to know the existence of the easement
because the mere opening of windows on one's own wall does not ipso facto create an
easement of light. Such contention might perhaps be in point if the estates had not originally
belonged to the same owner, who opened the windows. But the petitioner was in duty bound to
inquire into the significance of the windows, particularly because in the deed of sale, it was
stated that the seller had inherited the property from her aunt, Maria Florentino. Referring to the
Sentence of the Supreme Court of Spain dated February 7, 1896, which applied Article 541, this
Court in the case of Cortes vs. Yu-Tibo already cited, said that the establishment of the
easement "was an act which was in fact respected and acquiesced in by the new owner of the
servient estate, since he purchased it without making any stipulation against the easement
existing thereon, but on the contrary acquiesced in the new owner of the servient estate, since
he purchased it without making any stipulation against the easement existing thereon, but on
the contrary, acquiesced in the continuance of the apparent sign thereof." (p. 31). Moreover, it
has been held that purchasers of lands burdened with apparent easements do not enjoy the
rights of third persons who acquire property, though the burden it not recorded. (Sentence of the
Supreme Tribunal of Spain, April 5, 1898).

V.

Let us now discuss the case from the standpoint of justice and public policy.

First. — When Maria Encarnacion Florentino, as one of the devisees, accepted the camarin and
the lot, she could not in fairness receive the benefit without assuming the burden of the legacy.
That burden consisted of the service in fact during the lifetime of the original owner, which
service became a true easement upon her death.

Second. — According to Scaevola, the reason for the principle in question is that there is a tacit
contract. He says in vol. 10, p. 277:

(spanish word - page 424)

Aun hay mas: hay, en nuestro entender, no solo presuncion de voluntad del enajenante,
o sea del dueño de las fincas que estuvieren confundidas, sino convencion, siquiera sea
tacita, entre el vendedor y al adquirente de la finca vendida. Puesto que pudiendo
estipular la no existencia de la servidumbre, nada dicen o nada hacen, fuerza es
presumir que el segundo (comprador) acepta el estado jurisdico creado por el primero
(vendedor).

It is not just to allow Maria Encarnacion Florentino or her successor in interest to repudiate her
own undertaking, implied, it is true, but binding nevertheless. This easement is therefore a
burden which Maria Encarnacion Florentino and her successor in interest willingly accepted.
They cannot now murmur against any inconvenience consequent upon their own agreement.

Third. During the construction of the new house by the petitioner, the respondents filed an
action to stop the work. But petitioner continued the construction, so that when the Court of First
Instance was ready to pass upon the preliminary injunction, the work had almost been finished.
Petitioner, therefore, cannot complain if he is now ordered to tear down part of the new structure
so as not to shut off the light from respondents' windows.

Fourth. When petitioner bought this lot from the original coheir, Maria Encarnacion Florentino,
the windows on respondents' house were visible. It was petitioner's duty to inquire into the
significance of those windows. Having failed to do so, he cannot now question the easement
against the property which he purchased.

(spanish word - page 425)

This idea of easements can never become obsolete in the face of modern progress. On the
contrary, its need is all the more pressing and evident, considering that this mutual assistance
and giving way among estates is demanded by the complexities of modern conditions, such as
those which obtain in large cities where buildings, large and small, are so close together.

VI.
Recapitulating, we believe the easement of light and view has been established in favor of the
property of respondents, for these reasons:

1. Maria Florentino having died in 1892, according to a finding of fact of the Court of
Appeals, which we cannot review, Article 541 of the Civil Code is applicable to this case.

2. Granting, arguendo, that Maria Florentino died in 1885, nevertheless that same
principle embodied in article 541 of the Civil Code was already an integral part of the
Spanish law before the promulgation of the Civil Code in 1889, and therefore, even if the
instant case should be governed by the Spanish law prior to the Civil Code, the
easement in question would also have to be upheld.

3. The easement under review has been acquired by respondents through prescription.

4. The petitioner was not an innocent purchaser, as he was in duty bound to inquire into
the significance of the windows.

5. Justice and public policy are on the side of the respondents.

Wherefore, the judgment appealed from should be and is hereby affirmed, with costs against
the petitioner. So ordered.

Yulo, C. J., Moran Imperial, 1 and Havtiveras, 1 JJ., concur.

Separate Opinions

OZAETA, J., dissenting:

I regret to say that the omnibus opinion of the majority is a straddle over the baseless finding
that Maria Florentino died in 1892 and the assumption that she died in 1885. Since she could
not have died twice — and the date of her demise was properly raised as an issue in this case
— the equivocal position thus taken rests on no solid factual foundation. Straddling and tottering
as it is on shaky ground, the opinion as a whole appears to me untenable and its validity
questionable. Did Maria Florentino pass away in 1892? or based on the assumption that she
died in 1885 is a mere obiter dictum; and if she died in 1885, then Part I of the opinion based on
the assumption that she died in 1892 is likewise a mere obiter dictum. Thus it is not permissible
for the Court to straddle the issue.

There is absolutely no basis in the evidence for the finding that Maria Florentino died in 1892.
Indeed in its findings of fact the Court of Appeals made no mention of the date of Maria
Florentino's demise, but in its conclusion of law the year she died was incidentally mentioned in
the following manner:

. . . Habiendo pasado la propiedad de la casa de mamposteria a los demandantes, a la

muerte de Maria Florentino, ocurrida en 1892 (el damandado sostiene que fue con
anterioridad a 1889), no hay duda ninguna de que los demandantes adquirieron la
servidumbre de luces y vistas sobre el camarin del demandado mediante titulo y por
prescripcion (Art. 537).

The indirect statement to the effect that Maria Florentino died in 1892 was not based on any
evidence but solely on the conjecture indulged in by counsel for the respondents in his brief:
That she must have died in the year 1892 because the respondent Gabriel Florentino testified
during the trial as to facts of his own personal knowledge, and since he was fifty-eight years old
when he testified in 1938, it must be presumed that he was at least twelve years old when his
aunt Maria Florentino died, and that therefore the death of the latter must have occurred in the
year 1892. Such deductions were absurd on their face and the Court of Appeals clearly
committed an error of law in adopting them. A finding of fact must be based on competent
proofs — not on a mere conjecture.

The respondents themselves alleged under oath in their original as well as in their amended
complaint (but were silent as to this in their second amended complaint) that the death of Maria
Florentino occurred in the year 1888. No evidence was presented during the trial as to said
date, but nevertheless the trial court applied the Civil Code. The petitioner as appellant before
the Court of Appeals contended that the Partidas and not the Civil Code was the law applicable.
It was then that respondents (appellees below) tried to show by deduction and conjecture that
Maria Florentino must have died in 1892. To rebut that, appellant and his attorney made
inquiries as to the true date of Maria Florentino's demise and discovered from the church record
of burials as well as from her gravestone that she died on September 7, 1885, and was buried
on the following day, September 8, 1885. They alleged in their affidavit that they had been
unable to ascertain that date before on account of the misleading allegation in appellees'
complaint that Maria Florentino die in 1888. A certified copy of the partida de entierro as well as
a photograph of the gravestone showing the inscription of the date of Maria Florentino's death,
were offered by appellant in a motion for new trial filed in the Court of Appeals on March 4,
1940; and on March 14, 1940, the Court of Appeals ordered that said motion, together with the
exhibits accompanying it, "be attached to the record and brought to the attention of the Court
when the case is considered on its merits." Nevertheless the Court of Appeals either ignored or
overlooked said motion and the documentary evidence accompanying it when it considered and
decided the case on the merits. Under section 2 of Rule 55, as well as under sections 497 of Act
No. 190, the court should have considered the new evidence together with that adduced in the
trial below. Thus, I think it cannot be doubted that Maria Florentino died on September 7, 1885,
more than four years before the Civil Code took effect.

The majority seem to feel bound by the conjecture indulged in by the respondents and adopted
by the Court of Appeals that Maria Florentino died in 1892, considering it as a finding of fact by
the Court of Appeals. I beg to differ. A statement of fact not based on any proof whatever should
not be accepted by this Court, especially when, as in this case, it is indubitably shown to be
contrary to the truth.

It is said that the church record of Maria Florentino's burial and the photograph of her
gravestone showing the inscription:

D. O. M.

AQUIYACEN LOS RESTOS MOORTALES DE

D. BONIFACIO F. ANATASIO

FALLECIO EN 26 DE OCTUBRE DE 1890

Y SU ESPOSA

Da MARIA FLORENTINO

QUE MURIO

EN 7 DE SETIEMBRE DE 1885

RECUERDO DE

Da ENCARNACION FLORENTINO

are not newly discovered evidence because they "could have been discovered by petitioner
before the trial in the Court of First Instance by the exercise of due diligence." I disagree again.
There was no incentive on the part f the petitioner to look for evidence of the exact date of Maria
Florentino's demise while the case was being tried in the court below, for the respondents
themselves alleged under oath in their original and amended complaints that she died in 1888,
i.e., before the Civil Code took effect, and introduced no evidence whatever that she died after
1889. It was only when the respondents in their brief before the Court of Appeals tried to show
by mental acrobatism that she must have died in 1892 in order to justify the application of the
Civil Code, that the petitioner became interested in finding out the exact date of her death in
order to impugn that contention. Under the circumstances, I entertain no doubt that the proofs
offered may be considered newly discovered within the purview of our procedural law. After all,
the rules of evidence are but a means to an end — to help establish the truth. To illustrate the
irrationality of applying the rules of evidence too rigidly, let us suppose that an accused has
been convicted of murder and sentenced to death, but during the pendency of his appeal his
counsel discovers that the alleged victim is living and in good health, and counsel offers to
prove that fact and even presents the "murdered" man in person before the court. Should this
Court reject the offer of proof and affirm the death sentence simply because the appellant could
have discovered the existence of the alleged victim by the exercise of due diligence? Judging
from the opinion of the majority in this case, it should. What a travesty on justice

As a last argument on this point the majority say:

Lastly, the issue as to the date of Maria Florentino's death cannot be raised for the first
time on appeal. Petitioner did not in the trial court allege or prove this point. He
presented this issue for the first time in the Court of Appeals. (Sec. 497, Act. 190)

That is incorrect. Plaintiffs had the burden of proof. They are the ones who invoke the Civil
Code. It was up to them to prove that the transaction took place after 1889. They realized that
only during the appeal and, to supply their omission and even contradict their own sworn
allegation, they resorted to amazing deductions from the age of one witness. So it was the
respondents who "presented this issue for the first time in the Court of Appeals." The petitioner
had the right to meet in then and there.

Since I cannot ignore the glaring fact that Maria Florentino died not in 1892 but in 1885, I cannot
give my assent to the application of article 541 of the Civil Code to the controversy between the
parties. I therefore regard all the profuse discussions of the law and citations of jurisprudence
found in Part I of the majority opinion as purely academic.

Part II of the opinion is based on the assumption that Maria Florentino died in 1885. Here I
agree with my esteemed colleagues on the factual basis but not on the legal conclusions.

The transitory provisions of the Civil Code, Rules I and 2, provide that "rights vested under the
legislation prior to this Code by virtue of acts which transpired while it was in force, shall be
govern by such prior legislation even if the code should otherwise provide with respect thereto,
or should not recognize such rights"; and that "acts and contracts executed under the prior
legislation, and which are valid in accordance therewith, shall produce all their effects as by
these rules." The prior legislation referred to, insofar as this case is concerned, was none other
than the Partidas.

How were easements acquire under the Partidas? In three ways only: By contract, by
testament, or by prescription. (See law 14, title 31, Partida 3.) There was no provision in
the Partidas similar to article 541 of the Civil Code regarding the creation or acquisition of an
easement thru the establishment of an apparent sign thereof by the owner of two estates.

In their second alternative opinion the majority say that easement in question was constituted by
an implied contract among the heirs of Maria Florentino under law 14, title 31, Partida 3. The
law cited mentions "contract" and not "implied contract." As a source of right or obligation,
"contract" is entirely different from "implied" contract." The former is based upon the mutual
consent of the parties, supported by a lawful consideration, and with a definite subject matter,
as, for instance, a contract of lease (articles 1254 and 1261, Civil Code); while the latter is
merely imposed or implied by law from an act performed or committed by one of the parties
without the consent and even against the will of the other, as, for instance, the obligation of an
embezzler to indemnify his victim and the right of the latter to demand such indemnity. The
mere fact that one has used the property of another by tolerance or implied consent of the latter
can never give rise to an implied contract under which the former may assert and enforce a right
to the continued use of that property against the owner.

Next it is said: "Granting for the sake of argument that this easement was not created through
an implied contract according to Law 14, Title 31, Partida 3, yet that provision of
the Partidas was not inconsistent with the principle in question, so that there was a gap in
the Partidas which the Supreme Court of Spain filled up from the Roman Law and modern
codes by recognizing the existence of this kind of easement." (The principle referred to is that
embodied in article 541 of the Civil Code.)

Under this alternative argument it is admitted that the Partidas (the pre-Civil Code legislation)
contained no provision similar to article 541 of the Civil Code and hence it was necessary (?) to
import a principle from the Roman Law in order to fill "a gap in the old legislation" as was done
by the Supreme Court of Spain. in the last analysis, the alternative opinion applies to this case
not the previous legislation as required by the Civil Code transitory provision but a principle of
law imported from ancient Rome.

I disagree as to the necessity for such importation and "filling the gap" in order to justice to the
parties in this case. Let us consider the facts: Before Maria Florentino died on September 7,
1885, she owned a parcel of land in the commercial center of Vigan on which were built a house
and camarin. The camarin was one story and the house two stories high. Naturally, it was
convenient for her to open windows on that side of the house overlooking the camarin so long
as she did not decide to rebuild and raise the latter.

The pivotal question is, Did those windows constitute an apparent sign of easement of light and
view in favor of the house and against the camarin under the legislation in force here at that
time, so that upon the subsequent division of the two estates that sign would constitute a title of
and create such an easement? The negative answer is inescapable because the Partidas,
unlike the Civil Code, contained no provision supporting the affirmative. But my learned
colleagues, emulating the Supreme Court of Spain in similar cases, apply principle of the
Roman Law to "fill the gap" and justify the affirmative. The practical result of such "filling the
gap" is to give retroactive effect to article 541 of the Civil Code, in violation of the transitory
provision. The laws of Spain did not ex propio vigore apply to the Philippines. They had to be
expressly extended here by Royal Decrees. Witness the Civil Code, the Partidas, etc. That
being so, the opinion of the Supreme Court of Spain could not and did not have the force of law
in the Philippines. For this reason, I cannot agree with what the majority say that "we cannot
reject a doctrine established by the Spanish Supreme Tribunal as an integral part of the Spanish
law before the promulgation of the Civil Code in 1889." I know of no Royal Decree making such
doctrine an integral part of the Spanish law in the Philippines.

If we do not apply article 541 of the Civil Code — and we cannot apply it because Maria
Florentino died in 1885 — there is really a gap in the case for the respondents, but none in the
case for the petitioner. 1 Under the Partidas, or rather in the absence of an express provision
therein similar to article 541, the petitioner should win; and since the parties litigant herein are
entitled to have their case decided in accordance with the pre-Civil Code legislation in force in
the Philippines as provided in the transitory provisions, since that legislation without any "gap-
filling" is in favor of the petitioner, and since to "fill the gap" would prejudice him and unduly
favor the respondents, the Court should abstain from so doing as a matter of law and justice.

I repeat that as a matter of law and justice the Court should not go out of its way to "fill a gap in
the Partidas" by resorting to a principle in the Roman Law which was not a part of the law of this
country at the time the transactions involved took place, and for which reason it could not have
been in the mind of the parties. How can we charge Maria Florentino with knowledge of that
principle of the Roman Law, or even of the decisions of the Spanish Supreme Court, when she
constructed the windows in question? How can we make that principle binding upon her heirs,
or assume that they acted in accordance therewith, when they took possession of their
respective hereditary portions upon her death on September 7, 1885? Who knows but that had
they been apprised of such a principle of Roman Law and told that it would be held binding on
them they would have closed the windows in question or made an agreement regarding its
continuance as long as the camarin was not rebuilt?lawphil.net
It is argued that, as the Supreme Court of Spain has held, the principle in question is not
inconsistent with the provisions of the Partidas regarding the mode of acquiring and
extinguishing easements. To that I reply: Is the Court authorized to amend the law by adding
thereto a provision not inconsistent therewith and, what is worse, make the amendment
retroactive? The Supreme Court of Spain of the last century apparently thought so, but as I
cannot agree with it I must disregard its voice and follow the light of my own reason in the
premises. By adopting and following the doctrine of the Supreme Court of Spain the majority of
this Court have, I fear, established here a pernicious precedent. Hereafter no one in this country
can safely rely on our codes and statutes as enacted by our own legislature, for the court may at
any time read into them any provision or principle of law of any other jurisdiction — even of
ancient and archaic Rome — so long as such provision or principle is not inconsistent therewith;
altho, if we would stop and reflect for a moment, we should realize that, logically and legally
speaking, any provision not included in the law must necessarily be considered inconsistent with
the legislative will, for the legislature has not seen fir to incorporate i therein. "That is unfair! It is
absurd! No court would do that!" you would protest. Then, I ask, "why do you do it in the instant
case?"

As a third alternative opinion (Part III) the majority hold that the easement in question has been
acquired by respondents thru prescription. This opinion, however, is predicated upon the
assumption that the opening of the windows in question constituted an apparent sign of the
positive easement of light and view, thus making the period of prescription run from the date of
the demise of the original owner. But as we have seen , that assumption is wrong because it is
promised upon the improper and unlawful application of either article 541 or its equivalent
principle derived from the Roman Law and adopted by the Supreme Court of Spain. Without
such assumption, the period of prescription in this case commenced to run only from January,
1938, when the petitioner began the construction of the new house and when it is supposed the
respondents for the first time made a formal prohibition against the petitioner's raising his
building and obstructing respondents' light and view, in accordance with the Yu-Tibo case cited
in the majority opinion. Hence I think the prescription theory is also untenable.

"Filling the gap" is particularly unfortunate and disastrous in the present case because as a
consequence the petitioner will be compelled to tear down a portion of his newly built strong-
material house, which in the present emergency, for lack of building materials, he will be unable
to repair or patch up, thus not only causing him unnecessary loss and hardship but also leaving
the torn-off new building for the public to gape at and be scandalized with. The good Ilocanos
would perhaps not be able to understand why, on top of wanton and horrible daily destructions
by bombs now savagely going on in this war-torn world, the Court should find it necessary to
add another without any apparent substantial or material benefit to anybody. "Verily," they would
say, "this is a made world!"

In this age of fluorescent lights and air conditioning devices, the concommitant easements of
light and view and altius non tollendi would seem to be only a deterrent to economic progress
and should not be considered established except when the law applicable clearly so justifies.

For the foregoing reasons I vote for the reversal of the judgment appealed from.

PARAS, J., concurring:

I concur in the foregoing dissenting opinion of Mr. Justice Ozaeta,

G.R. No. L-14652 June 30, 1960

JUAN GARGANTOS, petitioner,

vs.
TAN YANON and THE COURT OF APPEALS, respondents.

Jose T. Nery for petitioner.

Constantino P. Tadena for respondents.

GUTIERREZ DAVID, J.:

Juan Gargantos appeals by certiorari from the decision of the Court of Appeals reversing the
judgment of the Court of First Instance of Romblon.

The record discloses that the late Francisco Sanz was the former owner of a parcel of land
containing 888 square meters, with the buildings and improvements thereon, situated in
the poblacion of Romblon. He subdivided the lot into three and then sold each portion to
different persons. One portion was purchased by Guillermo Tengtio who subsequently sold it to
Vicente Uy Veza. Another portion, with the house of strong materials thereon, was sold in 1927
to Tan Yanon, respondent herein. This house has on its northeastern side, doors and windows
over-looking the third portion, which, together with the camarin and small building thereon, after
passing through several hands, was finally acquired by Juan Gargantos, petitioner herein.

On April 23, 1955, Gargantos applied to the Municipal Mayor for a permit to demolish the
roofing of the old camarin. The permit having been granted, Gargantos tore down the roof of
the camarin. On May 11, 1955, Gargantos asked the Municipal Council of Romblon for another
permit, this time in order to construct a combined residential house and warehouse on his lot.
Tan Yanon opposed approval of this application.

Because both the provincial fiscal and district engineer of Romblon recommended granting of
the building permit to Gargantos, Tan Yanon filed against Gargantos an action to restrain him
from constructing a building that would prevent plaintiff from receiving light and enjoying the
view trough the window of his house, unless such building is erected at a distance of not less
than three meters from the boundary line between the lots of plaintiff and defendant, and to
enjoin the members of Municipal Council of Romblon from issuing the corresponding building
permit to defendant. The case as against the members of the Municipal Council was
subsequently dismissed with concurrence of plaintiff's council. After trial, the Court of First
Instance of Romblon rendered judgment dismissing the complaint and ordering plaintiff to pay
defendant the sum of P12,500.00 by way of compensatory, exemplary, moral and moderate
damages.

On appeal, the Court of Appeals set aside the decision of the Court of First Instance of Romblon
and enjoined defendant from constructing his building unless "he erects the same at a distance
of not less than three meters from the boundary line of his property, in conformity with Article
673 of the New Civil Code."

So Juan Gargantos filed this petition for review of the appellate Court's decision. The focal issue
herein is whether the property of respondent Tan Yanon has an easement of light and view
against the property of petitioner Gargantos.

The kernel of petitioner's argument is that respondent never acquired any easement either by
title or by prescription. Assuredly, there is no deed establishing an easement. Likewise, neither
petitioner nor his predecessors-in-interest have ever executed any deed whereby they
recognized the existence of the easement, nor has there been final judgment to that effect.
Invoking our decision in Cortes vs. Yu-Tibo (2 Phil., 24), petitioner maintains that respondent
has not acquired an easement by prescription because he has never formally forbidden
petitioner from performing any act which would be lawful without the easement, hence the
prescriptive period never started.

It is obvious, however, that Article 538, O.C.C. (now Article 621, N.C.C.) and the doctrine in the
Yu-Tibo case are not applicable herein because the two estates, that now owned by petitioner,
and that owner by respondent, were formerly owned by just one person, Francisco Sanz. It was
Sanz who introduced improvements on both properties. On that portion presently belonging to
respondent, he constructed a house in such a way that the northeastern side thereof extends to
the wall of the camarin on the portion now belonging to petitioner. On said northeastern side of
the house, there are windows and doors which serve as passages for light and view. These
windows and doors were in existence when respondent purchased the house and lot from Sanz.
The deed sale did not provide that the easement of light and view would not be established.
This then is precisely the case covered by Article 541, O.C.C (now Article 624, N.C.C) which
provides that the existence of an apparent sign of easement between two estates, established
by the proprietor of both, shall be considered, if one of them is alienated, as a title so that the
easement will continue actively and passively, unless at the time the ownership of the two
estate is divided, the contrary is stated in the deed of alienation of either of them, or the sign is
made to disappear before the instrument is executed. The existence of the doors and windows
on the northeastern side of the aforementioned house, is equivalent to a title, for the visible and
permanent sign of an easement is the title that characterizes its existence (Amor vs. Florentino,
74 Phil., 403). It should be noted, however, that while the law declares that the easement is to
"continue" the easement actually arises for the first time only upon alienation of either estate,
inasmuch as before that time there is no easement to speak of, there being but one owner of
both estates (Articles 530, O.C.C., now Articles 613, N.C.C).

We find that respondent Tan Yanon's property has an easement of light and view against
petitioner's property. By reason of his easement petitioner cannot construct on his land any
building unless he erects it at a distance of not less than three meters from the boundary line
separating the two estates.

Wherefore, the appealed decision is hereby affirmed with costs against petitioner.
G.R. No. L-22733 September 25, 1968

SALVADOR BENEDICTO (deceased). ROBERTO S. BENEDICTO, petitioner,

vs.
COURT OF APPEALS and VICENTE A. HERAS, respondents.

San Juan, Africa & Benedicto for petitioner.

Luis A. Dayot for respondents.

CASTRO, J.:

This case which orginated in the Court of First Instance of Manila was an action by the
respondent Vicente A. Heras to recover a portion of land enclosed and walled by the petitioner
Salvador Benedicto, and to demand the reopening of an easement of way between his real
property and that of the petitioner.

The facts, in the language of the stipulation of the parties, are:

1. The adjoining properties of the plaintiff [Heras] and the defendant [Benedicto] formerly
belonged to one owner, MIRIAM R. HEDRICK, consisting of Lots Nos. 8, 9, 10, 22, 23,
and 24 of Survey Plan RS-219, G. L. R. O. Record No. 662, as surveyed for Henry M.
Jones, et al. on June 26, 1912 by C. R. Maris, Bureau of Lands Surveryor and
appproved by the Director of Lands on July 20, 1912, containing an area of 1307.3 sq.
mts. covered by TCT No. 3623 of the Registry of Deeds of the City of Manila, whose
technical description as set forth in said TCT No. 3623 is hereto attached as Annex "A".

2. On Septebmer 29, 1917, the said MIRIAM R. HEDRICK sold a portion of the above
described property, particularly Lots Nos. 8, 9, 22 and 23 to CLARO M. RECTO, and
retained for herself Lots Nos. 10 and 24. A copy of the Escritura de Compra-Venta in
favor of Claro M. Recto is attached hereto and made a part hereof as Annex "B".

3. At the time of the sale, the following buildings were located on the respective
properties of Claro M. Recto and Miriam R. Hedrick as described in the Escritura de
Compra-Venta (annex "B"), to wit:

"SEGUNDO. Que sobre las parcelas 2a (Lote No. 9) y 3a (Lote No. 10) se hallan
levantados dos edificios (Chalets) de igual estructura, extencion configuracion y
volumen, construidos ambos de concreto y otras materiales fuertes, y sobre las
parcelas 5a (Lote No. 23) y 6a (Lote No. 24), las respectivas dependencias de
dichos dedificios."

For the purpose of showing the respective locations of said buildings, a photostatic copy
of Sheet No. 2 of the Cadastral Plan of the Manila Cadastral Survey, Case No. 59, is
hereto attached and made part hereof as Annex "C". This Cadastra lPlan (Annex "C")
was made on August 25, 1921 (subsequent to the sale of the property to Claro M. Recto
and subsequent to the issuance of the separate title TCT No. 7755 to Claro M.Recto,
which is mentioned in paragraph 5 of this Stipulation).

4. The sale to CLARO M. RECTO as evidenced by theEscritura de Compra-Venta

(Annex "B") was subject, among others, to the following conditions:

"SEXTO. Que entre la porcion vendida a Claro M. Recto y la que queda en poder de
Miriam R. Hedrick, hay un paso para vehiculos, de unos tres a cuatro metros de anchura
proximamente constituido por mitad o iguales partes sobre cada una de dichas
porciones, y ambas partes de esta escritura se obligan cada una a respetar el derecho
de la otra a usar de toda la extencion de dicho paso para todo el tiempo y todas las
necesidades de cada una de las dos propriedades, la vendida por la presente a Claro
M. Recto y la que queda en poder de Miriam R. Hedrick, siendo obligatorio este pacto
para todos los que con posterioridad adquirieran por cualquier titulo las fincas
mencionadas.

"SEPTIMO. Que en vista de la forma irregular del inmueble descrito en el Certificado de

Titulo aludido en el parrafo PRIMERO de esta escritura, ambas partes convienen en
practicar una nueva medicion de dicho inmueble con el fin de que la linea divisoria entre
la porcion vendida por la presente a Claro M. Recto y la que queda en el dominio de
Miriam R. Hedrick caiga en medio del paso descrito y aludido en el parrafo anterior, y
dicha linea sera perpendicular a la calle San Marcelino."

This agreement of the parties, MIRIAM R. HEDRICK and CLARO M. RECTO, is

annotated on the respective titles of the plaintiff and the defendant, copies of which
annotations are hereto attached and made parts hereof as Annex "D" (Annotation on
plaintiff's title, TCT. No. 62769) and Annex "E" (Annotation on defendant's title, TCT No.
45990).

5. By virtue of said Escritura de Compra-Venta (annex "B") but before the new survey
mentioned in "parrafo septimo" thereof was undertaken, CLARO M. RECTO obtained a
separate title, TCT. No. 7755 issued on October 2, 1917, a copy of the technical
description of which is hereto attached and made part hereof as Annex "F".

6. In order to carry out said "parrafo septimo" of theEscritura de Compra-Venta (Annex

"B") regarding the new survey of the properties to fix the dividing line between the
properties of CLARO M. RECTO and MIRIAM R. HEDRICK, the said Claro M. Recto
filed a Motion dated July 19, 1920, a copy of which motion is hereto attached and made
a part hereof asAnnex "G". In a letter dated December 21, 1920, a copy of which is
hereto attached and made thereof as Annex "H". CLARO M. RECTO wrote to a certain
MARCIAL ZAMORAof the General Land Registration Office asking for the issuance of a
new title in his favor in accordance with the new plan submitted by him (Annex "J" of this
Stipulation). The said Motion of July 19, 1920 was amended on September 30, 1921, as
per copy of the Amended Motion hereto attached and made part hereof as Annex "I", in
the Court of Land Registration of Manila, Record No. 662, for the issuance of a new title
for his property based on the new survey, the amendment consisting of the addition of a
paragraph which reads as follows:

"Que el compareciente no reclama las porciones Lote 9b y Lote 23b del referido
plano S.W.O. 3753, sino solamente las porciones Lotes A, B, C, y D."

The said Motion and Amended Motion were accompanied with Exhibit "A" (of said
motions), a copy of the Escritura de Compra-Venta, which is Annex "B" of this
Stipulation; Exhibit "B" (of said motions), the re-survey plan above-mentioned and
approved by the Director of Lands, a certified copy of which re-survey plan is hereto
attached and made part hereof as Annex "J"; and Exhibit "G" (of said motions), the
technical descriptions of the lots covered in the above-said re-survey plan (Annex "J" of
this Stipulation), a certified copy of which is hereto attached and made part hereof as
Annex "K". On October 20, 1921, said Claro M. Recto received a letter from the General
Land Registration Office, a certified copy of which is hereto attached and made part
hereof as Annex "L". Before said Motion and Amended Motion were acted upon, Claro
M. Recto filed a Motion to Withdraw the Motions of July 19, 1920 and September 30,
1921, dated January 30, 1922, on the ground that it appeared "from the report submitted
to this Court by the Chief Surveyor of the General Land Registration Office that the plan
S.W.O. 3753 attached to the motions of the undersigned of July 19, 1920, and
September 30, 1921, does not agree with the terms of the instrument of date of
September 21, 1917,and that Transfer Certificate of Title No. 7755 in the name of the
undersigned is in accord with the terms of said instrument." A copy of the Report of the
Chief Surveyor of the General Land Registration Office referred to in said motion to
withdraw and a copy of the said motion to withdraw are hereto attached and made parts
hereof as Annexes "M" and "N". The Court issued an Order dated January 31, 1922, a
copy of which is hereto attached and made part hereof as Annex "O", granting the
withdrawal of the motions dated July 19, 1920 and September 30, 1921.
 7. The property purchased by CLARO M. RECTO from MIRIAM R. HEDRICK became
the subject of a series of transfers, to wit:

a. Sold by CLARO M. RECTO to EMMANUEL CONTY, TCT No. 7755 was

cancelled by TCT No. 31334 dated September 1, 1928.

b. Sold by EMMANUEL CONTY TO SALVADOR BENEDICTO (the herein

defendant), TCT No. 31334 was cancelled by TCT No. 45990 dated December
1,1934. A copy of the technical description appearing on said TCT No. 45990,
whch is the present transfer certificate of title of the defendant, is hereto attached
and made part hereof as Annex "P", and the Survey Plan thereof as plotted by
the G.L.R.O. in accordance with the technical description (Annex "P") is hereto
attached and made part hereof as Annex "Q".

8. MIRIAM R. HEDRICK, as owner of the remaining lots Nos. 10 and 24 of Survey Plan
No. RS-219, subsequently obtained a new and separate title, TCT No. 22760 dated
September 20, 1924, whose technical description is based on the Cadastral Survey
made from January 20, to July 12, 1919, wherein both Lots Nos. 10 and 24 of Survey
Plan RS-219 were consolidated and designated as Lot No. 12 of Block No. 372 of the
Cadastral Survey of Manila. The technical description and areaof said Lot No. 12 based
on the Cadastral Survey are different from the technical description and area of Lots
Nos. 10 and 24 of Survey Plan RS-219, and likewise, Lots Nos. 8, 9, 22, and 23 of
Survey Plan RS-219 were consolidated and designated as Lot No. 11 of Block No. 372
of the Cadastral Survey of Manila with a different area and technical description.

