CASES IN OBLICON

GENERAL PRINCIPLES

LEUNG BEN VS O’BRIEN 38 PHIL 182

FACTS: On December 12, 1917, an action was instituted in the Court of First Instance of Manila by P.J. O’Brien to
recover of Leung Ben the sum of P15,000, all alleged to have been lost by the plaintiff to the defendant in a series
of gambling, banking, and percentage games conducted during the two or three months prior to the institution
of the suit. The plaintiff asked for an attachment against the property of the defendant, on the ground that the
latter was about to depart from the Philippines with intent to defraud his creditors. This attachment was issued. The
provision of law under which this attachment was issued requires that there should be a cause of action arising
upon contract, express or implied. The contention of the petitioner is that the statutory action to recover money
lost at gaming is not such an action as is contemplated in this provision, and he insists that the original complaint
shows on its face that the remedy of attachment is not available in aid thereof; that the Court of First Instance
acted in excess of its jurisdiction in granting the writ of attachment; that the petitioner has no plain, speedy, and
adequate remedy by appeal or otherwise; and that consequently the writ of certiorari supplies the appropriate
remedy for this relief.

ISSUE: Whether or not the statutory obligation to restore money won at gaming is an obligation arising from
contract, express or implied.

RULING: Yes. In permitting the recovery money lost at play, Act No. 1757 has introduced modifications in the
application of Articles 1798, 1801, and 1305 of the Civil Code.

The first two of these articles relate to gambling contracts, while article 1305 treats of the nullity of contracts
proceeding from a vicious or illicit consideration. Taking all these provisions together, it must be apparent that the
obligation to return money lost at play has a decided affinity to contractual obligation; and the Court believes
that it could, without violence to the doctrines of the civil law, be held that such obligations is an innominate
quasi-contract.

It is however, unnecessary to place the decision on this ground. In the opinion of the Court, the cause of action
stated in the complaint in the court below is based on a contract, express or implied, and is therefore of such
nature that the court had authority to issue the writ of attachment. The application for the writ of certiorari must
therefore be denied and the proceedings dismissed.

FURTUITUOUS EVENT

MIAA VS ALA INDUSTRIES CORP. GR NO 147349, FEB 13, 2004

FACTS: MIAA conducted a public bidding for a contract involving the structural repair and waterproofing of
the Ninoy Aquino International Airport (NAIA). The MIAA agrees to pay the CONTRACTOR the total amount
of (P32,000,000.00),payable as follows:

1. Initial payment shall be made upon submission of work accomplishment of not less than 15%;
2. Subsequent payments shall be for work accomplished as measured, verified and approved by
MIAA. Such progress billings shall indicate actual work accomplishments and shall be subject to the
approval of MIAA, which approval shall not be unreasonably withheld.
3. Progress billings shall be paid by the MIAA periodically but not more than once a month within 30
calendar days from receipt hereof.

Petitioner unilaterally rescinded the contract on the ground that respondent failed to complete the project
within the agreed completion date. Respondent objected to the rescission made by petitioner and
reiterated its claims. Both parties executed a compromise agreement, assisted by their counsels, and jointly
filed in court a motion for judgment based on compromise agreement.

ISSUE: Whether or not the delay of petitioner in complying with its obligation under the Compromise
Agreement is justified under the principle that no person shall be responsible for those events which could
not be foreseen, or which though foreseen, were inevitable.
RULING:
A fortuitous event is one that cannot be foreseen or, though foreseen, is inevitable. It has the following
characteristics:

(a) [T]he cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with
his obligations, must be independent of human will;

(b) it must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it
must be impossible to avoid;

(c) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal
manner; and (d) the obligor must be free from any participation in the aggravation of the injury resulting to
the creditor.

Henceforth, the claim of petitioner is untenable resulting the petition no merit.

The Petition is hereby DENIED, and the assailed Decision AFFIRMED. Costs against petitioner.
SO ORDERED.

