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Republic of the Philippines Supreme Court

Manila THIRD DIVISION

PACIFICO M. VALIAO, for himself and in behalf of his co-heirs LODOVICO, RICARDO, BIENVENIDO, all Surnamed VALIAO and NEMESIO M. GRANDEA, Petitioners,

- versus- REPUBLIC OF THE PHILIPPINES, MACARIO ZAFRA, and MANUEL YUSAY, Respondents,

G.R. No. 170757 Present:

VELASCO, JR., J., Chairperson, PERALTA, ABAD, MENDOZA, and PERLAS-BERNABE, JJ.

Promulgated: November 28, 2011

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DECISION PERALTA, J.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision[1] and Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No. 54811, which reversed the Decision[3] of the Regional Trial Court (RTC) of Kabankalan, Negros Occidental, Branch 61, in Land Registration Case No. 03, granting petitioners' application for registration of title over a parcel of land located in Ilog, Negros Occidental. The factual milieu of this case is as follows: On August 11, 1987, petitioners[4] Pacifico, Lodovico, Ricardo, Bienvenido, all surnamed Valiao, and Nemesio Grandea filed with the RTC of Kabankalan, Negros Occidental an application for registration of a parcel of land with an area of 504,535 square meters, more or less, situated in Barrio Galicia, Municipality of Ilog, Negros Occidental. On June 20, 1988, private oppositors Macario Zafra and Manuel Yusay filed their Motion to Dismiss the application on the following grounds: (1) the land applied for has not been declared alienable and disposable; (2) res judicata has set in to bar the application for registration; and (3) the application has no factual or legal basis. On August 24, 1988, the Republic of the Philippines (Republic), through the Office of the Solicitor General (OSG), opposed the application for registration on the following grounds, among others: that neither the applicants nor their predecessors-in-interest had been in

open, continuous, exclusive and notorious possession and occupation of the land in question since June 12, 1945 or prior thereto; that the muniment/s of title and/or the tax declaration/s and tax payments/receipts of applicants, if any, attached to or alleged in the application, do/es not constitute competent and sufficient evidence of a bona fide acquisition of the land applied for or of their open, continuous, exclusive and notorious possession and occupation in the concept of owner, since June 12, 1945 or prior thereto; that the parcel of land applied for is a portion of public domain belonging to the Republic, which is not subject to private appropriation; and that the present action is barred by a previous final judgment in a cadastral case prosecuted between the same parties and involving the same parcel of land. On July 3, 1989, the RTC denied private oppositors' Motion to Dismiss. Trial thereafter ensued. In support of their application for registration, petitioners alleged that they acquired the subject property in 1947, upon the death of their uncle Basilio Millarez (Basilio), who purchased the land from a certain Fermin Payogao, pursuant to a Deed of Sale[5] dated May 19, 1916 entirely handwritten in Spanish language. Basilio possessed the land in question from May 19, 1916 until his death in 1947. Basilio's possession was open, continuous, peaceful, adverse, notorious, uninterrupted and in the concept of an owner. Upon Basilio's death, the applicants as co-heirs possessed the said land until 1966, when oppositor Zafra unlawfully and violently dispossessed them of their property, which compelled them to file complaints of Grave Coercion and Qualified Theft against Zafra. In support of their claim of possession over the subject property, petitioners submitted in evidence Tax Declaration No. 9562[6] dated September 29, 1976 under the names of the heirs of Basilio Millarez. The RTC, in its Decision dated December 15, 1995, granted petitioners' application for registration of the subject property, the dispositive portion of which states:

WHEREFORE, in view of the foregoing, this Court hereby orders and decrees registration of Lot No. 2372 subject of the present proceedings and the registration of title thereto, in favor of the applicants, who are declared the true and lawful owners of said Lot No. 2372, except applicant Lodovico Valiao, who sold his right to Macario Zafra. Upon the finality of this decision, let the corresponding decree of registration and Certificate of Title be issued in the name of the applicants, Heirs of Basilio Millarez, namely: Pacifico Valiao, Ricardo Valiao, Bienvenido Valiao and Nemesio Grandea, subject to the rights of private oppositors, Macario Zafra and Manuel Yusay over said lot whose fishpond permits are declared VALID and will expire on December 31, 2003. No costs.

SO ORDERED.[7]

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Aggrieved by the Decision, the private oppositors and the Republic, through Assistant Prosecutor Josue A. Gatin, filed an appeal with the CA, which reversed the trial court's findings in its Decision dated June 23, 2005. The CA ruled that the classification of lands of the public domain is an exclusive prerogative of the executive department of the government and in the absence of such classification, the lands remain as unclassified until it is released therefrom and rendered open to disposition. Further, there exists a prior cadastral case involving the same parties herein and the same Lot No. 2372, which ruled that Lot No. 2372 belongs to the Republic. The CA held that such judgment constitutes res judicata that bars a subsequent action for land registration. It also ruled that the subject property is part of the inalienable land of the public domain and petitioners failed to prove that they and their predecessors-in-interest had been in open, continuous, exclusive and notorious possession of the land in question since June 12, 1945 or earlier. The dispositive portion of the decision reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. Accordingly, We REVERSE the Decision dated December 15, 1995 of the Regional Trial Court, DENY the application for registration of title filed by petitioners-appellees, DECLARE as moot and academic any and all claims of private oppositors-appellants over Lot No. 2372, and DECLARE the subject parcel of land to be inalienable and indisposable land belonging to the public domain.

SO ORDERED.[8]

Petitioners filed a motion for reconsideration, which was denied by the CA in a Resolution dated November 17, 2005. Hence, the present petition with the following issues:

I WHETHER OR NOT LOT NO. 2372 OF THE ILOG CADASTRE IS ALIENABLE AND DISPOSABLE LAND OF THE PUBLIC DOMAIN.

II WHETHER OR NOT THE CLAIM OF PRESCRIPTION BY THE APPLICANT WILL LIE ON LOT NO. 2372.

III WHETHER OR NOT THE DECISION OF THE COURT OF APPEALS IN CAD. CASE NO. 23, ENTITLED LODOVICO VALIAO, ET, AL., VS. MACARIO ZAFRA, ET, AL., AC G.R. NO. CV-68873, CONSTITUTES RES JUDICATA AS FAR AS THIS APPLICATION FOR REGISTRATION IS CONCERNED.

IV WHETHER OR NOT THE ALLEGED POSSESSION OF THE APPLICANTS THROUGH THEIR PREDECESSORS-IN-INTEREST IS SUFFICIENT TO SUSTAIN THEIR CLAIM FOR PRESCRIPTION.[9]

Petitioners claim that Lot No. 2372 is an alienable and disposable portion of the public domain. The possession of applicants' predecessors-in interest since 1916 until 1966 had been open, continuous and uninterrupted; thus, converting the said land into a private

land. The subject lot had already become private in character in view of the length of time the applicants and their predecessors-in-interest had possessed the subject lot, which entitles them to the confirmation of their title. Petitioners further claim that prior dismissal in a cadastral proceeding does not constitute res judicata in a subsequent application for registration of a parcel of land. In its Comment, the OSG submits that the issues to be resolved in the present petition, i.e., whether Lot No. 2372 is alienable and disposable land of the public domain and whether petitioners have the right to have the said property registered in their name through prescription of time are questions of fact, which were already passed upon by the CA and no longer reviewable by the Court, since findings of fact of the CA, when supported by sufficient evidence, are conclusive and binding on the parties. The OSG further claims that petitioners failed to prove that the subject lot is part of the alienable and disposable portion of the public domain and that petitioners' application for land registration is already barred by a prior decision in a cadastral case. Lastly, the OSG asserts that petitioners did not present sufficient evidence to prove that their possession over the subject lot applied for had been open, peaceful, exclusive, continuous and adverse. Anent the propriety of filing a petition for review under Rule 45 of the Rules of Court, the principle is well-established that this Court is not a trier of facts and that only questions of law may be raised. The resolution of factual issues is the function of the lower courts whose findings on these matters are received with respect and are, as a rule, binding on this Court. This rule, however, is subject to certain exceptions. One of these is when the findings of the appellate court are contrary to those of the trial court.[10] Due to the divergence of the findings of the CA and the RTC, the Court will now re-examine the facts and evidence adduced before the lower courts. Section 14 (1) of Presidential Decree No. (PD) 1529, otherwise known as the Property Registration Decree provides:

SEC. 14. Who may apply. - The following persons may file in

the proper Court of First Instance an application for registration of title to land, whether personally or through their duly-authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.

From the foregoing, petitioners need to prove that: (1) the land forms part of the alienable and disposable land of the public domain; and (2) they, by themselves or through their predecessors-in-interest, have been in open, continuous, exclusive, and notorious possession and occupation of the subject land under a bona fide claim of ownership from June 12, 1945 or earlier.[11] These the petitioners must prove by no less than clear, positive and convincing evidence.[12]

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Under the Regalian doctrine, which is embodied in our Constitution, all lands of the public domain belong to the State, which is the source of any asserted right to any ownership of land. All lands not appearing to be clearly within private ownership are presumed to belong to the State. Accordingly, public lands not shown to have been reclassified or released as alienable agricultural land or alienated to a private person by the State remain part of the inalienable public domain.[13] Unless public land is shown to have been reclassified as alienable or disposable to a private person by the State, it remains part of the inalienable public domain. Property of the public domain is beyond the commerce of man and not susceptible of private appropriation and acquisitive prescription. Occupation thereof in the concept of owner no matter how long cannot ripen into ownership and be registered as a title.[14] The burden of proof in overcoming the presumption of State ownership of the lands of the public domain is on the person applying for registration (or claiming ownership), who must prove that the land subject of the application is alienable or disposable. To overcome this presumption, incontrovertible evidence must be established that the land subject of the application (or claim) is alienable or disposable.[15] There must be a positive act declaring land of the public domain as alienable and disposable. To prove that the land subject of an application for registration is alienable, the applicant must establish the existence of a positive act of the government, such as a presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute. The applicant may also secure a certification from the government that the land claimed to have been possessed for the required number of years is alienable and disposable.[16] No such evidence was offered by the petitioners to show that the land in question has been classified as alienable and disposable land of the public domain. In the absence of incontrovertible evidence to prove that the subject property is already classified as alienable and disposable, we must consider the same as still inalienable public domain.[17] Verily, the rules on the confirmation of imperfect title do not apply unless and until the land subject thereof is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain.

With respect to the existence of a prior cadastral case, it appears that on July 11, 1966, the petitioners filed in Cadastral Case No. 23 of the then CFI of Negros Occidental a petition to reopen the proceedings relative to three lots, one of which is Lot No. 2372. The lower court, in its Order[18] dated October 20, 1980, held that Lot No. 2372 belongs to the Republic. It found that after the subject lot was declared public land, it was found to be inside the communal forest. On appeal, the CA, in its Decision[19] dated August 7, 1984, found no reversible error and affirmed the decision of the cadastral court. Thereafter, a petition elevating the case to this Court was dismissed for lack of merit.[20] In the present case, the CA, in its Decision dated June 23, 2005, ruled that such judgment constitutes res judicata that will bar a subsequent action for land registration on the same land.

In Director of Lands v. Court of Appeals,[21] the Court held that a judicial declaration that a parcel of land is public, does not preclude even the same applicant from subsequently seeking a judicial confirmation of his title to the same land, provided he thereafter complies with the provisions of Section 48[22] of Commonwealth Act No. 141, as amended,

and as long as said public lands remain alienable and disposable. In the case at bar, not only did the petitioners fail to prove that the subject land is part of the alienable and disposable portion of the public domain, they failed to demonstrate that they by themselves or through their predecessors-in-interest have possessed and occupied the subject land since June 12, 1945 or earlier as mandated by the law. It is settled that the applicant must present proof of specific acts of ownership to substantiate the claim and cannot just offer general statements which are mereconclusions of law than factual evidence of possession.[23] Actual possession consists in the manifestation of acts of dominion over it of such a nature as a party would actually exercise over his own property.[24] The testimonies of Nemesio and Pacifico as to their own and their predecessors-in-interest's possession and ownership over the subject lot fail to convince Us.Petitioners claim that Basilio was in possession of the land way back in 1916. Yet no tax declaration covering the subject property, during the period Basilio allegedly occupied the subject property, i.e., 1916 to 1947, was presented in evidence. Other than the bare allegations of Nemesio and Pacifico that Basilio allegedly introduced improvements on the subject property, there is nothing in the records which would substantiate petitioners' claim that Basilio was in possession of Lot No. 2372 since June 12, 1945 or earlier, the period of possession required by law. Hence, petitioners' assertion that Basilio possessed the property in question from 1916 to 1947 is, at best, conjectural and self-serving. As regards petitioners' possession of the land in question from 1947 to 1966, petitioners could only support the same with a tax declaration dated September 29, 1976.At best, petitioners can only prove possession since said date. What is required is open, exclusive, continuous and notorious possession by petitioners and their predecessors-in-interest, under a bona fide claim of ownership, since June 12, 1945 or earlier.[25] Petitioners failed to explain why, despite their claim that their predecessors-in-interest have possessed the subject properties in the concept of an owner even before June 12, 1945, it was only in 1976 that they started to declare the same for purposes of taxation. Moreover, tax declarations and receipts are not conclusive evidence of ownership or of the right to possess land when not supported by any other evidence. The disputed property may have been declared for taxation purposes in the names of the applicants for registration, or of their predecessors-in-interest, but it does not necessarily prove ownership. They are merely indicia of a claim of ownership.[26] Evidently, since the petitioners failed to prove that (1) the subject property was classified as part of the disposable and alienable land of the public domain; and (2) they and their predecessors-in-interest had been in open, continuous, exclusive, and notorious possession and occupation thereof under a bona fide claim of ownership since June 12, 1945 or earlier, their application for confirmation and registration of the subject property under PD 1529 should be denied. WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 54811, which reversed the Decision of the Regional Trial Court of Kabankalan, Negros Occidental, Branch 61, in Land Registration Case No. 03, is AFFIRMED. The application for registration of title filed by the petitioners Pacifico Valiao, Lodovico Valiao, Ricardo Valiao, Bienvenido

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Valiao, and Nemesio Grandea, over Lot No. 2372, with a total area of 504,535 square meters, more or less, situated in Barrio Galicia, Municipality of Ilog, Negros Occidental, is DENIED. SO ORDERED.

Republic of the Philippines Supreme Court

Manila THIRD DIVISION

REPUBLIC OF THE PHILIPPINES, Petitioner, - versus - CARLOS R. VEGA, MARCOS R. VEGA, ROGELIO R. VEGA, LUBIN R. VEGA, HEIRS OF GLORIA R. VEGA, NAMELY: FRACISCO L. YAP, MA. WINONA Y. RODRIGUEZ, MA. WENDELYN V. YAP and FRANCISCO V. YAP, JR., Respondents, ROMEA G. BUHAY-OCAMPO, FRANCISCO G. BUHAY, ARCELI G. BUHAY-RODRIGUEZ, ORLANDO G. BUHAY, SOLEDAD G. BUHAY-VASQUEZ, LOIDA G. BUHAY-SENADOSA, FLORENDO G. BUHAY, OSCAR G. BUHAY, ERLYN BUHAY-GINORGA, EVELYN BUHAY-GRANETA, and EMILIE BUHAY-DALLAS, Respondents-Intervenors.

G. R. No. 177790 Present: CARPIO MORALES, J., Chairperson, BRION, BERSAMIN, VILLARAMA, JR., and SERENO, JJ. Promulgated: January 17, 2011

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D E C I S I O N SERENO, J.:

This is a Rule 45 Petition filed by the Republic of the Philippines (petitioner Republic), through the Office of the Solicitor General (OSG), questioning the Decision of the Court of Appeals,[1] which affirmed a lower courts grant of an application for original registration of title covering a parcel of land located in Los Baos, Laguna. The facts of the case as culled from the records of the trial court and the appellate court are straightforward and without much contention from the parties.

On 26 May 1995, respondents Carlos R. Vega, Marcos R. Vega, Rogelio R. Vega, Lubin R. Vega and Heirs of Gloria R. Vega namely, Francisco L. Yap, Ma. Winona Y. Rodriguez, Ma. Wendelyn V. Yap and Francisco V. Yap, Jr. (respondents Vegas) filed an application for registration of title. The application covered a parcel of land, identified as Lot No. 6191, Cadastre 450 of Los Baos, Laguna, with a total area of six thousand nine hundred two (6,902) square meters (the subject land). The case was docketed as Land Registration Case No. 103-95-C and raffled to the Regional Trial Court of Calamba, Laguna, Branch 92. Respondents Vegas alleged that they inherited the subject land from their mother, Maria Revilleza Vda. de Vega, who in turn inherited it from her father, Lorenzo Revilleza. Their mothers siblings (two brothers and a sister) died intestate, all without leaving any offspring. On 21 June 1995, petitioner Republic filed an opposition to respondents Vegas application for registration on the ground, inter alia, that the subject land or portions thereof were lands of the public domain and, as such, not subject to private appropriation.