9. The property of MIRIAM R. HEDRICK covered by TCT No. 22760, as above-stated,

became the subject of a seriesof transfers, to wit:

a. Sold by MIRIAM R. HEDRICK to CHOW KWO HSIEN, TCT No. 22760 was
cancelled by TCT No. 22766 dated September 23, 1924.

b. Sold by CHOW KWO HSIEN to GENERAL SECURITY AND INVESTMENT

CO., TCT No. 22766 was cancelled by TCT No. 49798 dated August 26, 1936.

c. Sold by GENERAL SECURITY AND INVESTMENT CO. to VICENTE A.

HERAS (the herein plaintiff), TCT No. 49798 was cancelled by TCT No. 62769
dated September 19, 1941. A copy of the technical description appearing on said
TCT No. 62769 which is the present title of the plaintiff, is hereto attached and
made part hereof as Annex "R", and the Relocation Plan thereof, S.W.O. 39343,
approved by the Assistant Director of Lands on April 19, 1955, is hereto attached
and made part hereof as Annex "S".

10. Sometime in 1941, the plaintiff [Heras] demolished the entire building situated on his
property.

The trial court found that after selling Lots 8, 9, 22 and 23 (with an area of 766.90 square
meters), Miriam R. Hedrick obtained a separate title for the remaining Lots 10 and 24. The total
area of these two lots was 540.4 square meters only [together with those sold to Claro M. Recto
the two lots formed one parcel with an area of 1,307.3 square meters covered by TCT 3623],
but in the new title (TCT 22760) issued to Hedrick, their total area was made to appear to be
681.30 square meters. The increase in area was due to the fact that the technical description
used in the new title was based on a cadastral survey. Since the respondent Heras, as
successor-in-interest of Miriam R. Hedrick, owned no more than 540.4 square meters, the court
held that no portion of his property had been encroached upon by the petitioner Benedicto.

The trial court likewise found that the easement of way was found entirely within the property of
Benedicto, contrary to the stipulation in the deed of sale between Miriam R. Hedrick and Claro
M. Recto that it should be between their properties, with each contributing an equal portion of
his property. According to the court, this was the reason why Recto, Benedicto's predecessor-in-
interest, who had earlier asked for a resurvey in accordance with the deed of sale, subsequently
withdrew his motion, after finding that the passageway was located entirely within his property.
Accordingly, the court directed both parties to contribute equally to the maintenance of a three
to four-meter-wide passageway between their properties, with the property line running at the
middle of the passageway. It rejected Benedicto's claim that the easement had been
extinguished by nonuser and by the cessation of the necessity for a passageway.

Both parties appealed to the Court of Appeals. Salvador Benedicto, who in the meantime died,
was substituted by the judicial administrator of his estate, Roberto S. Benedicto.On February
29, 1964 the Court of Appeals rendered a decision affirming in toto the decision of the trial court,
and on April 3, 1964 it denied the motions for reconsideration filed by the parties.

The petitioner Benedicto seeks a review of the decision of the Court of Appeals. 1 According to
him, the easement was originally constituted because the buildings then erected on the
respective properties of Miriam R. Hedrick and Claro M. Recto so adjoined each other that the
only way the back portions of the properties could be reached by their owners from San
Marcelino street was through the passageway. He claims that when the respondent Heras had
his building demolished in 1941 the property gained direct access to San Marcelino street with
the result that since then there has been no need for the passageway. The petitioner argues
further that it could be assumed that since 1941 the passageway ceased to be used "for
certainly [the respondent] could not be expected to be making 'detours' to reach San Marcelino
Street when the very frontage of his property was now open in its entirety to San Marcelino
Street."

Article 631 of the Civil Code provides in part:

Art. 631. Easments are extinguished:

xxx xxx xxx

(2) By nonuser for ten years, with respect to discontinuous easements, this period shall
be computed from the day on which they ceased to be used; and, with respect to
continuous easements, from the day on which an act contrary to the same took place;

(3) When either or both of the estates fall into such condition that the easement cannot
be used; but it shall revive if the subsequent condition of the estates or either of them
should again permit its use, unless when the use becomes possible, sufficient time for
prescription has elapsed, in accordance with the provisions of the preceding number; . . .
.

This provision was taken from article 546 of the Civil Code of 1889, with the modification that
the period of nonuser was reduced from 20 to 10 years.1awphîl.nèt

The petitioner argues at length that this case is governed by the present Code, and that since
14 years had elapsed from the time the building on Heras' property was demolished in 1941 to
1955 when this action was begun (during which period he assumed that the passageway
ceased to be used because Heras' property had direct access to the street), the easement must
be deemed to have been extinguished.

For the purposes of this decision we do not find it necessary to determine whether the
appropriate period of nonuser in this case is 20 or 10 years. For one thing, there is no
indubitable proof of nonuser. The petitioner merely assumes that the passageway in question
had not been in use since 1941 because the property of Heras has since gained direct access
to San Marcelino street with the demolitionof his house. For another, even if we assume that the
period of prescription based on nonuser is 10 years, the very testimony of the petitioner
Benedicto shows that it was only in 1946 that he had the passageway walled in by constructing
a fence, and since the present action was filed in 1955, granting that article 631 of the Civil
Code is applicable, the prescriptive period has not yet elapsed.

Nor can presumptive renunciation by Heras of the use of the said passageway be inferred. It
would appear from the record that Heras started the construction of an apartment building on
his parcel of land after the demolition of his house in 1941, and that although interrupted by
World War II, construction was continued in 1955. Since it is patent from the stipuation of facts
that the easement in question is mainly a vehicular passageway, the obvious need for such
passageway to the rear portion of the projected apartment building negates any presumptive
renunciation on the part of Heras.

Moreover, the easement in this case is perpetual in character ("para todo el tiempo y todas las
necesidades de cada una de las dos propriedades, la vendida por la presente a Claro M. Recto
y la que queda en poder de Miriam R. Hedrick, siendo obligatorio este pacto para todos los que
con posterioridad adquirieran por cualquier titulo las fincas mencionadas") and was annotated
on all the transfer certificates of title issued in the series of transfers from Miriam R. Hedrick
through to the respondent Heras, and in the transfer certificates of title issued in the series of
transfers from Claro M. Recto through to the petitioner Benedicto. Since there is nothing in the
record that would point to a mutual agreement between any of the predecessors-in-interest not
between the petitioner and the respondent themselves with respect to the discontinuance or
obliteration of the easement annotated on the titles, the continued existence of the easement
must be upheld and respected.

The fact that the easement here is one of necessity does not detract from the conclusion we
have reached. For even assuming that with the demolition of the house on Heras' property the
necessity for the passageway ceased (a point traversed by Heras who claims that he
demolished his house precisely in order to build an apartment building in its place), still, as was
held in one case 2 "the fact that an easement [by grant] may have also qualified as an easement
of necessity does not detract from its permanency as a property right, which survives the
termination of the necessity." Indeed, when the easement in this case was established, the
parties unequivocally made provisions for its observance by all who in the future might succeed
them in dominion, and this is the reason the permanent character of the easement was
annotated on each and all of the transfer certificates of title.1awphîl.nèt

ACCORDINGLY, the decision appealed from is affirmed, at petitioner's cost.

G.R. No. L-31118 January 14, 1930

MARCELO FRANCISCO, plaintiff-appellant,

vs.
TIMOTEO PAEZ and RICARDO JABSON, defendants-appellees.

Gregorio Perfecto for appellant.

Prudencio A. Remigio for appellee Paez.
No appearance for other appellees.

ROMUALDEZ, J.:

In the complaint the plaintiff claims a right of way, upon payment of indemnity, across defendant
Paez's land; that the latter recognize the plaintiff's ownership of a piece of land of 23.46 square
meters, that he vacate it, and that the defendant indemnify him for the damages arising from
said occupation.

Defendant Paez answered with a general denial and set up the special defense of prescription.
Defendant Jabson, in turn, also answered with a general denial, and by way of special defense
denied that the plaintiff has any right of way over his land, because outside of it there is another
possible way to the street, which is shorter and less prejudicial.

After the judicial commissioner appointed for the purpose had taken the evidence and inspected
the land, the Court of First Instance of Manila decided the case as follows:

In view of the foregoing considerations, the complaint is dismissed with respect to the
first cause of action. It is held that the plaintiff is the absolute owner of the piece of land
mentioned in the second cause of action, with an area of 23.46 square meters and
included within lot No. 13, block No. 2718 of the certificate of title issued in his favor, and
he is entitled to the ownership of the small house built of strong materials by defendant
Paez thereon, upon payment of its value, or to compel the defendant to purchase said
land at twenty pesos (P20) per square meter. Should the plaintiff choose the first
alternative, he shall pay the price to be agreed upon by and between himself and said
defendant, and in default thereof, the value to be later determined by the court after
hearing the evidence that might be presented in connection therewith. Defendant Paez
shall pay the costs of this action. So ordered. (Pages 40 and 41, bill of exceptions.)

The plaintiff appealed from this judgment, and makes the following assignments of error:

1. In holding that the plaintiff's action to enforce his right of way over defendant Paez's
land is barred by the statute of limitations.

2. In not holding that the action to enforce a right of way is imprescriptible.

3. In denying the relief sought in the complaint, respecting the right of way through
Timoteo Paez's land.

The question raised in this appeal, then, is whether the plaintiff's right of way over defendant
Paez's land has prescribed or is imprescriptible.

The trial court held the plaintiff's right to have been barred on the following grounds:

It has been proved that the parcels of land now belonging to defendant Ricardo Jabson
originally belonged to a certain Paulino Castañeda y Francisco, married to Teodora del
Mundo, who, on December 20, 1908 obtained decree No. 3138 in proceeding No. 4865,
and subsequently, certificate of title No. 1449. On October 20, 1909, the parcel of land
thus held by Paulino Castañeda y Francisco was subdivided by the latter into two parts,
one containing 193.66 square meters, situated in the inner portion of the space between
Padre Rada and Ilaya Streets, and the other containing 173.71 square meters,
conterminous with said streets. The first of these parcels, that is, the interior portion,
after successive transfers became the property of the plaintiff herein, and the second
 portion, after several transfers, also, became the property of defendant Jabson.
Therefore, from October 20, 1909, when the property was subdivided into the two
aforesaid portions, there arose the right of the original owners of the interior parcel to
claim a right of way over the adjacent land which was then the land abutting upon P.
Rada and Ilaya Streets, through which was the nearest and shortest way to said streets.
Notwithstanding the fact that from that date said right arose, none of the previous
owners exercised said right until the plaintiff attempted to enforce it through the
complaint filed on September 1, 1927, that is, after almost eighteen years had elapsed.

Section 40 of the Code of Civil Procedure provides that the action to recover ownership
or possession of real property, or an interest therein, may only be exercised within ten
years after the cause of said action arises. Applying this legal provision to the facts
established in this case, it is evident that the plaintiff cannot obtain the relief he seeks in
his complaint because his action is barred by the statute of limitations, inasmuch as
neither he nor his predecessors demanded the right of way within said limitations.
(Pages 36, 37, and 38, bill of exceptions.)

The facts related by the court below are based upon the result of these proceedings. But we
should not lose sight of the fact that although it is true that easements are extinguished by non-
user for twenty years (article 546, No. 1, Civil Code), nevertheless, the case at bar does not
deal with an easement which has been used, while the legal provisio cited is only applicable to
easements which being in use are later abandoned. Here is what Manresa says on this point:

Prescription affects all easements lawfully arisen although they may not have been
used. Nevertheless, the second paragraph of article 546, number 2, refers to an
easement in use, for one cannot discontinue using what one has never used, and there
can be no act, at least in all the cases, adverse to an inchoate easement. (4
Commentaries on the Civil Code, fourth edition, page 662.) And in speaking of legal
easements, such as the one in question, the same author observes.

(c) Others, finally, may be extinguished by non-user, but only with respect to the actual
form or manner in which they had been exercised, and the right or the power to claim the
exercise of legal easement does not prescribe, as occurs especially in the case of
the right of way and easement of aqueduct. (Emphasis ours.) (Ditto, pages 662 and
663).

The appellee also cites in support of his appeal No. 5 of said article 546 which refers to
extinction of easements by waiver. It should be noted that in the case of intermittent easements,
such as the right of way, the waiver must be, if not formal and solemn, at least such as may be
obviously gathered from positive acts, and the mere refraining from claiming the right is not, to
our mind, sufficient for the purpose. This seems to be the drift of the following commentaries
made by Manresa:

There has also been some discussion as to whether the waiver should
be express or implied. It may be that the act of walling up a window by the owner of the
dominant estate is a plain act of implied waiver, and yet, this act does not of itself
extinguish the easement, but only serves to mark the beginning of the prescription. In
intermittent easements (like the one in question) the mere fact of leaving them seems to
indicate a waiver, and yet, it is not sufficient to extinguish them. It seems then that as a
general rule, an express waiver should be required, but without prejudice to having the
courts decide in exceptional cases that there is an evident waiver, inferred from acts
which reveal it beyond all doubt. (Ibid., pages 667, 668.) (Emphasis ours.)

The mere fact that the plaintiff and his predecessors refrained from claiming the easement,
without any positive act to imply a real waiver, does not, in our opinion, bring the case within the
provision of the aforesaid article 546, No. 5, of the Civil Code.

Our conclusion is that such a right of way, provided by the law for the benefit of private
individuals, may be waived, for Manresa so declares:
 Legal easements established in the interest of private individuals may be waived, but not
so those of public utility. (Opus, volume and edition as aforecited, page 668.)

But the court holds, for the reasons stated above, that said article 546, No. 5, Civil Code, is not
applicable to the instant case, with reference to waiver, nor is No. 2 of the same article,
regarding non-user; and therefore, the plaintiff's right of way cannot be deemed extinguished.

The judgment appealed from is modified and it is held that, upon payment of the proper
indemnity, the plaintiff is entitled to a right of way through the shortest and least prejudicial
portion of the servient estate, from plaintiff's lot designated No. 3, in the plan Exhibit A, through
defendant Timoteo Paez's lot No. 12 according to said plan, to P. Rada Street, as provided in
articles 564, 565 and concordant articles of the Civil Code.

Without express pronouncement of costs. So ordered.

G.R. No. L-23818 January 21, 1976

EMILIO PURUGGANAN, plaintiff-appellee,

vs.
FELISA PAREDES and TRANQUILINO BARRERAS, defendants-appellants.

Agripino Brillantes and Paredes, Purugganan & Lizardo for appellee.

Marcelino N. Sayo & Associates for appellants.

MARTIN, J.:

The main issue in this appeal is whether or not the summary judgment of the Court of First
Instance of Abra based on the pleadings and reports submitted by the commissioner in Civil
Case No. 738 entitled Emilio P. Purugganan vs. Felisa Paredes, et al., was correctly rendered.

Plaintiff-appellee Emilio Purugganan is the owner of a piece of a residential lot subdivided as

Lot 1 and Lot 2, situated at the poblacion of Bangued, Abra and technically described under
Torrens Title No. R-6 in his name, adjacent to and bounded on the North by the lot of
defendant-appellant Felisa Paredes. The lots of the plaintiff-appellee are subject to an
easement of drainage in favor of the defendants-appellants fully quoted in the Decree of
Registration of the Court of First Instance of Abra, G.L.R.O. Rec. No. 3256 to wit:

That the oppositor (Felisa Paredes) withdraws her opposition to the registration
of the lots Nos. 1 and 2 of the applicant, and in compensation to said withdrawal
by the oppositor of her opposition, the applicant agrees to respect an easement
or servitude over a portion of the lots Nos. 1 and 2 which is EIGHT AND ONE
HALF (8-½) meters in length commencing from point 4 of Lot No. 2 and
stretching towards Lot No. 1 going Eastward, and the width is ONE (1) meter, in
order that the rain water coming from the roofing of a house to be constructed by
the oppositor over the ruins of her brick wall now standing along the Northeastern
boundary of Lot 1 shall fall into the land of the applicant.

In or about the month of March 1951, the defendants-appellants constructed a house on their lot
adjacent to Lots 1 and 2 of plaintiff-appellee in such a manner that the southern side of their
house is exactly on the brick wall, the southern side of which is the demarcation line between
the plaintiff-appellee and the defendants-appellants, demolishing said brick wall and built
thereon the southern wall of their house with 3 windows. The house constructed by the
defendants-appellants is 2-½ meters longer than the length of roofing allowed in the
abovequoted Decree of Registration, and has an outer roofing (eaves) of 1.20 meters,
protruding over the property of the plaintiff-appellee which is .20 meters wider than that allowed
in the same Decree of Registration, and the rain water from the GI roofing falls about 3 meters
inside Lots 1 and 2 of the plaintiff-appellee. The defendants-appellants also placed 3 windows
each on the first and second floors of their house on the side facing Lots 1 and 2 of plaintiff-
appellee. From the time the defendants-appellants started to construct their house, the plaintiff-
appellee has repeatedly and continuously been demanding from the defendants-appellants that
the construction of their house be in accordance with the easement, but the defendants-
appellants refused to observe the easement and to close their windows. They also prohibited
the plaintiff-appellee from constructing a party wall between points 1 and 2 of Lot 2 and between
points 2 and 3 and 4 of Lot 1.

In their answer, defendants-appellants admitted the allegations in paragraph 4 of the complaint

with respect to the existence of an "Amicable Settlement" with the plaintiff-appellee but
interposing a denial of the rest and alleging that the ruined brick wall which stands between the
properties of the plaintiff-appellee and their properties solely and exclusively belongs to them to
the exclusion of the plaintiff-appellee, the same having been inherited by defendant-appellant
Felisa Paredes from her ascendants from time immemorial, possessing them, peacefully,
continuously and adversely against any other party for so many years up to the present; they
also admitted having constructed a house on the very lot owned by them, with windows on the
side facing the south, the same as the house which turned into ruins by reason of the bombing
of Bangued in March 1945, but they denied that the same was constructed in or about March
1951, as said house was reconstructed and re-erected on the ruins of a Spanish-built house
sometime in later months of 1950. They further alleged that the house standing on the dominant
estate pertaining to Felisa Paredes was constructed long before the issuance of the Decree of
Registration alluded to in the complaint and that they have not violated the terms of the Decree
of Registration referred to in paragraph 4 the complaint; had long existed before the Decree of
Registration in question was issued, in the same way that said windows existed long before the
bombing of Bangued in March 1945 and therefore, plaintiff-appellee, as owner of the servient
estate, is estopped from questioning the existence of said windows; that since time immemorial,
the house bombed in March 1945, on which ruins stands the present house, had windows
facing Lot No. 1, in the same way the windows of the present house are so constructed facing
same lot No. 1 a long time with notice, knowledge and acquiescence of the plaintiff-appellee as
owner of the servient estate. Defendants-appellants prayed that plaintiff-appellee be ordered to
respect all existing construction on their lot and to refrain from constructing a party wall to
obstruct the easement of light, and view; that the easement of light and view be inscribed on the
title of plaintiff-appellee's lots as well as to pay the actual moral and consequential damages.

On September 7, 1959, the trial court pursuant to a pre-trial agreement issued an order
appointing the Provincial Land Officer of the Bureau of Lands, Ilocos Norte, or his duly
authorized representative to relocate the monuments and determine the boundary line between
the lots of the parties involved.

On May 5, 1962 plaintiff-appellee filed a motion for summary judgment in accordance with the
prayer of his complaint except the portion relative to damages where he reserved his right to
present his evidence. He supported his motion for summary judgment with an affidavit of merits
to which he has attached the Original Certificate of Title No. R-6 the Decree of Registration for
the issuance of said certificate of title, the Order dated September 7, 1959 and the report of the
Commissioner. In asking for summary judgment plaintiff-appellee contended that from the
respective pleadings of the parties and the Commissioner's Report relative to the relocation and
boundaries of his lands and the adjacent lands of defendants-appellants which are both covered
by Torrens Certificate of Title, it is evident that there is no genuine issue as to any material fact,
except as to the amount of damages.

On June 4, 1962 defendants-appellants opposed the motion for summary judgment on the
ground that their answer to the plaintiff-appellee's complaint has raised genuine and material
issues of facts. In their supporting affidavit, defendants-appellants alleged that the plaintiff-
appellee was the private surveyor who surveyed their lot in 1925 and that in the course of his
survey he had acted in bad faith when he excluded the portion of their land, which was the
subject matter of their opposition to the registration of plaintiff-appellee's lots; that they
constructed their house in 1950 without any protest from the plaintiff-appellee and was almost
complete when the Decree of Registration was issued by the court; that the plaintiff-appellee
knew fully well that the defendants-appellants were merely reconstructing a house which had
been existing prior to the bombing of Bangued in 1945; and that the brick wall standing along
the house is exclusively owned by them.

On July 30, 1962, the lower court rendered the now questioned Summary Judgment, the
dispositive portion of which reads:

IN VIEW OF THE FOREGOING CONSIDERATION, summary judgment is

hereby rendered in favor of the plaintiff and against the defendants:

(a) Ordering the defendants to reconstruct the roof and eaves of their house on
the southern side now existing on their lot such that the falling water shall not fall
on curve into the lots of the plaintiff beyond one meter from the boundary line and
by 8-½ meters in length and to remove the said protruding eaves and roof;

(b) Ordering the herein defendants to reconstruct the wall of their house on the
southern side either by placing in two meters north of the boundary line if they
desired their windows on the first and second floors to continue to exist, or to
 permanently close the three windows on the second floor and such other
openings or apertures facing the lot of the plaintiff;

(c) Ordering the defendants to comply with what is ordered above in Pars. (a)
and (b) within sixty (60) days from the finality of this judgment. Upon their failure
to do so the Provincial Sheriff of Abra is hereby authorized to implement this
judgment and execute the acts mentioned in Pars. (a) and (b) hereof, at the
expense of the defendants:

(d) Enjoining perpetually the herein defendants from prohibiting the plaintiff from
making such legal and lawful constructions on his lots up to the boundary
between plaintiff's lot and defendants' lot, provided always that such construction
in whatever form, as a firewall, fence, etc., shall not violate the casement of
drainage in favor of the defendants, and to conform with the provisions of Art.
675 of the New Civil Code; and

(e) Ordering the defendants from further encroaching into plaintiff's lots and
molesting the said plaintiff in the lawful exercise of dominion over his own
property.

Plaintiff-appellee reserved his right to adduce evidence with respect to damages.

On September 3, 1962 defendants-appellants moved for reconsideration of the foregoing

decision on the ground that there is a genuine and material issue of fact and that said decision
is unsupported by law and evidence. Whereupon the court a quo, deferring in the meantime any
action on the motion, issued an order appointing Atty. Gelacio Bolante, Clerk of Court, to act as
commissioner to make an ocular inspection on the premises of the lot in question and to
measure the eaves of the house of the defendants-appellants to find out whether it conforms
with the annotation contained in the Torrens certificate of Title of the plaintiff-appellee.

On December 4, 1962 the Clerk of Court submitted his report. After receiving a copy of said
report defendants-appellants manifested to the court that they agree with the findings of facts
therein and prayed that judgment be rendered in accordance therewith and that their ownership
of the brick wall mentioned in said report be confirmed.

On July 23, 1963 the trial court denied the motion for reconsideration of its summary judgment.

Hence, this appeal.

Defendants-appellants contended that the lower court erred in rendering a summary judgment
because (1) there is actually a genuine issue of material facts raised in the pleadings; (2) that it
made a finding of fact not supported by any evidence; and (3) that it rendered summary
judgment without any legal basis. They claimed that after denying the allegations of plaintiff-
appellee's complaint that they have violated the easement of drainage there was actually a
genuine issue of material fact presented. The allegation referred to is that contained in
paragraph 6 which states that the roof of defendants' house protrudes by .2 meter wider and 2-
½ meters longer than that allowed by the Decree of Registration. This denial in paragraph 4 of
the Answer of the defendants-appellants reads as follows:

That the defendants deny the allegations in paragraph 6 of the complaint, and
allege that the house standing on the dominant estate pertaining to Felisa
Paredes, was constructed long before the issuance of the Decree of Registration
alluded to in the complaint, the herein defendants not having violated the terms
of the Decree of Registration to in paragraph 4 of the complaint.

Again in their opposition to the motion for summary judgment, defendants-appellants repeated
the same denial and averments by alleging therein:

Defendants specifically denied these allegations of the plaintiff and alleged that
(a) the house of the defendants was constructed sometime in the latter months of
1950, before the issuance of the Decree of Registration adverted to by the
 plaintiff, and therefore could not have violated that said Decree, and (b) that the
windows complained of by the plaintiff are reconstructed windows of the
reconstructed house of the dominant estate which had been in existence since
the Spanish Regime, with the knowledge, acquiescence and toleration of the
plaintiff and his predecessors in interests for more than sixty (60) years.

Even the supporting affidavit of defendants-appellants alleged that the brick wall standing along
their house and adjacent to the land of the plaintiff-appellee is owned by them. A close look at
the foregoing denials however, will show that the allegations defendants-appellants were trying
to challenge relate to the validity of the easement of drainage as annotated in the Certificate of
Title of plaintiff-appellee and not to the allegation that the roof of defendants-appellants
protrudes by .2 meter wider and 2-½ meters longer than that allowed by the Decree of
Registration. This must be the reason why in his summary judgment, the trial judge noted the
first issue as: "(1) that the house now standing on the lot of the defendants was constructed
before the issuance of the Decree of Registration and, therefore, such construction did not
violate said Decree of Registration particularly the easement annotated on the Original
Certificate of Title No. R-6 ...."

It is only in their Motion for Reconsideration that defendants-appellants made the clarification
that the issue is not whether their house was constructed before or subsequent to the Amicable
Settlement but whether or not the roofing was .2 meter wider and 2-½ meters longer than the
distance allowed in the Decree of Registration. So after the clarification, the trial judge ordered
that an ocular inspection of the premises of the lots in question be made and the eaves of the
house of the defendants-appellants be measured whether it conforms with the annotation
contained in the Torrens Certificate of Title of plaintiff-appellee. After the ocular inspection
defendants-appellants readily manifested their conformity to the findings of fact made by the
commissioner appointed by the court. Under such a situation, it would seem that there was no
need for a trial on the merits to resolve the question as to whether the defendants-appellants'
roof was constructed in violation of the easement of drainage of plaintiff-appellee. All that
remained for the trial court, to do was to evaluate the facts and the arguments in the pleadings
and the reports of the commissioner.

Defendants-appellants faulted the trial court for concluding that they have violated the
conditions of the easement of drainage without taking into consideration the report of the
commissioner appointed by it. After going over the pleadings of the parties and the reports of
the commissioner, we find no substantial ground to disturb the conclusion of the trial court.
Defendants-appellants have made a mistake in applying the distances prescribed in the Decree
of Registration to the roofing of their house. They failed to comprehend the meaning of the
phrase "servidumbre de vertiente de los tejados" constitutes on the land of plaintiff. Translated,
it means the easement of receiving water falling from the roof which is an encumbrance
imposed on the land of the plaintiff-appellee. Consequently, the distances prescribed in the
Decree of Registration should not correspond to the width and length of the roof of the
defendants-appellants' house but to the distance of the rain water falling inside the land of the
plaintiff-appellee because the encumbrance is not the roof itself but the rain water falling inside
the property of the plaintiff-appellee. The Amicable Settlement, which was the basis of the
Decree of Registration, clearly states that the servitude on the land is to the extent of the
distances setforth thus:

... the applicant agrees to respect an easement of servitude over a portion of the
lots Nos. 1 and 2 which is EIGHT AND ONE HALF (8-½) meters in length
commencing from point 4 of Lot No. 2 and stretching towards Lot No. 1 going
Eastward, and the width is ONE (1) meter, in order that the rain water coming
from the roofing of a house to be constructed by the oppositor over the ruins of
her brick wall now standing along the Northeastern boundary of Lot 1 shall fall
into the land of the applicant.

And the Decree of Registration tersely states that a portion of Lot 1 and Lot 2 consisting of 8-½
meters long and 1 meter wide is subject to the easement of receiving water falling from the roof.
If these distances were made to correspond to the measurement of the roof then the
encumbrance on plaintiff-appellee's property would be more than the distances specified in the
Certificate of Title. The report submitted by the Commissioner appointed by the lower court to
make an ocular of the premises involved shows that the eaves of the house of defendants-
appellee and measures 8 meters and 20 centimeters in length; that during ordinary rain the
water falling from the eaves of the defendants-appellants' house fall within one meter from the
boundary line of plaintiff-appellee's property and during heavy rains more than one meter from
said boundary line. The foregoing findings and observations of the Commissioner weaken
defendants-appellants' disclaimer that they did not violate the conditions of the easement of
drainage of plaintiff-appellee. There is such violation because the roof of the defendants-
appellants protrudes by 98 centimeters over the property of plaintiff-appellee, so that during a
heavy rainfall the propulsion of the water would go as far as one meter over the property of the
latter. Obviously the lower court is correct in finding the defendants-appellants to have violated
the conditions of the easement of drainage of plaintiff-appellee.

Defendants-appellants also blamed the trial court for ruling that they have not acquired an
easement of light and view of the property of the plaintiff-appellee. The trial court's ruling that
defendants-appellants have not acquired an easement of light and view on the property of the
plaintiff-appellee is premised on Section 39 of Act 496 in accordance with which the servient
estate was registered. Said Section provides:

Every person receiving a certificate of title in pursuance of a decree of

registration ... shall hold the same free of all encumbrance except those noted on
said certificates ...

The same section, however, provides: "But if there are easement or other rights appurtenant to
a parcel of registered land which for any reason have failed to be registered, such easement or
rights shall remain so appurtenant notwithstanding such failure, and shall be held to pass with
the land until cut off or extinguished by the registration of the servient estate or in any other
manner (Sec. 39, Act No. 496, as amended by Act No. 2011, and Sec, 4, Act No. 3621). In the
case of Cid vs. Javier, 108 Phil. 850, 853, plaintiff's lot (dominant) as well as defendants' lot
(servient) are covered by Original Certificate of Title Nos. 7225 and 7545 respectively. In both of
them, there does not appear any annotation with respect to the easement supposedly acquired
by prescription which counting the twenty, (20) years from 1931 or 1914 would have already
ripened by 1937, date of the decrees of registration. In said case our Supreme Court held:

Granting that in the instant case an easement of light and view was acquired by
prescription, it was cut off or extinguished by the of the registration of the servient
estate under the Torrens System without the easement being annotated on the
corresponding certificate of title, pursuant to Sec. 39 of the Land Registration Act
(Act 496).

The lower court correctly applied the foregoing doctrine to the case at bar.

Indeed if defendants-appellants had acquired the said easement of light and view by
prescription through user since time immemorial why did they not intervene in the registration
proceedings for the inclusion of said easement in the Certificate of Title of plaintiff-appellee as
an encumbrance thereon, in the same manner that the easement of drainage was annotated in
the Certificate of Title of plaintiff-appellee? The easement of drainage was inscribed in the
Certificate of Title of plaintiff-appellee in their favor by virtue of an amicable settlement resulting
from their opposition to the registration of plaintiff-appellee's property. In this light, their defense
of user "since time immemorial" becomes flimsy and is merely being used to simulate a factual
issue.

Finally, defendants-appellants argued that the summary judgment of the lower court has no
legal basis. Summary judgment is employed as a method of disposing a case when the
pleadings, depositions, admission and affidavits filed by the parties show that there is no
genuine issue as to any material fact and that the movant is entitled to a judgment as a matter
of law (Section 3 of Rule 34). In the case at bar the plaintiff-appellee's right to the reliefs sought
is dependent on the existence or non-existence of the easement of drainage and of light and
view of favor of the defendants-appellants as well as on the conditions attached to such
easements. There is no dispute that plaintiff-appellee's property was registered in 1951 under
the Torrens System and that only the easement of drainage is annotated on his Certificate of
Title, subject to prescribed distances. But what defendants-appellants have advanced as factual
issues are: (1) that they have not violated the prescribed distances of the easement of drainage;
and (2) that the easement of light and view was in existence since time imemorial. The first
factual issue was resolved by the report submitted by the commissioner to which defendants-
appellants have given their conformity. The second factual issue is immaterial to the disposition
of the case because the servient estate was registered in 1951 without the easement of light
and view being annotated on the title. Since the supposed easement of light and view is not
annotated on the title, it becomes immaterial whether such easement existed since time
immemorial. On this point, there is no need to have a trial on the merits and a summary
judgment would appear to be in order.