BERG V. TEUS G.R NO. L-6453, OCTOBER 30, 1954

 Tiglao v. Manila RailroadCo., 98 Phil 181, G.r L-7900, January 12, 1956

Thirty Five retired employees of the Defendant Manila Railroad Co. filed case to recover the sum of P7,275,
the aggregate balance of salary differentials still due them under a memorandum of agreement signed by
the Defendant and the unions representing its employees and laborers. The memorandum of agreement
above-mentioned, which was signed in October, 1948, and constitutes the basis of Plaintiffs’ claim,
contains the following stipulations:
“1. That the Manila Railroad Company hereby reiterates its approval of the standardized salaries provided
for by the Standardization Committee effective as of July 1, 1948, to be carried in all subsequent budgets
of the Company, payment to be made in accordance with Item 2; and immediate payment of said salaries
will commence with the available funds of P400,000, already appropriated for this purpose;
“2. That we hereby further agree that upon the exhaustion of the amount of P400,000, the employees and
laborers affected by the standardized plan will receive their present salaries provided that any wage
differential from date of exhaustion will be paid when funds for the purpose are available.”
It is agreed that Plaintiffs, who retired with gratuity in January, 1951, were entitled to collect the salary
differentials, or increase in pay, resulting from the standardization of their salaries.
In refusing to pay the balance still due the Plaintiffs, Defendant does not repudiate the above agreement,
but contends in substance that pursuant to its terms payment of salary differentials after the exhaustion of
the P400,000 already appropriated is subject to the condition that “funds for the purpose are available”
and that no such funds are available because Defendant is losing in its business.
The Defendant has, indeed, presented in evidence two summary statements of its accounting department,
showing that it has sustained losses in its operations during the fiscal year ending June 30, 1953, and
during the month of July next following. These statements, however, do not necessarily prove that, in a
multimillion-peso business such as that of the Defendant funds for the payment of a debt of P7,275 due
the Plaintiffs could not have been raised or made available because of the losses suffered in one year and
one month. The memorandum of agreement does not stipulate that the salary differentials shall be paid
only from surplus profits. In fact, the agreement provides that the standardized salaries — with the
resulting salary differentials naturally — are “to be carried in all subsequent budgets of the company.” And
we think it may be admitted that in a going concern the availability of funds for a particular purpose is a
matter that does not necessarily depend upon the cash position of the company but rather upon the
judgment of its board of directors in the choice of projects, measures or expenditures that should be given
preference or priority, or in the choice between alternatives. So if Defendant was able to raise or
appropriate funds to meet other obligations notwithstanding the fact that it was losing, we think it could
have done likewise with respect to its debt to the Plaintiffs, an obligation which is deserving of preferential
attention because it is owed to the poor.
Viewed in this light, that is, that the time to redeem Defendant’s promise to pay salary differentials, after
the exhaustion of what had already been appropriated for that purpose, really depended upon the
judgment of its board of directors — it not appearing that Defendant was bankrupt — the obligation to pay
the said salary differentials may be considered as one with a term whose duration has been left to the will
of the debtor, so that pursuant to article 1128 of the old Civil Code (Art. 1197 of the new), the duration of
the term may be fixed by the courts.
There is something to Defendant’s contention that in previous cases this Court has held that the duration
of the term should be fixed in a separate action for that express purpose. But we think the lower court has
given good reasons for not adhering to technicalities in its desire to do substantial justice. It says:
“(1) The facts in the instant case are not disputed, the parties having submitted the case for decision to be
based on an agreed stipulation of facts;
“(2) The fixing of a period for the payment of the obligation has been amply discussed by the parties in
their pleadings so that this Court may render judgment on that subject matter under the alternative prayer
of the Plaintiffs ‘for such further relief as this Honorable Court may deem just and equitable’;
“(3) To dismiss the present case and require the Plaintiffs to file another action for fixing the period
of Defendant’s obligation, would entail multiplicity of suits;
“(4) In this case there are thirty-five Plaintiffs who were low salaried employees of the DefendantManila
Railroad Company and the said Plaintiffs have not been paid their salary differentials for the period of,
from February 1 to June 30, 1948; and
“(5) To dismiss the present case and order the Plaintiffs to file another suit would open the door for
dilatory tactics leading to a protracted litigation and in effect deny the benefits of social justice.”
We may add that Defendant does not claim that if a separate action were instituted to fix the duration of
the term of its obligation, it could present better proofs than those already adduced in the present case.
Such separate action would, therefore, be a mere formality and would serve no purpose other than to
delay.
We, however, agree that the lower court should not have made the interest adjudged run from October 21,
1948, the day the action was commenced in the municipal court, but only from default of payment of the
principal within the period of one year fixed by the court.
Wherefore, with the only modification as to the date the adjudged interest is to commence to run, the
judgment below is affirmed, with costs against the Defendant and Appellant.