During the trial court hearing on the application for registration, respondents

Vegas presented several exhibits in compliance with the jurisdictional requirements, as well as witnesses to prove respondents Vegas ownership, occupation and possession of the land subject of the registration. Significant was the testimony of Mr. Rodolfo Gonzales, a Special Investigator of the Community Environment and Natural Resources Office (CENRO) of Los Baos, Laguna, under the Department of Environment and Natural Resources (DENR). He attested to having conducted an inspection of the subject land[2] and identified the corresponding Report dated 13 January 1997, which he had submitted to the Regional Executive Director, Region IV. The report stated that the area subject of the investigation was entirely within the alienable and disposable zone, and that there was no public land application filed for the same land by the applicant or by any other person.[3] During the trial, respondents-intervenors Romea G. Buhay-Ocampo, Francisco G. Buhay, Arceli G. Buhay-Rodriguez, Orlando G. Buhay, Soledad G. Buhay-Vasquez, Loida G. Buhay-Senadosa, Florendo G. Buhay, Oscar G. Buhay, Erlyn Buhay-Ginorga, Evelyn Buhay-Grantea and Emilie Buhay-Dallas (respondents-intervenors Buhays) entered their appearance and moved to intervene in respondents Vegas application for registration.[4] Respondents-intervenors Buhays claimed a portion of the subject land consisting of eight hundred twenty-six (826) square meters, purportedly sold by respondents Vegas mother (Maria Revilleza Vda. de Vega) to the formers predecessors-in-interest - the sisters Gabriela Gilvero and Isabel Gilverio - by virtue of a Bilihan ng Isang Bahagi ng Lupang Katihan dated 14 January 1951.[5] They likewise formally offered in evidence Subdivision Plan Csd-04-024336-D, which indicated the portion of the subject land, which they claimed was sold to their predecessors-in-interest.[6] In a Decision dated 18 November 2003, the trial court granted respondents Vegas application and directed the Land Registration Authority (LRA) to issue the corresponding decree of registration in the name of respondents Vegas and respondents-intervenors Buhays predecessors, in proportion to their claims over the subject land. Petitioner Republic appealed the Decision of the trial court, arguing that respondents Vegas failed to prove that the subject land was alienable and disposable, since the testimony of Mr. Gonzales did not contain the date when the land was declared as such. Unpersuaded by petitioner Republics arguments, the Court of Appeals affirmed in toto the earlier Decision of the trial court. Aggrieved by the ruling, petitioner filed the instant Rule 45 Petition with this Court.

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Respondents Vegas, who are joined by respondents-intervenors Buhays (collectively, respondents), raise procedural issues concerning the filing of the instant Petition, which the Court shall resolve first. Briefly, respondents found, in the instant Petition, procedural deficiencies that ought to warrant its outright dismissal. These deficiencies are as follows: (a) petitioner Republic failed to include the pertinent portions of the record that would support its arguments under Rule 45, Section 4 (d) of the Rules of Court, specifically the Appellees Brief of respondents Vegas in the appellate proceedings; and (b) it raised questions of fact, which are beyond the purview of a Rule 45 Petition.[7]

The Court is not persuaded by respondents arguments concerning the purported defects of the Petition.

First, petitioner Republics failure to attach a copy of respondents Vegas Appellees Brief to the instant Petition is not a fatal mistake, which merits the immediate dismissal of a Rule 45 Petition. The requirement that a petition for review on certiorari should be accompanied by such material portions of the record as would support the petition is left to the discretion of the party filing the petition.[8] Except for the duplicate original or certified true copy of the judgment sought to be appealed from,[9] there are no other records from the court a quo that must perforce be attached before the Court can take cognizance of a Rule 45 petition.

Respondents cannot fault petitioner Republic for excluding pleadings, documents or records in the lower court, which to their mind would assist this Court in deciding whether the Decision appealed from is sound. Petitioner Republic is left to its own estimation of the case in deciding which records would support its Petition and should thus be attached thereto. In any event, respondents are not prevented from attaching to their pleadings pertinent portions of the records that they deem necessary for the Courts evaluation of the case, as was done by respondents Vegas in this case when they attached their Appellees Brief to their Comment. In the end, it is the Court, in finally resolving the merits of the suit that will ultimately decide whether the material portions of the records attached are sufficient to support the Petition.

Second, the Petition raises a question of law, and not a question of fact. Petitioner Republic simply takes issue against the conclusions made by the trial and the appellate courts regarding the nature and character of the subject parcel of land, based on the evidence presented. When petitioner asks for a review of the decisions made by a lower court based on the evidence presented, without delving into their probative value but simply on their sufficiency to support the legal conclusions made, then a question of law is raised.

In New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and Rafael Susan,[10] the Court reiterated the distinction between a question of law and a question of fact in this wise:

We reiterate the distinction between a question of law and a

question of fact. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of the facts being admitted. A question of fact exists when a doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific

surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation. (Emphasis supplied) Petitioner Republic is not calling for an examination of the probative value or

truthfulness of the evidence presented, specifically the testimony of Mr. Gonzales. It, however, questions whether the evidence on record is sufficient to support the lower courts conclusion that the subject land is alienable and disposable. Otherwise stated, considering the evidence presented by respondents Vegas in the proceedings below, were the trial and the appellate courts justified under the law and jurisprudence in their findings on the nature and character of the subject land? Undoubtedly, this is a pure question of law, which calls for a resolution of what is the correct and applicable law to a given set of facts.

Going now to the substantial merits, petitioner Republic places before the Court the question of whether, based on the evidence on record, respondents Vegas have sufficiently established that the subject land is alienable and disposable. Was it erroneous for the Court of Appeals to have affirmed the trial courts grant of registration applied for by respondents Vegas over the subject land? We find no reversible error on the part of either the trial court or the Court of Appeals.

Presidential Decree No. 1529, otherwise known as the Property Registration

Decree, provides for the instances when a person may file for an application for registration of title over a parcel of land:

Section 14. Who May Apply. The following persons may file in

the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives:

Those who by themselves or through their predecessors-in-

interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier. x x x.

Thus, pursuant to the afore-quoted provision of law, applicants for registration of

title must prove the following: (1) that the subject land forms part of the disposable and alienable lands of the public domain; and (2) that they have been in open, continuous, exclusive and notorious possession and occupation of the land under a bona fide claim of ownership since 12 June 1945 or earlier.[11] Section 14 (1) of the law requires that the property sought to be registered is already alienable and disposable at the time the application for registration is filed.[12]

Raising no issue with respect to respondents Vegas open, continuous, exclusive and notorious possession of the subject land in the present Petition, the Court will limit its focus on the first requisite: specifically, whether it has sufficiently been demonstrated that the subject land is alienable and disposable.

Unless a land is reclassified and declared alienable and disposable, occupation of the same in the concept of an owner - no matter how long -cannot ripen into ownership

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and result in a title; public lands not shown to have been classified as alienable and disposable lands remain part of the inalienable domain and cannot confer ownership or possessory rights.[13]

Matters of land classification or reclassification cannot be assumed; they call for proof.[14] To prove that the land subject of an application for registration is alienable, an applicant must conclusively establish the existence of a positive act of the government, such as any of the following: a presidential proclamation or an executive order; other administrative actions; investigation reports of the Bureau of Lands investigator; or a legislative act or statute.[15] The applicant may also secure a certification from the government that the lands applied for are alienable and disposable.[16]

Previously, a certification from the DENR that a lot was alienable and disposable was sufficient to establish the true nature and character of the property and enjoyed the presumption of regularity in the absence of contradictory evidence.[17]

However, in Republic v. T.A.N. Properties, Inc.,[18] the Supreme Court overturned the grant by the lower courts of an original application for registration over a parcel of land in Batangas and ruled that a CENRO certification is not enough to certify that a land is alienable and disposable:

Further, it is not enough for the PENRO or CENRO to certify

that a land is alienable and disposable. The applicant for land registration must prove that the DENR Secretary had approved the land classification and released the land of the public domain as alienable and disposable, and that the land subject of the application for registration falls within the approved area per verification through survey by the PENRO or CENRO. In addition, the applicant for land registration must present a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. These facts must be established to prove that the land is alienable and disposable. Respondent failed to do so because the certifications presented by respondent do not, by themselves, prove that the land is alienable and disposable. (Emphasis supplied) Thus, as it now stands, aside from a CENRO certification, an application for

original registration of title over a parcel of land must be accompanied by a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records in order to establish that the land indeed is alienable and disposable.[19]

To comply with the first requisite for an application for original registration of title under the Property Registration Decree, respondents Vegas should have submitted a CENRO certification and a certified true copy of the original classification by the DENR Secretary that the land is alienable and disposable, together with their application. However, as pointed out by the Court of Appeals, respondents Vegas failed to submit a CENRO certification -- much less an original classification by the DENR Secretary -- to prove that the land is classified as alienable and disposable land of the public domain.[20] If the stringent rule imposed in Republic v. T.A.N. Properties, Inc., is to be followed, the absence of these twin certifications justifies a denial of an application for registration. Significantly,

however, the Courts pronouncement in Republic v. T.A.N. Properties, Inc., was issued after the decisions of the trial court[21] and the appellate court[22] in this case.

Recently, however, in Republic v. Serrano,[23] the Court affirmed the findings of the trial and the appellate courts that the parcel of land subject of registration was alienable and disposable. The Court held that a DENR Regional Technical Directors certification, which is annotated on the subdivision plan submitted in evidence, constitutes substantial compliance with the legal requirement:

While Cayetano failed to submit any certification which would formally attest to the alienable and disposable character of the land applied for, the Certification by DENR Regional Technical Director Celso V. Loriega, Jr., as annotated on the subdivision plan submitted in evidence by Paulita, constitutes substantial compliance with the legal requirement. It clearly indicates that Lot 249 had been verified as belonging to the alienable and disposable area as early as July 18, 1925.

The DENR certification enjoys the presumption of regularity

absent any evidence to the contrary. It bears noting that no opposition was filed or registered by the Land Registration Authority or the DENR to contest respondents' applications on the ground that their respective shares of the lot are inalienable. There being no substantive rights which stand to be prejudiced, the benefit of the Certification may thus be equitably extended in favor of respondents. (Emphasis supplied) Indeed, the best proofs in registration proceedings that a land is alienable and

disposable are a certification from the CENRO or Provincial Environment and Natural Resources Office (PENRO) and a certified true copy of the DENRs original classification of the land. The Court, however, has nonetheless recognized and affirmed applications for land registration on other substantial and convincing evidence duly presented without any opposition from the LRA or the DENR on the ground of substantial compliance.

Applying these precedents, the Court finds that despite the absence of a certification by the CENRO and a certified true copy of the original classification by the DENR Secretary, there has been substantial compliance with the requirement to show that the subject land is indeed alienable and disposable based on the evidence on record.

First, respondents Vegas were able to present Mr. Gonzales of the CENRO who testified that the subject land is alienable and disposable, and who identified his written report on his inspection of the subject land.

In the Report,[24] Mr. Gonzales attested under oath that (1) the area is entirely within the alienable and disposable zone as classified under Project No. 15, L.C. Map No. 582, certified on 31 December 1925;[25] (2) the land has never been forfeited in favor of the government for non-payment of taxes; (3) the land is not within a previously patented/decreed/titled property;[26] (4) there are no public land application/s filed by the applicant for the same land;[27] and (5) the land is residential/commercial.[28] That Mr. Gonzales appeared and testified before an open court only added to the reliability of the Report, which classified the subject land as alienable and disposable public land. The Court affirms the Court of Appeals conclusion that Mr. Gonzales testimony and written report

7

under oath constituted substantial evidence to support their claim as to the nature of the subject land.

Second, Subdivision Plan Csd-04-02433-6, formally offered as evidence by respondents-intervenors Buhays,[29] expressly indicates that the land is alienable and disposable. Similar to Republic v. Serrano, Mr. Samson G. de Leon, the officer-in-charge of the Office of the Assistant Regional Executive Director for Operations of the DENR, approved the said subdivision plan, which was annotated with the following proviso: [T]his survey is inside alienable and disposable area as per Project No. 15, L.C. Map No. 582, certified on Dec. 31, 1925. Notably, Mr. De Leons annotation pertaining to the identification of the land as alienable and disposable coincides with the investigation report of Mr. Gonzales.

Finally, upon being informed of respondents Vegas application for original registration, the LRA never raised the issue that the land subject of registration was not alienable and disposable. In the Supplementary Report submitted during the trial court proceedings,[30] the LRA did not interpose any objection to the application on the basis of the nature of the land. It simply noted that the subject subdivision plan (Psu-51460) had also been applied for in Case No. 1469, GLRO Record No. 32505, but that there was no decree of registration issued therefor. Thus, the LRA recommended that should the instant case be given due course, the application in Case No. 1469, GLRO Record No. 32505 with respect to plan Psu-51460 be dismissed. In addition, not only did the government fail to cross-examine Mr. Gonzales, it likewise chose not to present any countervailing evidence to support its opposition. In contrast to the other cases brought before this Court,[31] no opposition was raised by any interested government body, aside from the pro forma opposition filed by the OSG.

The onus in proving that the land is alienable and disposable still remains with the applicant in an original registration proceeding; and the government, in opposing the purported nature of the land, need not adduce evidence to prove otherwise.[32] In this case though, there was no effective opposition, except the pro forma opposition of the OSG, to contradict the applicants claim as to the character of the public land as alienable and disposable. The absence of any effective opposition from the government, when coupled with respondents other pieces of evidence on record persuades this Court to rule in favor of respondents.

In the instant Petition, petitioner Republic also assails the failure of Mr. Gonzales to testify as to when the land was declared as alienable and disposable. Indeed, his testimony in open court is bereft of any detail as to when the land was classified as alienable and disposable public land, as well as the date when he conducted the investigation. However, these matters could have been dealt with extensively during cross-examination, which petitioner Republic waived because of its repeated absences and failure to present counter evidence.[33] In any event, the Report, as well as the Subdivision Plan, readily reveals that the subject land was certified as alienable and disposable as early as 31 December 1925 and was even classified as residential and commercial in nature.

Thus, the Court finds that the evidence presented by respondents Vegas, coupled with the absence of any countervailing evidence by petitioner Republic, substantially establishes that the land applied for is alienable and disposable and is the subject of original registration proceedings under the Property Registration Decree. There was no reversible error on the part of either the trial court or the appellate court in granting the registration.

Respondents-intervenors Buhays title to that portion of the subject land is likewise affirmed, considering that the joint claim of respondents-intervenors Buhays over the land draws its life from the same title of respondents Vegas, who in turn failed to effectively oppose the claimed sale of that portion of the land to the formers predecessors-in-interest.

It must be emphasized that the present ruling on substantial compliance applies pro hac vice. It does not in any way detract from our rulings in Republic v. T.A.N. Properties, Inc., and similar cases which impose a strict requirement to prove that the public land is alienable and disposable, especially in this case when the Decisions of the lower court and the Court of Appeals were rendered prior to these rulings.[34] To establish that the land subject of the application is alienable and disposable public land, the general rule remains: all applications for original registration under the Property Registration Decree must include both (1) a CENRO or PENRO certification and (2) a certified true copy of the original classification made by the DENR Secretary.

As an exception, however, the courts - in their sound discretion and based solely on the evidence presented on record - may approve the application, pro hac vice, on the ground of substantial compliance showing that there has been a positive act of government to show the nature and character of the land and an absence of effective opposition from the government. This exception shall only apply to applications for registration currently pending before the trial court prior to this Decision and shall be inapplicable to all future applications.

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision dated 30 April 2007 and the trial courts Decision dated 18 November 2003 are hereby AFFIRMED. SO ORDERED.

SECOND DIVISION

[G.R. No. 178635, April 11 : 2011] SERVILLANO E. ABAD, PETITIONER, VS. OSCAR C. FARRALES AND DAISY C. FARRALES-

VILLAMAYOR, RESPONDENTS.

D E C I S I O N ABAD, J.: This case is about a) the need, when establishing the jurisdiction of the court over an action for forcible entry, for plaintiff to allege in his complaint prior physical possession of the property and b) the need for plaintiff to prove as well the fact of such prior physical possession.