IN VIEW OF THE FOREGOING, the summary judgment appealed from is hereby affirmed with
costs against defendants-appellants.

SO ORDERED.
Philipine Reports Citation: 101 Phil. 1196-1197 (Unreported Case)
Ponente: Justice J.B.L Reyes

CARIDAD ONGSIACO, ET. AL., plaintiffs – appellants

vs.
EMILIA ONGSIACO, ET. AL., defendants – appellees

GR. No. 7510, 30 March 1957

Appeal from an order of the Court of the First Instance of Nueva Ecija (Civil Case No. 755),
granting the motion to dismiss the complaint of Caridad Ongsiaco and her husband against her
sister Emilia and the latter’s husband. The complaint alleged three (3) causes of action. In the
motion to dismiss, it was alleged that all the causes of action had become barred by extinctive
prescription.

1. First Cause of Action: Alleged Revocation of the Donation. The cause of action for the
revocation of the donation made by the donor, Gorgonia Vda. de Ongsiaco, accrued from
the time the donee, Emilia Ongsiaco, failed to pay the yearly pension of PhP1,000 to the
donor, and that was on 30 September 1930. Hence, the action to revoke, being based on
a written contract, prescribed ten years thereafter, i.e., on 30 September 1940, under sec.
43 of Act 190, long before the present case was instituted.

2. Second Cause of Action: Construction of the Dikes Interfering with Appellants’ Easement
of Drainage. The basis of this cause of action can only be the legal servitude of drainage
of rural estate regulated by Art. 552 of 1889 Civil Code (The Old Civil Code). Since the
enjoyment of this servitude does not depend upon acts of man because descent of rain
water from the higher to the lower estates is due to the force of gravity, this easement
must be classed among the continuous ones (Article 532, Old Civil Code; Article 615, New
Civil Code), and it is subject to extinction by non-user for the period required by law (Article
546, Old Civil Code; Article 631, New Civil Code). The original 20-year period of extinctive
prescription by non-user under Article 546 of the Old Civil Code was reduced by sec. 41
of Act 190 to ten years from their violation, servitudes being clearly “interest in land”
(Soriano vs. Sternberg, 41 Phil. 211-212). Since according to plaintiffs’ own evidence, the
dikes obstructing the overflow from their land were built in 1937 or 1938, and the present
action for their destruction was filed in 1951, the lower court committed no error in holding
that the easement sought to be enforced had already been extinguished, and the plaintiffs’
action is barred by prescription.

3. Third Cause of Action: Fraudulent Reduction of Appellants’ Share and Its Usurpation by
the Defendants. It is alleged that through illegal manipulations of defendant Alzate,
husband of Emilia Ongsiaco, the share of the plaintiff Caridad Ongsiaco was made to
include public properties, thereby reducing its area, while proportionately increasing that
of the defendants. When the present case was instituted in 1951, more than 20 years had
run since the partition. Hence, this cause of action is barred by prescription.

The order of Court of First Instance of Nueva Ecija is AFFIRMED.

G.R. No. L-3099 May 21, 1951

CIPRIANA GONZALES, plaintiff-appellee,

vs.
PURIFICACION, GUILLERMO, EUSTACIO AND FAUSTINA, all surnamed DE DIOS,
assisted by their guardian CARLOTA INDUCIL defendants-appellants.

Celestino de Dios for appellants.

Rosendo Tansinsin for appellee.

BAUTISTA ANGELO, J.:

Plaintiff is the owner of a fishpond situated in the barrio of Bambang, Bulacan, adjacent to the
fishpond of defendants. The only source of water of her fishpond is Kay Pateng River, to which
it has neither ingress nor egress, because it has been completely cut off from it by the fishpond
of the defendants. After the several attempts made by her to obtain from the defendants a right
of way to and from said river to furnish a source of water to her fishpond proved futile, she filed
the present action in the Court of First Instance of Bulacan.

Upon agreement of the parties, the court designated one Felipe Asuncion, a surveyor, to
investigate the premises and study the most convenient place through which an aqueduct may
be constructed for the supply of water needed by the fishpond of the plaintiff, who accordingly
investigated the property and submitted his report. After the parties have presented their
evidence, the court rendered judgment, the dispositive part of which is as follows:

WHEREFORE the Court hereby renders judgment as follows: (a) the plaintiff to have a
right of passage for water from the river Kay Pateng to her fishpond, on the northwest
side of the dyke represented by the line connecting corners 6 and 7 of Psu-27824 lot No.
8 of the Ariston de Dios, by constructing a canal eight meters wide and about one
hundred meters long; (b) the plaintiff will construct at her expense a similar dyke, of the
same height and width alongside the said canal opposite the old dyke; and (c) the
plaintiff pay the defendants the sum of Seven hundred and ninety-eight pesos and
sixteen centavos (798.16) as just compensation including consequential damages.
Without pronouncement as to costs.

IT IS SO ORDERED.

Not satisfied with this judgment, defendants appealed to the Court of Appeals, the latter court
affirming the judgment with costs against the appellants. The case now before us on by way
of certiorari.

The only question which is presented to us for determination is whether there is law which
justifies the grant to the appellee of an easement of water over the land of the appellants in
order to give to the appellee a source of water to irrigate her fishpond.

The Court of Appeals holds the view that the claim of the appellee finds support in the
provisions of articles 118 to 125 of the Law of Waters 1866 and articles 557 and 558 of the Civil
Code, which were also relied upon by the court a quo. On this point the Court of Appeals said:
"A perusal of the provisions of the Law of Waters on this point shows that the easement of
aqueduct is granted for any of the purposes mentioned in article 113 of said law, such as
irrigation, public bath, or use of factories and drainage. The provisions of the Civil Code convey
the same idea as to the use for which the right of way may be needed. There is nothing,
however, in the provisions of both the Law of Waters and the Civil Code above mentioned, that
prohibits the use of water for purposes other than those mentioned in said laws. Plaintiff-
appellee has proven that she has the right to draw water from Kay Pateng River to make her
fishpond as productive as the other surrounding fishponds."

We agree with the Court of Appeals that articles 557 and 558 of the Civil Code can be invoked
in support of the claim of the appellee. Article 557 provides that "any person who wishes to use
upon his own land any water of which he may have the control is entitled to take it through the
intervening estates, subject to the obligation of indemnifying the owners thereof." The phrase "of
which he may have the control" should be interpreted in connection with article 558 (1) which
means that he has a right to dispose of the water. This was interpreted to mean one who has
obtained from the government a grant to use water from a river (Gonzales vs. Banzon, 51 Phil.,
15). The use to which the water may be applied must also be interpreted in the same way: that
the water be sufficient for the use intended (558[1]). And according to Manresa "Puede el agua
solicitarse para cualquiera de los usos necesarios de la vida." (4 Manresa, 704, 3rd Ed.). In fact
these article were applied to a grant to use water from a river for irrigation purposes in the case
mentioned above.

But as to the second canal, however, the defendant Mariano B. Banzon has filed a
counterclaim alleging that he has obtained from the Director of Public Works a grant to
use 50 liters of water per second from the Talisay River to irrigate his lands, and, in
accordance with the provision of article 557 in connection with article 558 of the Civil
Code, he asks that he be authorized to open, maintain and preserve a canal similar to
the second one mentioned on plaintiff's land upon payment of the proper indemnity to
the plaintiff, alleging that the place where said canal passes is the most convenient and
least onerous to third parties, and that there is no other place more appropriate and less
prejudicial.

The defendant Mariano B. Banzon undoubtedly has a right to compulsory easement of

aqueduct upon payment of indemnity since, although he is not the owner of the waters of
the Talisay River, he can dispose of 50 liters of the same per second, by virtue of the
grant from the Director of Public Works. This may be inferred from the provision of article
125 of the Law of Waters of August 3, 1866, which authorizes the owner of the land on
which it is sought to impose the compulsory easement of aqueduct, to object when the
applicant is not the owner or grantee of the water.

To enjoy the right granted by article 557 of the Civil Code, the requisites established in
article 558 of the same code must be complied with. (Gonzales vs. Banzon, supra).

If a person who has obtained from the Government a grant to use water a river from irrigation
was given the right to construct a canal over the intervening lands of other private owners upon
payment of indemnity, no valid reason is seen for not granting the same privilege to the herein
appellee who desires to draw water from a river for the use of her fishpond. A fishpond comes
within the classification of agricultural land and is regarded as an important source of revenue
(Molina vs. Rafferty, 38 Phil. 167). It is generally constructed in low lands or swampy places and
draw its breadth of life from brooks and rivers. It is just as rich and valuable as any piece of
agricultural land and in some regions it is regarded as the main source of wealth. It is an
undertaking to be encouraged and promoted, for it contributes to the economic development of
the people. Our law should be interpreted in a sense that may give it life if it can be done without
doing violence to reason or to any rule of statutory construction.

There can, therefore, be no doubt with regard to the right of the appellee to draw the water she
needs for her fishpond through the land of the defendants if she has obtained the necessary
permit to use the water from the Government. The law requires that this permit be obtained from
the Director of Public Works. (Sec. 14 of Act 2152, as amended by Act 3208; The Philippine
Sugar Estate Development Co. vs. Unson and Williams, 53 Phil., 599.) While there is no proof
to this effect, at least this matter is not an issue in this case. This point is not disputed. The only
important question to be determine is how and where the right should be exercised, but this is a
question of fact which the Court of Appeals has determined and which it is not now within our
province to pass upon. The finding of said Court on this matter is final.

Wherefore, the petition is hereby dismissed, without pronouncement as to costs.

G.R. No. 95738 December 10, 1991

ADRIANA DIONISIO, ET AL., petitioners,

vs.
JUDGE RODOLFO ORTIZ OF THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH
89 AND PABLO TAN GONZAGA, et al., respondents.

Herrera, Laurel, De los Reyes, Roxas & Teehankee for petitioners.

Sergio Ortiz for private respondents.

GUTIERREZ, JR., J.:

The controversy in the instant case arose from the private respondents' act of opening a new
gate along Howmart Road claiming an easement of right of way in their favor.

The facts are as follows:

The petitioners are co-owners of lots contiguous to each other situated in the Sitio of Kangkong,
District of Balintawak, Quezon City.

The private respondents are also co-owners of lots which are adjacent to the lots owned by the
petitioners. Lot 272-B has an area of 1,427 sq. m. which was later subdivided into two lots
where Lot 272-A was assigned to Chua Lee and Chua Bun Tong pursuant to a memorandum
agreement executed by and between them. They are also owners of another lot at the upper
portion of Lot 272-B with an area of 914 sq. m.

By virtue of an agreement entered intobetween the owners of the contiguous lots and the
members of the Quezon City Industrial Estates Association (QCIEA), a right of way was granted
over Howmart Road which is a private road traversing the contiguous lots owned by the
petitioners, among others, in favor of the QCIEA members. In return for its use, QCIEA paid
compensation to the petitioners for this right of way. The private respondents are bona fide
members of the QCIEA.

In order to have access to Howmart Road, there is a gate in private respondents' 914 sq. m. lot
fronting Howmart Road and another gate in Lot 272-A. As a result of the subdivision of Lot 272,
the private respondents opened a new gate in Lot 272-B also fronting Howmart Road which is
now the gate in question.

On October 5, 1989, under the instructions of Maxima Dionisio, certain persons commenced the
digging of four holes in a parallel line and afterwards put up steel posts wielded to a steel plate
in front of the newly constructed gate of private respondents amidst the latter's
protestations.The petitioners claim that the surreptitiously constructed gate opened directly into
the house of Maxima Dionisio, exposing them to air and noise pollution arising from the
respondents' delivery trucks and service vehicles.

On November 7, 1989, the private respondents instituted a civil action for damages against the
petitioners. The complaint sought the immediate issuance of a writ of preliminary injunction
ordering the petitioner to remove the barricade erected by them in front of the iron gate.

On January 8, 1990, respondent Judge Ortiz issued an Order granting the writ of preliminary
mandatory injunction. The dispositive portion of the order reads:

ACCORDINGLY, plaintiffs' prayer for the issuance of a writ of preliminary mandatory

injunction is GRANTED, and a writ of preliminary mandatory injunction shall issue
ordering the defendants to remove the barricade erected by them in front of the iron gate
of the plaintiffs at their Lot 272-B, within twenty-four (24) hours from receipt of the writ,
and in case of their failure to do so, the plaintiffs are authorized to remove the said
barricade by themselves, the expenses for which is chargeable to the defendants, upon
 plaintiffs' putting up of a bond in the amount of P20,000.00, approved by this Court, and
conditioned as provided in the Rules, within five (5) days from receipt of this order.
(Rollo, p. 34)

The petitioners then filed a petition for certiorari before the Court of Appeals assailing the Order
of Judge Ortiz.

Fifteen days later, the petitionersremoved the barricade in front of the gate of the private
respondents after they failed to obtain a temporary restraining order (TRO) from the Court of
Appeals enjoining the lower court from implementing its order.

The Court of Appeals dismissed the petition on the ground that the issue has already become
moot and academic since the petitioners have already complied with the Order of the lower
court.

The petitioners' motion for reconsideration was likewise denied.

Hence, this petition alleging that:

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONERS'

COMPLIANCE WITH THE ORDER DATED 8 JANUARY 1990 GRANTING THE WRIT
OF PRELIMINARY MANDATORY INJUNCTION RENDERS THE PETITION
FOR CERTIORARI MOOT AND ACADEMIC CONSIDERING THAT:

1. THE HONORABLE COURT OF APPEALS CAN STILL GRANT PRACTICAL

RELIEF TO THE PARTIES BY RECALLING OR LIFTING THE WRIT OF
PRELIMINARY MANDATORY INJUNCTION.

2. THE ISSUANCE OF THE WRIT OF PRELIMINARY MANDATORY

INJUNCTION SHOULD NOT PREEMPT THE RESOLUTION OF THE PETITION
ON THE ISSUE OF THE VALIDITY OF THE ORDER GRANTING THE WRIT.
(Rollo, pp. 17-18)

The real issue to be resolved in this case is whether or not the private respondents have
an easement of right of way over Howmart Road. Afterwhich it can be determined
whether or not the private respondents are entitled to the injunctive relief.

The private respondents' claim that they have every right to use Howmart Road as
passageway to EDSA by reason of the fact that public respondents are bonafide
members of the QCIEA which has a standing oral contract of easement of right of way
with the petitioners. The contract is still subsisting even after its alleged expiration in
December, 1988 as evidenced by the two (2) letters signed by Maxima Dionisio and
Atty. Telesforo Poblete, counsel for the Dionisio Family addressed to the QCIEA
requesting for an increase in the compensation for said right of way. In such a case, it is
alleged that the petitioners did not have the right to put the barricade in question in front
of the private respondents' gate and stop them from using said gate as passageway to
Howmart Road.

There is no question that a right of way was granted in favor of the private respondents
over Howmart Road but the records disclose that such right of way expired in December,
1988. The continued use of the easement enjoyed by QCIEAincluding the private
respondents is by the mere tolerance of the owners pending the renegotiation of the
terms and conditions of said right of way. This is precisely shown by the two letters to
the QCIEA requesting for an increase in compensation for the use of Howmart Road.
Absent an agreement of the parties as to the consideration, among others, no contract of
easement of right of way has been validly entered into by the petitioners and QCIEA
(see Robleza v. Court of Appeals, (74 SCRA 354 [1989]). Thus, the private respondents'
claim of an easement of right of way over Howmart Road has no legal or factual basis.

Not having any right, the private respondents arenot entitled to the injunctive relief
granted by the lower court.
We have held in several cases that in order to be entitled to an injunctive writ, one must
show an unquestionable right over the premises and that such right has been violated.
(Rivera v. IAC, 169 SCRA 307 [1989]; Viray v. CA, 191 SCRA 308 [1990]; Buayan Cattle
Co. Inc. v. Quintillan, 128 SCRA 276 [1984])

The party applying for preliminary injunction must show that (a) the invasion of the right
sought to be protected is material and substantial; (b) the right of complainant is clear
and unmistakable; and (c) there is an urgent and paramount necessity for the writ to
prevent serious damage. (Director of Forest Administration v. Fernandez, 192 SCRA
121 [1990]; Phil. Virginia Tobacco Administration v. Delos Angeles, 164 SCRA 543
[1988])

In the case at bar, the private respondents have not shown that there is an urgent and
paramount necessity for the issuance of the writ.

The records show that there are two (2) gates through which the private respondents
may pass to have direct access to EDSA: (1) the northern gate which opens directly to
EDSA; and (2) the southern gate along Howmart Road. The records also disclose that
the petitioners and the other lot owners previously prohibited and prevented members of
QCIEA from opening new gates. The claim that they were forced to open a new gate by
reason of the subdivision of Lot 272 where a wall was constructed between these 2 lots
is untenable. The private respondents can not assert a right of way when by their own or
voluntary act, they themselves have caused the isolation of their property from the
access road. Article 649 of Civil Code justifies petitioners' claim, to wit:

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

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

In case the right of way is limited to the necessary passage for the cultivation of
the estate surrounded by others and for the gathering of its crops through the
servient estate without a permanent way, the indemnity shall consist in the
payment of the damage caused by such encumbrance.

This easement is not compulsory if the isolation of the immovable is due to the
proprietor's own acts. (564a) (Emphasis supplied)

The construction of a wall between the 2 lots leaving only a small passageway between
them is an act imputable to the private respondents which precludes them from asserting
a right of way. The opening of the new gate would definitely be very convenient to the
private respondents but mere convenience is not enough to serve as basis for the
assertion of a right of way. (see Ramos, Sr. v. Gatchalian Realty, Inc., 154 SCRA 703
[1987])

It was therefore inaccurate for the lower court to state that the private respondents have
shown a clear right to justify the issuance of the writ of preliminary injunction when the
facts and circumstances of the case do not warrant it. In such a case, certiorari will lie to
correct the abuse of discretion committed by the lower court. (Maguan v. Court of
Appeals, 146 SCRA 107 [1986]). Such task was incumbent upon the Court of Appeals
when the petitioners filed their petition for certiorari before it questioning the propriety of
the Order of the lower court. The respondent Court, however, dismissed the petition on
the ground that the issue was already moot and academic upon the petitioners'
compliance with the Order of the respondent Judge.
The fact that the barricade constructed by the petitioners was already removed upon the
issuance of the questioned preliminary injunction does not make the petition moot and
academic as ruled by the Court of Appeals. The granting of the writ and the subsequent
compliance should not preempt the determination of the issue brought before it. The
validity of the Order was precisely the subject of the petition for certiorari. As aptly
explained in the case of Anglo-Fil Trading Corporation v. Lazaro, 124 SCRA 494 [1983]:

xxx xxx xxx

The petitioners' contention that the lifting of the restraining order had rendered
moot and academic the injunction case in the trial court is likewise untenable. A
restraining order is dstinguished from an injunction in that it is intended as a
restraint on the defendant until the propriety of granting an injunction pendente
lite can be determined, and it goes no further than to preserve the status quo
until such determination. Therefore, the grant, denial, or lifting of a restraining
order does not in anyway pre-empt the court's power to decide the issue in the
main action which in the case at bar, is the injunction suit. In fact, the records will
show that the trial court proceeded with the main suit for injunction after the lifting
of the restraining orders. (At p. 512)

The Court of Appeals has the power to recallor lift the writ of preliminary mandatory
injunction so issued if it finds that the party is not so entitled. However, in dismissing the
petition the court, in effect affirmed the lower court's finding that the private respondents
were indeed entitled to the writ of preliminary injunction. But as we have earlier found,
the private respondents are not entitled to the injunctive relief considering that they have
no clear right over Howmart Road.

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the Court
of Appeals and the Order of the Regional Trial Court in Civil Case No. Q-89-3949 are
SET ASIDE. The writ of preliminary injunction is hereby LIFTED.

SO ORDERED.
G.R. No. 77628 March 11, 1991

TOMAS ENCARNACION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and THE INTESTATE ESTATE OF THE LATE
EUSEBIO DE SAGUN and THE HEIRS OF THE LATE ANICETA MAGSINO VIUDA DE
SAGUN,* respondents.

Esteban M. Mendoza for petitioner.

Oscar Gozos for private respondents.

FERNAN, C.J.:

Presented for resolution in the instant petition for review is the not-so-usual question of whether
or not petitioner is entitled to a widening of an already existing easement of right-of-way. Both
the trial court and the Appellate Court ruled that petitioner is not so entitled, hence the recourse
to this Court. We reverse.

The facts are undisputed.

Petitioner Tomas Encarnacion and private respondent Heirs of the late Aniceta Magsino Viuda
de Sagun are the owners of two adjacent estates situated in Buco, Talisay,
Batangas. ** Petitioner owns the dominant estate which has an area of 2,590 square meters
and bounded on the North by Eusebio de Sagun and Mamerto Magsino, on the south by Taal
Lake, on the East by Felino Matienzo and on the West by Pedro Matienzo. Private respondents
co-own the 405-square-meter servient estate which is bounded on the North by the National
Highway (Laurel-Talisay Highway), on the South by Tomas Encarnacion, on the East by
Mamerto Magsino and on the West by Felipe de Sagun. In other words, the servient estate
stands between the dominant estate and the national road.

Prior to 1960, when the servient estate was not yet enclosed with a concrete fence, persons
going to the national highway just crossed the servient estate at no particular point. However, in
1960 when private respondents constructed a fence around the servient estate, a roadpath
measuring 25 meters long and about a meter wide was constituted to provide access to the
highway. One-half meter width of the path was taken from the servient estate and the other one-
half meter portion was taken from another lot owned by Mamerto Magsino. No compensation
was asked and non was given for the portions constituting the pathway.1

It was also about that time that petitioner started his plant nursery business on his land where
he also had his abode. He would use said pathway as passage to the highway for his family and
for his customers.

Petitioner's plant nursery business through sheer hard work flourished and with that, it became
more and more difficult for petitioner to haul the plants and garden soil to and from the nursery
and the highway with the use of pushcarts. In January, 1984, petitioner was able to buy an
owner-type jeep which he could use for transporting his plants. However, that jeep could not
pass through the roadpath and so he approached the servient estate owners (Aniceta Vda. de
Sagun and Elena Romero Vda. de Sagun) and requested that they sell to him one and one-half
(1 1/2) meters of their property to be added to the existing pathway so as to allow passage for
his jeepney. To his utter consternation, his request was turned down by the two widows and
further attempts at negotiation proved futile.

Petitioner then instituted an action before the Regional Trial Court of Batangas, Branch 6
(Tanauan) to seek the issuance of a writ of easement of a right of way over an additional width
of at least two (2) meters over the De Saguns' 405-square-meter parcel of land.2

During the trial, the attention of the lower court was called to the existence of another exit to the
highway, only eighty (80) meters away from the dominant estate. On December 2, 1985, the
lower court rendered judgment dismissing petitioner's complaint. It ruled:
 It is clear, therefore, that plaintiff at present has two outlets to the highway: one, through
the defendants' land on a one meter wide passageway, which is bounded on both sides
by concrete walls and second, through the dried river bed eighty meters away. The
plaintiff has an adequate outlet to the highway through the dried river bed where his jeep
could pass.

The reasons given for his claim that the one-meter passageway through defendants'
land be widened to two and one-half meters to allow the passage of his jeep, destroying
in the process one of the concrete fences and decreasing defendants' already small
parcel to only about 332.5 square meters, just because it is nearer to the highway by 25
meters compared to the second access of 80 meters or a difference of only 65 meters
and that passage through defendants' land is more convenient for his (plaintiffs)
business and family use are not among the conditions specified by Article 649 of the
Civil Code to entitle the plaintiff to a right of way for the passage of his jeep through
defendant's land.3

On appeal, the Court of Appeals affirmed the decision of the trial court on January 28, 1987 and
rejected petitioner's claim for an additional easement.

In sustaining the trial court, the Court of Appeals opined that the necessity interposed by
petitioner was not compelling enough to justify interference with the property rights of private
respondents. The Appellate Court took into consideration the presence of a dried river bed only
eighty (80) meters away from the dominant estate and conjectured that petitioner might have
actually driven his jeep through the river bed in order to get to the highway, and that the only
reason why he wanted a wider easement through the De Sagun's estate was that it was more
convenient for his business and family needs.

After evaluating the evidence presented in the case, the Court finds that petitioner has
sufficiently established his claim for an additional easement of right of way, contrary to the
conclusions of the courts a quo.

While there is a dried river bed less than 100 meters from the dominant tenement, that access is
grossly inadequate.1âwphi1 Generally, the right of way may be demanded: (1) when there is
absolutely no access to a public highway, and (2) when, even if there is one, it is difficult or
dangerous to use or is grossly insufficient. In the present case, the river bed route is traversed
by a semi-concrete bridge and there is no ingress nor egress from the highway. For the jeep to
reach the level of the highway, it must literally jump four (4) to five (5) meters up. Moreover,
during the rainy season, the river bed is impassable due to the floods. Thus, it can only be used
at certain times of the year. With the inherent disadvantages of the river bed which make
passage difficult, if not impossible, it is if there were no outlet at all.

Where a private property has no access to a public road, it has the right of easement over
adjacent servient estates as a matter of law.4

With the non-availability of the dried river bed as an alternative route to the highway, we transfer
our attention to the existing pathway which straddles the adjoining properties of the De Sagun
heirs and Mamerto Magsino.

The courts below have taken against petitioner his candid admission in open court that he
needed a wider pathway for the convenience of his business and family. (TSN, August 2, 1985,
pp. 24-26). We cannot begrudge petitioner for wanting that which is convenient. But certainly
that should not detract from the more pressing consideration that there is a real and compelling
need for such servitude in his favor.

Article 651 of the Civil Code provides that "(t)he width of the easement of right of way shall be
that which is sufficient for the needs of the dominant estate, and may accordingly be changed
from time to time." This is taken to mean that under the law, it is the needs of the dominant
property which ultimately determine the width of the passage. And these needs may vary from
time to time. When petitioner started out as a plant nursery operator, he and his family could
easily make do with a few pushcarts to tow the plants to the national highway. But the business
grew and with it the need for the use of modern means of conveyance or transport. Manual
hauling of plants and garden soil and use of pushcarts have become extremely cumbersome
and physically taxing. To force petitioner to leave his jeepney in the highway, exposed to the
elements and to the risk of theft simply because it could not pass through the improvised
pathway, is sheer pigheadedness on the part of the servient estate and can only be counter-
productive for all the people concerned. Petitioner should not be denied a passageway wide
enough to accomodate his jeepney since that is a reasonable and necessary aspect of the plant
nursery business.

We are well aware that an additional one and one-half (1 1/2) meters in the width of the pathway
will reduce the servient estate to only about 342.5 square meters. But petitioner has expressed
willingness to exchange an equivalent portion of his land to compensate private respondents for
their loss. Perhaps, it would be well for respondents to take the offer of petitioner seriously. 5 But
unless and until that option is considered, the law decrees that petitioner must indemnify the
owners of the servient estate including Mamerto Magsino from whose adjoining lot 1/2 meter
was taken to constitute the original path several years ago. Since the easement to be
established in favor of petitioner is of a continuous and permanent nature, the indemnity shall
consist of the value of the land occupied and the amount of the damage caused to the servient
estate pursuant to Article 649 of the Civil Code which states in part:

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

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

xxx xxx xxx

WHEREFORE, in conformity with the foregoing discussion, the appealed decision of the Court
of Appeals dated January 28, 1987 is REVERSED and SET ASIDE. Petitioner Tomas
Encarnacion is hereby declared entitled to an additional easement of right of way of twenty-five
(25) meters long by one and one-half (1 1/2) meters wide over the servient estate or a total area
of 62.5 square meters after payment of the proper indemnity.

SO ORDERED.
G.R. No. L-63996 September 15, 1989

EUSEBIO FRANCISCO, petitioner,

vs.
INTERMEDIATE APPELLATE COURT and CRESENCIO J. RAMOS, respondents.

Arturo Agustines for petitioner.

Padilla Law Office for private respondent.

NARVASA, J.:

Contested in the appellate proceedings at bar is the entitlement of Cresencio J. Ramos, owner
of Lot 860-A of the Malinta Estate, to an easement of right of way through the land belonging to
petitioner Eusebio Francisco, Lot 266 also of the same Malinta Estate. The Court of First
Instance of Bulacan declared Ramos to be so entitled, by judgment rendered in Civil Case No.
66-V-73. That judgment was affirmed by the Intermediate Appellate Court in CA-G.R. No.
60968-R, promulgated on September 7, 1982. Francisco contends that both Courts are wrong,
and asks this Court to reverse them. About the basic facts there is no dispute.

Ramos' Lot 860-A used to be a part of Lot 860 of the Malinta Estate. Lot 860 was owned by
Cornelia and Frisca Dila, and had a frontage along Parada Road measuring 51.90 meters.
Adjoining Lot 860 was Lot 226, owned by Eusebio Francisco, as aforestated; it also had a
frontage along Parada Road of 62.10 meters.

On December 3,1947, the co-owners of Lot 860 (Cornelia and Frisca Dila) executed a deed by
which an undivided one-third portion of the land was donated to a niece, Epifania Dila, and
another undivided one-third (1/3) portion to the children of a deceased sister, Anacleta Dila, and
the remaining portion, also an undivided third, was declared to pertain exclusively to and would
be retained by Cornelia Dila. 1 The new co-owners then had Lot 860 subdivided and
respectively allocated to themselves as follows: 2

Lot 860-A (2,204 sq. m.), to Cornelia Dila;

Lot 860-B (5,291 sq. m.), to Epifana Dila (the niece);

Lot 860-C (3,086 sq. m.), to Cornelia Dila also; and

Lot 860-D (5,291 sq. m.), to the heirs of Anacleta Dila the other niece).

After this, the co-owners signed a partition agreement, 3 putting an end to their co-ownership
and assuming exclusive ownership and possession of their respective individual shares in
accordance with the subdivision plan.

The former co-owners evidently overlooked the fact that, by reason of the subdivision, Lot 860-B
of Epifania Dila came to include the entire frontage of what used to be Lot 860 along Parada
Road, and thus effectively isolated from said road the other lots, i.e., Lots 860- A and 860-C of
Cornelia Dila, and Lot 860-D of the children of Anacleta Dila. 4

Anyway, Cornelia sold Lot 860-A (2,204 sq. m. to the sisters Marcosa, Margarita, and Irinea
Eugenio. 5 And in 1971, the Eugenio Sisters sold the land to Cresencio J. Ramos. 6

Some months later, in March, 1972, after having set up a piggery on his newly acquired
property, Ramos had his lawyer write to Eusebio Francisco — owner, as above mentioned, of
the adjoining lot, Lot 266- to ask for a right of way through the latter's land. Negotiations
thereafter had however failed to bring about a satisfactory arrangement. Francisco's proposal
for an exchange of land at the rate of one (1) square meter from him to three (3) square meters
from Ramos, as was supposedly the custom in the locality, was unacceptable to Ramos. 7
Later that year, 1972, Ramos succeeded, through the intercession of Councilor Tongco of
Valenzuela, in obtaining a three-meter wide passageway through Lot 860-B of Epifania Dila
. 8 Yet in August, 1973, he inexplicably put up a ten-foot high concrete wall on his lot, this was in
August, 1973, and thereby closed the very right of way granted to him across Lot 860-B. It
seems that what he wished was to have a right of passage precisely through Francisco's land,
considering this to be more convenient to him, and he did not bother to keep quiet about his
determination to bring suit, if necessary, to get what he wanted. 9

Francisco learned of Ramos' intention and reacted by replacing the barbed-wire fence on his lot
along Parada Road with a stone wall, also in August, 1973. 10 Shortly thereafter, Francisco was
served with summons and a copy of the complaint in Civil Case No. 66-V-73 of the Court of First
Instance of Bulacan, instituted by Ramos, 11 as well as a writ of preliminary mandatory injunction
directing him to remove his stone fence and keep his lot open for Ramos' use .12

Francisco moved to dissolve the mandatory injunction. The Court appointed a commissioner
who conducted an ocular inspection of the lots in question, Lots 860-A, 860-B and 266 and
submitted a report of his findings. On the basis of the commissioner's report, the Court issued
another Order on September 10, 1973, 13 granting Ramos —

. . . a temporary right of way over defendant's property hereby ordering defendant

to immediately remove all obstructions existing on points 2 and 4 of Annex A [of
the Commissioner's Report] up to the second post of the stone wall along points
2 and 3 in order that plaintiff may have a free access to his property, upon
plaintiffs filing a bond in the sum of P2,000.00 without in any way determining by
this grant the issue or issues involved in this case, but merely as a measure of
temporary relief in the exercise of its power of equity.