Caltex Philippines, Inc. v. IAC G.r No. 72703, November 13, 1992
FACTS OF THE CASE:
Respondent Asia Pacific Airways Inc., entered into an agreement with petitioner Caltex (Philippines) Inc.,
whereby petitioner agreed to supply private respondent's aviation fuel requirements for two years.
Respondent had an outstanding obligation to petitioner in the total amount of P4,072,682.13. A Deed of
Assignment was executed in favor of petitioner and assigned to petitioner its receivables or refunds of
Special Fund Import Payments from National Treasury of the Philippines as payment. Respondent,
learned that the amount remitted to petitioner exceeded the amount covered by the Deed of Assignment
and requested a refund of P900,000 and also demanded the refund of the remaining amount. Petitioner
informed private respondent that the amount not returned
(P510,550.63) represented interest and service charges at the rate of 18% per annum on
the unpaid and overdue account of respondent.

ISSUE/S:
Whether or not the Deed of Assignment entered into constituted dacion en pago so that petitioner was not
legally authorized to deduct the amount forinterest and service charges on the unpaid and overdue
accounts of private respondent
CONCLUSION:
The Deed of Assignment executed by the parties is not a dation in payment and did not totally
extinguishrespondent's obligations. The obligation is totally extinguished only when the parties, by
agreement, express or implied, or by their silence, consider the thing as equivalent to the obligation. In
order to judge the intention of the contracting parties, their contemporaneous and subsequent acts
shall be principally considered (Art. 1253, Civil Code). The foregoing subsequent acts of the parties clearly
show that they did not intend the Deed of Assignment to have the effect of totally extinguishing the
obligations of private respondent without payment of the applicable interest charges on the overdue
account. Finally, the payment of applicable interest charges on overdue account, separate from the
principal obligation of P4,072.682.13 was expressly stipulated in the Deed of Assignment. The law provides
that"if the debt produces interest, payment of the principal shall not be deemed to have been made
until the interests have been covered." (Art. 1253, Civil Code).

Dalton v. FGR Realty and Development Corp., G.r No. 172577, January 19, 2011

Facts:
Flora R. Dayrit (Dayrit) owned a... parcel of land... in Cebu City.Petitioner Soledad Dalton (Dalton),
Clemente Sasam, Romulo Villalonga, Miguela Villarente, Aniceta Fuentes, Perla Pormento,
Bonifacio Cabajar,... Carmencita Yuson, Angel Ponce, Pedro Regudo, Pedro Quebedo, Mary
Cabanlit, Marciana Encabo and Dolores Lim (Sasam, et al.) leased portions of the property.Dayrit
sold the property to respondent FGR Realty and Development CorporationDayrit and FGR
stopped accepting rental payments because they wanted to terminate the lease agreements
with Dalton and Sasam, et al.Dalton and Sasam, et al. consigned the rental payments with the
RTC.They failed to notify Dayrit and FGR about the consignation.Dayrit and FGR withdrew the
rental payments. In their motions, Dayrit and FGR reserved the right to question the validity of the
consignation.Dayrit, FGR and Sasam, et al. entered into compromise agreements... they agreed
to abandon all claims against each other. Dalton did not enter into a compromise... agreement
with Dayrit and FGR.
Issues:
Whether or not the consignation was void
Ruling:
First, in withdrawing the amounts consigned, Dayrit and FGR expressly reserved the right to
question the validity of the consignation.
Second, compliance with the requisites of a valid consignation is mandatory. Failure to comply
strictly with any of the requisites will render the consignation void.
Substantial compliance is not enough.
Articles 1257 and 1258 of the Civil Code state, respectively:
Art. 1257. In order that the consignation of the thing due may release the obligor, it must first be
announced to the persons interested in the fulfillment of the obligation.
The consignation shall be ineffectual if it is not made strictly in consonance with the provisions
which regulate payment.
Art. 1258. Consignation shall be made by depositing the things due at the disposal of judicial
authority, before whom the tender of payment shall be proved, in a proper case, and the
announcement of the consignation in other cases.
The consignation having been made, the interested parties shall also be notified thereof.
Principles:
Art. 1257. In order that the consignation of the thing due may release the obligor, it must first be
announced to the persons interested in the fulfillment of the obligation.
Art. 1258. Consignation shall be made by depositing the things due at the disposal of judicial
authority, before whom the tender of payment shall be proved, in a proper case, and the
announcement of the consignation in other cases.