The Facts and the Case Petitioner Servillano Abad claims that on August 6, 2002 he and his wife, Dr. Estrella E. Gavilan-Abad, bought a 428-square meter registered property on 7 Administration St., GSIS Village, Project 8, Quezon City,[1] from Teresita, Rommel, and Dennis Farrales. The

latter were the wife and sons, respectively, of the late brother of respondents Oscar Farrales (Oscar) and Daisy Farrales-Villamayor (Daisy).[2] Teresita operated a boarding

house on the property.[3]

Because the Abads did not consider running the boarding house themselves, they agreed to lease the property back to Teresita for P30,000.00 a month so she could continue with

8

her business.[4] But, although the lease had a good start, Teresita suddenly abandoned the boarding house,[5] forcing the Abads to take over by engaging the services of Bencio Duran,

Teresita's helper, to oversee the boarding house business.[6]

On December 7, 2002, Dr. Abad went to the boarding house to have certain damage to some toilets repaired. While she was attending to the matter, she also hired house

painters to give the boarding house fresh coat of paint.[7] On December 8, 2002 Oscar and Daisy came, accompanied by two men, and forcibly took possession of the boarding

house. Frightened, the painters called the Abads who immediately sought police help. The Abads were later appeased, however, when they learned that the intruders left the place.

Two days later or on December 10, 2002, the day the Abads left for abroad, Oscar and

Daisy forcibly entered and took possession of the property once again. Because of this, on March 10, 2003 petitioner Servillano Abad (Abad) filed a complaint[8] for forcible entry

against the two before the Metropolitan Trial Court (MeTC) of Quezon City.[9]

Oscar and Daisy vehemently denied that they forcibly seized the place. They claimed ownership of it by inheritance. They also claimed that they had been in possession of the same from the time of their birth.[10] That Oscar had been residing on the property since 1967 as attested to by a March 31, 2003 certification issued by Barangay Bahay Toro.[11]

While the defendants admitted that Daisy herself ceased to reside on the property as early

as 1986, they pointed out that she did not effectively give up her possession. Oscar and Daisy further claimed that when their parents were still alive, the latter mortgaged the property to a bank to secure a loan. After their mother passed away, they decided to

lease portions of the property to help pay the loan. Daisy managed the operation of the boarding house.[12] To bolster their claim, Oscar and Daisy presented copies of rental

receipts[13] going back from 2001 to 2003. They would not have been able to lease the rooms unless they were in possession.[14]

Further, Oscar and Daisy asked the MeTC to dismiss the action on the ground of failure of Abad to show that he and his wife enjoyed prior physical possession of the property, an

essential requisite in forcible entry cases. Abad's allegation that he and his wife immediately leased the property after they bought it was proof that they were never in

possession of it for any length of time.[15]

On March 30, 2005 the MeTC rendered a decision[16] in favor of Abad, stating that Oscar and Daisy could not acquire ownership of the property since it was registered. And, as

owner, Abad was entitled to possession.

Disagreeing with the MeTC, Oscar and Daisy went up to the Regional Trial Court (RTC) of Quezon City. In a decision17 dated October 26, 2005, the RTC affirmed the decision of the MeTC in its totality. It held that Oscar and Daisy could no longer impugn the jurisdiction of

the MeTC over the action since they raised the ground of Abad's failure to allege prior physical possession in his complaint for the first time on appeal. Besides, said the RTC,

since the complaint alleged that Servillano owned the property, it may be presumed that he also had prior possession of it. No evidence to the contrary having been presented, the

presumption stood.

Abad moved for immediate execution[18] and partial reconsideration[19] of the decision with

respect to his claim for attorney's fees, exemplary damages, and reasonable rents. For their part, Oscar and Daisy sought reconsideration[20] of the RTC decision and moved to

strike out Abad's motions.[21] On December 1, 2005 the RTC issued an Order,[22] granting Abad's motion for immediate execution that would place him in possession and ordering the immediate release to him of the P390,000.00 supersedeas bond that Oscar and Daisy

posted in the case. Further, the RTC partially reconsidered its decision by awarding attorney's fees of P20,000.00 to Abad. Oscar and Daisy moved for the reconsideration of

this order.[23] In an Order dated December 9, 2005, the RTC denied the motion for reconsideration filed by Oscar and Daisy of its October 26, 2005 Decision on the ground of

non-compliance with Section 4, Rule 15 of the Rules of Court.

Undaunted, Oscar and Daisy filed a petition for review[24] with the Court of Appeals (CA). On March 8, 2007 the CA rendered a decision,[25] annulling the decisions and orders

of both the MeTC and the RTC on the ground of lack of jurisdiction. The CA pointed out that Abad merely alleged in his complaint that he leased the property to Teresita after he and his wife bought the same and that, thereafter, Oscar and Daisy forcibly entered the same. Since Abad did not make the jurisdictional averment of prior physical possession,

the MeTC did not acquire jurisdiction over his action. Further, Oscar and Daisy ably proved actual possession from 1967 through the barangay certification. Since the MeTC had no

jurisdiction over the case, all the proceedings in the case were void.[26]

Abad moved for reconsideration but the CA denied the same,[27] hence, in the present petition for review.[28] Questions Presented

The case presents the following questions: 1. Whether or not Abad sufficiently alleged in his complaint the jurisdictional fact of prior physical possession of the disputed property to vest the MeTC with jurisdiction over his action; and 2. In the affirmative, whether or not Abad sufficiently proved that he enjoyed prior physical possession of the property in question.

The Court's Rulings Two allegations are indispensable in actions for forcible entry to enable first level courts to acquire jurisdiction over them: first, that the plaintiff had prior physical possession of the property; and,second, that the defendant deprived him of such possession by means of force, intimidation, threats, strategy, or stealth.[29] There is no question that Abad made an allegation in his complaint that Oscar and Daisy forcibly entered the subject property. The only issue is with respect to his allegation, citing such property as one "of which they have complete physical and material possession of the same until deprived thereof." Abad argues that this substantially alleges plaintiffs prior physical possession of the property before the dispossession, sufficient to confer on the MeTC jurisdiction over the action. The Court agrees. The plaintiff in a forcible entry suit is

9

not required to use in his allegations the exact terminology employed by the rules. It is enough that the facts set up in the complaint show that dispossession took place under the required conditions.[30] It is of course not enough that the allegations of the complaint make out a case for forcible entry. The plaintiff must also be able to prove his allegations. He has to prove that he had prior physical possession[31] for this gives him the security that entitles him to remain in the property until a person with a better right lawfully ejects him.[32] Here, evidently, the Abads did not take physical possession of the property after buying the same since they immediately rented it to Teresita who had already been using the property as a boarding house. Abad claims that their renting it to Teresita was an act of ownership that amounted to their acquiring full physical possession of the same.[33] But the Abad's lease agreement with Teresita began only in September 2002.[34] Oscar and Daisy, on the other hand, have proved that they had been renting spaces in the property as early as 2001 as evidenced by receipts that they issued to their lessees. This was long before they supposedly entered the property, using force, in 2002. Of course, Abad pointed out that the cited receipts covered rents in a place called "D's Condominium" in Sampaloc, Manila, and were only made to appear through handwritten notations that they were issued for rooms in the property subject of the suit.[35] But a close examination of the receipts shows that "D's Condominium" was just the name that Daisy employed in her business of renting rooms. The receipts did not necessarily describe another place. Indeed, they provided blank spaces for describing as the subject of rent the property subject of this case. And, except for Abad's bare claim that Teresita and his sons had long been in possession before they sold it to him and his wife, he offered no evidence to show that this was in fact the case. Abad assails as irregularly issued the barangay certification that Oscar had been residing on the subject property since 1967. He claims that it could have been issued as a mere favor to a friend, the barangay chairman having been Oscar's childhood playmate[36] But Abad has no proof of these allegations. He has not overcome the presumption that the barangay chairman performed his official duty and acted regularly in issuing such certification.[37] Finally, Abad argued that with the title to the property in his name, he has in his favor the right to the actual, physical, exclusive, continuous, and peaceful possession of the same. He pointed out that his possession de facto began from the time of the signing and notarization of the deed of absolute sale, becoming de jure once the title was issued in his name.[38] It is of course true that a property owner has the right to exercise the attributes of ownership, one of which is the right to possess the property. But Abad is missing the point. He is referring to possession flowing from ownership which is not in issue in this case. Possession in forcible entry cases means nothing more than physical possession or possession de facto, not legal possession in the sense contemplated in civil law. Only prior physical possession, not title, is the issue.[9]

For these reasons, the Court finds that Servillano utterly failed to prove prior physical possession in his favor. The absence of prior physical possession by the plaintiff in a forcible entry warrants the dismissal of the complaint.[40] WHEREFORE, the Court DENIES the petition for review of petitioner Servillano E. Abad andAFFIRMS in their entirety the decision dated March 8, 2007 and resolution dated June 19, 2007 of the Court of Appeals in CA-G.R. SP 92617. SO ORDERED. __________________________________________________________________________

Republic of the Philippines Supreme Court

Manila FIRST DIVISION

SPOUSES MANUEL AND FLORENTINA DEL ROSARIO,

G.R. No. 170575

Petitioners,

Present:

CORONA, C.J., Chairperson,

- versus - VELASCO, JR.,

LEONARDO-DE CASTRO,

DEL CASTILLO, and

PEREZ, JJ.

GERRY ROXAS FOUNDATION, INC., Promulgated:

Respondent. June 8, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - x D E C I S I O N

DEL CASTILLO, J.:

The allegations in the complaint and the reliefs prayed for are the determinants of the nature of the action[1] and of which court has jurisdiction over the action.[2]

This Petition for Review on Certiorari assails the April 26, 2005 Decision[3] of the Court of

Appeals (CA) in CA-G.R. SP No. 87784 which dismissed the Petition for Review before it. Also assailed is the CA Resolution[4] dated November 15, 2005 denying the Motion for Reconsideration thereto.

Factual Antecedents

The controversy between petitioners Manuel and Florentina Del Rosario

10

and respondent Gerry Roxas Foundation Inc. emanated from a Complaint for Unlawful Detainer filed by the former against the latter, the surrounding circumstances relative thereto as summarized by the CA in its assailed Decision are as follows:

The petitioner Manuel del Rosario appears to be the registered

owner of Lot 3-A of Psd-301974 located in Roxas City which is described in and covered by Transfer Certificate of Title No. T-18397 of the Registry of Deeds for the City of Roxas.

Sometime in 1991, the respondent, as a legitimate foundation, took possession and occupancy of said land by virtue of a memorandum of agreement entered into by and between it and the City ofRoxas. Its possession and occupancy of said land is in the character of being lessee thereof.

In February and March 2003, the petitioners served notices upon the

respondent to vacate the premises of said land. The respondent did not heed such notices because it still has the legal right to continue its possession and occupancy of said land.[5]

On July 7, 2003, petitioners filed a Complaint[6] for Unlawful Detainer against the respondent before the Municipal Trial Court in Cities (MTCC) of Roxas City, docketed as Civil Case No. V-2391. Said complaint contains, among others, the following significant allegations:

3. Plaintiffs are the true, absolute and registered owner[s] of a parcel

of land, situated at Dayao, Roxas City and covered by and described in Transfer Certificate of Title No. 18397 issued to the plaintiffs by the Register of Deeds for Roxas City as evidenced by a xerox copy thereof which is hereto attached as Annex A.

4. Sometime in 1991, without the consent and authority of the

plaintiffs, defendant took full control and possession of the subject property, developed the same and use[d] it for commercial purposes.

x x x x 7. Plaintiffs have allowed the defendant for several years, to make use

of the land without any contractual or legal basis. Hence, defendants possession of the subject property is only by tolerance.

8. But [plaintiffs] patience has come to its limits. Hence, sometime in

the last quarter of 2002, plaintiffs made several demands upon said defendant to settle and/or pay rentals for the use of the property.

x x x x 10. Notwithstanding receipt of the demand letters, defendant failed

and refused, as it continues to fail and refuse to pay reasonable monthly rentals for the use and occupancy of the land, and to vacate the subject premises

despite the lapse of the fifteen-day period specified in the said demand letters. Consequently, defendant is unlawfully withholding possession of the subject property from the plaintiffs, who are the owners thereof.[7] Upon service of summons, respondent filed its Answer[8] dated July 31, 2003 where it

averred that:

3. The defendant ADMITS the allegations set forth in paragraph 4 of the Complaint to the effect that the defendant took full control and possession of the subject property, developed the same and has been using the premises in accordance with its agreements with the City of Roxas and the purposes of the defendant corporation without any objection or opposition of any kind on the part of the plaintiffs for over twenty-two long years; the defendant specifically DENIES the allegations contained in the last part of this paragraph 4 of the Complaint that the defendant has used the property leased for commercial purposes, the truth of the matter being that the defendant has used and [is] still using the property only for civic non-profit endeavors hewing closely to purposes of the defendant Gerry Roxas Foundation Inc.,inter alia, devoted to general welfare, protection, and upliftment of the people of Roxas City, Capiz, and in Panay Island, and elsewhere in the Philippines; that the Foundation has spent out of its own funds for the compliance of its avowed aims and purposes, up to the present, more than P25M, and that all the improvements, including a beautiful auditorium built in the leased premises of the Foundation shall accrue to the CITY (of Roxas), free from any compensation whatsoever, upon the expiration of this Lease (Memorandum of Agreement, Annex 2 hereof), eighteen (18) years hence;

x x x x 5. The defendant specifically DENIES the allegations set forth in

paragraph 7 of the Complaint, the truth being that the defendant took possession of the subject property by virtue of Memorandums of Agreement, photo-copies of which are hereto attached as Annexes 1 and 2 and made integral parts hereof, entered into by defendant and the City of Roxas, which is the true and lawful owner thereof; thus, the possession of the subject property by the defendant foundation is lawful, being a lessee thereof;

x x x x 8. The defendant ADMITS the allegations set forth in paragraph 10 of

the Complaint that defendant refused to pay monthly rental to the plaintiffs and to vacate the premises, but specifically DENIES the rest of the allegations thereof, the truth being that defendant has no obligation whatsoever, to the plaintiffs, as they are neither the owners or lessors of the land occupied by defendant;

x x x x

11

As and by way of

AFFIRMATIVE DEFENSE

The defendant repleads the foregoing allegations, and avers further that:

12. The plaintiffs have no cause of action against defendant. The leased property does not belong to the plaintiffs. The property

covered by Transfer Certificate of Title No. T-18397, [is] occupied by the [defendant] as [lessee] of the City of Roxas since 1991, the latter having acquired it by purchase from the plaintiffs way back on February 19, 1981, as evidenced by the Deed of Absolute Sale which is hereto attached as Annex 3 and made an integral part hereof.While, admittedly, the said certificate of title is still in the name of the plaintiffs, nevertheless, the ownership of the property covered therein has already transferred to the City of Roxas upon its delivery to it. Article 1496 of the Civil Code provides that, ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. It is also provided under Article 1498 of the Civil Code that, when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing, which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. Upon execution of the Deed of Absolute Sale (Annex 3), the plaintiffs have relinquished ownership of the property subject thereof in favor of the vendee, City of Roxas. Necessarily, the possession of the property subject of the said Deed of Absolute Sale now pertains to the City of Roxas and the plaintiffs have no more right, whatsoever, to the possession of the same. It is defendant foundation by virtue of the Memorandums of Agreement (Annexes 1 and 2 hereof), which has the legal right to have possession of the subject property;[9]

After the MTCC issued an Order setting the case for preliminary conference, respondent

filed on October 20, 2003 a Motion to Resolve its Defenses on Forum Shopping and Lack of Cause of Action. Records show that before the instant case was filed, the City of Roxas had already filed a case against petitioners for Surrender of Withheld Duplicate Certificate Under Section 107, [Presidential Decree No.] 1529 docketed as Special Case No. SPL-020-03 with the Regional Trial Court (RTC) of Roxas City. Subsequently, on October 27, 2003, petitioners filed their Opposition to the said Motion.

Ruling of the Municipal Trial Court in Cities

On November 24, 2003, the MTCC issued an Order[10] resolving the respondents

Motion. In the said Order, the MTCC held that:

The plaintiffs [have] no cause of action against herein defendant. The defendant is the lessee of the City of Roxas of the parcel of land in question. There has been no previous contractual relationship between the plaintiffs Del Rosarios and the defendant Gerry Roxas Foundation, Inc. affecting the title of the land leased by the [Gerry] Roxas Foundation. The Gerry Roxas Foundation, Inc. has not unlawfully withheld the possession of the land it is leasing from its lessor. Its right to the physical possession of the land leased by it from the City of Roxas subsists and continues to subsist until the termination of the contract of lease according to its terms and pursuant to law.