14
Ramos posted the required bond, and Court issued the writ of preliminary injunction.

After filing his answer with counterclaim, 15 Francisco once more moved for the setting aside of
the injunctive writs on the ground that they had been issued in excess of the Court's jurisdiction
since they did more than merely preserve the status quo, and were based on the
commissioner's report which was not only inaccurate and inconclusive but had been adopted by
the Court without hearing or according him an opportunity to comment on or object to it. 16 By
Order dated November 19, 1973, the Court dissolved the injunctions, setting aside its Orders of
August 31, and September 10, 1973. 17

Six (6) days later, however, the Court handed down its verdict, adversely to Francisco. The
dispositive part thereof reads as follows:

In view of the foregoing premises: (1) the road right of way prayed for by plaintiff
over defendant's land, Exhibit 'A- l' is hereby granted, plaintiff shall pay defendant
the amount of Twenty Pesos (P20.00) per square meter as indemnity or a total of
Three Hundred Fifty Pesos (P350.00) considering that the area of Exhibit 'A-l' is
17.5 square meters; (2) the writ for a permanent mandatory injunction is likewise
granted and defendant is consequently directed to remove immediately the
adobe fence along the road right of way as fixed by this Court and to refrain from
obstructing said passage in any manner what ever, upon payment by the plaintiff
of the sum of Three Hundred Fifty Pesos to the defendant, through this court; (3)
upon the defendant's failure to do so, the Sheriff is hereby directed to
immediately remove said obstructions at defendant's expenses; (4) let a copy of
the decision be served upon the Register of Deeds of Bulacan for proper
annotation of the road right of way on defendant's title, Transfer Certificate of
Title over Lot 266 upon finality of this decision.

Defendant's counterclaim for moral and exemplary damages and attorney's fees
are dismissed for lack of merit.

Francisco appealed to the Court of Appeals. 18 In its own decision promulgated on September 7,
1982, the latter affirmed the Trial Court's judgment, 19 and later denied Francisco's motion for
reconsideration. 20 Francisco then appealed to this Court. Francisco submits that — 21
 1) Ramos' complaint, containing no averment that demand for the easement of
right of 28 way had been made only after payment of proper indemnity in
accordance with Article 649 of the Civil Code, was dismissible for failure to state
a cause of action;

2) It was error to brush aside said statutory pre-condition in Article 649 as of "no
consequence" or "absurd" in light of "the principle of substantial performance" in
Article 1234 of the Civil Code;

3) In view of the last paragraph of said Article 649, Francisco's Lot 266 may not
be considered a servient estate subject to a compulsory easement of right of way
in favor of Ramos' Lot 860-A;

4) Courts are not empowered to establish judicial easements; and

5) Ramos was not entitled to a writ of mandatory injunction against Francisco.

In Bacolod-Murcia Milling Co., Inc. v. Capital Subdivision, Inc., 22 this Court held that a
compulsory easement of way cannot be obtained without the presence of four (4) requisites
provided for in Articles 649 and 650 of the Civil Code, which the owner of the dominant
tenement must establish, to wit:

(1) That the dominant estate is surrounded by other immovables and has no
adequate outlet to a public highway (Art. 649, par. 1);

(2) After payment of proper indemnity (Art. 649, par. 1, end);

(3) That the isolation was not due to acts of the proprietor of the dominant estate;
and

(4) That the right of way claimed is at the point least prejudicial to the servient
estate; and insofar as consistent with this rule, where the distance from the
dominant estate to a public highway may be the shortest. (Art. 650).

What clearly the appealed Decision overlooked or failed to accord the significance due it is the
fact already adverted to and which has never been disputed that respondent Ramos, having
already been granted access to the public road (Parada Road) through the other adjoining Lot
860-B owned by Epifania Dila — and this, at the time he was negotiating with petitioner for the
similar easement over the latter's Lot 266 that he now claims — inexplicably gave up that right
of access by walling off his property from the passageway thus established. The evidence, also
uncontradicted, is that said passageway was 2.76 meters wide, or wide enough to
accommodate a truck. The surveyor who at the instance of petitioner made a survey of the
premises on September 13, 1973, shortly after Ramos had filed his complaint, verified the
existence of said passageway from the presence of tire marks found on the scene and indicated
on the sketch plan he prepared the path that it took from said respondent's Lot 860-A through
Lot 860-B to Parada Road. 23 That there was such a passageway was also confirmed by
another witness, Parada Barrio Captain Fausto Francisco, one of those who had earlier tried to
bring petitioner and respondent to an agreement about the proposed right of way through the
property of the former. This witness declared, as already stated, that after the negotiations had
been stalled by the failure of the parties to agree on the terms of a proposed land exchange that
would have given Ramos access to Parada Road, said respondent had been able to obtain right
of passage to the same public road over a 3-meter wide portion of Lot 860-B owned by Epifania
Dila through the intercession of Councilor Tongco of Valenzuela . 24 The presence of the tire
marks indicating that the portion of Lot 860-B where they were found had been used as a
passageway was also brought to the attention of the Trial Court at the ocular inspection
conducted, with the parties present or duly represented, on May 17, 1974. 25

The evidence is, therefore, persuasively to the effect that the private respondent had been
granted an adequate access to the public highway (Parada Road) through the adjacent estate
of Epifania Dila even as he was trying to negotiate a satisfactory agreement with petitioner
Francisco for another passageway through the latter's property. If at the time he filed suit
against the petitioner, such access (through the property of Epifania Dila) could no longer be
used, it was because he himself had closed it off by erecting a stone wall on his lot at the point
where the passageway began for no reason to which the record can attest except to
demonstrate the isolation of his property alleged in his complaint. But the law makes it amply
clear that an owner cannot, as respondent has done, by his own act isolate his property from a
public highway and then claim an easement of way through an adjacent estate. The third of the
cited requisites: that the claimant of a right of way has not himself procured the isolation of his
property had not been met indeed the respondent had actually brought about the contrary
condition and thereby vitiated his claim to such an easement. It will not do to assert that use of
the passageway through Lot 860-B was dffficult or inconvenient, the evidence being to the
contrary and that it was wide enough to be traversable by even a truck, and also because it has
been held that mere inconvenience attending the use of an existing right of way does not justify
a claim for a similar easement in an alternative location.

... the petitioner contends that since the respondent company constructed the
concrete wall blocking his ingress and egress via the Gatchalian Avenue, the
nearest, most convenient and adequate road to and from a public highway, he
has been constrained to use as his temporary' way the adjoining lots belonging to
different persons. Said way is allegedly 'bumpy and impassable especially during
rainy seasons because of flood waters, mud and tall 'talahib' grasses thereon.'
Moreover, according to the petitioner, the road right of way which the private
respondents referred to as the petitioner's alternative right of way to Sucat Road
is not an existing road but has remained a proposed road as indicated in the
subdivision plan of the Sabrina Rodriguez Lombos Subdivision. 26

The petitioner's position is not impressed with merit. ... As borne out by the
records of the case, there is a road right of way provided by the Sabrina
Rodriguez Lombos Subdivision indicated as Lot 4133-G-12 in its subdivision plan
for the buyers of its lots. The fact that said lot is still undeveloped and causes
inconvenience to the petitioner when he uses it to reach the public highway does
not bring him within the ambit of the legal requisite (of lack of adequate outlet). . .
.To allow the petitioner access to Sucat Road through Gatchalian Avenue inspite
of a road right of way provided by the petitioner's subdivision for its buyers simply
because Gatchalian Avenue allows petitioner a much greater ease in going to
and from the main thoroughfare is to completely ignore what jurisprudence has
consistently maintained through the years regarding an easement of a right of
way, that 'mere convenience for the dominant estate is not enough to serve as its
basis. To justify the imposition of this servitude, there must be a real, not fictitious
or artificial, necessity for it. 27

On the authority of the Bacolod-Murcia ruling already referred to that all the four requisites
prescribed in Articles 649 and 650 must be established in order to warrant the creation of a legal
or compulsory easement of way, what has already been stated as to the absence of one of
those requisites is, without going any further, already decisive of this appeal and impels a
reversal of the appealed Decision, which has clearly ignored or failed to correctly appreciate the
import of crucial facts dictating a disposition contrary to that made therein.

Whether the Court of Appeals also erred, as the petitioner would put it, in not dismissing the
action for want of averment or showing that proper indemnity had been pre-paid for the right of
way demanded is not now inquired into. While such a proposition would appear to be supported
by the Bacolod-Murcia ruling which in part states that:

... The Central's original complaint only makes reference to a reasonable

compensation in paragraph 14 and no more. Assuming that such an expression
can be stretched into a manifestation that the Central is willing to pay such
compensation as may be ultimately fixed by the Court, it still is not prepayment
required by Article 649 of the Civil Code;...

reservations may with reason be held about interpreting Article 649 to require advance payment
of indemnity as a condition precedent to the filing of an action for a compulsory right of way. The
appealed Decision of the Court of Appeals observes that:
 ... It is absurd to say that even before the complaint is filed there must be a prior
payment of the indemnity for We do not know as yet how much such indemnity
would be. If both parties had previously agreed on such indemnity, no suit would
be essential. 28

There would, indeed, be some point in looking askance at a reading of the law which would
impute to it a strict requirement to pay "proper indemnity" in advance of a suit the purpose of
which, in addition to creating an easement, is precisely to fix the amount of the indemnity to be
paid therefor.

The question, however, is better left for consideration in a more appropriate setting where a
ruling would not constitute the mere dictum that it might be perceived to be were it to be made
here.

WHEREFORE, the appealed Decision of the Court of Appeals is REVERSED and SET ASIDE.
The complaint in Civil Case No. 66-V-73 of the Court of First Instance of Bulacan is
DISMISSED, the private respondent declared without right to the easement sued for, and the
writ of preliminary mandatory injunction issued in said case is LIFTED. Costs against the private
respondent.

SO ORDERED.
 G.R. No. 112331 May 29, 1996

ANASTACIA QUIMEN, Petitioner, v. COURT OF APPEALS and YOLANDA Q.

OLIVEROS, Respondents.

BELLOSILLO, J.:

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

Thus we conclude from the succeeding facts: Petitioner Anastacia Quimen together with her
brothers Sotero, Sulpicio, Antonio and sister Rufina inherited a piece of property situated in
Pandi, Bulacan. They agreed to subdivide the property equally among themselves, as they did,
with the shares of Anastacia, Sotero, Sulpicio and Rufina abutting the municipal road.
The share of Anastacia, located at the extreme left, was designated as Lot No. 1448-B-1. It is
bounded on the right by the property of Sotero designated as Lot. No. 14413-B-2. Adjoining
Sotero's property on the right are Lots Nos. 1448-B-3 and 1448-B-4 originally owned by Rufina
and Sulpicio, respectively, but which were later acquired by a certain Catalina Santos. Located
directly behind the lots of Anastacia and Sotero is the share of their brother Antonio designated
as Lot No. 1448-B-C which the latter divided into two (2) equal parts, now Lots Nos. 1448-B-6-A
and 1448-B-6-B, each with an area of 92 square meters. Lot No. 1448-B-6-A is located behind
Anastacia's Lot No. 1448-B-1, while Lot No. 1448-B-6-B is behind the property of Sotero, father
of respondent Yolanda.

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

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

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

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

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

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

Petitioner now comes to us imputing ERROR to respondent Court of Appeals: (a) in

disregarding the agreement of the parties; (b) in considering petitioner's property as a servient
estate despite the fact that it does not abut or adjoin the property of private respondent; and, (c)
in holding that the one-meter by five-meter passage way proposed by private respondent is the
least prejudicial and the shortest distance to the public road.

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

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

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

As defined, an easement is a real right on another's property, corporeal and immovable,

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

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

A cursory examination of the complaint of respondent Yolanda for a right of way 13 readily
shows that
[E]ven before the purchase of the said parcels of land the plaintiff was reluctant to purchase the
same for they are enclosed with permanent improvements like a concrete fence and store and
have (sic) no egress leading to the road but because of the assurance of the defendant that
plaintiff will be provided one (1) meter wide and five (5) meters long right of way in the sum of
P200.00 per square meter to be taken from Anastacia's lot at the side of a concrete store until
plaintiff reach(es) her father's land, plaintiff was induced to buy the aforesaid parcels of land . . .
That the aforesaid right of way is the shortest, most convenient and the least onerous leading to
the road and being used by the plaintiff's predecessors-in-interest from the very inception . . .

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

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

In the trial court, petitioner openly admitted

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

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

xxx xxx xxx

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

A. It is not true, sir.

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

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

xxx xxx xxx

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

A. In my property, sir.

Q. Now you will agree with me . . . the main reason why your brother is (sic) using this property
is because there was a store located near this portion?
 17
A. Yes, and according to the father of Yolanda there is no other way than this, sir.

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

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

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

SO ORDERED.
G.R. No. 75905 October 12, 1987

REMIGIO O. RAMOS, SR., petitioner,

vs.
GATCHALIAN REALTY, INC., EDUARDO ASPREC, and COURT OF
APPEALS, respondents.

GUTIERREZ, JR., J.:

In this petition for review on certiorari, the petitioner assails the decision of the Court of Appeals
dated August 29, 1986 which affirmed the November 14, 1984 order of the Regional Trial Court,
Branch CXI at Pasay City dismissing the petitioner's civil action for a right of way with prayer for
preliminary injunction.

Petitioner Ramos is the owner of a house and lot containing an area of 901 square meters
covered by Transfer Certificate of Title No. 14927 situated at Barrio San Dionisio, Parañaque,
Metro Manila. The lot was acquired by the petitioner from Science Rodriguez Lombos
Subdivision In the subdivision survey plan of Lot 4133-G, (LRC) PSD-172544, the lot is more
particularly described as Lot 4133-G-11 (Exhibits "1" and "1-A "). Two road lots abut petitioner's
property namely lot 4133-G-12 with an area of 2,160 square meters clearly appearing as a
proposed road in the Lombos subdivision plan and Lot 4135 of the Parañaque Cadastre now
known as Pambansa Road but more commonly referred to as Gatchalian Avenue.

Respondents Asprec own Lot 4135. Gatchalian Avenue is alongside Lot 4135. Respondent
Gatchalian Realty was granted the road right of way and drainage along Lot 4135 to service the
Gatchalian and Asprec subdivision, by the respondent Asprecs.

The records of this case disclose that on April 30, 1981, a complaint for an easement of a right
of way with preliminary mandatory injunction was filed by Ramos against the private
respondents. Among the allegations in the complaint are:

... that he (referring to the petitioner) constructed his house at 27 Gatchalian

Avenue (also known as Pambansa Road), Paranaque, and has since resided
therein with his family from 1977 up to the present; that during construction of the
house, Gatchalian Realty, Inc. built a 7-8, feet high concrete wall right infront of
appellant's premises, blocking his entrance/exit to Gatchalian Road, the nearest,
most convenient and adequate entrance/exit to the public road. or highway,
formerly Sucat Road but now known as Dr. A. Santos Avenue, Parañaque; that
this house and lot is only about 100 meters from Sucat, Road passing thru
Gatchalian Avenue; that prior to this, appellant and his counsel addressed
separate request/demand letters (Exh. A and Annex B) to defendant company to
allow him to exercise a right of way on the subject premises; that in September
1977, a meeting/conference was held between appellant and his counsel on one
hand and Mr. Roberto Gatchalian and counsel on the other, during which
defendant Corporation manifested its conformity to grant appellant the requested
right of way upon payment of proper indemnity, with the request that appellant
inform defendants Asprec of their aforesaid agreement; that consequently,
appellant wrote Mr. Cleto Asprec on September 16, 1977 (Exh. D); that with the
construction of the 7-8 feet concrete wall appellant and his family have been
constrained to pass through the back portion of their lot bounded by other lots
belonging to different owners, which is grassy and cogonal as temporary
ingress/egress with great inconvenience and hardship, and this becomes all the
more pronounced during the rainy season due to flood and mud (Exhs. B-1, B-1-
A, B-2; B-2-A, B-3, B-3-A, B-3-B and B-4); and, lastly, that the aforesaid concrete
wall is dangerously leaning towards appellant's premises posing great danger or
hazard. (Court of Appeals Decision, p. 3, Rollo, p. 39)

On May 20, 1981, the respondent corporation filed a motion to dismiss on grounds of lack of
cause of action and bar by prior judgment alleging that the complaint was merely a reproduction
of that filed on October 26, 1972 in Civil Case No. 5930-P which was dismissed on October 30,
1980 for failure to prosecute within a reasonable length of time. Respondents Asprec later
joined the respondent company in its motion to dismiss and adopted the grounds and
arguments stated therein.

On November 20, 1981, after the petitioner had filed his opposition to the above motions, the
lower court issued its order denying the motion to dismiss on the ground that the order
dismissing the earlier case was not an adjudication on the merits.

On November 26, 1981, the petitioner filed an urgent exparte motion for the issuance of a
preliminary mandatory injunction as well as a preliminary prohibitory injunction. On the same
day, the lower court set the motion for hearing on December 1, 1981, later reset to December
10, 1981, and ordered that:

In the meantime, pending determination of the application on the merits and in

order that the reliefs sought therein may not be rendered moot and academic, the
defendants and all persons acting upon their orders are hereby temporarily
enjoined from building, constructing and/or erecting a wall, fence or any
enclosure adjoining or abutting plaintiff's premises and/or from restraining,
preventing or prohibiting the plaintiff, his family or persons residing in his
premises as well as any person/s who may have any dealing or business with
them from using, passing and/or traversing the said Gatchalian Avenue in going
to or returning from the plaintiff's premises and in going to or returning from Sucat
Road via Gatchalian Avenue, until further orders from this Court. (Order dated
November 26,1981, Records, p. 66).

On December 1, 1981, Gatchalian Realty filed its answer and averred, among others, that:

xxx xxx xxx

Defendant Corporation has never entered into a verbal agreement with plaintiff to
grant the latter a road right of way;

xxx xxx xxx

The so-called Gatchalian Avenue or Palanyag Road is not a public road but a
private street established and constructed by the defendant Corporation intended
for the sole and exclusive use of its residents and lot buyers of its subdivisions,
as well as of the subdivisions owned and operated by the various naked owners
of the different portions constituting the entire length and breadth of said street;

If plaintiff's property referred to in the complaint is Lot No. 4133-G-11, (LRC) Psd-
229001 (sic), then a grant of a right of way to plaintiff is not a legal necessity,
because such lot has an eating road right of way, more particularly Lot 4133-G-
12, towards Dr. Arcadio Santos Avenue(Sukat Road);

xxx xxx xxx

The opening of Gatchalian Avenue to the property of plaintiff will unduly cause
great prejudice to defendant Corporation as it can no longer effectively regulate
the use of the said private road; ...

Assuming, though not admitting, that plaintiff may be granted a right of way, still
the reasonable compensation for such grant would be some P800,000.00, as
such portion of Gatchalian Avenue consists of some 2,000 square meters of
prime and valuable property which could readily command a market value of
P400.00 per square meter; moreover, plaintiff still has to shoulder his
proportionate share of the expenses and upkeep of such street and the real
estate taxes imposed thereon. (Answer of Gatchalian Realty, Inc., Records, pp.
81-82).
On December 2, 1981, respondent Asprec filed their answer which basically contained the
same averments as that of the realty company.

At the hearing of the petitioner's application for issuance of a writ of preliminary injunction to
compel the private respondents to remove the wall constructed right in front of the petitioner's
premises barring him access to Gatchalian Avenue, both parties presented oral and
documentary evidence to support their respective positions. After the hearing, the lower court
issued the following order:

Plaintiff is given fifteen (15) days to file a memorandum and the defendant is
given another fifteen days from receipt thereof to file a reply, after which the case
shall be deemed submitted for resolution. So ordered. (TSN, December 10,
1981, p. 57)

After compliance by both parties with the above order, the lower court, on July 9, 1982,
rendered a decision the dispositive part of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against

the defendants ordering the latter to grant the former a right of way through
Palanyag Road to and from Don Arcadio Santos Avenue and to and from his
residence, upon payment by the plaintiff to the defendants Asprecs the sum of
P5,000 as indemnity therefor and under the following terms and conditions to wit:
(1) the easement created shall be only in favor of the plaintiff, members of his
family and person or persons dealing with them; and (2) the opening to be
created through the concrete wall separating plaintiff's residence and Palanyag
Road shall only be three (3) meters wide and shall be provided by an iron gate by
the plaintiff all at the expense of the plaintiff. Without pronouncement as to costs
and damages. (Rollo, p. 30)

Thereafter, the respondent company filed a motion to set aside and/or reconsider the lower
court's decision for being premature since only the application for the writ of injunction was
heard and submitted for resolution and not the entire case. Respondents Asprec, likewise, filed
a motion for reconsideration mainly on the ground that the lower court's grant of a right of way
through Gatchalian Avenue in petitioner's favor would be in derogation of the "Contract of
Easement of Road Right-of-Way and of Drainage" executed between them and Gatchalian
Realty.

In his opposition to both motions, the petitioner argued that on the basis of the transcript of
steno graphic notes taken on December 10, 1981, it was clear that both parties submitted the
entire case for resolution inasmuch as the pieces of evidence for the injunction and for the main
case were the same and there was nothing left to be presented. Thus, in effect, the petitioner
contended that the lower court's decision dated July 9, 1982 was an adjudication on the merits.

On July 8, 1983, the lower court under a new judge by virtue of the reorganization of the
judiciary, issued an order setting aside and vacating its previous decision dated July 9, 1982 on
the ground that the same was "rendered prematurely as the defendants had not presented their
evidence on the main evidence."

After the petitioner had rested his case, the respondent company filed a motion to dismiss
based on the insufficiency of the evidence adduced by the petitioner. An opposition to said
motion, was, thereafter, filed by the petitioner.

On November 14, 1984, the lower court, acting on the respondent company's motion to dismiss,
issued an order with the following tenor:

WHEREFORE, finding the motion to dismiss of defendant corporation Gatchalian

Realty, Inc. to be impressed with merit, the same is hereby granted. For
insufficiency of evidence, plaintiff's complaint is hereby dismissed, without
pronouncement as to costs. (Rollo, p. 34)
The Court of Appeals on August 29, 1986, found that the petitioner failed to establish the
existence of the pre-conditions in order that he could legally be entitled to an easement of a
right of way. It affirmed the lower court's order dated November 14, 1984 in all respects, with
costs against the petitioner.

Hence, this petition which presents the following assignment of errors:

PUBLIC RESPONDENT ERRED IN AFFIRMING I-IV TOTO THE ORDER OF DISMISSAL OF

THE TRIAL COURT IN ALL RESPECTS WITH COSTS AGAINST THE PETITIONER.

II

PUBLIC RESPONDENT ERRED IN ITS DECISION TO THE EFFECT THAT PETITIONER HAS
NOT SUFFICIENTLY MET THE REQUIREMENTS OF THE LAW AND IN FAILING TO PROVE
HIS RIGHT OF WAY THROUGH GATCHALIAN AVENUE OR PALANYAG ROAD AGAINST
THE RESPONDENTS HEREIN;

III

PUBLIC RESPONDENT ERRED IN FAILING TO SET ASIDE THE ORDER OF THE TRIAL
COURT, AND NOT ADOPTING THE DECISION OF THE TRIAL COURT DATED JULY 9,1982
GRANTING TO PETITIONER A RIGHT OF WAY IN THE SUBJECT PREMISES. (Rollo, pp. 14-
15)

These assigned errors center on the issue of whether or not the petitioner has successfully
shown that all the requisites necessary for the grant of an easement of a right of way in his favor
are present.

An easement or servitude in an encumbrance imposed upon an immovable for the benefit of

another immovable belonging to a different owner as defined in Article 613 of the Civil Code. It
is established either by law, in which case it is called legal or by the will of the parties, in which
event it is a voluntary easement. (See Article 619, Civil Code of the Philippines; City of Manila
vs. Entote, 57 SCRA 497, 503).

Since there is no agreement between the contending parties in this case granting a right of way
by one in favor of the other, the establishment of a voluntary easement between the petitioner
and the respondent company and/or the other private respondents is ruled out. What is left to
examine is whether or not the petitioner is entitled to a legal or compulsory easement of a right
of way.

In the case of Bacolod-Murcia Milling Company, Inc. vs. Capitol Subdivision Inc., et al. (17
SCRA 731, 735-6), we held that:

... the Central had to rely strictly on its being entitled to a compulsory servitude of
right of way, under the Civil Code, and it could not claim any such servitude
without first establishing the pre-conditions for its grant fixed by Articles 649 and
650 of the Civil Code of the Philippines:

(1) That it is surrounded by other immovables and has no

adequate outlet to a public highway (Art. 649, par. 1);

(2) After payment of proper indemnity (Art. 649, p. 1. end);

(3) That the isolation was not due to the Central's own acts (Art.
649, last par.); and

(4) That the right of way claimed is "at the point least prejudicial to
the servient estate; and insofar as consistent with this rule, where
 the distance from the dominant estate to a public highway may be
the shortest." (Art. 650).

By express provision of law, therefore, a compulsory right of way can not be

obtained unless the four requisites enumerated are first shown to exist, and the
burden of proof to show their existence was on the Central. (See also Angela
Estate, Inc. vs. Court of First Instance of Negros Occidental 24 SCRA 500, 510)

On the first requisite, the petitioner contends that since the respondent company constructed
the concrete wall blocking his ingress and egress via the Gatchalian Avenue, the "nearest, most
convenient and adequate road" to and from a public highway, he has been constrained to use
as his "temporary" way the adjoining lots belonging to different persons. Said way is allegedly
"bumpy and impassable especially during rainy seasons because of flood waters, mud and tall
'talahib' grasses thereon." Moreover, according to the petitioner, the road right of way which the
private respondents referred to as the petitioner's alternative way to Sucat Road is not an
existing road but has remained a proposed road as indicated in the subdivision plan of the
Sobrina Rodriguez Lombos Subdivision.

The petitioner's position is not impressed with merit. We find no reason to disturb the appellate
court's finding of fact that the petitioner failed to prove the non-existence of an adequate outlet
to the Sucat Road except through the Gatchalian Avenue. As borne out by the records of the
case, there is a road right of way provided by the Sabrina Rodriguez Lombos Subdivision
indicated as Lot 4133-G-12 in its subdivision plan for the buyers of its lots. The fact that said lot
is still undeveloped and causes inconvenience to the petitioner when he uses it to reach the
public highway does not bring him within the ambit of the legal requisite. We agree with the
appellate court's observation that the petitioner should have, first and foremost, demanded from
the Sabrina Rodriguez Lombos Subdivision the improvement and maintenance of Lot 4133-G-
12 as his road right of way because it was from said subdivision that he acquired his lot and not
either from the Gatchalian Realty or the respondents Asprec. To allow the petitioner access to
Sucat Road through Gatchalian Avenue inspite of a road right of way provided by the
petitioner's subdivision for its buyers simply because Gatchalian Avenue allows petitioner a
much greater ease in going to and coming from the main thoroughfare is to completely ignore
what jurisprudence has consistently maintained through the years regarding an easement of a
right of way, that "mere convenience for the dominant estate is not enough to serve as its basis.
To justify the imposition of this servitude, there must be a real, not a fictitious or artificial,
necessity for it." (See Tolentino, Civil Code of the Philippines, Vol. II, 2nd ed., 1972, p. 371)

Considering that the petitioner has failed to prove the existence of the first requisite as
aforestated, we find it unnecessary to discuss the rest of the preconditions for a legal or
compulsory right of way.

Once again, we apply the rule that findings of facts of the Court of Appeals are binding on the
Supreme Court and who not be overturned when supported by the evidence on record save in
the known exceptions such as gross misappreciation of the evidence or misapprehension of
facts. (See Community Savings and Loan Association, Inc. vs. Court of Appeals, et al., G.R. No.
75786 promulgated on August 31, 1987; Regalario vs. Northwest Finance Corporation, 117
SCRA 45; Agton vs. Court of Appeals, 113 SCRA 322).

WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED for lack of merit. The
questioned decision of the Court of Appeals is AFFIRMED.

SO ORDERED.
G.R. No. L-57641 October 23, 1982

ANTOLIN A. JARIOL, and PAULO S. RODRIGUEZ, In their capacities as Joint Executors

of the Estate of Humiliano Rodriguez, deceased, petitioners,
vs.
HON. COURT OF APPEALS, DOMINO JAGDON, in his Capacity as Administrator of the
Estate of Timoteo Rodriguez, deceased, CLEMENTE RODRIGUEZ, TERESITA
RODRIGUEZ, JULIA RODRIGUEZ, AMPARO RODRIGUEZ, FAUSTA RODRIGUEZ,
FRANCISCA VDA. DE RODRIGUEZ, INES VDA. DE RODRIGUEZ, ADDULA RODRIGUEZ,
DOLORES RODRIGUEZ and JUANITA RODRIGUEZ, respondents.

Orlando Paray and Francis Zosa & Associates for petitioners.

Pedro T. Garcia for respondents Domino Jagdon, Francisca Vda. de Rodriguez and Fausta
Rodriguez.

Domingo Quibranza for respondents Ines Vda. de Rodriguez, Abdulia Rodriguez and Juanita
Rodriguez.

Castor Y. Hontanosas, Sr. for respondents Clemente Rodriguez, Teresita Rodriguez, Julia
Rodriguez and Amparo Rodriguez.

MELENCIO-HERRERA, J.:

This is a Petition for Review on certiorari of the Decision of the Court of Appeals in its Case No.
CA-G.R. No. 47020-R. The Petition was initially denied but upon a second Motion for
Reconsideration, the denial was reconsidered and it was given due course.

We have found the facts to be as follows:

The deceased Quirino Rodriguez left four children: Humiliano, Timoteo, Jose, all surnamed
Rodriguez, and Ines Rodriguez de Pages.

On November 25, 1951, these heirs (Jose, then deceased, being represented by Ines Vda. de
Rodriguez and his adult children Abdulia, Dolores and Juanita), entered into an extrajudicial
partition to divide a parcel of land covered by Transfer Certificate of Title No. RT-345 (T-193) of
the Registry of Deeds, Cebu City, in the name of the deceased. The deed was signed by two
witnesses and notarized by Atty. Bernardo B. Solotan. In this agreement, the property was
divided into Lots "A" to "G" inclusive. Lot "F" was adjudicated to Humiliano, and Lot "G" to
Timoteo. Lot "G" has no egress to the public roads.

On November 16, 1953, the original and copies of the Deed of Partition were allegedly burned
when the Quirino Rodriguez Building was razed by fire.

On May 22, 1956, Timoteo died and his son, Clemente Rodriguez, was appointed executor of
the estate, but was later replaced by Dominino Jagdon. They are two of the private respondents
herein.

After Humiliano's death in 1961 or 1962, petitioners Antolin A. Jariol, his son-in- law, and Paulo
S. Rodriguez, his son, were appointed executors of his estate.

On June 27, 1960, the Deed of Extra-Judicial Partition, with annotations and additions on the
left and right hand margins on page 4 and below the notarial acknowledgment on page 5, was
registered by Clemente Rodriguez, son of Timoteo, in the Office of the Register of Deeds of
Cebu. These annotations are reproduced in full hereunder:

On the left hand margin of Page 4:

 That on the approved subdivision plan with reference to the existing actual
private lane, Lots 802-B-2-B-2-C, 802-B-2-B-2-D, 802-B-2-B-2B shall allot for the
private lane three (3) meters each on their respective sides and thence six (6)
meters for lot 802-B-2-B-2-F following the existing private lane,more particularly
described at the bottom of page 5 of this document. (Emphasis supplied).

On the right hand margin of page 4:

That the contracting parties to the aforementioned extrajudicial partition of the

estate of the deceased, Quirino Rodriguez, hereby will and bind themselves
together with all the heirs, successors, and assigns to an the provisions of the
said document.

Below the acknowledgment of page 5:

That the owners of the following lots bind themselves for their mutual benefit a
perpetual easement of right of way described as follows:

Lot No. 802-B-2-B-2-G — Three meters in width on the N. boundary.

Lot No. 802- B-2-B-2-D — Three meters in width on the S. W. boundary.

Lot No. 802-B-2-B-2-C — Three meters in width on the S. W. boundary.

Lot No. 802-B-2-B-2-B — Three meters in width on the S. W. boundary.