Stronghold Insurance Company, Inc. v. Tokyu Construction Company G.R Nos 158820-21
June 5, 2009
Norton Resources and Development Corporation v. All Asia Bank Corporation G.r No
162523. November 25, 2009
 Braganza v. Abrille, 105 Phil 456, Gr L-12471, April 13,1959
FACTS:
Rosario Braganza and her sons loaned from De Villa Abrille P70,000 in Japanese war notes and in
consideration thereof, promised in writing to pay him P10,00 + 2% per annum in legal currency of
the Philippines 2 years after the cessation of the war. Because they have no paid, Abrille sued
them in March 1949. The Manila court of first instance and CA held the family solidarily liable to
pay according to the contract they signed. The family petitioned to review the decision of the CA
whereby they were ordered to solidarily pay De Villa Abrille P10,000 + 2% interest, praying for
consideration of the minority of the Braganza sons when they signed the contract.
ISSUE:
Whether the boys, who were 16 and 18 respectively, are to be bound by the contract of loan they
have signed.
RATIO:
The SC found that Rosario will still be liable to pay her share in the contract because the minority
of her sons does not release her from liability. She is ordered to pay 1/3 of P10,000 + 2% interest.
However with her sons, the SC reversed the decision of the CA which found them similarly liable
due to their failure to disclose their minority. The SC sustained previous sources in Jurisprudence –
“in order to hold the infant liable, the fraud must be actual and not constructive. It has been held
that his mere silence when making a contract as to his age does not constitute a fraud which can
be made the basis of an action of deceit.”
The boys, though not bound by the provisions of the contract, are still liable to pay the actual
amount they have profited from the loan. Art. 1340 states that even if the written contract is
unenforceable because of their non-age, they shall make restitution to the extent that they may
have profited by the money received. In this case, 2/3 of P70,00, which is P46,666.66, which when
converted to Philippine money is equivalent to P1,166.67.
Phil National Construction Corp v. CA 272 SCRA 183,1997
PNB v. Utility Assurance & Surety Co. Inc. 177 SCRA 393, 1989
 Victoriano v. CA G.r No. 87550, Feb. 11, 1991

This petition seeks the review on certiorari of the decision of the Court of Appeals dated
January 10, 1989, which reversed the ruling of the trial court declaring petitioner Divina J.
Victoriano (hereafter "Victoriano") as owner of Lot 897, and instead, declaring the heirs of
Crispin Arcilla, herein represented by Ladislawa A. Masigla (hereafter "Masigla") as true
owners thereof. The dispositive portion of the Court of Appeals’ decision provides as
follows:jgc:chanrobles.com.ph

"WHEREFORE, in view of the foregoing, the judgment appealed from is hereby reversed
and set aside. In lieu thereof, judgment is hereby rendered:jgc:chanrobles.com.ph

"1. Declaring plaintiffs-appellants as the owners of Lot #897 located in Barangay Santol,
Tansa, Cavite;

"2. Ordering defendant-appellee to execute the proper deed of sale to enable plaintiffs-
appellants to transfer the title to the property in their name and in case of failure of
defendant-appellee to do so within 30 days from finality hereof, the Register of Deeds of
Cavite is hereby directed to cancel Transfer Certificate of Title No. T-124731 in the name of
defendant-appellant and issue a new one in the name of plaintiffs-appellants.

"SO ORDERED." (pp. 21-22, Rollo)

The facts of the case, as obtained from the Court of Appeals’ decision, are as
follows:chanrob1es virtual 1aw library

Masigla was in possession of Lot 897 which is situated in Barangay Santol, Tanza, Cavite. In
1987, her son, Domingo Masigla entered the adjoining property, Lot 898, owned by
Victoriano, and prohibited her and her tenants from cultivating the land. Victoriano filed a
criminal case for theft, malicious mischief, usurpation and squatting against Domingo. In
the process, Victoriano discovered that title to Lot No. 897 was registered in the name of
her grandfather, Cirilo Tamio (TCT No. 1648). She secured an extrajudicial partition from all
the heirs of Cirilo Tamio, who thus waived their shares in the lot in her favor. Victoriano
thereafter secured a title (TCT No. 124731) to said lot in her name.