The defendant had presented as its main defense that the property

was already sold by the plaintiffs to the present lessor of the property, the City of Roxas thru a Deed of Absolute Sale dated February 19, 1981 executed by herein [plaintiff] spouses as vendors.

Plaintiffs had not directly and specifically shown that the purported

Deed of Absolute Sale does not exist; rather, they contend that said document is merely defective. They had not even denied the signatories to the said Contract of Sale; specifically the authenticity of the spouses-plaintiffs signatures; all that plaintiffs did merely referred to it as null and void and highly questionable without any specifications.

When the parties pleadings fail to tender any issue of fact, either

because all the factual allegations have been admitted expressly or impliedly; as when a denial is a general denial; there is no need of conducting a trial, since there is no need of presenting evidence anymore. The case is then ripe for judicial determination, either through a judgment on the pleadings (Rules of Court, Rule 34) or by summary judgment under Rule 35, Rules of Court.

In the instant case, plaintiffs alleged that sometime in 1991, without

the consent and authority of the plaintiffs, defendant took full control and possession of the subject property, developed the same and use[d] it for commercial purposes. x x x for so many years, plaintiffs patiently waited for someone to make representation to them regarding the use of the subject property, but the same never happened.Plaintiff[s] have allowed the defendant for several years, to make use of the land without any contractual or legal basis. Hence, defendants possession of the subject property is only by tolerance.

x x x x Defendant admits the allegations of the plaintiffs that the defendant

took full control and possession of the subject property, developed the same and has been using the premises in accordance with its agreements with the City of Roxas and the purposes of the defendant corporation without any objection or opposition of any kind on the part of the plaintiffs for over twenty-two long years.

12

That the defendants possession of the subject property is by virtue of a contract of lease entered into by the defendant foundation with the City of Roxas which is the true and lawful owner, the latter having acquired said property by virtue of a Deed of Absolute Sale as early as February 19, 1981, long before the defendant foundations occupation of the property. In Alcos v. IAC 162 SCRA 823 (1988), Buyers immediate possession and occupation of the property was deemed corroborative of the truthfulness and authenticity of the deed of sale.

WHEREFORE, although this Court finds the defense on forum

shopping interposed by the defendant to be untenable and unmeritorious, and hence, denied; this Court still finds the pleadings filed by the plaintiffs-spouses to be without a cause of action and hence, dismisses this instant complaint. With cost against the plaintiffs.

SO ORDERED.[11]

Ruling of the Regional Trial Court On appeal, the RTC of Roxas City, Branch 17 rendered a Decision[12] dated July 9, 2004 affirming the MTCC Order. Ruling of the Court of Appeals

Aggrieved, petitioners filed with the CA a Petition for Review. However, the CA, in a Decision[13] dated April 26, 2005, dismissed the petition and affirmed the assailed Decision of the RTC.

Petitioners timely filed a Motion for Reconsideration[14] which was, however, denied in a

Resolution[15] dated November 15, 2005.

Issues Still undaunted, petitioners now come to this Court on a Petition for Review

on Certiorari raising the following issues: I. Whether x x x in determining if there is a case for unlawful detainer, a court

should limit itself in interpreting a single phrase/allegation in the complaint; and,

II. Whether x x x there exists an unlawful detainer in this case.[16]

Our Ruling The petition is bereft of merit.

The allegations in petitioners Complaint constitute judicial admissions.

Petitioners alleged in their Complaint before the MTCC, among others, that: (1) sometime in 1991, without their consent and authority, respondent took full control and possession of the subject property, developed the same and used it for commercial purposes; and (2) they allowed the respondent for several years, to make use of the land without any contractual or legal basis. Petitioners thus conclude that respondents possession of subject property is only by tolerance.

Section 4, Rule 129 of the Rules of Court provides that:

Sec. 4. Judicial admissions. An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. x x x A judicial admission is one so made in pleadings filed or in the progress of a trial as to

dispense with the introduction of evidence otherwise necessary to dispense with some rules of practice necessary to be observed and complied with.[17] Correspondingly, facts alleged in the complaint are deemed admissions of the plaintiff and binding upon him.[18]The allegations, statements or admissions contained in a pleading are conclusive as against the pleader.[19]

In this case, petitioners judicially admitted that respondents took control and possession of

subject property without their consent and authority and that respondents use of the land was without any contractual or legal basis.

Nature of the action is determined by the judicial admissions in the Complaint.

In Spouses Huguete v. Spouses Embudo,[20] citing Caiza v. Court of Appeals,[21] this Court held that what determines the nature of an action as well as which court has jurisdiction over it are the allegations of the complaint and the character of the relief sought.

This Court, in Sumulong v. Court of Appeals,[22] differentiated the distinct causes of action in forcible entry vis--vis unlawful detainer, to wit:

Forcible entry and unlawful detainer are two distinct causes of action defined in Section 1, Rule 70 of the Rules of Court. In forcible entry, one is deprived of physical possession of any land or buildingby means of force, intimidation, threat, strategy, or stealth. In unlawful detainer, one unlawfully withholds possession thereof after the expiration or termination of his right to hold possession under any contract, express or implied. In forcible entry, the possession is illegal from the beginning and the only issue is who has the prior possession de facto. In unlawful detainer, possession was originally lawful but became unlawful by the expiration or termination of the right to possess and the issue of rightful possession is the one decisive, for in such action, the

13

defendant is the party in actual possession and the plaintiff's cause of action is the termination of the defendant's right to continue in possession.[23]

The words by force, intimidation, threat, strategy or stealth shall include every situation or condition under which one person can wrongfully enter upon real property and exclude another, who has had prior possession, therefrom.[24] The foundation of the action is really the forcible exclusion of the original possessor by a person who has entered without right.[25]

The act of going on the property and excluding the lawful possessor therefrom necessarily

implies the exertion of force over the property, and this is all that is necessary.[26]The employment of force, in this case, can be deduced from petitioners allegation that respondent took full control and possession of the subject property without their consent and authority.

Stealth, on the other hand, is defined as any secret, sly, or clandestine act to avoid

discovery and to gain entrance into or remain within residence of another without permission,[27] while strategy connotes the employment of machinations or artifices to gain possession of the subject property.[28] The CA found that based on the petitioners allegations in their complaint, respondents entry on the land of the petitioners was by stealth x x x.[29] However, stealth as defined requires a clandestine character which is not availing in the instant case as the entry of the respondent into the property appears to be with the knowledge of the petitioners as shown by petitioners allegation in their complaint that [c]onsidering the personalities behind the defendant foundation and considering further that it is plaintiffs nephew, then the vice-mayor, and now the Mayor of the City of Roxas Antonio A. del Rosario, although without any legal or contractual right, who transacted with the foundation, plaintiffs did not interfere with the activities of the foundation using their property.[30] To this Courts mind, this allegation if true, also illustrates strategy.

Taken in its entirety, the allegations in the Complaint establish a cause of action for forcible entry, and not for unlawful detainer.

In forcible entry, one is deprived of physical possession of any land or building by means of force, intimidation, threat, strategy, or stealth.[31] [W]here the defendants possession of the property is illegal ab initio, the summary action for forcible entry (detentacion) is the remedy to recover possession.[32]

In their Complaint, petitioners maintained that the respondent took possession and

control of the subject property without any contractual or legal basis.[33] Assuming that these allegations are true, it hence follows that respondents possession was illegal from the very beginning. Therefore, the foundation of petitioners complaint is one for forcible entry that is the forcible exclusion of the original possessor by a person who has entered without right.[34] Thus, and as correctly found by the CA, there can be no tolerance as petitioners alleged that respondents possession was illegal at the inception.[35]

Corollarily, since the deprivation of physical possession, as alleged in

petitioners Complaint and as earlier discussed, was attended by strategy and force, this Court finds that the proper remedy for the petitioners was to file a Complaint for Forcible Entry and not the instant suit for unlawful detainer.

Petitioners should have filed a Complaint for Forcible Entry within the reglementary one-year period from the time of dispossession.

Petitioners likewise alleged in their Complaint that respondent took possession and occupancy of subject property in 1991. Considering that the action for forcible entry must be filed within one year from the time of dispossession,[36] the action for forcible entry has already prescribed when petitioners filed their Complaint in 2003. As a consequence, the Complaint failed to state a valid cause of action against the respondent.

In fine, the MTCC properly dismissed the Complaint, and the RTC and the CA correctly

affirmed said order of dismissal. WHEREFORE, the petition is DENIED. The Decision dated April 26, 2005 and the Resolution

dated November 15, 2005 of the Court of Appeals in CA-G.R. SP No. 87784 are AFFIRMED. SO ORDERED.

SECOND DIVISION

[G.R. No. 151369, March 23 : 2011] ANITA MONASTERIO-PE AND THE SPOUSES ROMULO TAN AND EDITHA PE-TAN,

PETITIONERS, VS. JOSE JUAN TONG, HEREIN REPRESENTED BY HIS ATTORNEY-IN-FACT, JOSE Y. ONG, RESPONDENT.

D E C I S I O N PERALTA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal and nullification of the Decision[1] and Order,[2] respectively dated October 24, 2001 and January 18, 2002, of the Regional Trial Court (RTC) of Iloilo City, Branch 24. The instant petition stemmed from an action for ejectment filed by herein respondent Jose Juan Tong (Tong) through his representative Jose Y. Ong (Ong) against herein petitioners Anita Monasterio-Pe (Anita) and the spouses Romulo Tan and Editha Pe-Tan (Spouses Tan). The suit was filed with the Municipal Trial Court in Cities (MTCC), Branch 3, Iloilo City and docketed as Civil Case No. 2000(92). In the Complaint, it was alleged that Tong is the registered owner of two parcels of land known as Lot Nos. 40 and 41 and covered by Transfer Certificate of Title (TCT) Nos. T-9699 and T-9161, together with the improvements thereon, located at Barangay Kauswagan, City Proper, Iloilo City; herein petitioners are occupying the house standing on the said parcels of land without any contract of lease nor are they paying any kind of rental and

14

that their occupation thereof is simply by mere tolerance of Tong; that in a letter dated December 1, 1999, Tong demanded that respondents vacate the house they are occupying, but despite their receipt of the said letter they failed and refused to vacate the same; Tong referred his complaint to the Lupon of Barangay Kauswagan, to no avail.[3] In their Answer with Defenses and Counterclaim, herein petitioners alleged that Tong is not the real owner of the disputed property, but is only a dummy of a certain alien named Ong Se Fu, who is not qualified to own the said lot and, as such, Tong's ownership is null and void; petitioners are the true and lawful owners of the property in question and by reason thereof they need not lease nor pay rentals to anybody; a case docketed as CA-G.R. CV No. 52676 (RTC Civil Case No. 20181) involving herein petitioner Pe and respondent is pending before the Court of Appeals (CA) where the ownership of the subject property is being litigated; respondent should wait for the resolution of the said action instead of filing the ejectment case; petitioners also claimed that there was, in fact, no proper barangay conciliation as Tong was bent on filing the ejectment case before conciliation proceedings could be validly made.[4] On March 19, 2001, the MTCC rendered judgment in favor of herein respondent, the dispositive portion of which reads as follows: WHEREFORE, judgment is rendered, finding the defendants Anita Monasterio-Pe, and Spouses Romulo Tan and Editha Pe-Tan to be unlawfully withholding the property in litigation, i.e., Lot. Nos. 40 and 41 covered by TCT Nos. T-9699 and 9161, respectively, together with the buildings thereon, located at Brgy. Kauswagan, Iloilo City Proper, and they are hereby ordered together with their families and privies, to vacate the premises and deliver possession to the plaintiff and/or his representative. The defendants are likewise ordered to pay plaintiff reasonable compensation for the use and occupancy of the premises in the amount of P15,000.00 per month starting January, 2000 until they actually vacate and deliver possession to the plaintiff and attorney's fees in the amount of P20,000.00. Costs against the defendants. SO DECIDED.[5] Aggrieved by the above-quoted judgment, petitioners appealed the decision of the MTCC with the RTC of Iloilo City. In its presently assailed Decision, the RTC of Iloilo City, Branch 24 affirmed in its entirety the appealed decision of the MTCC. Hence, the instant petition for review on certiorari. At the outset, it bears emphasis that in a petition for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be raised by the parties and passed upon by this Court.[6] It is a settled rule that in the exercise of this Court's power of review, it does not inquire into the sufficiency of the evidence presented, consistent with the rule that this Court is not a trier of facts.[7] In the instant case, a perusal of the errors assigned by

petitioners would readily show that they are raising factual issues the resolution of which requires the examination of evidence. Certainly, issues which are being raised in the present petition, such as the questions of whether the issue of physical possession is already included as one of the issues in a case earlier filed by petitioner Anita and her husband, as well as whether respondent complied with the law and rules on barangay conciliation, are factual in nature. Moreover, the appeal under Rule 45 of the said Rules contemplates that the RTC rendered the judgment, final order or resolution acting in its original jurisdiction.[8] In the present case, the assailed Decision and Order of the RTC were issued in the exercise of its appellate jurisdiction. Thus, petitioners pursued the wrong mode of appeal when they filed the present petition for review on certiorari with this Court. Instead, they should have filed a petition for review with the CA pursuant to the provisions of Section 1,[9] Rule 42 of the Rules of Court. On the foregoing bases alone, the instant petition should be denied. In any case, the instant petition would still be denied for lack of merit, as discussed below. In their first assigned error, petitioners contend that the RTC erred in holding that the law authorizes an attorney-in-fact to execute the required certificate against forum shopping in behalf of his or her principal. Petitioners argue that Tong himself, as the principal, and not Ong, should have executed the certificate against forum shopping. The Court is not persuaded. It is true that the first paragraph of Section 5,[10] Rule 7 of the Rules of Court, requires that the certification should be signed by the "petitioner or principal party" himself. The rationale behind this is because only the petitioner himself has actual knowledge of whether or not he has initiated similar actions or proceedings in different courts or agencies.[11] However, the rationale does not apply where, as in this case, it is the attorney-in-fact who instituted the action.[12] Such circumstance constitutes reasonable cause to allow the attorney-in-fact to personally sign the Certificate of Non-Forum Shopping. Indeed, the settled rule is that the execution of the certification against forum shopping by the attorney-in-fact is not a violation of the requirement that the parties must personally sign the same.[13] The attorney-in-fact, who has authority to file, and who actually filed the complaint as the representative of the plaintiff, is a party to the ejectment suit.[14] In fact, Section 1,[15] Rule 70 of the Rules of Court includes the representative of the owner in an ejectment suit as one of the parties authorized to institute the proceedings. In the present case, there is no dispute that Ong is respondent's attorney-in-fact. Hence, the Court finds that there has been substantial compliance with the rules proscribing forum shopping. Petitioners also aver that the certificate against forum shopping attached to the complaint in Civil Case No. 2000(92) falsely stated that there is no other case pending before any other tribunal involving the same issues as those raised therein, because at the time the said complaint was filed, Civil Case No. 20181 was, in fact, still pending with the CA (CA-

15

G.R. CV No. 52676), where the very same issues of ejectment and physical possession were already included. Corollarily, petitioners claim that the MTCC has no jurisdiction over Civil Case No. 2000(92) on the ground that the issue of physical possession raised therein was already included by agreement of the parties in Civil Case No. 20181. As such, petitioners assert that respondent is barred from filing the ejectment case, because in doing so he splits his cause of action and indirectly engages in forum shopping. The Court does not agree. The Court takes judicial notice of the fact that the disputed properties, along with three other parcels of land, had been the subject of two earlier cases filed by herein petitioner Anita and her husband Francisco against herein respondent and some other persons. The first case is for specific performance and/or rescission of contract and reconveyance of property with damages. It was filed with the then Court of First Instance (CFI) of Iloilo City and docketed as Civil Case No. 10853. The case was dismissed by the CFI. On appeal, the Intermediate Appellate Court (IAC) upheld the decision of the trial court. When the case was brought to this Court,[16] the decision of the IAC was affirmed. Subsequently, the Court's judgment in this case became final and executory per Entry of Judgment issued on May 27, 1991. Subsequently, in 1992, the Spouses Pe filed a case for nullification of contract, cancellation of titles, reconveyance and damages with the RTC of Iloilo City. This is the case presently cited by petitioners. Eventually, the case, docketed as Civil Case No. 20181, was dismissed by the lower court on the ground of res judicata. The RTC held that Civil Case No. 10853 serves as a bar to the filing of Civil Case No. 20181, because both cases involve the same parties, the same subject matter and the same cause of action. On appeal, the CA affirmed the dismissal of Civil Case No. 20181. Herein petitioner Anita assailed the judgment of the CA before this Court, but her petition for review oncertiorari was denied via a Resolution[17] dated January 22, 2003. On June 25, 2003, the said Resolution became final and executory. The Court notes that the case was disposed with finality without any showing that the issue of ejectment was ever raised. Hence, respondent is not barred from filing the instant action for ejectment. In any case, it can be inferred from the judgments of this Court in the two aforementioned cases that respondent, as owner of the subject lots, is entitled to the possession thereof. Settled is the rule that the right of possession is a necessary incident of ownership.[18] Petitioners, on the other hand, are consequently barred from claiming that they have the right to possess the disputed parcels of land, because their alleged right is predicated solely on their claim of ownership, which is already effectively debunked by the decisions of this Court affirming the validity of the deeds of sale transferring ownership of the subject properties to respondent. Petitioners also contend that respondent should have filed an accion publiciana and not an unlawful detainer case, because the one-year period to file a case for unlawful detainer has already lapsed.