Lot No. 802-B-2-B-2-F — Six meters in width along the common boundary line of
the said lots with the said boundary line as the centerline. 1

It is said that

xxx xxx xxx

Of the seven (7) heirs who signed at the left hand margins of pages 1, 2, 3 and 5
and at the bottom of page 4, only five (5) initials are found with the left hand
margin insertion, with one "T.R. by C.L.R.", on the right hand margin insertion
only four (4) initials are found with one "T.R. by C.L.R.", with the insertion of the
bottom of page 5, only five (5) initials are found with one "T.R. by C.L.R.", and

No signatures or initials of the two witnesses are found with any of the
insertions. 2

To be noted from the partition agreement is the fact that four heirs were to contribute for the
easement of right-of-way three (3) meters each, while Humiliano, to whom Lot "F" appertained,
was to give six meters.

Upon the contention that they had discovered the annotations only in 1964, petitioners Antolin
A. Jariol and Paulo S. Rodriguez, as joint executors of Humiliano's estate, together with Ines
Rodriguez de Pages, filed an action with the Court of First Instance of Cebu on March 11, 1965
against respondents Dominino Jagdon as administrator of the estate of Timoteo Rodriguez,
Clemente Rodriguez, Dolores Rodriguez, and Ines Vda. de Rodriguez, seeking to declare the
nullity of the annotations and insertions for having been surreptitiously and maliciously added
long after the execution of the principal document, and the cancellation of the easements of
right of way noted as encumbrances on the Certificates of Title issued for the subdivided lots,
particularly on "Lot F". It was alleged that the initials of Humiliano and Ines Rodriguez de Pages
affixed to the insertions were forged as found by a handwriting expert; that not all the parties to
the document had affixed their initials to the insertions; that had the annotations been made at
the time of the execution of the document, Timoteo, who was still alive, should have signed the
annotations and not his son Clemente. The Complaint was amended three times to include
other heirs either as parties plaintiffs or parties defendants.
During the trial, petitioners presented the deposition of Ines Rodriguez de Pages, then 81 years
old, to the effect that the initials "I.R.P. " appearing in the insertions were not her own.

Defendants-respondents, on the other hand, sustained the genuineness and due execution of
the annotations or additions and presented their own handwriting expert. They averred that the
agreement merely confirmed the existing right of way.

In its judgment rendered on August 22, 1968, the Trial Court concluded:

It is the conclusion of this Court therefore, that the initials of Ines Rodriguez de
Pages and Humiliano Rodriguez were forged and that Clemente Rodriguez, in
initialing the said insertions or additions without any power of attorney from
Timoteo Rodriguez does not bind the latter. Hence, the alleged agreement
creating the easement is of no force and legal effect upon the heirs of Quirino
Rodriguez. 3

and declared the alterations or annotations complained of illegal and unlawful and without any
legal force and effect; ordered the Register of Deeds of Cebu to cancel the easement of right of
war noted as encumbrances on the title; and finding that Clemente Rodriguez was responsible
for the "falsification of the insertions" and the "forgery" of the initials of Humiliano and Ines
Rodriguez de Pages, required defendants therein to pay actual, moral and exemplary damages
as well as attorney's fees for having "abetted" the "wrondoing" of Clemente.

After defendants-respondents' Motion for New Trial on the ground that the deposition of Ines R.
de Pages should not have been admitted in evidence, was denied, they appealed to the Court
of Appeals.

On October 15, 1980, the Court of Appealls 4 reversed the judgment appealed from and
dismissed the Third Amended Complaint as well as all counterclaims principally on the ground
that the right-of-way involved, which was a pre-existing one, even prior to the extra judicial
partition, sprang not from any voluntary concession but from law.

Petitioners came to this Court on a Petition for Review on certiorari asserting that respondent
Appellate Court erred in skirting the issue on the genuineness and/or binding effect of the forged
alterations and insertions on the Deed of Extrajudicial Partition; and in holding that a legal
easement of right-of-way automatically attaches to Lot "F" adjudicated to Humiliano, as the
servient estate, which was not an issue framed by the parties on appeal.

Petitioners take issue with the findings of respondent Court, which read in part:

Appellees also presented the deposition of Ines Rodriguez Pages, then aged 81, who denied
the genuineness of her initials to the questioned insertions. On the other hand, appellants
presented, inter alia, Atty. Bernardo Solatan, the lawyer who prepared and notarized the
extrajudicial partition document; and Mrs. Amparo R. Casafranca, daughter of Humiliano
Rodriguez and sister-in-law of appellee Jariol. Atty. Solatan testified that the partition document
was made under the direction of Humiliano Rodriguez (tsn-Cavalida, Jan. 15, 1968, p. 237); that
he prepared the insertions at the instance of Humiliano Rodriguez (tsn-Cavalida, Jan. 15, 1968,
pp. 240-242); and that the initials attributed to Humiliano Rodriguez and Ines Rodriguez de
Pages were authentic. Unrebutted was the testimony of Mrs. Casafranca that her father
Humiliano Rodriguez favored the maintaining of a road right of way (tsn-Javier, May 9, 1968,
p.4), and that this easement existed long before the execution of the extrajudicial partition (tsn-
Javier, May 9, 1968, p. 6).<äre||anº•1àw> Appellee Jariol confirmed that he knows of only one
easement, that is, the one adjacent to his house (tsn-lyog, May 23, 1968, p. 35). We can only
conclude that the easement encumbrance inserted in the extra-judicial partition referred to the
existing right-of-way to which Humiliano Rodriguez was in favor of maintaining. 5

The Appellate Court then went on to state:

It cannot be denied that easements of right-of-way, being discontinuous, cannot

be acquired by prescription. However, a close perusal of the subdivision plan of
Lot 802-B-2-B-2 (Exh. D) reveals that Lot 802-B-2-B-2-G with an area of 1422
 square meters has no access to the public roads. Corner no. 1 of this lot is
almost 80 meters from Juan Luna street and about 73 meters from Colon Street,
the latter through Lot No. 802-B-2-B-2-F. Under the partition agreement, Lot 802-
B-2-B-2- G appertained to Timoteo Rodriguez and his heirs. A legal easement of
right-of- way can therefore be established in favor of the heir to which this lot
went. Section 652 of the New Civil Code reads: "Whenever a piece of land
acquired by sale, exchange or partition is surrounded by other estates of the
vendor, exchanger, or co-owner, he shall be obliged to grant a right-of-way
without indemnity." Section 651 explains: "The width of the easement of right-of-
way shall be that which is sufficient for the needs of the dominant estate, and
may accordingly be changed from time to time." From the foregoing discussions,
it would be immaterial to delve into whether the insertions in the extrajudicial
partition are illegal and unauthorized. The right of the dominant estate to demand
a right-of-way springs not from any voluntary concession but from law. Appellees
must provide the owners of the dominant estate (Lot 802-B-2-B-2-G in this case)
egress to the public road. Had the partition been the other way around, surely
appellees would want a way out to the street. Justice and equity demand that
the status quo be maintained with regards to the easement of right-of-
way. 6 (Emphasis supplied)

Upon the foregoing exposition, we find that there is no substantial justification for setting aside
the aforequoted findings of respondent Court. In the first place, it did not entirely disregard the
matter of the questioned alterations and insertions. It summarized the conflicting evidence
thereon, as quoted hereinabove, observing that "unrebutted was the testimony of Mrs.
Casafranca that her father Humiliano Rodriguez favored the maintaining of a right-of-way (tsn.
Javier, May 9, 1968, p. 4)." Mrs. Amparo R. Casafranca, who testified of her own knowledge, is
the sister- in-law and sister, respectively, of petitioners. If Humiliano himself favored the right-of-
way, petitioners, as his successors-in-interest, should be held bound by it. Respondent Court
added that the Notary Public, Atty. Bernardo Solotan, who authenticated the document, also
declared that the initials of Humiliano and Ines R. de Pages were authentic, and that the
insertions were made at the instance of Humiliano. We view those declarations as amounting to
findings of fact made by an Appellate Court, which we consider as binding on us.

And as far as Timoteo is concerned, although the Trial Court found that he did not initial the
insertions, supra, there can be no denying that he would be the last to object to the easement
established for it also inured to the benefit of "Lot G". which was allocated to him.

Secondly, the substantial question is whether or not "Lot G " is entitled to the easement of right
of way. In point of fact, a road right of way providing access to the public road from "Lot G"
existed long before the execution of the extrajudicial partition even during the lifetime of Quirino
Rodriguez. The Deed of Partition merely sought to legalize and give stability to the access road
already existing. That was confirmed by the testimony of Mrs. Casafranca. That is also the
position taken by the other heirs who have been included as defendants respondents. As a
matter of law, considering that "Lot G " has no access to the public road, the easement is
explicitly provided for in Article 652 of the Civil Code 7 , its width being determined by the needs
of the servient estate pursuant to Article 651 8 of the same law.

Thirdly, the justice of the situation rather than the technicalities of the controversy should govern
herein. The questioned insertions and annotations refer to an "existing actual private lane." The
question of legality of those insertions is linked with the need for its continued existence and the
laws on easement cannot but have a definite bearing. The annotations did not "create" a right-
of-way, contrary to the opinion of the Trial Court. They merely confirmed are existing one.
Respondent Appellate Tribunal did not "by judicial fiat" establish a "legal easement of right- of-
way" on Lot "F". It found that it had been pre-existing and that under the circumstances, the
laws on easement were applicable. A chapel exits in the interior constructed by the deceased
Quirino Rodriguez, who was also responsible for giving chapel-goers access thereto from the
street. 9 The right-of-way exists for the mutual benefit of most of the heirs of Quirino Rodriguez.
As aptly stated by respondent Court "justice and equity demand that the status quobe
maintained with regards to the easement of right of way."

With the conclusions arrived at, the Resolution, dated June 30, 1982, giving due course to this
Petition must be set aside and this Petition denied.
WHEREFORE, let this Petition for Review be, as it is, hereby denied for lack of merit.

Costs against petitioners.

SO ORDERED.
G.R. No. 125339 June 22, 1998

CRESENCIA CRISTOBAL, ROBERTO MAKIMKIM, DAMASO MAKIMKIM, SPOUSES

SALVADOR HERMALINO and PONCIANA MAKIMKIM, MILAGROS MAKIMKIM, REMEDIOS
MAKIMKIM, SPOUSES FRANCISCO ESTANISLAO and FLORDELIZA MAKIMKIM,
ERLINDA MAKIMKIM, JOSE MAKIMKIM and GINA MAKIMKIM, petitioners,
vs.
COURT OF APPEALS, CESAR LEDESMA, INC., SPOUSES JESUS C. PACIONE and
LERMA B. PACIONE, respondents.

BELLOSILLO, J.:

This petition for review seeks the reversal of the decision of respondent Court of Appeals of 16
January 1996 in CA-G.R. CV Case No. 37273, "Cresencia Cristobal, et al. v. Cesar Ledesma,
Inc., et al.," 1 which affirmed in toto the decision of the RTC-Br. 81, Quezon
City, 2 dismissing herein petitioners' complaint for easement of right of way, and the
Resolution of 14 June 1996 denying their motion for reconsideration.

Petitioners own a house and lot situated at No. 10 Visayas Avenue Extension, Quezon
City, where they have been residing from 1961 to the present. Respondent Cesar
Ledesma, Inc., on the other hand, is the owner of a subdivision at Barrio Culiat along
Visayas Avenue which once included the disputed residential lots, Lot 1 and Lot 2, with
areas of 164 square meters and 52 square meters, respectively, located adjacent to
petitioners' property. Lots 1 and 2 were originally part of a private road known as Road
Lot 2 owned exclusively by Cesar Ledesma, Inc. Petitioners were using Road Lot 2 in
going to and from the nearest public road. When Visayas Avenue became operational as
a national road in 1979, Cesar Ledesma, Inc., filed a petition before the RTC of Quezon
City to be allowed to convert Road Lot 2 into residential lots. 3 The petition was granted,
hence, Road Lot 2 was converted into residential lots designated as lot 1 and lot 2.
Subsequently, Cesar Ledesma , Inc., sold both lots to Macario Pacione in whose favor
transfer Certificates of Title were correspondingly issued. In turn, Macario Pacione
conveyed the lots to his son and dauhter-in-law, respondent spouses Jesus and Lerma
Pacione.

When the Pacione spouses, who intended to build a house on Lot 1, Visited the property
in 1987, they found out that the lot was occupied by a squatter named Juanita Geronimo
and a portion was being used a passageway by petitioners to and from Visayas Avenue.
Accordingly, the spouses complained about the intrusion into their property to the
Barangay Office. At the barangay conciliation proceeding, petitioners offered to pay for
the use of a portion of Lot 1 as passageway but the Pacione spouses rejected the offer.
When the parties failed to arrive at an amicable settlement, the spouses started
enclosing Lot 1 with a concrete fence.

Petitioners prostested the enclosure alleging that their property was bounded on all
sides by residential houses belonging to different owners and had no adequate outlet
and inlet to Visayas Avenue except through the property of the Paciones. As their
protests went unheeded, petitioners instituted an action for easement of right of way with
prayer for the issuance of a temporary restraining order (TRO).

On 3 June 1987 the trial court issued a TRO directing the Pacione spouses to cease and
desist from fencing the disputed property. The Paciones objected arguing that
petitioners were not entitled to a TRO since they showed no valid basis for its issuance,
and that petitioners had no cause of action against respondents because there were
actually two (2) accessible outlets and inlets — a pathway right in front of their gate
leading towards an asphalted 5-meter road to the left, and across an open space to the
right adjacent to respondents' lot likewise leading to Visayas Avenue.

At the instance of the parties, the trial court ordered an ocular inspection of the property.
A Board of Commissioners was constituted for that purpose composed of
representatives chosen by the parties, with Deputy Sheriff Florencio D. Dela Cruz, Jr., as
representative of the court.

On 3 January 1990 Deputy Sheriff Dela Cruz, Jr., submitted his Report 4 relative to the
ocular inspection on the litigated lots —

. . . there is another way from the Visayas Ave. to the plaintiffs' lot existing
at the time of the ocular inspection. Plaintiffs can use the street originating
from Visayas Avenue, identified as Ma. Elena St., which is about 2.5 m. in
width and about 150 m. in length up to an intersection, meeting a private
road, which is about 100 meters in length, that ends at the lower portion of
the right side of the adjacent vacant lot previously identified, and at the
back of a lot with concrete fence located at the back of the plaintiffs'
properly. From that point the plaintiff must enter the adjacent vacant lot
(entry to the said lot is still possible during ocular inspection because the
barbed wires were not properly placed) to reach a gate at the side of the
plaintiffs' lot, about 16 m. from the end of the private road, allegedly used
by the plaintiffs before the adjacent lot was enclosed by barbed wires.
According to Atty. Mendoza, counsel for the defendants, that gate no
longer exist(ed) at the time of the ocular inspection.

As may be observed from the above report, only one outlet was indicated by Sheriff Dela
Cruz, Jr. The other outlet across an open space to the right referred to by the Pacione
spouses was not reflected thereon. Howecer, on the basis of the report as well as the
testimonial an documentary evidence of the parties, the trial court dismissed the
complaint holding that one essential requisite of a legal easement of right of way was not
proved, i.e., the absence of an alternative adequate way or outlet to a public highway, in
this case, Visayas Avenue. 5

Petitioners appealed to the Court of Appeals arguing that the trial court erred in finding
that they failed to sufficiently establish the essential fact that from their property no
adequate outlet or access to a highway existed; and, that the conversion of the Road Lot
into two (2) residential lots by Cesar Ledesma, Inc., was violative of PD No. 957, hence
illegal, and the titles issued as a consequence of the conversion were null and void.

On 16 January 1996 the Court of Appeals rendered its assailed decision affirming the
findings of the trial court —

The burden of proving the existence of the requisites of easement of right

of way lies on the owner of the dominant estate. In the case at bar, plaintiff-
appellants failed to prove that there is no adequate outlet from their
property to a public highway. Convenience of the dominant estate is not a
gauge for the grant of compulsory right of way. The true standard for the
grant of the legal right is "adequacy." Hence, when there is already an
existing adequate outlet from the dominant estate to a public highway, as
in this case, even if the outlet, for one reason or another, be inconvenient,
the need to open up another servitude is entirely unjustified. To justify the
imposition of a easement of right of way, there must be real, not ficitious or
artificial necessity for it. A right of way is legally demandable, but the
owner of the dominant estate is not at liberty to impose one based on
arbitrary choice. Art. 650 of the Civil Code provides for the criteria in the
establishment of such easement but it has been settled that the criteria of
"least prejudicial" prevails over shortest distance. Each case must be
weighed according to its individual merits and judged according to the
sound discreation of the court (Costabella Corporation v. Court of Appeals,
G.R. No. 80511, 193 SCRA 333 [1991]).

The second assigned error has no legal leg to stand on since plaintiff-
appellants cannot just introduce a new issue to an already settled one,
especially for the time on appeal.
Their motion for reconsideration having been denied, petitioners now come to us with
the following assignment of errors: First, the Court of Appeals erred in applying the
doctrine in Costabella, considering that in the instant case the four (4) requisites that
must be complied with by an owner of the dominant estate in order to validly claim a
compulsory right of way have been clearly established by petitioners, contrary to the
Decision appealed from, and that the facts in Costabella are not the same as in the
present case. Second, the Court of Appeals seriously erred in holding that the question
of legality or illegality of the conversion of Road Lot 2 into two (2) residential lots by the
Cesar Ledesma, Inc., is a new issue raised for the first time on appeal, because such
issue appeared in the complaint filed before the trial court.

Quite noticeably, petitioners' first assigned error is essentially factual in nature, i.e., it
merely assails the factual findings of both the Court of Appeals and the trial court. Basic
is the rule in this jurisdiction that only questions of law may be raised in a petition for
review under Rule 45 of the 1997 Rules of Civil Procedure. The jurisdiction of the
Supreme Court in cases brought to it from the Court of Appeals is limited to reviewing
errors of law, the findings of fact of the appellate court being conclusive. 6 We have
emphatically declared that it is not the function of this Court to analyze or weigh such
evidence all over again, its jurisdiction being limited to reviewing errors of law that may
have been committed by the lower court. 7

Petitioners insist that their petition raises a question of law, that is, the correctness of
the appellate court's ruling that one who has an existing passageway, however
inconvenient that passageway may be, is no longer entitled to an easement of right of
way.

We do not agree. Questions of law are those that do not call for any examination of the
probative value of the evidence presented by the parties. 8 In the instant case,
petitioners' assignment of errors would have this Court go over the facts because it
necessarily entails an examination of the evidence and its subsequent re-evaluation to
determine whether petitioners indeed have no sufficient outlet to the highway.

Petitioners next claim that the findings of the appellate court are based on
misapprehension of facts, which circumstance warrants a review of the appellate court's
decision. Yet, they failed to sufficiently demonstrate this allegation in their pleadings.
Absent a clear showing that the findings complained of are totally devoid of support in
the record, or that they are so glaringly erroneous as to constitute serious abuse of
discretion, such findings must stand.

At any rate, even assuming that the first assignment of error may be properly raised
before this Court, we find no reversible error in the assailed decision. To be entitled to a
compulsory easement of right of way, the preconditions provided under Arts. 649 and
650 of the Civil Code must be established. These are: (1) that the dominant estate is
surrounded by other immovables and has no adequate outlet to a public highway; (2)
that proper indemnity has been paid; (3) that the isolation was not due to acts of the
proprietor of the dominant estate; (4) that the right of way claimed is at a point least
prejudicial to the servient estate and, in so far as consistent with this rule, where the
distance from the dominant estate to a public highway may be the shortest. 9 The burden
of proving the existence of these prerequisites lies on the owner of the dominant
estate. 10

In the present case, the first element is clearly absent. As found by the trial court and the
Court of Appeals, an outlet already exist, which is a path walk located at the left side of
petitioners' property and which is connected to a private road about five hundred (500)
meters long. The private road, in turn, leads to Ma. Elena Street which is about 2.5 meters
wide and, finally, to Visayas Avenue. This outlet was determined by the court a quo to be
sufficient for the needs of the dominants estate, hence petitioners have no cause to
complain that they have no adequate outlet to Visayas Avenue.

Further, no evidence was adduced by petitioners to prove that the easement they seek to
impose on private respondents' property is to be established at a point least prejudicial
to the servient estate. For emphasis, Lot 1 is only 164 square meters and an improvident
imposition of the easement on the lot may unjustly deprive private respondents of the
optimum use and enjoyment of their property, considering that its already small area will
be reduced further by the easement. Worse, it may even render the property useless for
the purpose for which private respondents purchased the same.

It must also be stressed that, by its very nature, and when considered with reference to
the obligations imposed on the servient estate, an easement involves an abnormal
restriction on the property rights of the servient owner and is regarded as a charge or
encumbrance on the servient estate. Thus, it is incumbent upon the owner of the
dominant estate to establish by clear and convincing evidence the presence of all the
preconditions before his claim for easement of right of way be granted. Petitioners
miserably failed in this regard.

On the question of adequacy of the existing outlet, petitioners allege that the path walk is
much longer, circuitous and inconvenient, as from Visayas Avenue one has to pass by
Ma. Elena St., turn right to a private road, then enter, then vacant lot, and turn right again
to exit from the vacant lot until one reaches petitioners' property.

We find petitioners' concept of what is "adequate outlet" a complete disregard of the

well-entrenched doctrine that in order to justify the imposition of an easement of right of
way there must be a real, not ficititious or artificial, necessity for it. Mere convenience for
the dominant estate is not what is required by law as the basis for setting up a
compulsory easement. Even in the face of necessity, if it can be satisfied without
imposing the easement, the same should not be imposed. 11

Thus, in Ramos v. Gatchalian, 12 this Court disallowed the easement prayed for — even if
petitioner therein "had to pass through lots belonging to other owners, as temporary
ingress and egress, which lots were grassy, cogonal an greatly inconvenient due to flood
and mud" — because it would run counter to the prevailing jurisprudence that mere
convenience for the dominant estate does not suffice to serve as basis for the easement.

Also, in Floro v. Llenado, 13 we refused to impose an easement of right of way over

petitioner's property, although private respondent's alternative routes admittedly
inconvenient because he had to traverse several rice lands and rice paddies belonging to
different persons, not to mention that said passage, as found by the trial court, was
impassable during rainy season.

Admittedly, the proposed right of way over private respondents' property is the most
convenient, being the shorter and the more direct route to Visayas Avenue. However, it is
not enough that the easement be where the way is shortest. It is more improtant that it be
where it will cause the least prejudice to the servient estate. 14 As discussed elsewhere,
petitioners failed to sufficiently demonstrate that the proposed right of way shall be at a
point least prejudicial to the servient estate.

The second assignment of error was likewise properly rejected by the appellate court.
Primarily, the issue of legality or illegality of the conversion of the road lot in question
has long been laid to rest in LRC Case No. Q-1614 15 which declared with finality the
legality of the segregation subdivision survey plan of the disputed road lot.
Consequently, it is now too late for petitioners to question the validity of the conversion
of the road lot.

Finally, questions relating to non-compliance with the requisites for conversion of

subdivision lots are properly cognizable by the National Housing Authority (NHA), now
the Housing and Land Use Regulatory Board (HLURB), pursuant to Sec. 22 of PD
957 16 and not by the regular court. Under the doctrine of primary administrative
jurisdiction, 17 where jurisdiction is vested upon an administrative body, no resort to the
courts may be made before such administrative body shall have acted upon the matter.
WHEREFORE, Petition is DENIED. The 16 January 1996 Decision and the 14 June 1996
Resolution of the Court of Appeals denying reconsideration thereof are AFFIRMED.
Costs against petitioners.

SO ORDERED.
G.R. No. L-10372 December 24, 1915

DOMINGO LAO and ALBINA DE LOS SANTOS, applicants-appellants,

vs.
THE HEIRS OF LORENZA ALBURO, objectors-appellees.

Medina, Gabriel and Diaz for appellants.

Buenaventura Reyes for appellees.

TORRES, J.:

This appeal by bill of exceptions was taken from the judgment of August 17, 1914, in which the
honorable judge of the Court of Land Registration decreed that, after the description of the
parcel of land No. 2 should have been amended in the manner indicated, the parcels of land in
the case at bar should be registered in the name of the applicants, Domingo Lao and his wife
Albina de los Santos. It was held in this decree that the wall, called a stone wall in the plan of
the said parcel No. 2, was a party wall between the said parcel and the property adjoining it on
the north-west. Counsel for the applicants excepted to this finding and moved for a new trial. His
motion was overruled whereupon the applicants excepted and duly filed their bill of exceptions,
which was approved and transmitted to this court.

On May 8, 1914, counsel for the said husband and wife filed a written application in the Court of
Land Registration for the registration of four parcels of land, together with the buildings thereon,
of which they claimed to be the absolute owners. The first of said parcels, Lot No. 1, comprising
a house and three other buildings known as accesorias, all of strong materials, is situated in
Calle Juan Luna, formerly Calle Jolo or Anloague of the district of Binondo, and has an area of
175.08 square meters; the second parcel, Lot No. 2, comprising a house of strong materials
erected thereon, likewise situated in Calle Juan Luna, formerly Calle Jolo or Anloague, Binondo,
is 212.05 square meters in area; the third parcel of land, Lot No. 3, located in Calle Elcano, San
Nicolas, Binondo, and measures 596.06 square meters in area; and the fourth parcel of land,
Lot No. 2, containing two buildings of strong materials, one of them of three stories, situated in
Calle Elcano, San Nicolas, Binondo, 813.01 square meters in area. The street numbers of the
two latter properties appear in the said judgment, and their boundaries are given in both the said
plan No. 1 and in their respective technical descriptions.

The application recites that the first of the four above-mentioned properties was appraised in the
last assessment, the land at P4,664 and the buildings at P4,000; the second parcel, the land at
P5,492 and the buildings at P3,600; the third parcel, the land at P6,329 and the buildings at
P4,000; and the fourth parcel, the land at P8,529 and the buildings at P22,500; and that the said
properties are all unencumbered and no one has any right or share therein except the
applicants, who acquired them by purchase, the first parcel from Felix Zalvidea, by a public
instrument of June 11, 1912; the second parcel, from Clara Lichauco and her husband Catalino
Arevalo, by a public instrument of September 12, 1912; the third parcel, from Antonio Abraham
Brimo, by a public instrument of March 28, 1911; and the fourth parcel, from Marcela Lao, by a
public instrument of April 17, 1914. The application recited the names of the tenants who
occupy the first three properties and states that the applicants occupy the fourth. The names
and addresses of the owners or proprietors of the adjoining properties are also given.

After due service of notice, counsel for the administrator of the estate of the deceased Lorenza
Alburo filed in court a written objection, alleging that in the part of the application relative to the
second parcel of the plan No. 1, a stone wall shown in that plan to be northeast of the said
parcel had been improperly included; that this wall had belonged to the said Lorenza Alburo, for
it had existed since March 8, 1881; that the principal timbers of the building that had belonged to
the said deceased had rested on it for more than thirty-five years, and the latter's successors
had been and were now in the quiet, peaceable and uninterrupted possession of the said wall.
At the trial of the case both parties thereto introduced documentary and oral evidence, and the
judge of the Court of Land Registration made a personal inspection of the wall in question and
of the respective properties of the applicants and the objectors.

In the judgment appealed from it is held that the applicants, Domingo Lao and Albina de los
Santos, conclusively and satisfactorily proved that they were, and had been for about forty
years, the lawful owners and possessors of the four properties sought to be registered;
wherefore the court decreed the registration thereof in their names, but ordered that record be
made in the decree that the wall marked on the plan of the parcel No. 2 as a stone wall was a
party wall.

Hence the question to be decided relates solely to the matter of the said wall of the property
designated as parcel No. 2 — the subject matter of the objection filed by the administrator of the
estate of the deceased Lorenza Alburo, owner of the property adjoining that designated as
parcel No. 2 — inasmuch as the administrator alleges in his objection that the said stone wall
forms a part of the property that belonged to the said deceased while the applicants claim that
this wall is theirs, being a part of the strong-minded material house constructed on the said
parcel of land, Lot No. 2 according to the plan, Exhibit A.

Article 572 of the Civil Code provides that the easement of party walls is presumed, unless there
is a title or exterior mark or proof to the contrary in the dividing walls of adjoining buildings up to
the common point of elevation. As the court held judgment appealed from that the wall which
lies between the properties of the applicant and the objectors was a party wall, and as the
applicants appealed from this ruling, it devolves upon us to decide whether it is in fact a party
wall, as counsel for the administrator of the estate of the deceased Alburo or for her heirs finally
admitted that it was in assenting to that decision, although he averred in his written objection
that it was the exclusive property of the objectors; or whether, on the contrary, this wall is a part
of property marked No. 2 on the plan Exhibit A, as the applicants claims.

Article 573 of the Civil Code also declares that it shall be understood that there are exterior
signs which conflict with the easement of party wall, when, among other circumstances, the
entire wall is built on one of the lots and not on the line dividing the two adjoining parcels; when
the dividing wall, being constructed of stone and cement, has stone projecting at intervals from
the surface on one side only and not on the other; and when it supports joists, beams, floors,
and the roof timbers of one of the houses but not of the adjoining building.1awphil.net

The record shows it to have been duly proven that the enclosing wall of Lot No. 2 of the plan
Exhibit A, belonging to the applicants, is much higher than the adjoining building of the
objectors; that along the top of the said wall there is a gutter which catches the rain water from
the eaves of the roof of the applicants' building and carries it thence to Calle Juan Luna through
an iron pipe fastened to the said wall; that one-half of the top of the said wall is covered by the
roof of the applicants' building; that the supports of the said wall project toward the side of the
applicants' land and that none of the buttresses are on the side of the objectors' lot; that the
stones of the wall in dispute are bound or inset in the rear enclosing wall of the applicants'
property in such wise that the two walls that inclose the lot form but a single construction, the
exterior signs of which show that the wall in question is not a party wall, but that it forms a part
of the applicant's building and belongs to them.

Besides the signs just referred to, the evidence also shows that on the objectors' land and
flanking the disputed wall there is another and lower wall which has no connection with the one
in question. Cayetano Arguelles, a master builder, who climbed to the top of the wall in question
and examined it, testified that the aforesaid drain caught the rain water from the eaves of the
applicants' roof, and that from the outside the division or space between the applicants' wall and
the wall on the objectors' land could be seen; that the lower part of this latter wall had two arch
like hollows; that according to the testimony of the objector, Ireneo Mendoza, the latter wall was
that of an old building that had belonged to the said deceased and was destroyed by an
earthquake; and that in the rear of the objectors' land were the ruins of a wall which had also
flanked the wall in dispute, and these ruins, according to the said witness Mendoza were what
was left of the wall of a latrine formerly existing there.
These exterior signs contrary to the existence of a party-wall easement cannot be offset by the
circumstance that the dispute wall projects into Calle Juan Luna 74 centimeters farther than the
applicants' building, and neither can the fact that the face of this projecting wall is on the same
street line as the objectors' building, for the reason that, in view of the said signs contrary to the
existence of the easement of party wall, the projection of the wall does not prove that it was a
party wall belonging in common to the applicants and the objectors and that the latter shared in
the ownership thereof.

The objectors have not proved that a part or one-half of the wall in litigation was erected on the
land that belonged to the deceased Lorenza Alburo. The fact that the owners of the objectors'
property may have surreptitiously inserted some of the timbers or joists of their building in the
wall belonging to the applicants is not enough to convert this latter into a party wall, when there
are so many exterior signs to indicate the exclusive ownership of the wall and to conflict with the
existence of the easement that the objectors endeavor to establish. The wall in litigation is fully
proven by the record to belong exclusively to the applicants.

All of the applicants' properties, including the wall in question, should therefore be registered.itc-
a1f

For the foregoing reasons the judgment appealed from is affirmed, but the decree of registration
of the property designated as Lot No. 2 shall include the disputed wall as belonging exclusively
to the applicants, and that part of said wall is a party wall is hereby reversed; without special
finding as to costs. So ordered.
G.R. No. 911 March 12, 1903

MAXIMO CORTES, plaintiff-appellant,

vs.
JOSE PALANCA YU-TIBO, defendant-appellant.

Felipe G. Calderon, for appellant.

Simplicio del Rosario, for appellee.