The heirs of Crispin Arcilla, represented by Masigla, filed a complaint in court (RTC-Cavite,
Trece Martires, Br. 23) for reconveyance of Lot No. 897, claiming that their father, Crispin
Arcilla, had bought the lot from Cirilo Tamio, and that they had been in possession thereof
since 1927. Masigla could not, however, present a deed of sale evidencing the transfer of
the property from Cirilo Tamio to Crispin Arcilla. All that she and her heirs could present
were a "Sinumpaang Salaysay" dated January 20, 1927, wherein the children of Cirilo
Tamio authorized their mother to sell Lot 897 to Crispin Arcilla; the owner’s duplicate of the
title to the property in the name of Cirilo Tamio and real property tax receipts and tax
declarations, the earliest of which is 1944. Masigla claimed that taxes were being paid
since 1927 but the receipt had been lost or destroyed.cralawnad

Victoriano on the other hand, presented the Transfer Certificate of Title in her name (TCT
124731), a tax declaration and a receipt dated March 30, 1983 (p. 18, Rollo).

In a decision dated October 5, 1987 (p. 61, Rollo), the trial court ruled in favor of
Victoriano, declaring her the lawful and absolute owner of Lot No. 897.

Masigla appealed, assigning as errors, the failure of the trial court to consider Masigla’s
evidence submitted in support of her claim for reconveyance and rendering instead a
decision allowing recovery of possession in favor of Victoriano, based on the allegation
and evidence in her counterclaim.

The Court of Appeals reversed the decision of the trial court and declared Masigla and
her co-heirs as true owners of the property. In the resolution dated March 17, 1989, it
denied Victoriano’s motion for reconsideration.

Victoriano filed this petition on the following grounds:jgc:chanrobles.com.ph

"1. The respondent Court of Appeals abused its discretion by deciding this case based on
the principles of the ‘Statute of Frauds’ and then on the principle of ‘laches’ which
principles were never raised in the lower court.

"2. The respondent Court of Appeals decided questions of substance in a way not in
accord with law or with the applicable decisions of the Supreme Court." (p. 9, Rollo).

We uphold the Court of Appeals’ decision.

The trial court’s ruling was anchored solely on the failure of Masigla to prove transfer of
ownership from Cirilo Tamio to their predecessor-in-interest, Crispin Arcilla, because of the
absence of a deed of sale.

Apparently, the trial court relied on the Statute of Frauds principle which requires "an
agreement for the sale . . ." of real property or an interest therein (Art. 1 403(e)) to be in
writing. It overlooked the fact that this principle applies only to executory contracts. As
correctly observed by the Court of Appeals:chanrob1es virtual 1aw library

‘The Statute of Frauds is applicable only to executory contracts, not to contracts either
totally or partially performed. Thus, where a contract of sale is alleged to be
consummated, it matters not that neither the receipt for the consideration nor the sale
itself was in writing, because oral evidence of the alleged consummated sale is not
forbidden by the Statute of Frauds and may not be excluded in court. (Iñigo v. Estate of
Maloto, 21 SCRA (1901) 246)’

"Thus, the testimony of plaintiffs-appellants on this point is admissible to prove the

existence of the sale, it being of record that the land has been in their possession since
1927." (CA Decision, pp. 19-20, Rollo)

Performance of the contract, whether total or partial, takes it out of the operation of the
statute (Gomez v. Salcedo, 26 Phil. 485; Hernandez v. Andal, 78 Phil. 196). This
performance, necessarily must be duly proved. And it is in this light that Masigla pointed
out the circumstances to show performance on the contract or transfer of ownership, as
follows:jgc:chanrobles.com.ph

"1. Plaintiffs-appellants are in possession of the owner’s copy of the title;

"2. They have been undisturbed in their possession of the land for more than fifty years;
"3. They are in possession of a ‘Sinumpaang Salaysay’ wherein the children of Cirilo Tamio
authorized their mother to sell Lot 897 specifically to Crispin Arcilla, the predecessor of
plaintiffs-appellants;

"4. They introduced improvements on the land;

"5. They incurred expenses for the resurvey of the land when they had the title in the name
of Cirilo Tamio reconstituted (TSN p. 30, Nov. 29, 1983);

"6. The tax declarations over the property were in the name of plaintiffs father;

"7. Plaintiffs-appellants have been religious in paying taxes over the property;