The Court does not agree. Sections 1 and 2, Rule 70 of the Rules of Court provide: Section 1. Who may institute proceedings and when. - Subject to the provisions of the next succeeding section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs. Section 2. Lessor to proceed against lessee only after demand. - Unless otherwise stipulated, such action by the lessor shall be commenced only after demand to pay or comply with the conditions of the lease and to vacate is made upon the lessee, or by serving written notice of such demand upon the person found on the premises, or by posting such notice on the premises if no person be found thereon, and the lessee fails to comply therewith after fifteen (15) days in the case of land or five (5) days in the case of buildings. Respondent alleged in his complaint that petitioners occupied the subject property by his mere tolerance. While tolerance is lawful, such possession becomes illegal upon demand to vacate by the owner and the possessor by tolerance refuses to comply with such demand.[19] Respondent sent petitioners a demand letter dated December 1, 1999 to vacate the subject property, but petitioners did not comply with the demand. A person who occupies the land of another at the latter's tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which a summary action for ejectment is the proper remedy against him.[20] Under Section 1, Rule 70 of the Rules of Court, the one-year period within which a complaint for unlawful detainer can be filed should be counted from the date of demand, because only upon the lapse of that period does the possession become unlawful.[21] Respondent filed the ejectment case against petitioners on March 29, 2000, which was less than a year from December 1, 1999, the date of formal demand. Hence, it is clear that the action was filed within the one-year period prescribed for filing an ejectment or unlawful detainer case. Neither is the Court persuaded by petitioners' argument that respondent has no cause of action to recover physical possession of the subject properties on the basis of a contract of sale because the thing sold was never delivered to the latter. It has been established that petitioners validly executed a deed of sale covering the subject parcels of land in favor of respondent after the latter paid the outstanding account of the former with the Philippine Veterans Bank. Article 1498 of the Civil Code provides that when the sale is made through a public

16

instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. In the instant case, petitioners failed to present any evidence to show that they had no intention of delivering the subject lots to respondent when they executed the said deed of sale. Hence, petitioners' execution of the deed of sale is tantamount to a delivery of the subject lots to respondent. The fact that petitioners remained in possession of the disputed properties does not prove that there was no delivery, because as found by the lower courts, such possession is only by respondent's mere tolerance. Lastly, the Court does not agree with petitioners' assertion that the filing of the unlawful detainer case was premature, because respondent failed to comply with the provisions of the law on barangay conciliation. As held by the RTC, Barangay Kauswagan City Proper, through its Pangkat Secretary and Chairman, issued not one but two certificates to file action after herein petitioners and respondent failed to arrive at an amicable settlement. The Court finds no error in the pronouncement of both the MTCC and the RTC that any error in the previous conciliation proceedings leading to the issuance of the first certificate to file action, which was alleged to be defective, has already been cured by the MTCC's act of referring back the case to the PangkatTagapagkasundo of Barangay Kauswagan for proper conciliation and mediation proceedings. These subsequent proceedings led to the issuance anew of a certificate to file action. WHEREFORE, the instant petition is DENIED. The assailed Decision and Order of the Regional Trial Court of Iloilo City, Branch 24, are AFFIRMED. SO ORDERED. Carpio, (Chairperson), Nachura, Brion,* and Abad, JJ., concur. Endnotes:

Republic of the Philippines

Supreme Court Manila

FIRST DIVISION

PEDRO ANGELES , Represented by ADELINA T. ANGELES, Attorney-in Fact, Petitioner, - versus -

ESTELITA B. PASCUAL, MARIA THERESA PASCUAL, NERISSA PASCUAL, IMELDA PASCUAL, MA. LAARNI PASCUAL and EDWIN PASCUAL, Respondents.

G.R. No. 157150 Present: CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN, DEL CASTILLO, and *PEREZ, JJ. Promulgated: September 21, 2011

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

R E S O L U T I O N

BERSAMIN, J.: Under appeal is the decision promulgated on January 31, 2002 in CA- G.R. CV No. 61600,[1] which involved a dispute about the true location of the respective lots of the parties, with the respondents claiming that the petitioner had encroached on their lot but the latter denying the encroachment.

Antecedents Neighbors Regidor Pascual (Pascual) and Pedro Angeles (Angeles) were registered owners of adjacent parcels of land located in Cabanatuan City. Pascual owned Lot 4, Block 2 (Lot 4) of the consolidation-subdivision plan (LRC) Psd-951, a portion of the consolidation of Lots 1419-B-2B-3, 1419-B-2-B-4 and 1419-B-2-B-5, Psd- 9016, LGC (GLRO) Cadastral Record No. 94 covered by Transfer Certificate Title No. T-43707 of the Registry of Deeds of Nueva Ecija;[2] Angeles owned Lot 5, Block 2 (Lot 5) of the same consolidation-subdivision plan covered by TCT No. T-9459 of the Registry of Deeds of Nueva Ecija.[3] Each of them built a house on his respective lot, believing all the while that his respective lot was properly delineated. It was not until Metropolitan Bank and Trust Company (Metrobank), as the highest bidder in the foreclosure sale of the adjacent Lot 3, Block 2 (Lot 3), caused the relocation survey of Lot 3 that the geodetic engineer discovered that Pascuals house had encroached on Lot 3. As a consequence, Metrobank successfully ejected Pascual. In turn, Pascual caused the relocation survey of his own Lot 4 and discovered that Angeles house also encroached on his lot. Of the 318 square meters comprising Lot 4, Angeles occupied 252 square meters, leaving Pascual with only about 66 square meters. Pascual demanded rentals for the use of the encroached area of Lot 4 from Angeles, or the removal of Angeles house. Angeles refused the demand. Accordingly, Pascual sued Angeles for recovery of possession and damages in the Regional Trial Court (RTC) in Cabanatuan City.

In the course of the trial, Pascual presented Clarito Fajardo, the geodetic engineer who had conducted the relocation survey and had made the relocation plan of Lot 4.[4] Fajardo testified that Angeles house was erected on Lot 4. On the other hand, Angeles presented Juan Fernandez, the geodetic engineer who had prepared the sketch plan relied upon by Angeles to support his claim that there had been no encroachment.[5] However, Fernandez explained that he had performed only a table work, that is, he did not actually go to the site but based the sketch plan on the descriptions and bearings appearing on the TCTs of Lot 4, Lot 5 and Lot 6; and recommended the conduct of a relocation survey.[6] In its decision of November 3, 1998,[7] the RTC held that there was no dispute that Pascual and Angeles were the respective registered owners of Lot 4 and Lot 5; that what was disputed between them was the location of their respective lots; that Pascual proved Angeles encroachment on Lot 4 by preponderant evidence; and that Pascual was entitled to relief. The RTC thus disposed:

WHEREFORE, premises considered, judgment is rendered in favor of the plaintiff and against the defendant as follows:

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1) ordering the defendant or persons claiming right through

him to cause the removal of his house insofar as the same occupies the portion of Lot 4, Block 2 (TCT No. T-43707), of an area of 252 square meters, as particularly indicated in the Sketch Plan (Exhibit C-1); and

2) and without pronouncement to damages in both the

complainant and counterclaim.

With Costs. SO ORDERED.[8]

Angeles appealed to the CA. On January 31, 2002, the CA affirmed the RTC,[9] and held that as between the findings of the geodetic engineer (Fajardo) who had actually gone to the site and those of the other (Fernandez) who had based his findings on the TCTs of the owners of the three lots, those of the former should prevail. However, the CA, modifying the RTCs ruling, applied Article 448 of the Civil Code (which defined the rights of a builder, sower and planter in good faith). The decision decreed thus:[10]

WHEREFORE, the decision appealed from is MODIFIED. Plaintiffs-appellees are ordered to exercise within thirty (30) days from the finality of this decision their option to either buy the portion of defendant-appellants house on their Lot. No. 4, or to sell to defendant-appellant the portion of their land on which his house stands. If plaintiffs-appellees elect to sell the land or buy the improvement, the purchase price must be at the prevailing market price at the time of payment. If buying the improvement will render the defendant-appellants house useless, then plaintiffs-appellees should sell the encroached portion of their land to defendant-appellant. If plaintiffs-appellees choose to sell the land but defendant-appellant is unwilling or unable to buy, then the latter must vacate the subject portion and pay reasonable rent from the time plaintiffs-appellees made their choice up to the time they actually vacate the premises. But if the value of the land is considerably more than the value of the improvement, then defendant-appellant may elect to lease the land, in which case the parties shall agree upon the terms of the lease. Should they fail to agree on said terms, the court of origin is directed to fix the terms of the lease. From the moment plaintiffs-appellees shall have exercised their option, defendant-appellant shall pay reasonable monthly rent up to the time the parties agree on the terms of the lease or until the court fixes such terms. This is without prejudice to any future compromise which may be agreed upon by the parties. SO ORDERED.

Angeles expectedly sought reconsideration, but the CA denied his motion on February 13, 2003.

Issues Hence, Angeles appeals, assailing: (a) the credence the CA accorded to the testimony and relocation plan of Fajardo as opposed to the survey plan prepared by Fernandez; and (b) the options laid down by the CA, i.e., for Pascual either to buy the portion of Angeles house or to sell to Angeles the portion of his land occupied by Angeles were contrary to its finding of good faith.

Ruling The petition lacks merit.

I

The Court, not being a trier of facts, cannot review factual issues

Section 1, Rule 45 of the Rules of Court explicitly states that the petition for

review on certiorari shall raise only questions of law, which must be distinctly set forth. In appeal by certiorari, therefore, only questions of law may be raised, because the Supreme Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during the trial. The resolution of factual issues is the function of lower courts, whose findings thereon are received with respect and are binding on the Supreme Court subject to certain exceptions.[11] A question, to be one of law, must not involve an examination of the probative value of the evidence presented by the litigants or any of them. There is a question of law in a given case when the doubt or difference arises as to what the law is on certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or falsehood of alleged facts.[12] Whether certain items of evidence should be accorded probative value or weight, or should be rejected as feeble or spurious; or whether or not the proofs on one side or the other are clear and convincing and adequate to establish a proposition in issue; whether or not the body of proofs presented by a party, weighed and analyzed in relation to contrary evidence submitted by adverse party, may be said to be strong, clear and convincing; whether or not certain documents presented by one side should be accorded full faith and credit in the face of protests as to their spurious character by the other side; whether or not inconsistencies in the body of proofs of a party are of such gravity as to justify refusing to give said proofs weight all these are issues of fact. Questions like these are not reviewable by the Supreme Court whose review of cases decided by the CA is confined only to questions of law raised in the petition and therein distinctly set forth.[13]

Nonetheless, the Court has recognized several exceptions to the rule, including: (a) when the findings are grounded entirely on speculation, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts;

18

(e) when the findings of facts are conflicting; (f) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (g) when the findings are contrary to those of the trial court; (h) when the findings are conclusions without citation of specific evidence on which they are based; (i) when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondent; (j) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (k) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.[14] The circumstances of this case indicate that none of such exceptions is attendant herein. The credence given by the RTC to the testimony and relocation plan of Fajardo was conclusive upon this Court especially by virtue of the affirmance by the CA of the RTC. Resultantly, the fact of Angeles encroachment on Pascuals Lot 4 was proved by preponderant evidence. It is noteworthy to point out, too, that the argument of Angeles based on the indefeasibility and incontrovertibility of Torrens titles pursuant to Presidential Decree No. 1529 (The Property Registration Decree) is inapplicable considering that the ownership of Lot 4 and Lot 5 was not the issue. Nor were the metes and bounds of the lots as indicated in the respective TCTs being assailed, for the only issue concerned the exact and actual location of Lot 4 and Lot 5.

II Angeles was a builder in good faith

To be next determined is whether the CAs application of Article 448 of the Civil Code was correct and proper. Article 448 of the Civil Code provides thusly:

Article 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 provision contemplates a person building, or sowing, or planting in good faith on land owned by another. The law presupposes that the land and the building or plants are owned by different persons, like here. The RTC and CA found and declared Angeles to be a builder in good faith. We cannot veer away from their unanimous conclusion, which can easily be drawn from the fact that Angeles insists until now that he built his house entirely

on his own lot. Good faith consists in the belief of the builder that the land he is building on is his and in his ignorance of a defect or flaw in his title.[15] With the unassailable finding that Angeles house straddled the lot of Pascual, and that Angeles had built his house in good faith, Article 448 of the Civil Code, which spells out the rights and obligations of the owner of the land as well as of the builder, is unquestionably applicable. Consequently, the land being the principal and the building the accessory, preference is given to Pascual as the owner of the land to make the choice as between appropriating the building or obliging Angeles as the builder to pay the value of the land. Contrary to the insistence of Angeles, therefore, no inconsistency exists between the finding of good faith in his favor and the grant of the reliefs set forth in Article 448 of the Civil Code. WHEREFORE, the Court DENIES the petition for review on certiorari; and AFFIRMS the decision promulgated on January 31, 2002 by the Court of Appeals in C.A.-G.R. CV No. 61600. No pronouncement on costs of suit. SO ORDERED.

Republic of the Philippines

SUPREME COURT Manila

FIRST DIVISION G.R. No. 140528 December 7, 2011 MARIA TORBELA, represented by her heirs, namely: EULOGIO TOSINO, husband and children: CLARO, MAXIMINO, CORNELIO, OLIVIA and CALIXTA, all surnamed TOSINO, APOLONIA TOSINO VDA. DE RAMIREZ and JULITA TOSINO DEAN; PEDRO TORBELA, represented by his heirs, namely: JOSE and DIONISIO, both surnamed TORBELA; EUFROSINA TORBELA ROSARIO, represented by her heirs, namely: ESTEBAN T. ROSARIO, MANUEL T. ROSARIO, ROMULO T. ROSARIO and ANDREA ROSARIO-HADUCA; LEONILA TORBELA TAMIN; FERNANDO TORBELA, represented by his heirs, namely: SERGIO T. TORBELA, EUTROPIA T. VELASCO, PILAR T. ZULUETA, CANDIDO T. TORBELA, FLORENTINA T. TORBELA and PANTALEON T. TORBELA; DOLORES TORBELA TABLADA; LEONORA TORBELA AGUSTIN, represented by her heirs, namely: PATRICIO, SEGUNDO, CONSUELO and FELIX, all surnamed AGUSTIN; and SEVERINA TORBELA ILDEFONSO, Petitioners, vs. SPOUSES ANDRES T. ROSARIO and LENA DUQUE-ROSARIO and BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 140553 LENA DUQUE-ROSARIO, Petitioner, vs. BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondent.

D E C I S I O N LEONARDO-DE CASTRO, J.: Presently before the Court are two consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court, both assailing the Decision1 dated June 29, 1999 and Resolution2 dated October 22, 1999 of the Court of Appeals in CA-G.R. CV No. 39770.