MAPA, J.:

This suit was brought to obtain an injunction, in accordance with the provisions of section 162 to
172 of the Code of Civil Procedure, for the purpose of restraining the continuation of certain
buildings commenced by the defendant. The court below issued a preliminary injunction during
the trial, but, upon, rendering final judgment, dissolved the injunction, with the costs against the
plaintiff. The latter excepted to this judgment and assigns error:

In the trial the following facts were admitted without contradiction:

(1) That house No. 65 Calle Rosario, this city, property of the wife of the plaintiff, has certain
windows therein, through which it receives light and air, said windows opening on the adjacent
house, No. 63 of the same street; (2) that these windows have been in the existence since the
year 1843 and (3) that the defendant, the tenant of the said house No. 63, has commenced
certain work with the view to raising the roof of the house in such a manner that one-half of the
windows in said house No. 65 has been covered, thus depriving the building of a large part of
the air and light formerly received through the window. In its decision the court below practically
finds the preceding facts, and further finds that the plaintiff has not proven that he has, by any
formal act, prohibited the owner of house No. 63, from making improvements of any kind therein
at any time prior to the complaint.

The contention of the plaintiff is that by the constant and uninterrupted use of the windows
referred to above during a period of fifty-nine years he acquired from prescription an easement
of light in favor of the house No. 65, and as a servitude upon house No. 63, and, consequently,
has acquired the right to restrain the making of any improvements in the latter house which
might in any manner be prejudicial to the enjoyment of the said easement. He contends that the
easement of light is positive; and that therefore the period of possession for the purposes of the
acquisition of a prescriptive title is to begin from the date on which the enjoyment of the same
commenced, or, in other words, applying the doctrine to this case, from the time that said
windows were opened with the knowledge of the owner of the house No. 63, and without
opposition on this part.

The defendant, on the contrary, contends that the easement is negative, and that therefore the
time for the prescriptive acquisition thereof must begin from the date on which the owner of the
dominant estate may have prohibited, by a formal act, the owner of the servient estate from
doing something which would be lawful but for the existence of the easement.

The court below in its decision held in the easement of light is negative, and this ruling has been
assigned by the plaintiff as error to be corrected by this court.

A building may receive light in various manners in the enjoyment of an easement of light,
because the openings through which the light penetrates may be made in one's own wall, in the
wall of one's neighbor, or in a party wall. The legal doctrine applicable in either one of these
cases is different, owing to the fact that, although anyone may open windows in his own wall, no
one has a right to do so in the wall of another without the consent of the owner, and it is also
necessary, in accordance with article 580 of the Civil Code, to obtain the consent of the other
coowner when the opening is to be made in a party wall.

This suit deals with the first case; that is, windows opened in a wall belonging to the wife of the
plaintiff, and it is this phase of the easement which it is necessary to consider in this opinion.
When a person opens windows in his own building he does nothing more than exercise an act
of ownership inherent in the right of property, which, under article 348 of the Civil Code,
empowers him to deal with his property as he may see fit, with no limitations other than those
established by law. By reason of the fact that such an act is performed wholly on a thing which
is wholly the property of the one opening the window, it does not in itself establish any
easement, because the property is used by its owner in the exercise of dominion, and not as the
exercise of an easement: "For a man," says law 13, title 31, third partida, "should not use that
which belongs to him as if it were a service only, but as his own property." Coexistent with this
right is the right of the owner of the adjacent property to cover up such windows by building on
his own land or raising a wall contiguously to the wall in which the windows are opened (art. 581
of the same Code), by virtue of the reciprocity of rights which should exist between abutting
owners, and which would cease to exist if one could do what he pleased on his property and the
other could not do the same on his. Hence it is that the use of the windows opened in a wall of
one's own property, in the absence of some covenant or express agreement to the contrary, is
regarded as an act of mere tolerance on the part of the owner of the abutting property
(judgments of the supreme court of Spain of the 17th of May, 1876; 10th of May, 1884; 30th of
May, 1890), and does not create any right to maintain the windows to the prejudice of the latter
(judgment of the supreme court of Spain of the 13th of June, 1877). The mere toleration of such
an act does not imply on the part of the abutting owner a waiver of his right to freely build upon
his land as high as he may see fit, nor does it avail the owner of the windows for the effects of
possession according to article 1942 of the Civil Code, because it is a mere possession at will.
From all this it follows that the easement of light with respect to the openings made in one's own
edifice does not consist precisely in the fact of opening them or using them, inasmuch as they
may be covered up at any time by the owner of the abutting property, and, as Manresa says in
his commentaries on the Civil Code, "there is no true easement as long as the right to impede
its use exists." The easement really consists of in prohibiting or restraining the adjacent owner
from doing anything which may tend to cut off or interrupt the light; in short, it is limited to the
obligation of not impeding the light (ne luminibus officiatur). The latter coincides in its effects,
from this point of view, with the obligation of refraining from increasing the height of a building
(altius non tollendi), which, although it constitutes a special easement, has for its object, at
times, the prevention of any interruption of the light enjoyed by the adjacent owner.

It will be readily observed that the owner of the servient estate subject to such easement is
under no obligation whatsoever to allow anything to be done on his tenement, nor to do
anything there himself, but is simply restrained from doing anything thereon which may tend to
cut off the light from the dominant estate, which he would undoubtedly be entitled to do were it
not for the existence of the easement. If, then, the first condition is that which is peculiar to
positive easements, and the second condition that which is peculiar to negative easements,
according to the definition of article 533 of the Civil Code, it is our opinion that the easement of
lights in the case of windows opened in one's own wall is of a negative character, and, as such,
can not be acquired by prescription under article 538 of the Civil Code, except by counting the
time of possession from the date on which the owner of the dominant estate may, by a formal
act have prohibited the owner of the servient estate from doing something which it would be
lawful from him to do were it not for the easement.

The supreme court of Spain, in its decisions upon this subject, has established these principles
by a long line of cases. In its judgment of May 14, 1861, the said court holds that "the
prescription of the easement of lights does not take place unless there has been some act of
opposition on the part of the person attempting to acquire such a right against the person
attempting to obstruct its enjoyment." The easements of light and view," says the judgment of
March 6, 1875, "because they are of a negative character, can not be acquired by a prescriptive
title, even if continuous, or although they may have been used for more than twenty-eight years,
if the indispensable requisite for prescription is absent, which is the prohibition on the one part,
and the consent on the other, of the freedom of the tenement which it is sought to charge with
the easement." In its judgment of June 13, 1877, it is also held that use does not confer the right
to maintain lateral openings or windows in one's own wall to the prejudice of the owner of the
adjacent tenement, who, being entitled to make use of the soil and of the space above it, may,
without restriction, build on his line or increase the height of existing buildings, unless he has
been " forbidden to increase the height of his buildings and to thus cut off the light," and such
prohibition has been consented to and the time fixed by law subsequently expired. The court
also holds that it is error to give the mere existence or use of windows in a wall standing wholly
on the land of one proprietor the creative force of true easement, although they may have
existed from the time immemorial. Finally, the judgments of the 12th of November, 1899, and
the 31st of May, 1890, hold that "as this supreme court has decided, openings made in walls
standing wholly on the land of one proprietor and which overlook the land of another exist by
mere tolerance in the absence of an agreement to the contrary, and can not be acquired by
prescription, except by computing the time from the execution of some act of possession which
tends to deprive the owner of the tenement affected of the right to build thereon." Various other
judgments might be cited, but we consider that those above mentioned are sufficient to
demonstrate the uniformity of the decisions upon this point. It is true that the supreme court of
Spain, in its decisions of February 7 and May 5, 1896, has classified as positive easements of
lights which were the object of the suits in which these decisions were rendered in cassation,
and from these it might be believed at first glance that the former holdings of the supreme court
upon this subject had been overruled. But this is not so, as a matter of fact, inasmuch as there
is no conflict between these decisions and the former decisions above cited.

In the first of the suits referred to, the question turned upon two houses which had formerly
belonged to the same owner, who established a service of light on one of them for the benefit of
the other. These properties were subsequently conveyed to two different persons, but at the
time of the separation of the property nothing was said as to the discontinuance of the
easement, nor were the windows which constituted the visible sign thereof removed. The new
owner of the house subject to the easement endeavored to free it from the incumbrance,
notwithstanding the fact that the easement had been in existence for thirty-five years, and
alleged that the owner of the dominant estate had not performed any act of opposition which
might serve as a starting point for the acquisition of a prescriptive title. The supreme court, in
deciding this case, on the 7th of February, 1896, held that the easement in this particular case
was positive, because it consisted in the active enjoyment of the light. This doctrine is doubtless
based upon article 541 of the Code, which is of the following tenor: "The existence of apparent
sign of an easement between two tenements, established by the owner of both of them, shall be
considered, should one be sold, as a title for the active and passive continuance of the
easement, unless, at the time of the division of the ownership of both tenements, the contrary
should be expressed in the deed of conveyance of either of them, or such sign is taken away
before the execution of such deed."

The word "active" used in the decision quoted in classifying the particular enjoyment of light
referred to therein, presupposes on the part of the owner of the dominant estate a right to such
enjoyment arising, in the particular case passed upon by that decision, from the voluntary act of
the original owner of the two houses, by which he imposed upon one of them an easement for
the benefit of the other. It is well known that easements are established, among other cases, by
the will of the owners. (Article 536 of the Code). It was an act which was, in fact, respected and
acquiesced in by the new owner of the servient estate, since he purchased it without making
any stipulation against the easement existing thereon, but, on the contrary, acquiesced in the
continuance of the apparent sign thereof. As is stated in the decision itself, "It is a principle of
law that upon a division of a tenement among various persons -- in the absence of any mention
in the contract of a mode of enjoyment different from that to which the former owner was
accustomed -- such easements as may be necessary for the continuation of such enjoyment are
understood to subsist." It will be seen, then, that the phrase "active enjoyment" involves an idea
directly opposed to the enjoyment which is the result of a mere tolerance on the part of the
adjacent owner, and which, as it is not based upon an absolute, enforceable right, may be
considered as of a merely passive character. Therefore, the decision in question is not in
conflict with the former rulings of the supreme court of Spain upon the subject, inasmuch as it
deals with an easement of light established by the owner of the servient estate, and which
continued in force after the estate was sold, in accordance with the special provisions of article
541 of the Civil Code.

Nor is the other decision cited, of May 5, 1896, in conflict with the doctrine above laid down,
because it refers to windows opened in a party wall, and not in a wall the sole and exclusive
property of the owner of the dominant tenement, as in the cases referred to by the other
decisions, and as in the case at bar. The reason for the difference of the doctrine in the one and
the other case is that no part owner can, without the consent of the other, make in a party wall a
window or opening of any kind, as provided by article 580 of the Civil Code. The very fact of
making such openings in such a wall might, therefore, be the basis for the acquisition of a
prescriptive title without the necessity of any active opposition, because it always presupposes
the express or implied consent of the other part owner of the wall, which consent, in turn,
implies the voluntary waiver of the right of such part owner to oppose the making of such
openings or windows in such a wall.

With respect to the provisions of law 15, title 31, third partida, which the appellant largely relied
upon in this oral argument before the court, far from being contrary to it, is entirely in accord with
the doctrine of the decisions above referred to. This law provides that "if anyone shall open a
window in the wall of his neighbor, through which the light enters his house," by this sole fact he
shall acquire a prescriptive title to the easement of light, if the time fixed in the same law (ten
years as to those in the country and twenty years as to absentees) expires without opposition
on the part of the owner of the wall; but, with the exception of this case, that is to say, when the
windows are not opened in the wall of the neighbor, the law referred to requires as a condition
to the commencement of the running of the time for the prescriptive acquisition of the easement,
that "the neighbor be prohibited from raising his house, and from thereby interrupting the light."
That is to say, he must be prohibited from exercising his right to build upon his land, and cover
the window of the other. This prohibition, if consented to, serves as a starting point for the
prescriptive acquisition of the easement. It is also an indispensable requisite, therefore, in
accordance with the law of thepartidas, above mentioned, that some act of opposition be
performed, in order that an easement may be acquired with respect to openings made in one's
own wall.

For a proper understanding of this doctrine, it is well to hold in mind that the Code of
the partidas, as well as the Roman law, clearly distinguishes two classes of easements with
respect to the lights of houses, as may be seen in law 2 of title 31, of the third partida. One of
them consists in "the right to pierce the wall of one's neighbor to open a window through which
the light may enter one's house" (equivalent to the so-called easement of luminum of the
Romans); the other is "the easement which one house enjoys over another, whereby the latter
can not at any time be raised to a greater height than it had at the time the easement was
established, to the end at the light be not interrupted." (Ne luminibus officiatur.) For the
prescriptive acquisition of the former the time must begin, as we have seen, from the opening of
the window in the neighbor's wall. As to the second, the time commences from the date on
which he was "prevented from raising his house." Some of the judgments which establish the
doctrine above laid down were rendered by the supreme court of Spain interpreting and
applying the above cited law 15, title 31, partida 3, and therefore they can not in any sense be
regarded as antagonistic to the law itself.

The question as to whether the windows of the house of the plaintiff are, or are not, so-called
regulation windows, we consider of but little importance in this case, both because the authority
of the decisions of the law of thepartidas, above cited, refers to all kinds of windows, and not to
regulation windows solely, and because the record does not disclose, nor has the appellant
even stated, the requirements as to such regulation windows under the law in operation prior to
the Civil Code, which he asserts should be applied and on which he relies to demonstrate that
he has acquired by prescription the easement in question. With respect to the watershed which,
according to the plaintiff, exists over the window in question, the record does not disclose that
the same has been destroyed by the defendant. He expressly denies it on page 7 of his brief,
and affirms (p. 8) that the tenant of the appellant's property himself removed it, by reason of the
notice served on him; on the other hand, the judgment of the court below contains no findings
with respect to this fact, nor does it disclose the former existence of any such watershed.
Furthermore, the opinion which we have formed with respect to this matter, in so far as we are
able to understand the merits of the case, is that this shed was a mere accessory of the window,
apparently having no other purpose than that of protecting it against the inclemency of the
weather; this being so, we are of opinion that it should follow the condition of the window itself,
in accordance with the legal maxim that the accessory always follows the principal. The
appellant contends that the shed should be regarded as a projection within the provisions of
article 582 of the Code; but it is sufficient to observe that this article speaks of windows with
direct views, balconies, or similar projections, in order to conclude that the article does not refer
to such watersheds, which have not the slightest degree of similarity to balconies, nor are they
constructed for the purpose of obtaining the view -- this being the subject-matter which this
article expressly purports to control -- inasmuch as such sheds have rather the effect of limiting
the scope of the view than of increasing it.

The fact that the defendant did not cover the windows of the other house adjacent No. 63 at the
time he covered the windows of the appellant, a fact which the latter adduces as proof of the
recognition on the part of the former of the prescriptive acquisition of the easement of the light in
favor of that house, which, according to his statement, is under precisely the same conditions as
the house of the plaintiff, does not necessarily imply, in our opinion, any such recognition, as it
might be the result of a mere tolerance on the part of the defendant. Certainly the fact of his
tolerating the use by the owner of that house of such windows, supposing the facts to be as
stated, does not carry with it as a result an obligation to exercise the same forbearance with
respect to the plaintiff; but whatever may be the legal status of the windows in the house
referred to with respect to the house No. 63, we cannot pass upon the point, nor can we form
suppositions concerning the matter for the purpose of drawing conclusions of any kind
therefrom to support our opinion, for the simple reason that it is not a point at issue in the case,
and more especially because the defendant not only denied the existence of the alleged
easement of light in favor of the house referred to, but, on the contrary, he affirms that demand
has been made that the windows in said house be closed, as may be seen on page 8 of his
brief.

The point discussed in this trial being whether the plaintiff has acquired the easement which he
seeks to enforce over the house of which the defendant is tenant, it is evident that the
provisions of article 585 of the Civil Code can not be invoked without taking for granted the very
point at issue. This article refers to cases in which, under any title, the right has been acquired
to have direct views, balconies, or belvederes over contiguous property. The existence of such
a right being the very point at issue, the supposition upon which the article rests is lacking, and
it is therefore not in point.

As a result of the opinion above expressed, we hold:

1. That the easement of light which is the object of this litigation is of a negative character, and
therefore pertains to the class which can not be acquired by prescription as provided by article
538 of the Civil Code, except by counting the time of possession from the date on which the
owner of the dominant estate has, in a formal manner, forbidden the owner of the servient
estate to do an act which would be lawful were it not for the easement.

2. That, in consequence thereof, the plaintiff, not having executed any formal act of opposition
to the right of the owner of the house No. 63 Calle Rosario (of which the defendant is tenant), to
make therein improvements which might obstruct the light of the house No. 65 of the same
street, the property of the wife of the appellant, at any time prior to the complaint, as found by
the court below in the judgment assigned as error, he has not acquired, nor could he acquire by
prescription, such easement of light, no matter how long a time have elapsed since the windows
were opened in the wall of the said house No. 65, because the period which the law demands
for such prescriptive acquisition could not have commenced to run, the act with which it must
necessarily commence not having been performed.

Therefore, we affirm the judgment of the court below and condemn the appellant to the payment
of all damages caused to the plaintiff, and to the payment of the costs of this appeal. So
ordered.

Arellano, C.J., Cooper, Willard, and Ladd, JJ., concur.

Torres, J., did not sit in this case.

ON MOTION FOR A REHEARING.

The plaintiff asks for a rehearing of the decision of the court of March 12th last upon the ground
that the same contains error:

First, because the decision holds that the window opened in the plaintiff's own wall and
watershed do not constitute the continuous and apparent easements of prospect, light, and
ventilation, or jus projitiendi and jus spillitiendi, this ruling being in opposition to the provisions of
laws 12, 14, and 15, title 31, third partida, and articles 530, 532, 533, 537, 538, 582, and 585 of
the Civil Code.
This allegation is entirely unfounded, inasmuch as the decision of the court contains no
declaration as to whether the windows and watershed do or do not constitute continuous and
apparent easements, or jus projitiendi and jus spillitiendi. These questions were not drawn into
issue by the complaint, and therefore any decision thereon one way or the other would have
been mere dicta. What the court did hold was that the easement of light, when it is sought to
claim such benefit from a window opened in one's own wall, as does the appellant with respect
to the tenement of the defendant, belongs to the class of negative easements, and that on hold
on that account the time of possession for prescriptive acquisition of the title thereto must be
counted, not from the time of the opening of the windows, but from the time at which the owner
thereof has executed some act of opposition tending to deprive the owner of the servient
tenement of his right, under the law, build upon it to such height as he might see fit in the
legitimate use of his rights of ownership. With respect to the watershed, the court held that the
shed in question in the case is not included within the class of projections referred to in article
582 of the Civil Code, and certain it is that neither this article nor any of the other provisions of
law cited by the appellant in his motion papers established any doctrine contrary to that laid
down in the decision, either with regard to the watershed or with respect to the windows. It is not
necessary to say anything further upon this point. It is sufficient to read the text of the laws cited
to reach the conclusion that the assertion made by the appellant in his motion papers is entirely
gratuitous.

Article 582 provides that windows with direct views, balconies, or other similar projections
opening upon the tenement of one's neighbor are not permissible unless there are two meters
distance between the wall in which such openings are constructed and the adjacent tenement.
From this the appellant draws the conclusion that he who opens windows in his own wall without
respecting the distance mentioned does not exercise an act of ownership, as stated in the
decision, inasmuch as he violates an express provisions of the law.

The conclusion reached is evidently false. The appellant confounds the facts with the law -- an
act of ownership with the right of ownership. The owner of a thing does not cease to be such
owner because in his manner of use or enjoyment thereof he violates some provision of law.
The acts which he performs, in our opinion, even if abusive or contrary to law, are in a strict
sense acts of ownership, acts in the exercise of dominion, because this character is not derived
from a greater or less degree of compliance with the provisions of law, but from the existence of
the status of owner on the part of the person who exercises such acts. In order that the act
performed by the owner of a wall in opening windows therein be a true act of ownership it is a
matter of indifference whether or not the distance prescribed by article 582 of the Code has
been respected, although, considered from a legal point of view, it might be an illegal act, as not
complying with the conditions imposed by law.

The doctrine laid down by law 13, title 31, partida 3, cited in the decision, to the effect that "a
man should not use that which belongs to him as if it were a service only, but as his own
property" is of general application, and does not refer to the easements which is a property
owner may establish for the benefit of his heirs, as is erroneously believed by the appellant. The
very same law provides that easements which "a man imposes upon his house must be for the
benefit of the tenement or thing of another, and not that of his own tenement;" and this is
because things are of service to their owner by reason of dominion, and not in the exercise of a
right of easement. "Res sua," says a legal maxim, "nemini jure servitutis servit."

The provision of article 1942 of the Civil Code to the effect that acts which are merely tolerated
procedure no effect with respect to possession is applicable as much as to the prescription of
real rights as to the prescription of the 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. Hence, it is because the use of windows in one's own wall is the result of a mere
tolerance that the supreme court of Spain, in its judgment of June 13, 1877, has held that such
user lacks the creative force of a true easement, although continued from time immemorial. The
citation of article 1959 of the Civil Code and of law 21, title 29, partida 3, made by the petitioner,
is therefore not in point, because both of these provisions of law, which refer to the
extraordinary period of prescription presuppose possession as a necessary requisite, even if
without either just title or good faith.

The second error assigned is that in the decision the court holds that the gravamina constituted
by the window and the projection are negative easements, against the provisions of article 533,
which define them as positive, which definition, he adds, is supported by the judgments of the
supreme court of Spain of February 7 and May 5, 1896, cited in paragraph 12 of the said
decision, which judgments declare that the easement resulting from a window is positive.

It is not true that article 533 of the Civil Code says that the easement of light is positive, because
it does nothing more than give in general terms the definition of positive easements and
negative easements, without attempting to specify whether the easement of lights pertains to
the first or to the second class. We have declared that the easement is negative, having in mind
this very definition of the Code and the doctrine established by the judgments of the supreme
court of Spain which have been cited in our opinion. The interpretation which the appellant
attempts to give the article of the Civil Code cited is evidently erroneous and, consequently, the
citation made by him in support of his contention is not in point.

Our opinion of the true extent and meaning of the judgments of the supreme court of Spain of
February 7 and May 5, 1896, has been already sufficiently explained, and it is therefore
unnecessary to go into the subject again here. We refer to our decision with respect to what was
said therein upon this subject.

The decision of the court does not contain the declaration, as gratuitously assumed by the
appellant, that the easement resulting from a projection is of a negative character; nor, in fact,
had we any occasion to make such a declaration, in view of the nature of the issues raised and
discussed during the trial. What we did, indeed, hold was that the watershed mentioned in the
complaint, the purpose of which was simply to protect the window in question from sun and rain,
was a mere accessory to that window, and that in no case could it be considered as a projection
within the provisions of article 582 of the Civil Code, as so erroneously contended by the
appellant at the trial. We find nothing in his motion papers which can in any way weaken this
holding.

The third error is assigned is that the court holds that the easement of light, as negative, can not
be acquired by prescription except by counting the period of possession from the time at which
the owner of the servient tenement has been prohibited from making improvements which might
interfere with said easement, contrary to the provisions of law 14, title 31, partida 3, and articles
538 and 585 of the Civil Code, which establish the contrary.

This assertion is entirely destitute of foundation, inasmuch as neither in the law of

the partidas nor in the articles of the Civil Code mentioned is to be found the doctrine which the
appellant arbitrarily seeks to deduce from them. It is sufficient to read the text to reach the
conclusion that the assertion is wholly gratuitous.

The fourth error assigned is that the court holds that the watershed, as being an accessory of
the window, can not in itself constitute an easement, this being contrary to the provisions of
articles 582 and 585 of the Civil Code, and law 2, title 31, partida 3, which do not make any
such distinction.

Neither of the law cited speaks expressly of watersheds. We have held that article 582 refers
solely to windows, balconies, and other similar projections, and that the watershed in question
does not pertain to this class of projections, our holding being based upon the reasons given in
our decision. The appellant advances no argument worthy of serious consideration, and
therefore we continue to believe that our opinion in this matter is strictly in accordance with the
law.

The appellant has attached to his motion for a rehearing two judgments, one rendered by the
Royal Audiencia of Manila September 6, 1877, and the other by the supreme court of Spain on
the 22d of February, 1892, and we think it well to say a few words concerning them.
In the opinion of the appellant these judgments support the theory contended for by him at the
trial, that the easement of lights is positive and not negative. His error in so believing is evident,
inasmuch as neither of the judgments referred to establishes any such doctrine. On the
contrary, it appears clear, from the first of these judgments, that the easement referred to is
negative in the opinion of the court which rendered it. This appears from the eight conclusion of
law therein, which is literally as follows: "From the evidence introduced by the defendant, and
even from the testimony of witnesses of the plaintiff, it has been proven that since 1828 the
house in question has suffered no change or alteration in its roof, which projects over Cosio's
lot, which constitutes the active opposition necessary in order to acquire by prescription the right
to the light." It will be seen, then, that the latter part of the preceding transcript of the conclusion
of law days down precisely the same doctrine as that expressed in our decision -- that active
opposition is a necessary condition for prescriptive acquisition of an easement of light. And this
also demonstrates conclusively that the court which rendered the judgment referred to
considered the easement to be negative, inasmuch as positive easements do not require any
active opposition as a basis for their prescriptive acquisition, such an act being solely necessary
to the prescription of negative easements.

It would appear, judging from his allegations as a whole, that the appellant confuses positive
easements with continuous easements, and the judgments referred to, in fact, declares in its
fourth conclusion of law that the easement of light is continuous. If these were really so the error
of the appellant would be manifest, because continuity is not a quality exclusively peculiar to
positive easements; there are negative easements which are also continuous. Hence if is that
the Civil Code, after classifying easements, in article 532, as continuous and discontinuous,
classifies them also as positive and negative (art. 533), thus giving to understand that this latter
classification depends upon other characteristics entirely distinct from the continuity or
discontinuity of easements. If all continuous easements were positive and all discontinuous
easements were negative, then the express division of easements into positive and negative
made by the Code, after establishing the division of the same as continuous or discontinuous,
would be entirely unnecessary, as they would be entirely merged or included in the latter
classification. It is sufficient to read the text of the Code to understand beyond the possibility of
a doubt that a negative easement may be continuous, and that a positive easement may be
discontinuous, according to the special nature of each one.

With respect to the second judgment -- the judgment of the supreme court of Spain of February
22, 1892 -- it is certainly difficult to understand how the appellant could have imagined that he
had found therein the slightest ground for his contention, inasmuch as it lays down no doctrine
which relates even inference to the subject of easements, and simply holds, in the first of only
two paragraphs in which its conclusions are contained, that "judgments should be clear, precise,
and responsive to the complaint and the issues properly raised at the trial;" and in the second,
that "the judgment appealed was contradictory as to the questions it decides, because it makes
certain declarations favorable to some of the contentions in the plaintiff's complaint and then
gives judgment for the defendant, without making any distinction." It was for this reason alone,
and for no other, that the judgment appealed was reversed and annulled. In the judgment
rendered by the same supreme court upon the merits of the case, as a result of this decision in
cassation, no other doctrine is laid down than that "the judgment must be that the defendant
comply with those claims advanced by the complaint to which he was consented, and that he
must be discharged as to those allegations which have been denied by him and which have not
been proved by the plaintiff."

There is not one word on these judgments which says that the easement of lights is positive, nor
that a watershed constitutes a true projection within the meaning attached to this word in article
582 of the Civil Code, as has been vainly contended by the appellant in the trial.

Therefore the appellant's motion for a rehearing of the decision of March 12, 1903, is denied.

Arellano, C.J., Cooper, Willard and Ladd, JJ., concur.

Torres and McDonough, JJ., did not sit in this case.
 ON MOTION FOR WRIT OF ERROR TO REMOVE THE CASE TO THE SUPREME COURT
OF THE UNITED STATES.

WILLARD, J.:

The application to this court for the allowance of a writ of error or appeal for the purpose of
removing this case to the Supreme Court of the United States is denied.

Section 10 of the act of Congress of July 1, 1902, is as follows:

SEC. 10. That the Supreme Court of the United States shall have jurisdiction to review,
revise, reverse, modify, or affirm the final judgments and decrees of the Supreme Court
of the Philippine Islands in all actions, cases, causes, and proceedings now pending
therein or hereafter determined thereby in which the Constitution or any statute, treaty,
title, right, or privilege of the United States is involved, or in causes in which the value in
controversy exceeds twenty-five thousand dollars, or in which the title or possession of
real estate exceeding in value the sum of twenty-five thousand dollars, to be ascertained
by the oath of either party or of other competent witnesses, is involved or brought in
question; and such final judgments or decrees may and can be reviewed, revised,
reversed, modified, or affirmed by said Supreme Court of the United States on appeal or
writ of error by the party aggrieved, in the same manner, under the same regulations,
and by the same procedure, as far as applicable, as the final judgments and decrees of
the circuit courts of the United States.

There is no question in the case relating to the Constitution or any statute of the United States.
The evidence submitted by the applicant shows that the value of his property over which the
litigation turns is $11,867.70, money of the United States.

The fact that the plaintiff owns other houses in different parts of the city as to which he claims an
easement of light similar to the one claimed in this case, that the decision in this case destroys
all of these claimed easements, and that the value of those other houses exceeds $25,000,
gold, is not important. The test is the value of the matter in controversy. The matter in
controversy here was the easement of light and air over the property No. 63 Calle del Rosario
and in favor of house No. 65. That easement could not be worth more than the house itself.

The easements in favor of other houses of the plaintiff over other lots than No. 63 were not in
controversy in this suit. (Town of Elgin vs. Marshall, 106 U. S., 578.) So ordered.
 [G.R. No. 3598. July 24, 1908. ]

MIGUEL FABIE Y GUTIERREZ, Petitioner-Appellee, v. JULITA LICHAUCO AND THE

CHILDREN OF FRANCISCO L. ROXAS, Respondents-Appellants.

Ledesma & Sumulong, and Del-Pan, Ortigas & Fisher for Appellants.

Rosado, Sanz & Opisso for Appellee.

SYLLABUS

1. REALTY; INCUMBRANCES; PRESUMPTION. — It is a settled rule that real estate shall be

presumed to be free from incumbrance unless and until the contrary is shown. (Decisions of the
supreme court of Spain of April 7, 1864, and December 13, 1865.)

2. ID.; EASEMENTS. — When the construction of windows and balconies does not constitute
an actual invasion of the rights of another, but is a lawful exercise of an inherent right, the
easement of light and view is negative.

3. ID.; ID.; BURDEN OF PROOF. — One who opposes the registration of title to land upon
which he claims all easement in the name of another, basing his claim on the provisions of
article 541 of the Civil Code, must show that the "apparent sign of the easement," upon which
he relies, was in existence at the time the servitude was established.

4. ID.; ID.; PRESCRIPTION. — When an easement of light and view is negative, the period for
prescription begins to run from the date on which the owner of the dominant estate, by a formal
act, prohibited the owner of the servient estate to do something which he might properly do if
the easement did not exist., (Art. 538, Civil Code.)

DECISION

MAPA, J. :

This is an appeal from a judgment of the Court of Land Registration. The petitioner applied for
the registration of his property, situated at 22 Calle San Jacinto, district of Binondo, Manila, free
from all incumbrances, with the exception of an easement of right of way which he recognizes
as existing in favor of the estates of the respondents Lichauco and Hijos de Roxas, which adjoin
the property of the petitioner on the right and left of its entrance, respectively. In addition to the
said easement of right of way the respondents claim that of light, view, and drainage in favor of
their respective properties; said claim was modified in part during the course of the litigation as
far as it referred to Julita Lichauco, who finally reduced her opposition (fol. 138) to the easement
of right of way and of light and view.

In the judgment appealed from it is held that the easement of right of way exists in favor of the
respective properties of Julita Lichauco and Hijos de Roxas, and the latter are further entitled to
the easement of drainage. The claim of both respondents as to other easements was
dismissed.

(a) Opposition made by Julita Lichauco. This opponent invokes as the only legal foundation for
her claim the provisions of article 541 of the Civil Code. The language of said provision is as
follows:jgc:chanrobles.com.ph

"The existence of an apparent sign of an easement between two estates established by the
owner of both shall be considered, should one of them be alienated, as a title, in order that the
easement may continue actively and passively, unless, at the time of the division of the
ownership of both estates, the contrary should be expressed in the instrument of alienation of
either of them, or if said sign is removed before the execution of the instrument."cralaw
virtua1aw library
It is alleged by Lichauco, as a material fact for applying the above legal provision, that her
property, as well as that of the petitioner, came from Juan Bautista Santa Coloma, the original
owner of both estates, who, at the time of constructing them, established upon the latter estate,
not only an easement of right of way, which the petitioner admits, but also the easement of light
and view which she claims; and that when both properties were alienated, that of the petitioner
on the 28th of November, 1848, and that of the respondent (Julita Lichauco) on the 31st of
October of the same year, the apparent sign of the existence of said easement was not
removed, nor was it expressed in the instrument of alienation of the estates that such
easements should be abolished.