"8. The immediate heirs of Cirilo Tamio, that is, his wife and children, never contested
plaintiffs-appellants’ possession of the land, nor did they set up any claim over the
property. This behavior negates any pretense that there was no sale in favor of Crispin
Arcilla." (ibid., p. 20, Rollo)

In ruling in favor of Masigla, the Court of Appeals mentioned the principle of the Statute of
Frauds merely to point out the trial court’s improper reliance thereon. It was not raised as
a new issue. Precisely, the inapplicability of the Statute of Frauds allows the filing of
Masigla’s complaint seeking the reconveyance of property, which was erroneously
registered in Victoriano’s name.chanrobles.com : virtual law library

Likewise, We agree with the Court of Appeals when it barred Victoriano’s action to
recover possession of Lot No. 897, premised on the principle of laches. 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."
(Heirs of Batiog Lacamen v. Heirs of Laruan, G.R. No. L-27088, July 31, 1975, 65 SCRA 125)
the Court of Appeals observed:jgc:chanrobles.com.ph

"However, defendant-appellee disregards the fact that plaintiffs-appellants have been in

continuous possession of the land since 1927 and they were not ousted therefrom by the
grandfather of defendant-appellee who sold the property to them, nor by the immediate
successors of the seller. It was only after decades had passed that it was discovered that
the sale was never registered or the title cancelled and transferred in the name of
plaintiffs-appellants. True, titled lands cannot be acquired by prescription, however,
defendant-appellee’s inaction for more than 50 years now bars her from acquiring
possession of the land on the ground of laches." (p. 25, Rollo)

Again, the principle of laches was mentioned to refute Victoriano’s claims that "no title to
registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession (Sec. 46, Act No. 496, now Sec. 47 of PD No. 1529). Thus,
the Court of Appeals stated:jgc:chanrobles.com.ph

"At this state, therefore, respondents-appellants’ claim of absolute ownership over the
land cannot be countenanced. It has been held that while a person may not acquire title
to the registered property through continuous adverse possession, in derogation of the
title of the original registered owner, the heir of the latter, however, may lose his right to
recover back the possession of such property and the title thereto, by reason of laches."
(p. 25, Rollo)
ACCORDINGLY, the petition is DENIED and the decision of the Court of Appeals dated
January 10, 1989 as well as its Resolution dated March 17, 1989 declaring the heirs of
Crispin Arcilla, represented by Ladislawa A. Masigla as the owners of Lot No. 897 are
AFFIRMED.chanrobles virtual lawlibrary

SO ORDERED.

Miguel v. Catalino , G.r No. L-23072, November 29, 1968

SIMEON B. MIGUEL, ET AL., plaintiffs-appellants,

vs.
FLORENDO CATALINO, defendant-appellee.

Bienvenido L. Garcia for plaintiffs-appellants.

Moises P. Cating for defendant-appellee.

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

Direct appeal from the judgment in Civil Case No. 1090 of the Court of First Instance of Baguio,
dismissing the plaintiffs' complaint for recovery of possession of a parcel of land, registered under
Act 496, in the name of one Bacaquio,1 a long-deceased illiterate non-Christian resident of
Mountain Province, and declaring the defendant to be the true owner thereof.

On January 22, 1962, appellants Simeon, Emilia and Marcelina Miguel, and appellant Grace
Ventura brought suit in the Court below against Florendo Catalino for the recovery of the land
above-described, plaintiffs claiming to be the children and heirs of the original registered owner,
and averred that defendant, without their knowledge or consent, had unlawfully taken possession
of the land, gathered its produce and unlawfully excluded plaintiffs therefrom. Defendant answered
pleading ownership and adverse possession for 30 years, and counterclaimed for attorney's fees.
After trial the Court dismissed the complaint, declared defendant to be the rightful owner, and
ordered the Register of Deeds to issue a transfer certificate in lieu of the original. Plaintiffs
appealed directly to this Court, assailing the trial Court's findings of fact and law.

As found by the trial Court, the land in dispute is situated in the Barrio of San Pascual, Municipality
of Tuba, Benguet, Mountain Province and contains an area of 39,446 square meters, more or less.
It is covered by Original Certificate of Title No. 31, which was issued on 28 December 1927 in the
name of Bacaquio (or Bakakew), a widower. No encumbrance or sale has ever been annotated in
the certificate of title.