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The petitioners in G.R. No. 140528 are siblings Maria Torbela,3 Pedro Torbela,4 Eufrosina Torbela Rosario,5Leonila Torbela Tamin, Fernando Torbela,6 Dolores Torbela Tablada, Leonora Torbela Agustin,7 and Severina Torbela Ildefonso (Torbela siblings). The petitioner in G.R. No. 140553 is Lena Duque-Rosario (Duque-Rosario), who was married to, but now legally separated from, Dr. Andres T. Rosario (Dr. Rosario). Dr. Rosario is the son of Eufrosina Torbela Rosario and the nephew of the other Torbela siblings. The controversy began with a parcel of land, with an area of 374 square meters, located in Urdaneta City, Pangasinan (Lot No. 356-A). It was originally part of a larger parcel of land, known as Lot No. 356 of the Cadastral Survey of Urdaneta, measuring 749 square meters, and covered by Original Certificate of Title (OCT) No. 16676,8in the name of Valeriano Semilla (Valeriano), married to Potenciana Acosta. Under unexplained circumstances, Valeriano gave Lot No. 356-A to his sister Marta Semilla, married to Eugenio Torbela (spouses Torbela). Upon the deaths of the spouses Torbela, Lot No. 356-A was adjudicated in equal shares among their children, the Torbela siblings, by virtue of a Deed of Extrajudicial Partition9 dated December 3, 1962. On December 12, 1964, the Torbela siblings executed a Deed of Absolute Quitclaim10 over Lot No. 356-A in favor of Dr. Rosario. According to the said Deed, the Torbela siblings "for and in consideration of the sum of NINE PESOS (P9.00) x x x transfer[red] and convey[ed] x x x unto the said Andres T. Rosario, that undivided portion of THREE HUNDRED SEVENTY-FOUR square meters of that parcel of land embraced in Original Certificate of Title No. 16676 of the land records of Pangasinan x x x."11 Four days later, on December 16, 1964, OCT No. 16676 in Valeriano’s name was partially cancelled as to Lot No. 356-A and TCT No. 5275112 was issued in Dr. Rosario’s name covering the said property. Another Deed of Absolute Quitclaim13 was subsequently executed on December 28, 1964, this time by Dr. Rosario, acknowledging that he only borrowed Lot No. 356-A from the Torbela siblings and was already returning the same to the latter for P1.00. The Deed stated: That for and in consideration of the sum of one peso (P1.00), Philippine Currency and the fact that I only borrowed the above described parcel of land from MARIA TORBELA, married to Eulogio Tosino, EUFROSINA TORBELA, married to Pedro Rosario, PEDRO TORBELA, married to Petra Pagador, LEONILA TORBELA, married to Fortunato Tamen, FERNANDO TORBELA, married to Victoriana Tablada, DOLORES TORBELA, widow, LEONORA TORBELA, married to Matias Agustin and SEVERINA TORBELA, married to Jorge Ildefonso, x x x by these presents do hereby cede, transfer and convey by way of this ABSOLUTE QUITCLAIM unto the said Maria, Eufrosina, Pedro, Leonila, Fernando, Dolores, Leonora and Severina, all surnamed Torbela the parcel of land described above.14 (Emphasis ours.) The aforequoted Deed was notarized, but was not immediately annotated on TCT No. 52751. Following the issuance of TCT No. 52751, Dr. Rosario obtained a loan from the Development Bank of the Philippines (DBP) on February 21, 1965 in the sum of P70,200.00, secured by a mortgage constituted on Lot No. 356-A. The mortgage was annotated on TCT No. 52751 on September 21, 1965 as Entry No. 243537.15 Dr. Rosario used the proceeds of the loan for the construction of improvements on Lot No. 356-A. On May 16, 1967, Cornelio T. Tosino (Cornelio) executed an Affidavit of Adverse Claim,16 on behalf of the Torbela siblings. Cornelio deposed in said Affidavit:

3. That ANDRES T. ROSARIO later quitclaimed his rights in favor of the former owners by virtue of a Deed of Absolute Quitclaim which he executed before

Notary Public Banaga, and entered in his Notarial Registry as Dec. No. 43; Page No. 9; Book No. I; Series of 1964; 4. That it is the desire of the parties, my aforestated kins, to register ownership over the above-described property or to perfect their title over the same but their Deed could not be registered because the registered owner now, ANDRES T. ROSARIO mortgaged the property with the DEVELOPMENT BANK OF THE PHILIPPINES, on September 21, 1965, and for which reason, the Title is still impounded and held by the said bank; 5. That pending payment of the obligation with the DEVELOPMENT BANK OF THE PHILIPPINES or redemption of the Title from said bank, I, CORNELIO T. TOSINO, in behalf of my mother MARIA TORBELA-TOSINO, and my Aunts EUFROSINA TORBELA, LEONILA TORBELA-TAMEN, DOLORES TORBELA, LEONORA TORBELA-AGUSTIN, SEVERINA TORBELA-ILDEFONSO, and my Uncles PEDRO TORBELA and FERNANDO, also surnamed TORBELA, I request the Register of Deeds of Pangasinan to annotate their adverse claim at the back of Transfer Certificate of Title No. 52751, based on the annexed document, Deed of Absolute Quitclaim by ANDRES T. ROSARIO, dated December 28, 1964, marked as Annex "A" and made a part of this Affidavit, and it is also requested that the DEVELOPMENT BANK OF THE PHILIPPINES be informed accordingly.17

The very next day, on May 17, 1967, the Torbela siblings had Cornelio’s Affidavit of Adverse Claim dated May 16, 1967 and Dr. Rosario’s Deed of Absolute Quitclaim dated December 28, 1964 annotated on TCT No. 52751 as Entry Nos. 27447118 and 274472,19 respectively. The construction of a four-storey building on Lot No. 356-A was eventually completed. The building was initially used as a hospital, but was later converted to a commercial building. Part of the building was leased to PT&T; and the rest to Mrs. Andrea Rosario-Haduca, Dr. Rosario’s sister, who operated the Rose Inn Hotel and Restaurant. Dr. Rosario was able to fully pay his loan from DBP. Under Entry No. 520197 on TCT No. 5275120 dated March 6, 1981, the mortgage appearing under Entry No. 243537 was cancelled per the Cancellation and Discharge of Mortgage executed by DBP in favor of Dr. Rosario and ratified before a notary public on July 11, 1980. In the meantime, Dr. Rosario acquired another loan from the Philippine National Bank (PNB) sometime in 1979-1981. Records do not reveal though the original amount of the loan from PNB, but the loan agreement was amended on March 5, 1981 and the loan amount was increased to P450,000.00. The loan was secured by mortgages constituted on the following properties: (1) Lot No. 356-A, covered by TCT No. 52751 in Dr. Rosario’s name; (2) Lot No. 4489, with an area of 1,862 square meters, located in Dagupan City, Pangasinan, covered by TCT No. 24832; and (3) Lot No. 5-F-8-C-2-B-2-A, with an area of 1,001 square meters, located in Nancayasan, Urdaneta, Pangasinan, covered by TCT No. 104189.21 The amended loan agreement and mortgage on Lot No. 356-A was annotated on TCT No. 52751 on March 6, 1981 as Entry No. 520099.22 Five days later, on March 11, 1981, another annotation, Entry No. 520469,23 was made on TCT No. 52751, canceling the adverse claim on Lot No. 356-A under Entry Nos. 274471-274472, on the basis of the Cancellation and Discharge of Mortgage executed by Dr. Rosario on March 5, 1981. Entry No. 520469 consisted of both stamped and handwritten portions, and exactly reads: Entry No. 520469. Cancellation of Adverse Claim executed by Andres Rosario in favor of same. The incumbrance/mortgage appearing under Entry No. 274471-72 is now

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cancelled as per Cancellation and Discharge of Mortgage Ratified before Notary Public Mauro G. Meris on March 5, 1981: Doc. No. 215; Page No. 44; Book No.1; Series Of 1981. Lingayen, Pangasinan, 3-11, 19981 [Signed: Pedro dela Cruz] Register of Deeds 24 On December 8, 1981, Dr. Rosario and his wife, Duque-Rosario (spouses Rosario), acquired a third loan in the amount of P1,200,000.00 from Banco Filipino Savings and Mortgage Bank (Banco Filipino). To secure said loan, the spouses Rosario again constituted mortgages on Lot No. 356-A, Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. The mortgage on Lot No. 356-A was annotated on TCT No. 52751 as Entry No. 53328325 on December 18, 1981. Since the construction of a two-storey commercial building on Lot No. 5-F-8-C-2-B-2-A was still incomplete, the loan value thereof as collateral was deducted from the approved loan amount. Thus, the spouses Rosario could only avail of the maximum loan amount of P830,064.00 from Banco Filipino. Because Banco Filipino paid the balance of Dr. Rosario’s loan from PNB, the mortgage on Lot No. 356-A in favor of PNB was cancelled per Entry No. 53347826 on TCT No. 52751 dated December 23, 1981. On February 13, 1986, the Torbela siblings filed before the Regional Trial Court (RTC) of Urdaneta, Pangasinan, a Complaint for recovery of ownership and possession of Lot No. 356-A, plus damages, against the spouses Rosario, which was docketed as Civil Case No. U-4359. On the same day, Entry Nos. 593493 and 593494 were made on TCT No. 52751 that read as follows: Entry No. 593494 – Complaint – Civil Case No. U-4359 (For: Recovery of Ownership and Possession and Damages. (Sup. Paper). Entry No. 593493 – Notice of Lis Pendens – The parcel of land described in this title is subject to Lis Pendens executed by Liliosa B. Rosario, CLAO, Trial Attorney dated February 13, 1986. Filed to TCT No. 52751 February 13, 1986-1986 February 13 – 3:30 p.m. (SGD.) PACIFICO M. BRAGANZA Register of Deeds27 The spouses Rosario afterwards failed to pay their loan from Banco Filipino. As of April 2, 1987, the spouses Rosario’s outstanding principal obligation and penalty charges amounted to P743,296.82 and P151,524.00, respectively.28 Banco Filipino extrajudicially foreclosed the mortgages on Lot No. 356-A, Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. During the public auction on April 2, 1987, Banco Filipino was the lone bidder for the three foreclosed properties for the price of P1,372,387.04. The Certificate of Sale29 dated April 2, 1987, in favor of Banco Filipino, was annotated on TCT No. 52751 on April 14, 1987 as Entry No. 610623.30 On December 9, 1987, the Torbela siblings filed before the RTC their Amended Complaint,31 impleading Banco Filipino as additional defendant in Civil Case No. U-4359 and praying that the spouses Rosario be ordered to redeem Lot No. 356-A from Banco Filipino. The spouses Rosario instituted before the RTC on March 4, 1988 a case for annulment of extrajudicial foreclosure and damages, with prayer for a writ of preliminary injunction and temporary restraining order, against Banco Filipino, the Provincial Ex Officio Sheriff and his Deputy, and the Register of Deeds of Pangasinan. The case was docketed as Civil Case No.

U-4667. Another notice of lis pendens was annotated on TCT No. 52751 on March 10, 1988 as Entry No. 627059, viz: Entry No. 627059 – Lis Pendens – Dr. Andres T. Rosario and Lena Duque Rosario, Plaintiff versus Banco Filipino, et. al. Civil Case No. U-4667 or Annulment of ExtraJudicial Foreclosure of Real Estate Mortgage – The parcel of land described in this title is subject to Notice of Lis Pendens subscribed and sworn to before Notary Public Mauro G. Meris, as Doc. No. 21; Page No. 5; Book 111; S-1988. March 7, 1988-1988 March 10, 1:00 p.m. (SGD.) RUFINO M. MORENO, SR. Register of Deeds32 The Torbela siblings intervened in Civil Case No. U-4667. Eventually, on October 17, 1990, the RTC issued an Order33 dismissing without prejudice Civil Case No. U-4667 due to the spouses Rosario’s failure to prosecute. Meanwhile, the Torbela siblings tried to redeem Lot No. 356-A from Banco Filipino, but their efforts were unsuccessful. Upon the expiration of the one-year redemption period in April 1988, the Certificate of Final Sale34and Affidavit of Consolidation35 covering all three foreclosed properties were executed on May 24, 1988 and May 25, 1988, respectively. On June 7, 1988, new certificates of title were issued in the name of Banco Filipino, particularly, TCT No. 165812 for Lot No. 5-F-8-C-2-B-2-A and TCT No. 165813 for Lot No. 356-A .36 The Torbela siblings thereafter filed before the RTC on August 29, 1988 a Complaint37 for annulment of the Certificate of Final Sale dated May 24, 1988, judicial cancelation of TCT No. 165813, and damages, against Banco Filipino, the Ex Officio Provincial Sheriff, and the Register of Deeds of Pangasinan, which was docketed as Civil Case No. U-4733. On June 19, 1991, Banco Filipino filed before the RTC of Urdaneta City a Petition for the issuance of a writ of possession. In said Petition, docketed as Pet. Case No. U-822, Banco Filipino prayed that a writ of possession be issued in its favor over Lot No. 5-F-8-C-2-B-2-A and Lot No. 356-A, plus the improvements thereon, and the spouses Rosario and other persons presently in possession of said properties be directed to abide by said writ. The RTC jointly heard Civil Case Nos. U-4359 and U-4733 and Pet. Case No. U-822. The Decision38 on these three cases was promulgated on January 15, 1992, the dispositive portion of which reads: WHEREFORE, judgment is rendered:

1. Declaring the real estate mortgage over Lot 356-A covered by TCT 52751 executed by Spouses Andres Rosario in favor of Banco Filipino, legal and valid; 2. Declaring the sheriff’s sale dated April 2, 1987 over Lot 356-A covered by TCT 52751 and subsequent final Deed of Sale dated May 14, 1988 over Lot 356-A covered by TCT No. 52751 legal and valid; 3. Declaring Banco Filipino the owner of Lot 356-A covered by TCT No. 52751 (now TCT 165813); 4. Banco Filipino is entitled to a Writ of Possession over Lot 356-A together with the improvements thereon (Rose Inn Building). The Branch Clerk of Court is hereby ordered to issue a writ of possession in favor of Banco Filipino; 5. [The Torbela siblings] are hereby ordered to render accounting to Banco Filipino the rental they received from tenants of Rose Inn Building from May 14, 1988; 6. [The Torbela siblings] are hereby ordered to pay Banco Filipino the sum of P20,000.00 as attorney’s fees;

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7. Banco Filipino is hereby ordered to give [the Torbela siblings] the right of first refusal over Lot 356-A. The Register of Deeds is hereby ordered to annotate the right of [the Torbela siblings] at the back of TCT No. 165813 after payment of the required fees; 8. Dr. Rosario and Lena Rosario are hereby ordered to reimburse [the Torbela siblings] the market value of Lot 356-A as of December, 1964 minus payments made by the former; 9. Dismissing the complaint of [the Torbela siblings] against Banco Filipino, Pedro Habon and Rufino Moreno in Civil Case No. U-4733; and against Banco Filipino in Civil Case No. U-4359.39

The RTC released an Amended Decision40 dated January 29, 1992, adding the following paragraph to the dispositive: Banco Filipino is entitled to a Writ of Possession over Lot-5-F-8-C-2-[B]-2-A of the subdivision plan (LRC) Psd-122471, covered by Transfer Certificate of Title 104189 of the Registry of Deeds of Pangasinan[.]41 The Torbela siblings and Dr. Rosario appealed the foregoing RTC judgment before the Court of Appeals. Their appeal was docketed as CA-G.R. CV No. 39770. In its Decision42 dated June 29, 1999, the Court of Appeals decreed: WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with modification. Items No. 6 and 7 of the appealed decision are DELETED. Item No. 8 is modified requiring [Dr. Rosario] to pay [the Torbela siblings] actual damages, in the amount of P1,200,000.00 with 6% per annum interest from finality of this decision until fully paid. [Dr. Rosario] is further ORDERED to pay [the Torbela siblings] the amount of P300,000.00 as moral damages; P200,000.00 as exemplary damages and P100,000.00 as attorney’s fees. Costs against [Dr. Rosario].43 The Court of Appeals, in a Resolution44 dated October 22, 1999, denied the separate Motions for Reconsideration of the Torbela siblings and Dr. Rosario. The Torbela siblings come before this Court via the Petition for Review in G.R. No. 140528, with the following assignment of errors: First Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE REGISTRATION OF THE DEED OF ABSOLUTE QUITCLAIM EXECUTED BY [DR. ANDRES T. ROSARIO] IN FAVOR OF THE [TORBELA SIBLINGS] DATED DECEMBER 28, 1964 AND THE REGISTRATION OF THE NOTICE OF ADVERSE CLAIM EXECUTED BY THE [TORBELA SIBLINGS], SERVE AS THE OPERATIVE ACT TO CONVEY OR AFFECT THE LAND AND IMPROVEMENTS THEREOF IN SO FAR AS THIRD PERSONS ARE CONCERNED. Second Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE SUBJECT PROPERTY COVERED BY T.C.T. NO. 52751 IS CLEAN AND FREE, DESPITE OF THE ANNOTATION OF ENCUMBRANCES OF THE NOTICE OF ADVERSE CLAIM AND THE DEED OF ABSOLUTE QUITCLAIM APPEARING AT THE BACK THEREOF AS ENTRY NOS. 274471 AND 274472, RESPECTIVELY. Third Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE NOTICE OF ADVERSE CLAIM OF THE [TORBELA SIBLINGS] UNDER ENTRY NO.