The apparent sign of the easements claimed in this case is made to consist of a gallery with
windows through which light is admitted. In her written opposition Lichauco states that the said
gallery is supported on columns erected on the ground belonging to the petitioner, and on the
first page of her brief submitted to this court she again states that the balcony of her building is
supported by uprights erected on land owned by the petitioner.

The parties to the suit having admitted the actual existence of the aforesaid gallery, the question
now to be decided is whether or not it existed when the ownership of the two estates of Juan
Bautista Santa Coloma was divided by the alienation of the one which now belongs to the
respondent (Lichauco) and which was the first sold on October 31, 1848.

The instrument of sale (fol. 78) presented by said respondent contains a description of said
house such as it was at that time, and after setting forth the boundaries thereof, states that the
house is built of stone and mortar, and that it is erected upon the lot of the owner, and has a
frontage of twenty and one-fourth varas and three and a half inches, with a depth of thirty-one
and one-fourth varas. Converting the varas into meters and disregarding the centimeters, it
results that said house had a frontage of 16 meters, equivalent to the twenty and one-fourth
varas and three and a half inches stated in the instrument when it was alienated for the first time
in October, 1818. Twenty years thereafter — that is, on the 13th of September, 1869 — the
house was surveyed and appraised by Architect Luciano Oliver at the request of the person who
then owned it, and in the certificate issued by the said architect (fol. 94) it is set forth that the
house measures 16 meters on the front facing Calle San Jacinto which confirms and
corroborates the measurement stated in the aforesaid instrument. Now then, according to the
plan on folio 137, Exhibit I of the respondent (Lichauco), the house has now a frontage of 18
meters and 60 centimeters, of which 16 meters and 60 centimeters correspond to the main part
of the same, and 1 meter and 90 centimeters to the gallery in question. It results, therefore, that
at the present day, the house has nearly" meters more frontage than when it was alienated by
Santa Coloma, the original owner thereof, or rather by the executors of his estate on the 31st of
October, 1848.

According to this it is evident that the front line of the house was increased by about 2 meters
after the same was sold by Santa Coloma, and it also seems clear to us that it is the gallery
mentioned above which constitutes the increase, both because it measures 1 meter and 90
centimeters, which, with a difference of a few centimeters, exactly represents such excess, and
because it has neither been alleged nor claimed by the said respondent, that the rest which
forms the main part of the house has suffered any alteration in its frontage since the year 1848.

There is furthermore another detail in support of said conclusion. As stated by the respondent,
the gallery is supported by columns erected on the lot of the petitioner, so that it is not merely a
body projecting, over the said lot without materially resting thereon but a construction erected
and having foundations in the lot of the petitioner inasmuch as the columns that support the said
gallery are planted therein. Therefore, at the present day the house is erected partly on land
belonging to the owner and partly, the gallery, over a lot belonging to another; that is, over that
of the petitioner. When it was sold in October, 1848, no portion of the house occupied the lot
last mentioned, but the entire building was erected over a lot belonging to the owner as set forth
in the instrument of sale.

To the foregoing considerations the following may be added in conclusion: In view of the fact
that the two buildings — namely, that of the petitioner and that of the respondent — originally
belonged to the same owner, and on the supposition that the gallery did already exist and that,
as stated, it is supported on columns erected in the lot now owned by the petitioner, it is not an
easy matter to explain how it was that when the ownership of the two properties was separated
the house of the respondent, of which the said gallery forms a part, was sold to one person
while the lot over which said gallery is erected or in which its columns are embedded was sold
to a different person. It would be a logical and natural thing to suppose that in the sale of the
gallery the land occupied by the same would have been included in order to avoid the division of
the ownership of the ground and the superficies, that is, the lot and that which is erected upon it.
The necessity for such division does not appear nor can any reasonable justification therefor be
discovered in the present case.

On the other hand, in none of the numerous papers presented by the respondent is there any
mention made of the gallery in question, notwithstanding the fact that in some of them the house
of the respondent (Lichauco) is minutely described. And it does not seem that this is due to
mere carelessness or inadvertence, or that it was considered unnecessary to mention said
gallery, inasmuch as a deliberate, careful, and repeated mention is made of the other gallery on
the side of the house facing the street, as may be seen from several of the other documents
above alluded to, among which are the certificate issued by Architect Luciano Oliver on
September 13,1869, (fol. 94), the instrument of sale executed in favor of Manuel Gonzalez
Junquito (fol. 104), and the mortgage deed of the same date in favor of the Obras Pias (fol.
116). In each of the said documents the statement is made that the house has a corridor
supported on columns on Calle San Jacinto, while nothing is said, even incidentally, regarding
the other corridor or gallery that now exists over the lot of the petitioner. In our opinion there is
no reason why in the description of the house, as made by various persons at different times,
mention should always have been made of only one of the galleries, the other being entirely
ignored, if both had really existed on the respective dates of the documents above referred to.

And it is useless to say, as argued by the respondent in her brief, that Architect Oliver’s
certificate, from which the description made in the subsequent documents was taken, contained
but a superficial description of the property without details of its four sides. For said reason she
states that the fact that no mention is made of the balcony or gallery in question is of no
importance, as the said certificate deals with the value of the property only, it being well known
that such a work is performed taking into account all the details and circumstances which may
increase or decrease the value of the same. Hence, the respondent goes on to say, that
mention was made, by said architect, of the veranda facing the street for the purpose of
distinguishing between the one built on private land and the one which was built over land
belonging to the city. For the very same reason she should have mentioned also the veranda
built over the lot of the petitioner, if it had been in existence, especially as the value of a
property erected on land belonging to the owner is not the same as that which is constructed on
land owned by another person. The omission of this detail in such a document wherein in order
to omit nothing mention is even made of a well and stable both of which are unimportant
portions of a building; such an omission, we say, added to the reasons given above, induces us
to come to the conclusion, as a result of the documentary evidence adduced at the trial, that the
gallery in question did not exist at the time when the house of the respondent was alienated by
its original owner, Santa Coloma, in October, 1848.

This conclusion is not weakened by the expert testimony offered by the respondent, the only
testimony which she introduced aside from the documentary evidence already mentioned. As
the judgment appealed from properly states, even if the forty or fifty years of existence of the
house referred to, according to the unanimous reckoning of the experts offered by said party is
accepted, yet, we do not reach the year 1848, more than fifty-seven years back, when the
separation of the ownership of said house and that of the petitioner took place; such date
constitutes the essential and culminating point of the question. Moreover, it does not appear that
said experts, who, among other things, base their opinion on the condition of the building and its
materials, have made a careful and sufficient examination and survey of the latter. This is
evidenced by the fact that one of them, Enrique Lafuente, states, on folio 146, that the columns
which support the gallery facing the street are built of stone, and that those of the other gallery
over the lot of the petitioner are of wood; while according to another, Ramon Herrera Davila,
(fol. 152) both sets of columns are built of stone, and the third, Jose Perez Siguenza (fol. 157),
affirms that they are all built of wood, those facing the street as well as those embedded in the
land of the petitioner.

Furthermore, all the experts discuss and reason, and render their opinion as if the house was in
the same condition as when sold by Santa Coloma in 1848, when it seems certain and
unquestionable that long after the said year it underwent, or must have undergone, very
important repairs of an essential nature. This is shown by the letter written by Manuel Gonzalez
Junquito, who owned it at the time, to his attorney in fact under date of March 25, 1889, and
was incorporated in the instrument of sale executed by said attorney in fact of the owner in favor
of the Respondent. In said letter Junquito states that the house was converted into a heap of
ruins, and that (undoubtedly for the said reason) during three years it had not yielded him a
single cent; for this reason he prayed his said attorney to see the way to sell it by all means at
the best price obtainable . . . It was thus that the said house which, as stated by Junquito in the
same letter, had cost him 15,000 pesos was sold to the respondent for only 8,000. If in 1889 the
house was a heap of ruins, it seems to us too hazardous to certify solely ill view of its present
condition, after undergoing repairs or having been practically rebuilt, the real condition in which
it was in 1848 — that is, forty years before it became ruined — especially since, as the
petitioner’s expert properly states, in the repair or rebuilding of the property old or used
materials may have been employed which would give it the appearance of being older than it
actually is.

The respondent states in her brief, as though intending to prove the great antiquity of the gallery
in question, that, notwithstanding, the fact that the petitioner acquired his property before she
acquired the adjoining building he has not been able to testify that the said gallery was built by
Julita Lichauco or by her predecessor after he had purchased his property, nor has it been
proven that since that time or at any time previous thereto there had been any disagreement
between the owners of the two properties on account of the gallery in question. Such allegation
absolutely lacks foundation, (1) because it is not true that the petitioner acquired his property
prior to the time when Julita Lichauco acquired hers, but entirely on the contrary since the
petitioner purchased his property on the 9th of May, 1894, and the respondent acquired hers on
the 25th of October, 1889, that is, five years previously; and (2) because the burden is not on
the petitioner to prove at what time the gallery in controversy was constructed inasmuch as he
limits himself to sustaining and defending the freedom of his property, denying the easements of
light and view that the respondent pretends to impose over it. It is a settled doctrine of law that a
property is assumed to be free from all incumbrance unless the contrary is proved. (Decisions of
the supreme court of Spain of April 7, 1864, and December 13, 1865.) The respondent who
claims the said easements, basing her claim on the provisions of article 541 of the Civil Code, is
obliged to prove that the aforementioned gallery, in which the apparent sign of the easement is
made to consist in the present case, existed at the time the ownership of her property and that
of the petitioner were separated, in October, 1848. And inasmuch as this issue has not been
proved, the claim of the respondent as to the easements of light and view, which the petitioner
does not admit, must of necessity be dismissed.

(b) Opposition of the heirs of Francisco L. Roxas. The real terms of this opposition do not
appear well defined. As the Court of Land Registration says in the judgment appealed from,
when this party appeared at the trial it stated (fol. 71) that it had no opposition to offer and only
desired that the matter of the easement of right of way, acknowledged by the petitioner, be
clearly established, and that the other rights of easement which their property holds over the
former be respected, not specifying, however, either at the time or during the course of the
proceedings as to which of said easements they referred when appearing. Hence the questions
raised by these respondents do not appear as clearly determined.

In the absence of due specification of the said points, and inferring it only from the language of
the agreement submitted by the parties to the suit, the Court of Land Registration assumed that
beyond the acknowledged easement of the right of way, the respondents claimed those of light,
view, and drainage, and on such supposition entered judgment in connection with said
easements only. Upon moving for a new hearing the respondent alleged as a foundation
therefor, as stated in the overruling thereof (p. 9 of the bill of exceptions), that the easement with
reference to balconies had not been acknowledged, and now in setting forth their injuries before
this court they speak of the eaves . . .

Admitting, for the sake of argument, that all of the above questions were duly set up and
discussed in the court below, the fact is that in the judgment appealed from no other easements
than those with reference to right of way and drainage from the roof have been allowed in favor
of the property of the respondents; therefore, the easements of light, view, and balconies remain
in dispute in the present instance. The easement with reference to eaves mentioned also in the
brief of the respondents should, in our opinion, be discarded inasmuch as it is included in this
case in the easement of drainage from the roof acknowledged in the judgment appealed from.
(P. 7 of the bill of exceptions.)

The Court of Land Registration in order to dismiss the opposition with reference to the
easement of light and view bases its decision on the fact that, the same being negative,
according to article 533 of the Civil Code, because the owner of the servient estate is prohibited
to do something which he could lawfully do if the easement did not exist, the time of possession
for prescription (and it is a matter of prescription for the reason that the respondents hold no
title) should begin to run, not from the date of the existence of the windows or balconies, but
from the day when the owner of the dominant estate, by means of a formal act, might have
prohibited the owner of the servient estate to do something which he could properly execute if
the easement did not exist; this was never carried out by the opponents or by their principals as
agreed to by the parties at the hearing.

In rebuttal of this portion of the judgment the respondents state in their brief as
follows:jgc:chanrobles.com.ph

"We agree with the trial court that as a general rule the easement with reference to view is a
negative one . . .; but we understand that there are cases in which the easement is positive
because it imposes on the owner of the servient estate the obligation to allow the owner of the
dominant estate to do on the property of the former something which the latter could not lawfully
do if the easement did not exist, . . . such as happens in the present case in which the windows
have a balcony projecting over the lot of the petitioner. In the case at bar there exists the
positive fact of windows with projecting, balconies opening over the land of the servient estate
which is not a right inherent to the dominion of the owner of the dominant estate, but a real
invasion of the right of another, a positive act which limits the dominion of the owner of the
servient estate which, constituting an easement, imposes on him the obligation to permit the
owner of the dominant estate to have such windows with balconies projecting over his
estate."cralaw virtua1aw library

According to this no question is raised by the respondents as to the legal nature of the
easement of view (in their brief the easement of light is ignored) which they acknowledge for the
reason that, in general, it is a negative one although in their opinion there are exceptions where
it acquires the nature of a positive easement, among them, when as in the present case, view is
obtained by means of windows with balconies projecting over the adjoining estate. On page 4 of
their brief they state that the latter fact was agreed to by the parties, which is tacitly contradicted
by the petitioner when denying, on page 14 of his brief, that the word balconies was used in the
agreement as synonymous with projecting windows and differing from windows, for although,
according to the said agreement, they overlook the lot of he petitioner, they are not, however,
over the same, nor is the contrary claimed in connection therewith by the representative of
the Respondents.

In reference to the above question the said agreement of facts reads as

follows:jgc:chanrobles.com.ph

"(1) That house No. 114, Calle San Jacinto, district of Binondo, this city, owned by the children
of Francisco L. Roxas, adjoining the property of the petitioner, underwent alterations in the early
part of the year 1882, and ever since that time it exists as it appears now with windows and
views overlooking the lot of the petitioner, with balconies and eaves from which rainfall drops on
the aforesaid lot."cralaw virtua1aw library

It seems evident under the terms of this agreement, that the house of the respondents has
balconies, it being, immaterial for our point of view that the word balconies be taken as
synonymous with windows or projections, since whether it be the one or the other the truth is
that the agreement does not state that such balconies are over the lot of the petitioner or
overlooking it, as claimed by the respondents. weather would this follow from the mere fact that
the said balconies jut out, because the projecting parts of a building may be constructed, and as
a matter of fact they are generally constructed, over the area of their own ground without
invading the limits of the adjoining land. What actually falls over the estate of the petitioner
according to the agreement is the water dropping from the projecting eaves of the respondents’
house, which is precisely the fact that has originated the easement of drainage from the roof
acknowledged in favor of solid house; projecting eaves, thus the agreement reads, from which
part of its water falls on said lot. Notwithstanding the fact that the word eaves, in the language of
the agreement, is preceded by the word balconies, upon both being united by the copulative
conjunction and, it becomes evident that the words in italics do not refer nor could they refer to
the balconies for the simple reason that their object is not to shed the water, a thing which, on
the contrary, is done by the eaves.

And that it is the water and not the balconies of the house of the respondents which falls over or
overlooks the lot of the petitioner, is further evidenced by the language of the other clauses of
the agreement in which the ideas are expressed with precision, from which it may be seen that
the preposition over is always in relation to the fall of the water and not to the balconies. Thus,
for example, clause 2 reads "that it does not appear if the construction of said windows,
balconies, and projecting eaves, as well as that part of the water from the roof of the said house,
fall on the lot now owned by Don Miguel Fabie . . ." And this very same thing is twice repeated in
clause 3, "that on the part of the children of Francisco L. Roxas there has not been an act of
opposition to prevent Miguel Fabie . . . work that may obstruct the light, remove the windows or
balconies and projecting eaves of the said house which now belongs to the children of
Francisco L. Roxas, or prevent a portion of the water from the roof of the same from falling on
the lot of Miguel Fabie . . ., neither has there been on the part of the said Fabie . . . any act to
obstruct said light or windows, preventing the continuance of the balconies and projecting
eaves, or that part of the water from the roof of the house falling . . . on his lot."cralaw virtua1aw
library

Therefore, it does not appear from the agreement, which is the only evidence we have before
us, no other having been offered at the hearing, that the house of the respondents has
balconies over the land of the petitioner; and as it is, since it has not been positively shown that
the said balconies exceed the limit of the lot owned by the former, nor less that they invade the
atmospheric area of the lot belonging to the latter, it follows that, even in accordance with the
theory maintained by the respondents with which, on account of its lack of basis, we consider it
unnecessary to deal herein as to its other aspect, the easement of view, which might result in
such case from the existence of the balconies alluded to, would be negative and not a positive
one, because the erection of the same would not constitute, according to their own statement,
an invasion of the right of another, but the lawful exercise of the right inherent to the dominion of
the respondents to construct within their own lot. And as said easement is negative, it can not
have prescribed in favor of the property of the respondents in the absence of any act of
opposition, according to the agreement, by which they or their principals would have prohibited
the petitioner or his principals to do any work which might obstruct the balconies in question,
inasmuch as said act of opposition is what constitutes the necessary and indispensable point of
departure for computing the time required by law for the prescription of negative easements.
(Art. 538, Civil Code.)

After the foregoing it is not necessary to say anything further to show the impropriety of the
claim of the respondents in connection with the other easement of balconies (projiciendi). They
claim this easement on the supposition that the balconies of their house are or look over the lot
of the petitioner; therefore, considering that this fact has not been proven, as shown heretofore,
said pretension fails and can not prosper in any way. It is unnecessary to discuss the questions
of law to which said fact might give rise had it been duly proven at the hearing.

For the reason above set forth, the judgment appealed from is affirmed in all its parts with the
costs of this instance against the appellants. So ordered.
 G.R. L-No. 2085 August 10, 1909

TIBURCIO SAENZ,Plaintiff-Appellant, vs. FIGUERAS HERMANOS,Defendant-Appellee.

Antonio V. Herrero for appellant.

Espiridion Guanco for appellee.

JOHNSON, J. :chanrobles virtual law library

It appears from the record that the plaintiff and the defendant own adjoining lots within the
municipality of Iloilo; that the defendant had constructed or was constructing a house of strong
materials upon its lot; that the line of the said house on the side toward the lot belonging to the
plaintiff was less than two meters from dividing line of the two lots; that the said house was of
two stories; that on the side of the house toward the lot of the plaintiff, the defendant in the first
story had placed three windows and in the second story had placed five windows, each looking
directly upon the lot of the plaintiff; and that the defendant had not obtained the permission of
the plaintiff to place the said windows and balconies in the manner above
indicated.chanroblesvirtualawlibrary chanrobles virtual law library

The defendant filed a general and a special denial. In its special denial the defendant alleged
that its house was being constructed in accordance with the law and customs of the
place.chanroblesvirtualawlibrary chanrobles virtual law library

After the hearing the evidence adduced during the trial of said cause, the lower court made the
following findings of fact:

The plaintiff's lot is now vacant but he intends to build a house thereon for business purposes,
and with that end in view has already deposited some lumber in said lot. The defendants have
constructed a two-story house on their lot, using the ground floor for stores, and the upper floor
as a dwelling. They have erected said house at a distance of 71 centimeters from the dividing
line at the front part, and at a distance of 70 centimeters at the rear. The house of the
defendants is being put to the use for which it was built. The defendants have opened three
windows on the ground floor of their house, in the part that overlooks the lot of the plaintiff, each
window being 1 meter and 20 centimeters wide and 2 meters high; on the upper floor they have
opened 5 windows, each 2 meters and 11 centimeters high and 1 meter and 60 centimeters
wide; they have also constructed a balcony at the front part of the house above the ground floor,
opening directly upon the lot of the plaintiff, and another balcony at the rear part of the house,
which up to the present time opens directly upon the plaintiff's lot, although the defendants state
that, according to the plan, said part is to be closed with boards. All of said windows are
required for the proper lighting and ventilation of said house, and for the circulation of air
therein. The house of the defendants is 23 meters long and built almost parallel to the dividing
line between the plaintiff's lot and that of the defendants. All of said windows and balconies are
at a distance of less than one meter from the dividing line of the plaintiff's lot and that of the
defendants, and are looking directly over the same.

The plaintiff claims that, under articles 581 and 582 of the Civil Code, the defendant is
prohibited from constructing his house and opening the windows and balconies looking directly
upon his property in the manner above described, and prays that the court issue an order
directing the defendant to close said windows and that the said defendant be prohibited
perpetually from constructing openings in its house except in conformity with said articles of the
Civil Code.chanroblesvirtualawlibrary chanrobles virtual law library

The lower court, after a full consideration of the evidence adduced during the trial of the cause
and after making the above findings of fact, concluded his sentence in the following language:

In view of the circumstances mentioned above, and although I find that the windows of the
house come within the prohibition contained in article 582 of the Civil Code, I am of the opinion
that the plaintiff is not entitled to the judgment asked for, or for any other judgment in his favor.
Therefore, it is ordered that judgment be entered in favor of the defendant for the recovery of
the costs herein. - (Signed) Henry C. Bates, judge of the Ninth Judicial District.
From this sentence the plaintiff appealed.chanroblesvirtualawlibrary chanrobles virtual law
library

No motion was made for a new trial in the court below. The plaintiff excepted only to the
judgment of the lower court, basing his objection upon the ground that the sentence of the lower
court was contrary to the provisions of said article 582, and in this court insists that he has a
right under said provisions of the Civil Code to have said windows closed and to have the
defendant prohibited from making openings in the side of the house overlooking his yard except
those openings provided for under said article.chanroblesvirtualawlibrarychanrobles virtual law
library

Article 581 of the Civil Code is as follows:

ART. 581. The owner of a wall which is not a party wall, adjoining another's estate, may make in
it windows or openings to admit light, at the height of the ceiling joists or immediately under the
ceiling, of the dimensions of thirty centimeters square, and, in any case, with an iron grate
embedded in the wall and a wire screen.chanroblesvirtualawlibrary chanrobles virtual law library

However, the owner of the house or estate adjoining the wall in which the openings are made
may close them, if he acquires the part ownership of the wall and should there be no agreement
to the contrary.chanroblesvirtualawlibrary chanrobles virtual law library

He may also obstruct them by building on his land or raising a wall adjacent to that having such
opening or window.

Article 582 of the Civil Code provides as follows:

ART. 582. Windows with direct views, or balconies or any similar openings projecting over the
estate of the neighbor, can not be made if there is not a distance of, at least, two meters
between the wall in which they are built and said estate.chanroblesvirtualawlibrary chanrobles
virtual law library

Neither can side nor oblique views be opened over said property, unless there is a distance of
sixty centimeters.

The foregoing provisions of the Civil Code enumerate the conditions under which an adjoining
lot owner may enjoy the easement of light and view. These provisions are positive and persons
attempting to exercise easement of light and view upon property of adjoining landowners are
governed by its provisions. Said article 582 absolutely prohibits the construction of windows with
direct views, or balconies or any similar openings projecting over adjoining property, unless
there is a distance of at least 2 meters between the wall in which they are built and the adjoining
property. The evidence adduced during the trial in the court below was not brought here.
Therefore, we are governed as to the facts by the findings of the lower court. The lower court
found that the distance between the wall of the house of the defendant and the dividing line
between the two lots was only 71 centimeters. The defendant, therefore, has violated the
provisions of said article 582 by building in his house nearer the line of the property of the
plaintiff than a distance of 2 meters.chanroblesvirtualawlibrary chanrobles virtual law library

Said article 581 provides the character of windows or openings in a wall adjoining the property
of another when such wall is constructed nearer the dividing line of the two properties than 2
meters. In the present case the defendant constructed his house so that the wall looking upon
the property of the plaintiff was less than 2 meters from the dividing line. He can, therefore, only
construct such windows as are provided for in said article
581.chanroblesvirtualawlibrary chanrobles virtual law library

The lower court bases his conclusions largely upon the fact that the plaintiff had stood by and
permitted the defendant to construct, or partially construct, his house without having made any
objections, as well as the further fact that the plaintiff had received no damages whatever
except purely sentimental damages. The first ground would seem to imply that the lower court
was of the opinion that the plaintiff was estopped from insisting upon his rights under the law, he
having permitted the defendant to partially construct the house in the manner above described.
There is nothing in the decision of the lower court which shows that the plaintiff at any time
before the commencement of the present action knew that the house of the defendant was
being constructed in violation of the provisions of said above-quoted articles. It was the duty of
the defendant to construct his house in accordance with the provisions of the law. The plaintiff
was not obliged to stand by for the purpose of seeing that the defendant had not violated the
law. There are many cases where the doctrine of estopped may be invoked against one who
claims a right where he has stood by and either expressly or tacitly given his consent to a
violation of his right by another. This doctrine, however, can not be invoked where the law
imposes an express duty upon the other person and prohibits him from the exercise of certain
acts in a certain way. The defendant only can blame himself for not constructing his house in
the manner provided for by law under the facts in the present case. (See decision of the
supreme court of Spain, June 6, 1892; 4 Manresa, 734, 735, 736-739; 9 Alcubilla,
541.) chanrobles virtual law library

Under all of the facts and the law presented in the present case, we are of the opinion, and so
hold, that the defendant is not entitled to the easement of light and view which the windows and
openings, which he was made in the house in question, give him, and, because of the fact that
he has constructed his houses nearer than 2 meters to the dividing line between his property
and the property of the plaintiff, he is only entitled to the easement of light and view provided for
in said article 581 above quoted. Therefore, let a judgment be entered reversing the judgment of
the lower court with costs, and directing the defendants, within a period of thirty days from the
receipt of the notice of this decision, to close the said openings and windows, in the said house,
looking directly upon the property of the plaintiff. So ordered.
G.R. No. L-14652 June 30, 1960

JUAN GARGANTOS, petitioner,

vs.
TAN YANON and THE COURT OF APPEALS, respondents.

Jose T. Nery for petitioner.

Constantino P. Tadena for respondents.

GUTIERREZ DAVID, J.:

Juan Gargantos appeals by certiorari from the decision of the Court of Appeals reversing the
judgment of the Court of First Instance of Romblon.

The record discloses that the late Francisco Sanz was the former owner of a parcel of land
containing 888 square meters, with the buildings and improvements thereon, situated in
the poblacion of Romblon. He subdivided the lot into three and then sold each portion to
different persons. One portion was purchased by Guillermo Tengtio who subsequently sold it to
Vicente Uy Veza. Another portion, with the house of strong materials thereon, was sold in 1927
to Tan Yanon, respondent herein. This house has on its northeastern side, doors and windows
over-looking the third portion, which, together with the camarin and small building thereon, after
passing through several hands, was finally acquired by Juan Gargantos, petitioner herein.

On April 23, 1955, Gargantos applied to the Municipal Mayor for a permit to demolish the
roofing of the old camarin. The permit having been granted, Gargantos tore down the roof of
the camarin. On May 11, 1955, Gargantos asked the Municipal Council of Romblon for another
permit, this time in order to construct a combined residential house and warehouse on his lot.
Tan Yanon opposed approval of this application.

Because both the provincial fiscal and district engineer of Romblon recommended granting of
the building permit to Gargantos, Tan Yanon filed against Gargantos an action to restrain him
from constructing a building that would prevent plaintiff from receiving light and enjoying the
view trough the window of his house, unless such building is erected at a distance of not less
than three meters from the boundary line between the lots of plaintiff and defendant, and to
enjoin the members of Municipal Council of Romblon from issuing the corresponding building
permit to defendant. The case as against the members of the Municipal Council was
subsequently dismissed with concurrence of plaintiff's council. After trial, the Court of First
Instance of Romblon rendered judgment dismissing the complaint and ordering plaintiff to pay
defendant the sum of P12,500.00 by way of compensatory, exemplary, moral and moderate
damages.

On appeal, the Court of Appeals set aside the decision of the Court of First Instance of Romblon
and enjoined defendant from constructing his building unless "he erects the same at a distance
of not less than three meters from the boundary line of his property, in conformity with Article
673 of the New Civil Code."

So Juan Gargantos filed this petition for review of the appellate Court's decision. The focal issue
herein is whether the property of respondent Tan Yanon has an easement of light and view
against the property of petitioner Gargantos.

The kernel of petitioner's argument is that respondent never acquired any easement either by
title or by prescription. Assuredly, there is no deed establishing an easement. Likewise, neither
petitioner nor his predecessors-in-interest have ever executed any deed whereby they
recognized the existence of the easement, nor has there been final judgment to that effect.
Invoking our decision in Cortes vs. Yu-Tibo (2 Phil., 24), petitioner maintains that respondent
has not acquired an easement by prescription because he has never formally forbidden
petitioner from performing any act which would be lawful without the easement, hence the
prescriptive period never started.

It is obvious, however, that Article 538, O.C.C. (now Article 621, N.C.C.) and the doctrine in the
Yu-Tibo case are not applicable herein because the two estates, that now owned by petitioner,
and that owner by respondent, were formerly owned by just one person, Francisco Sanz. It was
Sanz who introduced improvements on both properties. On that portion presently belonging to
respondent, he constructed a house in such a way that the northeastern side thereof extends to
the wall of the camarin on the portion now belonging to petitioner. On said northeastern side of
the house, there are windows and doors which serve as passages for light and view. These
windows and doors were in existence when respondent purchased the house and lot from Sanz.
The deed sale did not provide that the easement of light and view would not be established.
This then is precisely the case covered by Article 541, O.C.C (now Article 624, N.C.C) which
provides that the existence of an apparent sign of easement between two estates, established
by the proprietor of both, shall be considered, if one of them is alienated, as a title so that the
easement will continue actively and passively, unless at the time the ownership of the two
estate is divided, the contrary is stated in the deed of alienation of either of them, or the sign is
made to disappear before the instrument is executed. The existence of the doors and windows
on the northeastern side of the aforementioned house, is equivalent to a title, for the visible and
permanent sign of an easement is the title that characterizes its existence (Amor vs. Florentino,
74 Phil., 403). It should be noted, however, that while the law declares that the easement is to
"continue" the easement actually arises for the first time only upon alienation of either estate,
inasmuch as before that time there is no easement to speak of, there being but one owner of
both estates (Articles 530, O.C.C., now Articles 613, N.C.C).

We find that respondent Tan Yanon's property has an easement of light and view against
petitioner's property. By reason of his easement petitioner cannot construct on his land any
building unless he erects it at a distance of not less than three meters from the boundary line
separating the two estates.

Wherefore, the appealed decision is hereby affirmed with costs against petitioner.
 G.R. No. 36048 September 24, 1932

ALEJANDRO MASONGSONG, Plaintiff-Appellee, vs. VICTORIA FLORES, Defendant-

Appellant.

Gregorio Perfecto for appellant.

Pascual Santos for appellee.