The plaintiff-appellant Grace Ventura2 is the only child of Bacaquio by his first wife, Debsay, and
the other plaintiffs-appellants, Simeon, Emilia and Marcelina, all surnamed "Miguel", are his
children by his third wife, Cosamang. He begot no issue with his second wife, Dobaney. The three
successive wives have all died.

Bacaquio, who died in 1943, acquired the land when his second wife died and sold it to Catalino
Agyapao, father of the defendant Florendo Catalino, for P300.00 in 1928. Of the purchase price
P100.00 was paid and receipted for when the land was surveyed, but the receipt was lost; the
balance was paid after the certificate of title was issued. No formal deed of sale was executed, but
since the sale in 1928, or for more than 30 years, vendee Catalino Agyapao and his son,
defendant-appellee Florendo Catalino, had been in possession of the land, in the concept of
owner, paying the taxes thereon and introducing improvements.

On 1 February 1949, Grace Ventura, by herself alone, "sold" (as per her Transferor's Affidavit,
Exhibit "6") anew the same land for P300.00 to defendant Florendo Catalino.
In 1961, Catalino Agyapao in turn sold the land to his son, the defendant Florendo Catalino.

This being a direct appeal from the trial court, where the value of the property involved does not
exceed P200,000.00, only the issues of law are reviewable by the Supreme Court, the findings of
fact of the court a quobeing deemed conceded by the appellant (Jacinto v. Jacinto, 105 Phil. 1218;
Del Castillo v. Guerro, L-11994, 25 July 1960; Abuyo, et al. v. De Suazo, L-21202, 29 Oct. 1966;
18 SCRA 600, 601). We are thus constrained to discard appellant's second and third assignments
of error.

In their first assignment, appellants assail the admission in evidence over the objection of the
appellant of Exhibit "3". This exhibit is a decision in favor of the defendant-appellee against herein
plaintiff-appellant Grace Ventura, by the council of Barrio of San Pascual, Tuba, Benguet, in its
Administrative Case No. 4, for the settlement of ownership and possession of the land. The
decision is ultra vires because barrio councils, which are not courts, have no judicial powers (Sec.
1, Art. VIII, Constitution; see Sec. 12, Rep. Act 2370, otherwise known as the Barrio Charter).
Therefore, as contended by appellants, the exhibit is not admissible in a judicial proceeding as
evidence for ascertaining the truth respecting the fact of ownership and possession (Sec. 1, Rule
128, Rules of Court).

Appellants are likewise correct in claiming that the sale of the land in 1928 by Bacaquio to Catalino
Agyapao, defendant's father, is null and void ab initio, for lack of executive approval (Mangayao et
al. vs. Lasud, et al., L-19252, 29 May 1964). However, it is not the provisions of the Public Land
Act (particularly Section 118 of Act 2874 and Section 120 of Commonwealth Act 141) that nullify
the transaction, for the reason that there is no finding, and the contending parties have not shown,
that the land titled in the name of Bacaquio was acquired from the public domain (Palad vs. Saito,
55 Phil. 831). The laws applicable to the said sale are: Section 145(b) of the Administrative Code
of Mindanao and Sulu, providing that no conveyance or encumbrance of real property shall be
made in that department by any non-christian inhabitant of the same, unless, among other
requirements, the deed shall bear indorsed upon it the approval of the provincial governor or his
representative duly authorized in writing for the purpose; Section 146 of the same Code, declaring
that every contract or agreement made in violation of Section 145 "shall be null and void"; and Act
2798, as amended by Act 2913, extending the application of the above provisions to Mountain
Province and Nueva Vizcaya.

Since the 1928 sale is technically invalid, Bacaquio remained, in law, the owner of the land until
his death in 1943, when his title passed on, by the law on succession, to his heirs, the plaintiffs-
appellants.