MALCOLM, J.:

The question here to be decided is whether an alley constructed in accordance with the Revised
Ordinances of the City of Manila, and open to the public, falls within the provisions of article 584
of the Civil code, making codal article 582 concerning easements of light and view inapplicable
to buildings separated by a public thoroughfare.chanroblesvirtualawlibrary chanrobles virtual law
library

The facts as stipulated may be summarized in the following manner: Alejandro Masongsong is
the owner of a lot with Torrens title, situated in the City of Manila. Felipe Cruz, the husband of
Victoria Flores, is the owner of an adjoining lot. On the lot of Victoria Flores is a house which
was begun to be constructed on July 3, 1925, and was completed on November 10, 1926. This
house has windows overlooking the adjoining property of Masongsong, leaving a distance of
less than two meters between the two houses. Separating the two houses is an alley which on
Exhibits A and B, the latter a sketch prepared by the department of engineering and public
works of the City of manila, is denominated a public alley. The Torrens title of Masongsong
extends over this alley. When Masongsong, on June 22, 1928, applied to the city engineer for a
permit to construct a house on his property, he bound himself to the following conditions: (1)
That the building shall abut or face on the officially approved private alley as shown on the
location plan; and (2) that this approved private alley shall be opened to the public and with its
approved width preserved (3 m.) shall be maintained and kept in good repair by the grantee of
this permit, his heirs, executors and assigns and shall never be closed by any person so long as
there is a building or structure, abutting, facing or having access to said private
alley.chanroblesvirtualawlibrary chanrobles virtual law library

Article 582 of the Civil Code provides that "no windows or balconies or other similar projections
which directly overlook the adjoining property may be opened or built without leaving a distance
of not less than two meters between the wall in which they are built and such adjoining
property." Article 584 of the Civil Code makes the provisions of article 582 inapplicable "to
buildings separated by a public thoroughfare" ( una via publica). As intimated by Manresa in his
commentaries on article 584, its dispositions must be harmonized with the municipal
ordinances. In this connection, the Revised Ordinances of the City of Manila, in section 103, in
speaking of the issuance of permits for the erection of buildings, provides: "That the building
shall abut or face upon a public street or alley or on a private street or alley which has been
officially approved: And provided, further, That any private street or alley open in an interior lot
for the purposes of this section, once officially approved, shall be open to the general public,
and with its approved width preserved, shall be maintained and kept in good repair by the
grantee of the permit, his heirs, executors, and assigns, and shall never be closed by any
person so long as there is a building or other structure abutting or facing upon such private
street or alley." The same Revised Ordinances define, in section 35, an alley as "any public
thoroughfare less than seven meters and fifty centimeters in width between established
lines." chanrobles virtual law library

It will not escape notice, in the first place, that in the sketch of location of the house of Victoria
Flores, the department of engineering and public works of the City of Manila denominated the
opening between the houses of Masongsong and Flores as a public alley. In the second place,
it will be noticed that in the application of Masongsong to construct his house, it was agreed that
the approved private alley shall be opened to the public. In other words, the so-called private
alley is not in fact exactly private. For purposes of classification, we have private alleys opened
to the public and public alleys, the main difference appearing to be that first is constructed by
private funds and the second by public funds, but with no practical difference as to use. The first
is as much public as the latter, for anyone can travel them who has occasion to and no more
can be said of the latter. When the applicant for a house to be constructed on an interior lot
agrees to have a private alley opened to the public run past his house, he accepts the burdens
of the alley as well as its benefits.chanroblesvirtualawlibrary chanrobles virtual law library

It is also proper to observe that, although the house of Victoria Flores was begun to be
constructed on July 3, 1925, and received a certificate of final inspection from the City of Manila
on November 10, 1926, legal action was only commenced to enforce the right of Masongsong
on September 16, 1929. This tolerance came dangerously near to creating an
estoppel.chanroblesvirtualawlibrary chanrobles virtual law library

Answering the question at issue, we hold that a private alley open to the public, under the
circumstances of this case, falls within the exception provided by article 584 of the Civil Code to
article 582 thereof, and that accordingly the plaintiff has no legal cause of
action.chanroblesvirtualawlibrary chanrobles virtual law library

Judgment reversed, without special pronouncement as to costs in either

instance.chanroblesvirtualawlibrary chanrobles virtual law library

Abad Santos, Hull, Vickers, Imperial and Butte, JJ., concur.

Separate Opinions chanrobles virtual law library

VILLAMOR, J., dissenting: chanrobles virtual law library

I dissent. In my opinion, although the alley in question is open to the public, yet it has not for that
reason become a public alley, inasmuch as the owner of the land, Alejandro Masongsong, has
bound himself to maintain and keep it in good repair and never close it so long as there is a
building or structure abutting, facing or having access to said private alley, and therefore the
moment such building or structure should cease to exist the owner may close said private alley.
G.R. No. L-20786 October 30, 1965

IN RE: PETITION FOR CANCELLATION OF CONDITION ANNOTATED ON TRANSFER

CERTIFICATE OF TITLE No. 54417, QUEZON CITY, DRA. RAFAELA V. TRIAS, married to
MANUEL SIA RAMOS, petitioner-appellee,
vs.
GREGORIO ARANETA, INC. oppositor-appellant.

Yatco & Yatco for petitioner-appellee.

Araneta & Araneta for oppositor-appellant.

BENGZON, C.J.:

In May 1963, Rafaela Trias, married, filed in the Rizal court of first instance, a petition to cancel
from her Torrens certificate of title, the annotation appearing on its back which reads as follows:

5. That no factories will be permitted in this section.

She alleged she was the registered owner of this lot in Quezon City; that she wanted the
cancellation, not for the purpose of erecting a factory thereon, but merely to facilitate approval of
a loan she had applied for; that the restriction was illegal, because it impaired the owner's
dominical rights; and that it was a mere surplusage anyhow, because there are zoning
ordinances prohibiting establishment of factories in that district.

Acting on the petition, the court granted it, endorsing her views, particularly the one referring to
surplusage due to a zoning ordinance.

Two weeks later, Gregorio Araneta, Inc. moved for reconsideration of the order, alleging: (a)
that the condition had been inserted in the title pursuant to a contract of sale between it and
Rafaela's predecessor-in-interest; (b) that it received no timely notice of petition; (c) that the
order disregards contractual rights and obligations; (d) that the prohibition against factories was
valid, and not a surplusage; and (e) that the Court had no jurisdiction to act on the petition.

Upon denial of its motion to reconsider, Gregorio Araneta, Inc. appealed to this Court.

There are no issues of fact. The parties agree: (1) that the lot was part of a subdivision and
originally belonged to J.M. Tuason & Co. Inc. which corporation upon selling it (thru Araneta
Inc.) to a purchaser (Garcia Mateo and Deogracias Lopez), imposed the prohibition; that such
prohibition was accordingly printed on the back of the transfer certificate issued to the
purchaser; (2) after several transfers, always subject to the prohibition, Rafaela acquired the lot,
again subject to the limitation which was repeated on the back of her certificate; (3) that upon
receiving her certificate, she noticed the prohibition; and so, arguing that it infringes the owner's
right to use her land, she asked for its cancellation; (4) as already stated, she obtained relief.

The questions at issue here are: (a) the validity of the prohibition or limitation; (b) the effect of
the zoning ordinance.

Such prohibition is similar to other conditions imposed by sellers of subdivision lots upon
purchasers thereof, in and around Manila. It is in reality an easement,1 which every owner of
real estate may validly impose under Art. 594 of the Civil Code or under Art. 688 of the New
Civil Code, which provides that "the owner of a piece of land nay establish thereon the
easements which he may deem suitable, ... provided he does not contravene the law, public
policy or public order".

No law has been cited outlawing this condition or limitation, which evidently was imposed by the
owner of the subdivision to establish a residential section in that area, or the purpose of
assuring purchasers of the lots therein that the peace and quiet of the place will not be disturbed
by the noise or smoke of factories in the vicinity.

The limitation is essentially a contractual obligation which the seller, Tuason & Co., Inc. (thru
Araneta Inc.) imposed, and the purchaser agreed to accept. Of course, it restricts the free use of
the parcel of land by the purchaser. However, "while the courts have manifested some disfavor
of covenants restricting the use of property, they have generally sustained them where
reasonable, and not contrary to public policy ... ." (14 Am. Jur. 616.).

"The validity of building restrictions limiting buildings to residences, ... restrictions as to the
character or location of buildings or structures to be erected on the land ... has been sustained.
(14 Am. Jur. 617, citing cases.)

Now, it is proper for Tuason & Co., Inc. (thru Araneta, Inc.) to oppose the elimination of the
condition from the certificate of title, because, if it is erased, a purchaser who gets a new
certificate of title without the annotation, will hold the lot free from the encumbrance, and might
build a factory there.2 As declared by sec. 39 of Act 496 as amended, "every purchaser of
registered land ... shall hold the same free from all encumbrances except those noted in said
certificate."

The existence of a zoning ordinance prohibiting factories in the area is immaterial. The
ordinance might be repealed at any time; and if so repealed, this prohibition would not be
enforceable against new purchasers of the land, who may be ignorant thereof. The same
remark applies to Rafaela's promise not to build a factory on the lot: new owners might not be
bound.

A problem might arise if and when the ordinance is amended so as to convert the area into an
industrial zone — impliedly permitting factories. Probably, the limitation might still bind the lot
owner (with annotation) ; but it is not the present issue, and we do not now decide it.

IN THIS VIEW OF THE CASE, it becomes unnecessary to take up the other questions
discussed by appellant, regarding notice and jurisdiction. Neither do we pass on the point raised
by appellee concerning appellant's personality to object to the cancellation; because anyway,
the proper party in interest (J.M. Tuason & Co., Inc.) could be impleaded as substitute party on
appeal. (Alonzo v. Villamor, 16 Phil. 315).

The appealed order is reversed, and the petition to cancel is denied, with costs against
petitioner. So ordered.
G.R. No. 77425 June 19, 1991

THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF

IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,
vs.
HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE
CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and
THERESA RIETA TOLENTINO, respondents.

G.R. No. 77450 June 19, 1991

THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF

IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,
vs.
HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE
CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and
THERESA RIETA TOLENTINO, respondents.

Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Cavite.

Dolorfino and Dominguez Law Offices for Sps. Ignao.
Joselito R. Enriquez for private respondents.

REGALADO, J.:

These two petitions for review on certiorari1 seek to overturn the decision of the Court of
Appeals in CA-G.R. CV No. 054562 which reversed and set aside the order of the Regional Trial
Court of Imus, Cavite dismissing Civil Case No. 095-84, as well as the order of said respondent
court denying petitioner's motions for the reconsideration of its aforesaid decision.

On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of
deed of donation, rescission of contract and reconveyance of real property with damages
against petitioners Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus,
Cavite, together with the Roman Catholic Archbishop of Manila, before the Regional Trial Court,
Branch XX, Imus, Cavite and which was docketed as Civil Case No. 095-84 therein.3

In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio
de Castro and Martina Rieta, now both deceased, executed a deed of donation in favor of
therein defendant Roman Catholic Archbishop of Manila covering a parcel of land (Lot No. 626,
Cadastral Survey of Kawit), located at Kawit, Cavite, containing an area of 964 square meters,
more or less. The deed of donation allegedly provides that the donee shall not dispose or sell
the property within a period of one hundred (100) years from the execution of the deed of
donation, otherwise a violation of such condition would render ipso facto null and void the deed
of donation and the property would revert to the estate of the donors.

It is further alleged that on or about June 30, 1980, and while still within the prohibitive period to
dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose administration all
properties within the province of Cavite owned by the Archdiocese of Manila was allegedly
transferred on April 26, 1962, executed a deed of absolute sale of the property subject of the
donation in favor of petitioners Florencio and Soledad C. Ignao in consideration of the sum of
P114,000. 00. As a consequence of the sale, Transfer Certificate of Title No. 115990 was
issued by the Register of Deeds of Cavite on November 15, 1980 in the name of said petitioner
spouses.

What transpired thereafter is narrated by respondent court in its assailed decision.4

On December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to
dismiss based on the grounds that (1) herein private respondents, as plaintiffs therein, have no
legal capacity to sue; and (2) the complaint states no cause of action.
On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to dismiss
on three (3) grounds, the first two (2) grounds of which were identical to that of the motion to
dismiss filed by the Ignao spouses, and the third ground being that the cause of action has
prescribed.

On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to dismiss
on the ground that he is not a real party in interest and, therefore, the complaint does not state a
cause of action against him.

After private respondents had filed their oppositions to the said motions to dismiss and the
petitioners had countered with their respective replies, with rejoinders thereto by private
respondents, the trial court issued an order dated January 31, 1985, dismissing the complaint
on the ground that the cause of action has prescribed.5

Private respondents thereafter appealed to the Court of Appeals raising the issues on (a)
whether or not the action for rescission of contracts (deed of donation and deed of sale) has
prescribed; and (b) whether or not the dismissal of the action for rescission of contracts (deed of
donation and deed of sale) on the ground of prescription carries with it the dismissal of the main
action for reconveyance of real property.6

On December 23, 1986, respondent Court of Appeals, holding that the action has not yet
prescibed, rendered a decision in favor of private respondents, with the following dispositive
portion:

WHEREFORE, the Order of January 31, 1985 dismissing appellants' complaint is SET
ASIDE and Civil Case No. 095-84 is hereby ordered REINSTATED and REMANDED to
the lower court for further proceedings. No Costs.7

Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions for
reconsideration which were denied by respondent Court of Appeals in its resolution dated
February 6, 1987,8 hence, the filing of these appeals by certiorari.

It is the contention of petitioners that the cause of action of herein private respondents has
already prescribed, invoking Article 764 of the Civil Code which provides that "(t)he donation
shall be revoked at the instance of the donor, when the donee fails to comply with any of the
conditions which the former imposed upon the latter," and that "(t)his action shall prescribe after
four years from the non-compliance with the condition, may be transmitted to the heirs of the
donor, and may be exercised against the donee's heirs.

We do not agree.

Although it is true that under Article 764 of the Civil Code an action for the revocation of a
donation must be brought within four (4) years from the non-compliance of the conditions of the
donation, the same is not applicable in the case at bar. The deed of donation involved herein
expressly provides for automatic reversion of the property donated in case of violation of the
condition therein, hence a judicial declaration revoking the same is not necessary, As aptly
stated by the Court of Appeals:

By the very express provision in the deed of donation itself that the violation of the
condition thereof would render ipso facto null and void the deed of donation, WE are of
the opinion that there would be no legal necessity anymore to have the donation
judicially declared null and void for the reason that the very deed of donation itself
declares it so. For where (sic) it otherwise and that the donors and the donee
contemplated a court action during the execution of the deed of donation to have the
donation judicially rescinded or declared null and void should the condition be violated,
then the phrase reading "would render ipso facto null and void"would not appear in the
deed of donation.9

In support of its aforesaid position, respondent court relied on the rule that a judicial action for
rescission of a contract is not necessary where the contract provides that it may be revoked and
cancelled for violation of any of its terms and conditions.10 It called attention to the holding that
there is nothing in the law that prohibits the parties from entering into an agreement that a
violation of the terms of the contract would cause its cancellation even without court
intervention, and that it is not always necessary for the injured party to resort to court for
rescission of the contract.11 It reiterated the doctrine that a judicial action is proper only when
there is absence of a special provision granting the power of cancellation.12

It is true that the aforesaid rules were applied to the contracts involved therein, but we see no
reason why the same should not apply to the donation in the present case. Article 732 of the
Civil Code provides that donations inter vivosshall be governed by the general provisions on
contracts and obligations in all that is not determined in Title III, Book III on donations. Now, said
Title III does not have an explicit provision on the matter of a donation with a resolutory
condition and which is subject to an express provision that the same shall be considered ipso
facto revoked upon the breach of said resolutory condition imposed in the deed therefor, as is
the case of the deed presently in question. The suppletory application of the foregoing doctrinal
rulings to the present controversy is consequently justified.

The validity of such a stipulation in the deed of donation providing for the automatic reversion of
the donated property to the donor upon non-compliance of the condition was upheld in the
recent case of De Luna, et al. vs. Abrigo, et al.13 It was held therein that said stipulation is in the
nature of an agreement granting a party the right to rescind a contract unilaterally in case of
breach, without need of going to court, and that, upon the happening of the resolutory condition
or non-compliance with the conditions of the contract, the donation is automatically revoked
without need of a judicial declaration to that effect. While what was the subject of that case was
an onerous donation which, under Article 733 of the Civil Code is governed by the rules on
contracts, since the donation in the case at bar is also subject to the same rules because of its
provision on automatic revocation upon the violation of a resolutory condition, from parity of
reasons said pronouncements in De Luna pertinently apply.

The rationale for the foregoing is that in contracts providing for automatic revocation, judicial
intervention is necessary not for purposes of obtaining a judicial declaration rescinding a
contract already deemed rescinded by virtue of an agreement providing for rescission even
without judicial intervention, but in order to determine whether or not the rescission was
proper.14

When a deed of donation, as in this case, expressly provides for automatic revocation and
reversion of the property donated, the rules on contract and the general rules on prescription
should apply, and not Article 764 of the Civil Code. Since Article 1306 of said Code authorizes
the parties to a contract to establish such stipulations, clauses, terms and conditions not
contrary to law, morals, good customs, public order or public policy, we are of the opinion that,
at the very least, that stipulation of the parties providing for automatic revocation of the deed of
donation, without prior judicial action for that purpose, is valid subject to the determination of the
propriety of the rescission sought. Where such propriety is sustained, the decision of the court
will be merely declaratory of the revocation, but it is not in itself the revocatory act.

On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the
cause of action of herein private respondents has not yet prescribed since an action to enforce
a written contract prescribes in ten (10) years.15 It is our view that Article 764 was intended to
provide a judicial remedy in case of non-fulfillment or contravention of conditions specified in the
deed of donation if and when the parties have not agreed on the automatic revocation of such
donation upon the occurrence of the contingency contemplated therein. That is not the situation
in the case at bar.

Nonetheless, we find that although the action filed by private respondents may not be dismissed
by reason of prescription, the same should be dismissed on the ground that private respondents
have no cause of action against petitioners.

The cause of action of private respondents is based on the alleged breach by petitioners of the
resolutory condition in the deed of donation that the property donated should not be sold within
a period of one hundred (100) years from the date of execution of the deed of donation. Said
condition, in our opinion, constitutes an undue restriction on the rights arising from ownership of
petitioners and is, therefore, contrary to public policy.
Donation, as a mode of acquiring ownership, results in an effective transfer of title over the
property from the donor to the donee. Once a donation is accepted, the donee becomes the
absolute owner of the property donated. Although the donor may impose certain conditions in
the deed of donation, the same must not be contrary to law, morals, good customs, public order
and public policy. The condition imposed in the deed of donation in the case before us
constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of
the property donated, which right is an indispensable attribute of ownership. Such a prohibition
against alienation, in order to be valid, must not be perpetual or for an unreasonable period of
time.

Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered
applicable by analogy.1âwphi1Under the third paragraph of Article 494, a donor or testator may
prohibit partition for a period which shall not exceed twenty (20) years. Article 870, on its part,
declares that the dispositions of the testator declaring all or part of the estate inalienable for
more than twenty (20) years are void.

It is significant that the provisions therein regarding a testator also necessarily involve, in the
main, the devolution of property by gratuitous title hence, as is generally the case of donations,
being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the
property should be deemed anathema to the basic and actual intent of either the donor or
testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an
unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and
870 of the Code.

In the case at bar, we hold that the prohibition in the deed of donation against the alienation of
the property for an entire century, being an unreasonable emasculation and denial of an integral
attribute of ownership, should be declared as an illegal or impossible condition within the
contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said
statutory provision, such condition shall be considered as not imposed. No reliance may
accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is
that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for
the nullification of the deed of donation is not in truth violative of the latter hence, for lack of
cause of action, the case for private respondents must fail.

It may be argued that the validity of such prohibitory provision in the deed of donation was not
specifically put in issue in the pleadings of the parties. That may be true, but such oversight or
inaction does not prevent this Court from passing upon and resolving the same.

It will readily be noted that the provision in the deed of donation against alienation of the land for
one hundred (100) years was the very basis for the action to nullify the deed of d donation. At
the same time, it was likewise the controverted fundament of the motion to dismiss the case a
quo, which motion was sustained by the trial court and set aside by respondent court, both on
the issue of prescription. That ruling of respondent court interpreting said provision was
assigned as an error in the present petition. While the issue of the validity of the same provision
was not squarely raised, it is ineluctably related to petitioner's aforesaid assignment of error
since both issues are grounded on and refer to the very same provision.

This Court is clothed with ample authority to review matters, even if they are not assigned as
errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of
the case:16 Thus, we have held that an unassigned error closely related to an error properly
assigned,17 or upon which the determination of the question properly assigned is dependent, will
be considered by the appellate court notwithstanding the failure to assign it as error.18

Additionally, we have laid down the rule that the remand of the case to the lower court for further
reception of evidence is not necessary where the Court is in a position to resolve the dispute
based on the records before it. On many occasions, the Court, in the public interest and for the
expeditious administration of justice, has resolved actions on the merits instead of remanding
them to the trial court for further proceedings, such as where the ends of justice, would not be
subserved by the remand of the case.19 The aforestated considerations obtain in and apply to
the present case with respect to the matter of the validity of the resolutory condition in question.
WHEREFORE, the judgment of respondent court is SET ASIDE and another judgment is
hereby rendered DISMISSING Civil Case No. 095-84 of the Regional Trial Court, Branch XX,
Imus, Cavite.

SO ORDERED.
G.R. No. L-69970 November 28, 1988

FELIX DANGUILAN, petitioner,

vs.
INTERMEDIATE APPELLATE COURT, APOLONIA MELAD, assisted by her husband,
JOSE TAGACAY, respondents.

Pedro R. Perez, Jr. for petitioner.

Teodoro B. Mallonga for private respondent.

CRUZ, J.:

The subject of this dispute is the two lots owned by Domingo Melad which is claimed by both
the petitioner and the respondent. The trial court believed the petitioner but the respondent
court, on appeal, upheld the respondent. The case is now before us for a resolution of the
issues once and for all.

On January 29, 1962, the respondent filed a complaint against the petitioner in the then Court of
First Instance of Cagayan for recovery of a farm lot and a residential lot which she claimed she
had purchased from Domingo Melad in 1943 and were now being unlawfully withheld by the
defendant. 1 In his answer, the petitioner denied the allegation and averred that he was the
owner of the said lots of which he had been in open, continuous and adverse possession,
having acquired them from Domingo Melad in 1941 and 1943. 2 The case was dismissed for
failure to prosecute but was refiled in 1967. 3

At the trial, the plaintiff presented a deed of sale dated December 4, 1943, purportedly signed
by Domingo Melad and duly notarized, which conveyed the said properties to her for the sum of
P80.00. 4 She said the amount was earned by her mother as a worker at the Tabacalera factory.
She claimed to be the illegitimate daughter of Domingo Melad, with whom she and her mother
were living when he died in 1945. She moved out of the farm only when in 1946 Felix Danguilan
approached her and asked permission to cultivate the land and to stay therein. She had agreed
on condition that he would deliver part of the harvest from the farm to her, which he did from
that year to 1958. The deliveries having stopped, she then consulted the municipal judge who
advised her to file the complaint against Danguilan. The plaintiff 's mother, her only other
witness, corroborated this testimony. 5

For his part, the defendant testified that he was the husband of Isidra Melad, Domingo's niece,
whom he and his wife Juana Malupang had taken into their home as their ward as they had no
children of their own. He and his wife lived with the couple in their house on the residential lot
and helped Domingo with the cultivation of the farm. Domingo Melad signed in 1941 a private
instrument in which he gave the defendant the farm and in 1943 another private instrument in
which he also gave him the residential lot, on the understanding that the latter would take care
of the grantor and would bury him upon his death. 6 Danguilan presented three other
witnesses 7 to corroborate his statements and to prove that he had been living in the land since
his marriage to Isidra and had remained in possession thereof after Domingo Melad's death in
1945. Two of said witnesses declared that neither the plaintiff nor her mother lived in the land
with Domingo Melad. 8

The decision of the trial court was based mainly on the issue of possession. Weighing the
evidence presented by the parties, the judge 9 held that the defendant was more believable and
that the plaintiff's evidence was "unpersuasive and unconvincing." It was held that the plaintiff's
own declaration that she moved out of the property in 1946 and left it in the possession of the
defendant was contradictory to her claim of ownership. She was also inconsistent when she
testified first that the defendant was her tenant and later in rebuttal that he was her
administrator. The decision concluded that where there was doubt as to the ownership of the
property, the presumption was in favor of the one actually occupying the same, which in this
case was the defendant. 10
The review by the respondent court 11 of this decision was manifestly less than thorough. For
the most part it merely affirmed the factual findings of the trial court except for an irrelevant
modification, and it was only toward the end that it went to and resolved what it considered the
lone decisive issue.

The respondent court held that Exhibits 2-b and 3-a, by virtue of which Domingo Melad had
conveyed the two parcels of land to the petitioner, were null and void. The reason was that they
were donations of real property and as such should have been effected through a public
instrument. It then set aside the appealed decision and declared the respondents the true and
lawful owners of the disputed property.

The said exhibits read as follows:

EXHIBIT 2-b is quoted as follows: 12

I, DOMINGO MELAD, of legal age, married, do hereby declare in this receipt the
truth of my giving to Felix Danguilan, my agricultural land located at Barrio Fugu-
Macusi, Penablanca, Province of Cagayan, Philippine Islands; that this land is
registered under my name; that I hereby declare and bind myself that there is no
one to whom I will deliver this land except to him as he will be the one
responsible for me in the event that I will die and also for all other things needed
and necessary for me, he will be responsible because of this land I am giving to
him; that it is true that I have nieces and nephews but they are not living with us
and there is no one to whom I will give my land except to Felix Danguilan for he
lives with me and this is the length—175 m. and the width is 150 m.

IN WITNESS WHEREOF, I hereby sign my name below and also those present
in the execution of this receipt this 14th day of September 1941.

Penablanca Cagayan, September 14, 1941.

(SGD.) DOMINGO MELAD

WITNESSES:
1. (T.M.) ISIDRO MELAD
2. (SGD.) FELIX DANGUILAN
3. (T.M.) ILLEGIBLE

EXHIBIT 3-a is quoted as follows: 13

I, DOMINGO MELAD, a resident of Centro, Penablanca, Province of Cagayan,

do hereby swear and declare the truth that I have delivered my residential lot at
Centro, Penablanca, Cagayan, to Felix Danguilan, my son-in-law because I have
no child; that I have thought of giving him my land because he will be the one to
take care of SHELTERING me or bury me when I die and this is why I have
thought of executing this document; that the boundaries of this lot is—on the
east, Cresencio Danguilan; on the north, Arellano Street; on the south by Pastor
Lagundi and on the west, Pablo Pelagio and the area of this lot is 35 meters
going south; width and length beginning west to east is 40 meters.

IN WITNESS HEREOF, I hereby sign this receipt this 18th day of December
1943.

(SGD.) DOMINGO MELAD

WITNESSES:

(SGD.) ILLEGIBLE
(SGD.) DANIEL ARAO
It is our view, considering the language of the two instruments, that Domingo Melad did intend
to donate the properties to the petitioner, as the private respondent contends. We do not think,
however, that the donee was moved by pure liberality. While truly donations, the conveyances
were onerous donations as the properties were given to the petitioner in exchange for his
obligation to take care of the donee for the rest of his life and provide for his burial. Hence, it
was not covered by the rule in Article 749 of the Civil Code requiring donations of real properties
to be effected through a public instrument. The case at bar comes squarely under the doctrine
laid down in Manalo v. De Mesa, 14 where the Court held:

There can be no doubt that the donation in question was made for a valuable
consideration, since the donors made it conditional upon the donees' bearing the
expenses that might be occasioned by the death and burial of the donor Placida
Manalo, a condition and obligation which the donee Gregorio de Mesa carried
out in his own behalf and for his wife Leoncia Manalo; therefore, in order to
determine whether or not said donation is valid and effective it should be
sufficient to demonstrate that, as a contract, it embraces the conditions the law
requires and is valid and effective, although not recorded in a public instrument.

The private respondent argues that as there was no equivalence between the value of the lands
donated and the services for which they were being exchanged, the two transactions should be
considered pure or gratuitous donations of real rights, hence, they should have been effected
through a public instrument and not mere private writings. However, no evidence has been
adduced to support her contention that the values exchanged were disproportionate or unequal.

On the other hand, both the trial court and the respondent court have affirmed the factual
allegation that the petitioner did take care of Domingo Melad and later arranged for his burial in
accordance with the condition imposed by the donor. It is alleged and not denied that he died
when he was almost one hundred years old, 15 which would mean that the petitioner farmed the
land practically by himself and so provided for the donee (and his wife) during the latter part of
Domingo Melad's life. We may assume that there was a fair exchange between the donor and
the donee that made the transaction an onerous donation.

Regarding the private respondent's claim that she had purchased the properties by virtue of a
deed of sale, the respondent court had only the following to say: "Exhibit 'E' taken together with
the documentary and oral evidence shows that the preponderance of evidence is in favor of the
appellants." This was, we think, a rather superficial way of resolving such a basic and important
issue.

The deed of sale was allegedly executed when the respondent was only three years old and the
consideration was supposedly paid by her mother, Maria Yedan from her earnings as a wage
worker in a factory. 16 This was itself a suspicious circumstance, one may well wonder why the
transfer was not made to the mother herself, who was after all the one paying for the lands. The
sale was made out in favor of Apolonia Melad although she had been using the surname Yedan
her mother's surname, before that instrument was signed and in fact even after she got
married. 17The averment was also made that the contract was simulated and prepared after
Domingo Melad's death in 1945. 18It was also alleged that even after the supposed execution of
the said contract, the respondent considered Domingo Melad the owner of the properties and
that she had never occupied the same. 19

Considering these serious challenges, the appellate court could have devoted a little more time
to examining Exhibit "E" and the circumstances surrounding its execution before pronouncing its
validity in the manner described above. While it is true that the due execution of a public
instrument is presumed, the presumption is disputable and will yield to contradictory evidence,
which in this case was not refuted.

At any rate, even assuming the validity of the deed of sale, the record shows that the private
respondent did not take possession of the disputed properties and indeed waited until 1962 to
file this action for recovery of the lands from the petitioner. If she did have possession, she
transferred the same to the petitioner in 1946, by her own sworn admission, and moved out to
another lot belonging to her step-brother. 20 Her claim that the petitioner was her tenant (later
changed to administrator) was disbelieved by the trial court, and properly so, for its
inconsistency. In short, she failed to show that she consummated the contract of sale by actual
delivery of the properties to her and her actual possession thereof in concept of purchaser-
owner.

As was held in Garchitorena v. Almeda: 21

Since in this jurisdiction it is a fundamental and elementary principle that

ownership does not pass by mere stipulation but only by delivery (Civil Code, Art.
1095; Fidelity and Surety Co. v. Wilson, 8 Phil. 51), and the execution of a public
document does not constitute sufficient delivery where the property involved is in
the actual and adverse possession of third persons (Addison vs. Felix, 38 Phil.
404; Masallo vs. Cesar, 39 Phil. 134), it becomes incontestable that even if
included in the contract, the ownership of the property in dispute did not pass
thereby to Mariano Garchitorena. Not having become the owner for lack of
delivery, Mariano Garchitorena cannot presume to recover the property from its
present possessors. His action, therefore, is not one of revindicacion, but one
against his vendor for specific performance of the sale to him.

In the aforecited case of Fidelity and Deposit Co. v. Wilson, 22 Justice Mapa declared for the
Court:

Therefore, in our Civil Code it is a fundamental principle in all matters of

contracts and a well- known doctrine of law that "non mudis pactis sed traditione
dominia rerum transferuntur". In conformity with said doctrine as established in
paragraph 2 of article 609 of said code, that "the ownership and other property
rights are acquired and transmitted by law, by gift, by testate or intestate
succession, and, in consequence of certain contracts, by tradition". And as the
logical application of this disposition article 1095 prescribes the following: "A
creditor has the rights to the fruits of a thing from the time the obligation to deliver
it arises. However, he shall not acquire a real right" (and the ownership is surely
such) "until the property has been delivered to him."

In accordance with such disposition and provisions the delivery of a thing

constitutes a necessary and indispensable requisite for the purpose of acquiring
the ownership of the same by virtue of a contract. As Manresa states in his
Commentaries on the Civil Code, volume 10, pages 339 and 340: "Our law does
not admit the doctrine of the transfer of property by mere consent but limits the
effect of the agreement to the due execution of the contract. ... The ownership,
the property right, is only derived from the delivery of a thing ... "

As for the argument that symbolic delivery was effected through the deed of sale, which was a
public instrument, the Court has held:

The Code imposes upon the vendor the obligation to deliver the thing sold. The
thing is considered to be delivered when it is placed "in the hands and
possession of the vendee." (Civil Code, art. 1462). It is true that the same article
declares that the execution of a public instrument is equivalent to the delivery of
the thing which is the object of the contract, but, in order that this symbolic
delivery may produce the effect of tradition, it is necessary that the vendor shall
have had such control over the thing sold that, at the moment of the sale, its
material delivery could have been made. It is not enough to confer upon the
purchaser the ownership and the right of possession. The thing sold must be
placed in his control.When there is no impediment whatever to prevent the thing
sold passing into the tenancy of the purchaser by the sole will of the vendor,
symbolic delivery through the execution of a public instrument is sufficient. But if,
notwithstanding the execution of the instrument, the purchaser cannot have the
enjoyment and material tenancy of the thing and make use of it himself or
through another in his name, because such tenancy and enjoyment are opposed
by the interposition of another will, then fiction yields to reality—the delivery has
not been effected. 23
There is no dispute that it is the petitioner and not the private respondent who is in actual
possession of the litigated properties. Even if the respective claims of the parties were both to
be discarded as being inherently weak, the decision should still incline in favor of the petitioner
pursuant to the doctrine announced in Santos & Espinosa v. Estejada 24 where the Court
announced:

If the claim of both the plaintiff and the defendant are weak, judgment must be for
the defendant, for the latter being in possession is presumed to be the owner,
and cannot be obliged to show or prove a better right.

WHEREFORE, the decision of the respondent court is SET ASIDE and that of the trial court
REINSTATED, with costs against the private respondent. It is so ordered.