Notwithstanding the errors aforementioned in the appealed decision, we are of the opinion that the
judgment in favor of defendant-appellee Florendo Catalino must be sustained. For despite the
invalidity of his sale to Catalino Agyapao, father of defendant-appellee, the vendor Bacaquio
suffered the latter to enter, possess and enjoy the land in question without protest, from 1928 to
1943, when the seller died; and the appellants, in turn, while succeeding the deceased, also
remained inactive, without taking any step to reivindicate the lot from 1944 to 1962, when the
present suit was commenced in court. Even granting appellants' proposition that no prescription
lies against their father's recorded title, their passivity and inaction for more than 34 years (1928-
1962) justifies the defendant-appellee in setting up the equitable defense of laches in his own
behalf. As a result, the action of plaintiffs-appellants must be considered barred and the Court
below correctly so held. Courts can not 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 30 long years, only to spring from ambush and claim
title when the possessor's efforts and the rise of land values offer an opportunity to make easy
profit at his expense. In Mejia de Lucas vs. Gamponia, 100 Phil. 277, 281, this Court laid down a
rule that is here squarely applicable:
 Upon a careful consideration of the facts and circumstances, we are constrained to find,
however, that while no legal defense to the action lies, an equitable one lies in favor of the
defendant and that is, the equitable defense of laches. We hold that the defense of
prescription or adverse possession in derogation of the title of the registered owner
Domingo Mejia does not lie, but that of the equitable defense of laches. Otherwise stated,
we hold that while defendant may not be considered as having acquired title by virtue of his
and his predecessors' long continued possession for 37 years, the original owner's right to
recover back the possession of the property and title thereto from the defendant has, by the
long period of 37 years and by patentee's inaction and neglect, been converted into a stale
demand.

As in the Gamponia case, the four elements of laches are present in the case at bar, namely: (a)
conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation
of which complaint is made and for which the complaint seeks a remedy; (b) delay in asserting the
complainant's rights, the complainant having had knowledge or notice, of the defendant's conduct
and having been afforded an opportunity to institute a suit; (c) 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
(d) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit
is not held to be barred. In the case at bar, Bacaquio sold the land in 1928 but the sale is void for
lack of the governor's approval. The vendor, and also his heirs after him, could have instituted an
action to annul the sale from that time, since they knew of the invalidity of the sale, which is a
matter of law; they did not have to wait for 34 years to institute suit. The defendant was made to
feel secure in the belief that no action would be filed against him by such passivity, and also
because he "bought" again the land in 1949 from Grace Ventura who alone tried to question his
ownership; so that the defendant will be plainly prejudiced in the event the present action is not
held to be barred.

The difference between prescription and laches was elaborated in Nielsen & Co., Inc. vs. Lepanto
Consolidated Mining Co., L-21601, 17 December 1966, 18 SCRA p. 1040, as follows:

Appellee is correct in its contention that the defense of laches applies independently of
prescription. Laches is different from the statute of limitations. Prescription is concerned
with the fact of delay, whereas laches is concerned with the effect of delay. Prescription is a
matter of time; laches is principally a question of inequity of permitting a claim to be
enforced, this inequity being founded on some change in the condition of the property or the
relation of the parties. Prescription is statutory; laches is not. Laches applies in equity,
whereas prescription applies at law. Prescription is based on fixed time laches is not, (30
C.J.S., p. 522. See also Pomeroy's Equity Jurisprudence, Vol. 2, 5th ed., p. 177) (18 SCRA
1053).

With reference to appellant Grace Ventura, it is well to remark that her situation is even worse than
that of her co-heirs and co-plaintiffs, in view of her executing an affidavit of transfer (Exh. 6)
attesting under oath to her having sold the land in controversy to herein defendant-appellee, and
the lower Court's finding that in 1949 she was paid P300.00 for it, because she, "being a smart
woman of enterprise, threatened to cause trouble if the defendant failed to give her P300.00 more,
because her stand (of being the owner of the land) was buttressed by the fact that Original
Certificate of Title No. 31 is still in the name of her father, Bacaquio" (Decision, Record on Appeal,
p. 24). This sale, that was in fact a quitclaim, may not be contested as needing executive approval;
for it has not been shown that Grace Ventura is a non-christian inhabitant like her father, an
essential fact that cannot be assumed (Sale de Porkan vs. Yatco, 70 Phil. 161, 175).

Since the plaintiffs-appellants are barred from recovery, their divestiture of all the elements of
ownership in the land is complete; and the Court a quo was justified in ordering that Bacaquio's
original certificate be cancelled, and a new transfer certificate in the name of Florendo Catalino be
issued in lieu thereof by the Register of Deeds.
FOR THE FOREGOING REASONS, the appealed decision is hereby affirmed, with costs against
the plaintiffs-appellants.

Concepcion C.J., Dizon, Makalintal, Zaldivar, Sanchez, Fernando and Capistrano, JJ., concur.
Castro, J., took no part.