274471 WAS VALIDLY CANCELLED BY THE REGISTER OF DEEDS, IN THE ABSENCE OF A PETITION DULY FILED IN COURT FOR ITS CANCELLATION. Fourth Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RESPONDENT BANCO FILIPINO SAVINGS AND MORTGAGE BANK IS A MORTGAGEE IN GOOD FAITH. Fifth Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE FILING OF A CIVIL CASE NO. U-4359 ON DECEMBER 9, 1987, IMPLEADING RESPONDENT BANCO FILIPINO AS ADDITIONAL PARTY DEFENDANT, TOLL OR SUSPEND THE RUNNING OF THE ONE YEAR PERIOD OF REDEMPTION. Sixth Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE OWNERSHIP OVER THE SUBJECT PROPERTY WAS PREMATURELY CONSOLIDATED IN FAVOR OF RESPONDENT BANCO FILIPINO SAVINGS AND MORTGAGE BANK. Seventh Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE SUBJECT PROPERTY IS AT LEAST WORTH P1,200,000.00.45

The Torbela siblings ask of this Court: WHEREFORE, in the light of the foregoing considerations, the [Torbela siblings] most respectfully pray that the questioned DECISION promulgated on June 29, 1999 (Annex "A", Petition) and the RESOLUTION dated October 22, 1999 (Annex "B", Petition) be REVERSED and SET ASIDE, and/or further MODIFIED in favor of the [Torbela siblings], and another DECISION issue ordering, among other reliefs, the respondent Banco Filipino to reconvey back Lot No. 356-A, covered by T.C.T. No. 52751, in favor of the [Torbela siblings] who are the actual owners of the same. The [Torbela siblings] likewise pray for such other reliefs and further remedies as may be deemed just and equitable under the premises.46 Duque-Rosario, now legally separated from Dr. Rosario, avers in her Petition for Review in G.R. No. 140553 that Lot No. 4489 and Lot No. 5-F-8-C-2-B-2-A were registered in her name, and she was unlawfully deprived of ownership of said properties because of the following errors of the Court of Appeals:

A THE HON. COURT OF APPEALS PATENTLY ERRED IN NOT FINDING THAT THE PERIOD TO REDEEM THE PROPERTY HAS NOT COMMENCED, HENCE, THE CERTIFICATE OF SALE, THE CONSOLIDATION OF OWNERSHIP BY [BANCO FILIPINO], ARE NULL AND VOID.

B THE COURT OF APPEALS PATENTLY ERRED IN REFUSING TO RULE THAT THE FILING OF THE COMPLAINT BEFORE THE COURT A QUO BY THE [TORBELA SIBLINGS] HAD ALREADY BEEN PRESCRIBED.47

Duque-Rosario prays that the appealed decision of the Court of Appeals be reversed and set aside, and that Lot No. 4489 and Lot No. 5-F-8-C-2-B-2-A be freed from all obligations and encumbrances and returned to her. Review of findings of fact by the RTC and the Court of Appeals warranted.

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A disquisition of the issues raised and/or errors assigned in the Petitions at bar unavoidably requires a re-evaluation of the facts and evidence presented by the parties in the court a quo. In Republic v. Heirs of Julia Ramos,48 the Court summed up the rules governing the power of review of the Court: Ordinarily, this Court will not review, much less reverse, the factual findings of the Court of Appeals, especially where such findings coincide with those of the trial court.http://sc.judiciary.gov.ph/jurisprudence/2010/february2010/169481.htm - _ftn The findings of facts of the Court of Appeals are, as a general rule, conclusive and binding upon this Court, since this Court is not a trier of facts and does not routinely undertake the re-examination of the evidence presented by the contending parties during the trial of the case. The above rule, however, is subject to a number of exceptions, such as (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when the finding is grounded entirely on speculations, surmises, or conjectures; (4) when the judgment of the Court of Appeals is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both parties; (7) when the findings of the Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.49 As the succeeding discussion will bear out, the first, fourth, and ninth exceptions are extant in these case. Barangay conciliation was not a pre-requisite to the institution of Civil Case No. U-4359. Dr. Rosario contends that Civil Case No. U-4359, the Complaint of the Torbela siblings for recovery of ownership and possession of Lot No. 356-A, plus damages, should have been dismissed by the RTC because of the failure of the Torbela siblings to comply with the prior requirement of submitting the dispute to barangay conciliation. The Torbela siblings instituted Civil Case No. U-4359 on February 13, 1986, when Presidential Decree No. 1508, Establishing a System of Amicably Settling Disputes at the Barangay Level, was still in effect.50 Pertinent provisions of said issuance read: Section 2. Subject matters for amicable settlement. The Lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except:

1. Where one party is the government, or any subdivision or instrumentality thereof; 2. Where one party is a public officer or employee, and the dispute relates to the performance of his official functions; 3. Offenses punishable by imprisonment exceeding 30 days, or a fine exceeding P200.00; 4. Offenses where there is no private offended party; 5. Such other classes of disputes which the Prime Minister may in the interest of justice determine upon recommendation of the Minister of Justice and the Minister of Local Government.

Section 3. Venue. Disputes between or among persons actually residing in the same barangay shall be brought for amicable settlement before the Lupon of said barangay. Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complainant. However, all disputes which involved real property or any interest therein shall be brought in the barangay where the real property or any part thereof is situated. The Lupon shall have no authority over disputes:

1. involving parties who actually reside in barangays of different cities or municipalities, except where such barangays adjoin each other; and 2. involving real property located in different municipalities.

x x x x Section 6. Conciliation, pre-condition to filing of complaint. – No complaint, petition, action or proceeding involving any matter within the authority of the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any other government office for adjudication unless there has been a confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement has been repudiated. x x x. (Emphases supplied.) The Court gave the following elucidation on the jurisdiction of the Lupong Tagapayapa in Tavora v. Hon. Veloso51: The foregoing provisions are quite clear. Section 2 specifies the conditions under which the Lupon of a barangay "shall have authority" to bring together the disputants for amicable settlement of their dispute: The parties must be "actually residing in the same city or municipality." At the same time, Section 3 — while reiterating that the disputants must be "actually residing in the same barangay" or in "different barangays" within the same city or municipality — unequivocably declares that the Lupon shall have "no authority" over disputes "involving parties who actually reside in barangays of different cities or municipalities," except where such barangays adjoin each other. Thus, by express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over disputes where the parties are not actual residents of the same city or municipality, except where the barangays in which they actually reside adjoin each other. It is true that immediately after specifying the barangay whose Lupon shall take cognizance of a given dispute, Sec. 3 of PD 1508 adds: "However, all disputes which involve real property or any interest therein shall be brought in the barangay where the real property or any part thereof is situated." Actually, however, this added sentence is just an ordinary proviso and should operate as such. The operation of a proviso, as a rule, should be limited to its normal function, which is to restrict or vary the operation of the principal clause, rather than expand its scope, in the absence of a clear indication to the contrary. "The natural and appropriate office of a proviso is . . . to except something from the enacting clause; to limit, restrict, or qualify the statute in whole or in part; or to exclude from the scope of the statute that which otherwise would be within its terms." (73 Am Jur 2d 467.) Therefore, the quoted proviso should simply be deemed to restrict or vary the rule on venue prescribed in the principal clauses of the first paragraph of Section 3, thus: Although venue is generally determined by the residence of the parties, disputes involving real

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property shall be brought in the barangay where the real property or any part thereof is situated, notwithstanding that the parties reside elsewhere within the same city/municipality.52 (Emphases supplied.) The original parties in Civil Case No. U-4359 (the Torbela siblings and the spouses Rosario) do not reside in the same barangay, or in different barangays within the same city or municipality, or in different barangays of different cities or municipalities but are adjoining each other. Some of them reside outside Pangasinan and even outside of the country altogether. The Torbela siblings reside separately in Barangay Macalong, Urdaneta, Pangasinan; Barangay Consolacion, Urdaneta, Pangasinan; Pangil, Laguna; Chicago, United States of America; and Canada. The spouses Rosario are residents of Calle Garcia, Poblacion, Urdaneta, Pangasinan. Resultantly, the Lupon had no jurisdiction over the dispute and barangay conciliation was not a pre-condition for the filing of Civil Case No. U-4359. The Court now looks into the merits of Civil Case No. U-4359. There was an express trust between the Torbela siblings and Dr. Rosario. There is no dispute that the Torbela sibling inherited the title to Lot No. 356-A from their parents, the Torbela spouses, who, in turn, acquired the same from the first registered owner of Lot No. 356-A, Valeriano. Indeed, the Torbela siblings executed a Deed of Absolute Quitclaim on December 12, 1964 in which they transferred and conveyed Lot No. 356-A to Dr. Rosario for the consideration of P9.00. However, the Torbela siblings explained that they only executed the Deed as an accommodation so that Dr. Rosario could have Lot No. 356-A registered in his name and use said property to secure a loan from DBP, the proceeds of which would be used for building a hospital on Lot No. 356-A – a claim supported by testimonial and documentary evidence, and borne out by the sequence of events immediately following the execution by the Torbela siblings of said Deed. On December 16, 1964, TCT No. 52751, covering Lot No. 356-A, was already issued in Dr. Rosario’s name. On December 28, 1964, Dr. Rosario executed his own Deed of Absolute Quitclaim, in which he expressly acknowledged that he "only borrowed" Lot No. 356-A and was transferring and conveying the same back to the Torbela siblings for the consideration of P1.00. On February 21, 1965, Dr. Rosario’s loan in the amount ofP70,200.00, secured by a mortgage on Lot No. 356-A, was approved by DBP. Soon thereafter, construction of a hospital building started on Lot No. 356-A. Among the notable evidence presented by the Torbela siblings is the testimony of Atty. Lorenza Alcantara (Atty. Alcantara), who had no apparent personal interest in the present case. Atty. Alcantara, when she was still a boarder at the house of Eufrosina Torbela Rosario (Dr. Rosario’s mother), was consulted by the Torbela siblings as regards the extrajudicial partition of Lot No. 356-A. She also witnessed the execution of the two Deeds of Absolute Quitclaim by the Torbela siblings and Dr. Rosario. In contrast, Dr. Rosario presented TCT No. 52751, issued in his name, to prove his purported title to Lot No. 356-A. In Lee Tek Sheng v. Court of Appeals,53 the Court made a clear distinction between title and the certificate of title: The certificate referred to is that document issued by the Register of Deeds known as the Transfer Certificate of Title (TCT). By title, the law refers to ownership which is represented by that document. Petitioner apparently confuses certificate with title. Placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title. The TCT is only the best proof of ownership of a piece of land. Besides, the certificate cannot always be considered as conclusive evidence of ownership. Mere issuance of the

certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate or that the registrant may only be a trustee or that other parties may have acquired interest subsequent to the issuance of the certificate of title. To repeat, registration is not the equivalent of title, but is only the best evidence thereof. Title as a concept of ownership should not be confused with the certificate of title as evidence of such ownership although both are interchangeably used. x x x.54 (Emphases supplied.) Registration does not vest title; it is merely the evidence of such title. Land registration laws do not give the holder any better title than what he actually has.55 Consequently, Dr. Rosario must still prove herein his acquisition of title to Lot No. 356-A, apart from his submission of TCT No. 52751 in his name. Dr. Rosario testified that he obtained Lot No. 356-A after paying the Torbela siblings P25,000.00, pursuant to a verbal agreement with the latter. The Court though observes that Dr. Rosario’s testimony on the execution and existence of the verbal agreement with the Torbela siblings lacks significant details (such as the names of the parties present, dates, places, etc.) and is not corroborated by independent evidence. In addition, Dr. Rosario acknowledged the execution of the two Deeds of Absolute Quitclaim dated December 12, 1964 and December 28, 1964, even affirming his own signature on the latter Deed. The Parol Evidence Rule provides that when the terms of the agreement have been reduced into 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.56 Dr. Rosario may not modify, explain, or add to the terms in the two written Deeds of Absolute Quitclaim since he did not put in issue in his pleadings (1) an intrinsic ambiguity, mistake, or imperfection in the Deeds; (2) failure of the Deeds to express the true intent and the agreement of the parties thereto; (3) the validity of the Deeds; or (4) the existence of other terms agreed to by the Torbela siblings and Dr. Rosario after the execution of the Deeds.57 Even if the Court considers Dr. Rosario’s testimony on his alleged verbal agreement with the Torbela siblings, the Court finds the same unsatisfactory. Dr. Rosario averred that the two Deeds were executed only because he was "planning to secure loan from the Development Bank of the Philippines and Philippine National Bank and the bank needed absolute quitclaim[.]"58 While Dr. Rosario’s explanation makes sense for the first Deed of Absolute Quitclaim dated December 12, 1964 executed by the Torbela siblings (which transferred Lot No. 356-A to Dr. Rosario for P9.00.00), the same could not be said for the second Deed of Absolute Quitclaim dated December 28, 1964 executed by Dr. Rosario. In fact, Dr. Rosario’s Deed of Absolute Quitclaim (in which he admitted that he only borrowed Lot No. 356-A and was transferring the same to the Torbela siblings for P1.00.00) would actually work against the approval of Dr. Rosario’s loan by the banks. Since Dr. Rosario’s Deed of Absolute Quitclaim dated December 28, 1964 is a declaration against his self-interest, it must be taken as favoring the truthfulness of the contents of said Deed.59 It can also be said that Dr. Rosario is estopped from claiming or asserting ownership over Lot No. 356-A based on his Deed of Absolute Quitclaim dated December 28, 1964. Dr. Rosario's admission in the said Deed that he merely borrowed Lot No. 356-A is deemed conclusive upon him. Under Article 1431 of the Civil Code, "[t]hrough estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon."60 That admission cannot

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now be denied by Dr. Rosario as against the Torbela siblings, the latter having relied upon his representation. Considering the foregoing, the Court agrees with the RTC and the Court of Appeals that Dr. Rosario only holds Lot No. 356-A in trust for the Torbela siblings. Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. Trust relations between parties may either be express or implied. An express trust is created by the intention of the trustor or of the parties, while an implied trust comes into being by operation of law.61 Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will, or by words either expressly or impliedly evincing an intention to create a trust. Under Article 1444 of the Civil Code, "[n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended."62 It is possible to create a trust without using the word "trust" or "trustee." Conversely, the mere fact that these words are used does not necessarily indicate an intention to create a trust. The question in each case is whether the trustor manifested an intention to create the kind of relationship which to lawyers is known as trust. It is immaterial whether or not he knows that the relationship which he intends to create is called a trust, and whether or not he knows the precise characteristics of the relationship which is called a trust.63 In Tamayo v. Callejo,64 the Court recognized that a trust may have a constructive or implied nature in the beginning, but the registered owner’s subsequent express acknowledgement in a public document of a previous sale of the property to another party, had the effect of imparting to the aforementioned trust the nature of an express trust. The same situation exists in this case. When Dr. Rosario was able to register Lot No. 356-A in his name under TCT No. 52751 on December 16, 1964, an implied trust was initially established between him and the Torbela siblings under Article 1451 of the Civil Code, which provides: ART. 1451. 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. Dr. Rosario’s execution of the Deed of Absolute Quitclaim on December 28, 1964, containing his express admission that he only borrowed Lot No. 356-A from the Torbela siblings, eventually transformed the nature of the trust to an express one. The express trust continued despite Dr. Rosario stating in his Deed of Absolute Quitclaim that he was already returning Lot No. 356-A to the Torbela siblings as Lot No. 356-A remained registered in Dr. Rosario’s name under TCT No. 52751 and Dr. Rosario kept possession of said property, together with the improvements thereon. The right of the Torbela siblings to recover Lot No. 356-A has not yet prescribed. The Court extensively discussed the prescriptive period for express trusts in the Heirs of Maximo Labanon v. Heirs of Constancio Labanon,65 to wit: On the issue of prescription, we had the opportunity to rule in Bueno v. Reyes that unrepudiated written express trusts are imprescriptible: "While there are some decisions which hold that an action upon a trust is imprescriptible, without distinguishing between express and implied trusts, the better rule, as laid down by this Court in other decisions, is that prescription does supervene where the trust is merely an implied one. The reason has been expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc. vs. Magdangal, 4 SCRA 84, 88, as follows:

Under Section 40 of the old Code of Civil Procedure, all actions for recovery of real property prescribed in 10 years, excepting only actions based on continuing or subsisting trusts that were considered by section 38 as imprescriptible. As held in the case of Diaz v. Gorricho, L-11229, March 29, 1958, however, the continuing or subsisting trusts contemplated in section 38 of the Code of Civil Procedure referred only to express unrepudiated trusts, and did not include constructive trusts (that are imposed by law) where no fiduciary relation exists and the trustee does not recognize the trust at all." This principle was amplified in Escay v. Court of Appeals this way: "Express trusts prescribe 10 years from the repudiation of the trust (Manuel Diaz, et al. vs. Carmen Gorricho et al., 54 O.G. p. 8429, Sec. 40, Code of Civil Procedure)." In the more recent case of Secuya v. De Selma, we again ruled that the prescriptive period for the enforcement of an express trust of ten (10) years starts upon the repudiation of the trust by the trustee.66 To apply the 10-year prescriptive period, which would bar a beneficiary’s action to recover in an express trust, the repudiation of the trust must be proven by clear and convincing evidence and made known to the beneficiary.67The express trust disables the trustee from acquiring for his own benefit the property committed to his management or custody, at least while he does not openly repudiate the trust, and makes such repudiation known to the beneficiary or cestui que trust. For this reason, the old Code of Civil Procedure (Act 190) declared that the rules on adverse possession do not apply to "continuing and subsisting" (i.e., unrepudiated) trusts. In an express trust, the delay of the beneficiary is directly attributable to the trustee who undertakes to hold the property for the former, or who is linked to the beneficiary by confidential or fiduciary relations. The trustee's possession is, therefore, not adverse to the beneficiary, until and unless the latter is made aware that the trust has been repudiated.68 Dr. Rosario argues that he is deemed to have repudiated the trust on December 16, 1964, when he registered Lot No. 356-A in his name under TCT No. 52751, so when on February 13, 1986, the Torbela siblings instituted before the RTC Civil Case No. U-4359, for the recovery of ownership and possession of Lot No. 356-A from the spouses Rosario, over 21 years had passed. Civil Case No. U-4359 was already barred by prescription, as well as laches. The Court already rejected a similar argument in Ringor v. Ringor69 for the following reasons: A trustee who obtains a Torrens title over a property held in trust for him by another cannot repudiate the trust by relying on the registration. A Torrens Certificate of Title in Jose’s name did not vest ownership of the land upon him. The Torrens system 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. The Torrens system was not intended to foment betrayal in the performance of a trust. It does not permit one to enrich himself at the expense of another. Where one does not have a rightful claim to the property, the Torrens system of registration can confirm or record nothing. Petitioners cannot rely on the registration of the lands in Jose’s name nor in the name of the Heirs of Jose M. Ringor, Inc., for the wrong result they seek. For Jose could not repudiate a trust by relying on a Torrens title he held in trust for his co-heirs. The beneficiaries are entitled to enforce the trust, notwithstanding the irrevocability of the Torrens title. The intended trust must be sustained.70 (Emphasis supplied.) In the more recent case of Heirs of Tranquilino Labiste v. Heirs of Jose Labiste,71 the Court refused to apply prescription and laches and reiterated that:

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[P]rescription and laches will run only from the time the express trust is repudiated. The Court has held that for acquisitive prescription to bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust it must be shown that: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence thereon is clear and conclusive. Respondents cannot rely on the fact that the Torrens title was issued in the name of Epifanio and the other heirs of Jose. It has been held that a trustee who obtains a Torrens title over property held in trust by him for another cannot repudiate the trust by relying on the registration. The rule requires a clear repudiation of the trust duly communicated to the beneficiary. The only act that can be construed as repudiation was when respondents filed the petition for reconstitution in October 1993. And since petitioners filed their complaint in January 1995, their cause of action has not yet prescribed, laches cannot be attributed to them.72 (Emphasis supplied.) It is clear that under the foregoing jurisprudence, the registration of Lot No. 356-A by Dr. Rosario in his name under TCT No. 52751 on December 16, 1964 is not the repudiation that would have caused the 10-year prescriptive period for the enforcement of an express trust to run. The Court of Appeals held that Dr. Rosario repudiated the express trust when he acquired another loan from PNB and constituted a second mortgage on Lot No. 356-A sometime in 1979, which, unlike the first mortgage to DBP in 1965, was without the knowledge and/or consent of the Torbela siblings. The Court only concurs in part with the Court of Appeals on this matter. For repudiation of an express trust to be effective, the unequivocal act of repudiation had to be made known to the Torbela siblings as the cestuis que trust and must be proven by clear and conclusive evidence. A scrutiny of TCT No. 52751 reveals the following inscription: Entry No. 520099 Amendment of the mortgage in favor of PNB inscribed under Entry No. 490658 in the sense that the consideration thereof has been increased to PHILIPPINE PESOS Four Hundred Fifty Thousand Pesos only (P450,000.00) and to secure any and all negotiations with PNB, whether contracted before, during or after the date of this instrument, acknowledged before Notary Public of Pangasinan Alejo M. Dato as Doc. No. 198, Page No. 41, Book No. 11, Series of 1985. Date of Instrument March 5, 1981 Date of Inscription March 6, 198173 Although according to Entry No. 520099, the original loan and mortgage agreement of Lot No. 356-A between Dr. Rosario and PNB was previously inscribed as Entry No. 490658, Entry No. 490658 does not actually appear on TCT No. 52751 and, thus, it cannot be used as the reckoning date for the start of the prescriptive period. The Torbela siblings can only be charged with knowledge of the mortgage of Lot No. 356-A to PNB on March 6, 1981 when the amended loan and mortgage agreement was registered on TCT No. 52751 as Entry No. 520099. Entry No. 520099 is constructive notice to the whole world74 that Lot No. 356-A was mortgaged by Dr. Rosario to PNB as security for a loan, the amount of which was increased to P450,000.00. Hence, Dr. Rosario is deemed to have effectively repudiated the express trust between him and the Torbela siblings on March 6, 1981, on which day, the prescriptive period for the enforcement of the express trust by the Torbela siblings began to run.

From March 6, 1981, when the amended loan and mortgage agreement was registered on TCT No. 52751, to February 13, 1986, when the Torbela siblings instituted before the RTC Civil Case No. U-4359 against the spouses Rosario, only about five years had passed. The Torbela siblings were able to institute Civil Case No. U-4359 well before the lapse of the 10-year prescriptive period for the enforcement of their express trust with Dr. Rosario. Civil Case No. U-4359 is likewise not barred by laches. 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 a presumption that the party entitled to assert it either has abandoned it or declined to assert it. As the Court explained in the preceding paragraphs, the Torbela siblings instituted Civil Case No. U-4359 five years after Dr. Rosario’s repudiation of the express trust, still within the 10-year prescriptive period for enforcement of such trusts. This does not constitute an unreasonable delay in asserting one's right. A delay within the prescriptive period is sanctioned by law and is not considered to be a delay that would bar relief. Laches apply only in the absence of a statutory prescriptive period.75 Banco Filipino is not a mortgagee and buyer in good faith. Having determined that the Torbela siblings are the true owners and Dr. Rosario merely the trustee of Lot No. 356-A, the Court is next faced with the issue of whether or not the Torbela siblings may still recover Lot No. 356-A considering that Dr. Rosario had already mortgaged Lot No. 356-A to Banco Filipino, and upon Dr. Rosario’s default on his loan obligations, Banco Filipino foreclosed the mortgage, acquired Lot No. 356-A as the highest bidder at the foreclosure sale, and consolidated title in its name under TCT No. 165813. The resolution of this issue depends on the answer to the question of whether or not Banco Filipino was a mortgagee in good faith. Under Article 2085 of the Civil Code, one of the essential requisites of the contract of mortgage is that the mortgagor should be the absolute owner of the property to be mortgaged; otherwise, the mortgage is considered null and void. However, an exception to this rule is the doctrine of "mortgagee in good faith." Under this doctrine, even if the mortgagor is not the owner of the mortgaged property, the mortgage contract and any foreclosure sale arising therefrom are given effect by reason of public policy. This principle is based on the rule that all persons dealing with property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. This is the same rule that underlies the principle of "innocent purchasers for value." The prevailing jurisprudence is that a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor to the property given as security and in the absence of any sign that might arouse suspicion, has no obligation to undertake further investigation. Hence, even if the mortgagor is not the rightful owner of, or does not have a valid title to, the mortgaged property, the mortgagee in good faith is, nonetheless, entitled to protection.76 On one hand, the Torbela siblings aver that Banco Filipino is not a mortgagee in good faith because as early as May 17, 1967, they had already annotated Cornelio’s Adverse Claim dated May 16, 1967 and Dr. Rosario’s Deed of Absolute Quitclaim dated December 28, 1964 on TCT No. 52751 as Entry Nos. 274471-274472, respectively. On the other hand, Banco Filipino asseverates that it is a mortgagee in good faith because per Section 70 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, the notice of adverse claim, registered on May 17, 1967 by the Torbela siblings under Entry Nos. 274471-274472 on TCT No. 52751, already lapsed after

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30 days or on June 16, 1967. Additionally, there was an express cancellation of Entry Nos. 274471-274472 by Entry No. 520469 dated March 11, 1981. So when Banco Filipino approved Dr. Rosario’s loan forP1,200,000.00 and constituted a mortgage on Lot No. 356-A (together with two other properties) on December 8, 1981, the only other encumbrance on TCT No. 52751 was Entry No. 520099 dated March 6, 1981, i.e., the amended loan and mortgage agreement between Dr. Rosario and PNB (which was eventually cancelled after it was paid off with part of the proceeds from Dr. Rosario’s loan from Banco Filipino). Hence, Banco Filipino was not aware that the Torbela siblings’ adverse claim on Lot No. 356-A still subsisted. The Court finds that Banco Filipino is not a mortgagee in good faith. Entry Nos. 274471-274472 were not validly cancelled, and the improper cancellation should have been apparent to Banco Filipino and aroused suspicion in said bank of some defect in Dr. Rosario’s title. The purpose of annotating the adverse claim on the title of the disputed land is to apprise third persons that there is a controversy over the ownership of the land and to preserve and protect the right of the adverse claimant during the pendency of the controversy. It is a notice to third persons that any transaction regarding the disputed land is subject to the outcome of the dispute.77 Adverse claims were previously governed by Section 110 of Act No. 496, otherwise known as the Land Registration Act, quoted in full below:

ADVERSE CLAIM SEC. 110. Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Act for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimant’s residence, and designate a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be cancelled. If in any case the court after notice and hearing shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant double or treble costs in its discretion. Construing the aforequoted provision, the Court stressed in Ty Sin Tei v. Lee Dy Piao78 that "[t]he validity or efficaciousness of the [adverse] claim x x x may only be determined by the Court upon petition by an interested party, in which event, the Court shall order the immediate hearing thereof and make the proper adjudication as justice and equity may warrant. And it is ONLY when such claim is found unmeritorious that the registration thereof may be cancelled." The Court likewise pointed out in the same case that while a notice of lis pendens may be cancelled in a number of ways, "the same is not true in a registered adverse claim, for it may be cancelled only in one instance, i.e., after the claim is adjudged invalid or unmeritorious by the Court x x x;" and "if any of the registrations should be considered unnecessary or superfluous, it would be the notice of lis pendens and not the annotation of the adverse claim which is more permanent and cannot be cancelled without adequate hearing and proper disposition of the claim."

With the enactment of the Property Registration Decree on June 11, 1978, Section 70 thereof now applies to adverse claims: SEC. 70. Adverse claim. – Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registrations, may, if no other provision is made in this Decree for registering the same, make a statement in writing setting forth fully his alleged right, or interest, and how or under whom acquired, a reference to the number of the certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimant’s residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant. Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in any case, the court, after notice and hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. (Emphases supplied.) In Sajonas v. Court of Appeals,79 the Court squarely interpreted Section 70 of the Property Registration Decree, particularly, the new 30-day period not previously found in Section 110 of the Land Registration Act, thus: In construing the law aforesaid, care should be taken that every part thereof be given effect and a construction that could render a provision inoperative should be avoided, and inconsistent provisions should be reconciled whenever possible as parts of a harmonious whole. For taken in solitude, a word or phrase might easily convey a meaning quite different from the one actually intended and evident when a word or phrase is considered with those with which it is associated. In ascertaining the period of effectivity of an inscription of adverse claim, we must read the law in its entirety. Sentence three, paragraph two of Section 70 of P.D. 1529 provides: "The adverse claim shall be effective for a period of thirty days from the date of registration." At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days. But the above provision cannot and should not be treated separately, but should be read in relation to the sentence following, which reads: "After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest." If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse of thirty days, then it would not have been necessary to include the foregoing caveat to clarify and complete the rule. For then, no adverse claim need be cancelled. If it has been automatically terminated by mere lapse of time, the law would not have required the party in interest to do a useless act.

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A statute's clauses and phrases must not be taken separately, but in its relation to the statute's totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws. Unless clearly repugnant, provisions of statutes must be reconciled. The printed pages of the published Act, its history, origin, and its purposes may be examined by the courts in their construction. x x x. x x x x Construing the provision as a whole would reconcile the apparent inconsistency between the portions of the law such that the provision on cancellation of adverse claim by verified petition would serve to qualify the provision on the effectivity period. The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien upon the property. For if the adverse claim has already ceased to be effective upon the lapse of said period, its cancellation is no longer necessary and the process of cancellation would be a useless ceremony. It should be noted that the law employs the phrase "may be cancelled," which obviously indicates, as inherent in its decision making power, that the court may or may not order the cancellation of an adverse claim, notwithstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of registration. The court cannot be bound by such period as it would be inconsistent with the very authority vested in it. A fortiori, the limitation on the period of effectivity is immaterial in determining the validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing. It will therefore depend upon the evidence at a proper hearing for the court to determine whether it will order the cancellation of the adverse claim or not. To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third parties dealing with said property that someone is claiming an interest or the same or a better right than the registered owner thereof. The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim. This is in line with the provision immediately following: "Provided, however, that after cancellation, no second adverse claim shall be registered by the same claimant." Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be precluded from registering a second adverse claim based on the same ground. It was held that "validity or efficaciousness of the claim may only be determined by the Court upon petition by an interested party, in which event, the Court shall order the immediate hearing thereof and make the proper adjudication as justice and equity may warrant. And it is only when such claim is found unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest of the adverse claimant and giving notice and warning to third parties."80 (Emphases supplied.)

Whether under Section 110 of the Land Registration Act or Section 70 of the Property Registration Decree, notice of adverse claim can only be cancelled after a party in interest files a petition for cancellation before the RTC wherein the property is located, and the RTC conducts a hearing and determines the said claim to be invalid or unmeritorious. No petition for cancellation has been filed and no hearing has been conducted herein to determine the validity or merit of the adverse claim of the Torbela siblings. Entry No. 520469 cancelled the adverse claim of the Torbela siblings, annotated as Entry Nos. 274471-774472, upon the presentation by Dr. Rosario of a mere Cancellation and Discharge of Mortgage. Regardless of whether or not the Register of Deeds should have inscribed Entry No. 520469 on TCT No. 52751, Banco Filipino could not invoke said inscription in support of its claim of good faith. There were several things amiss in Entry No. 520469 which should have already aroused suspicions in Banco Filipino, and compelled the bank to look beyond TCT No. 52751 and inquire into Dr. Rosario’s title. First, Entry No. 520469 does not mention any court order as basis for the cancellation of the adverse claim. Second, the adverse claim was not a mortgage which could be cancelled with Dr. Rosario’s Cancellation and Discharge of Mortgage. And third, the adverse claim was against Dr. Rosario, yet it was cancelled based on a document also executed by Dr. Rosario. It is a well-settled rule that a purchaser or mortgagee 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 or mortgagor. 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 the vendor's or mortgagor's title, will not make him an innocent purchaser or mortgagee for value, if it 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 the measure of precaution which may be required of a prudent man in a like situation.81 While the defective cancellation of Entry Nos. 274471-274472 by Entry No. 520469 might not be evident to a private individual, the same should have been apparent to Banco Filipino. Banco Filipino is not an ordinary mortgagee, but is a mortgagee-bank, whose business is impressed with public interest. In fact, in one case, 82 the Court explicitly declared that the rule that persons dealing with registered lands can rely solely on the certificate of title does not apply to banks. In another case,83 the Court adjudged that unlike private individuals, a bank is expected to exercise greater care and prudence in its dealings, including those involving registered lands. A banking institution is expected to exercise due diligence before entering into a mortgage contract. The ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of its operations. Banco Filipino cannot be deemed a mortgagee in good faith, much less a purchaser in good faith at the foreclosure sale of Lot No. 356-A. Hence, the right of the Torbela siblings over Lot No. 356-A is superior over that of Banco Filipino; and as the true owners of Lot No. 356-A, the Torbela siblings are entitled to a reconveyance of said property even from Banco Filipino. Nonetheless, the failure of Banco Filipino to comply with the due diligence requirement was not the result of a dishonest purpose, some moral obliquity, or breach of a known duty for some interest or ill will that partakes of fraud that would justify damages.84 Given the reconveyance of Lot No. 356-A to the Torbela siblings, there is no more need to address issues concerning redemption, annulment of the foreclosure sale and certificate of

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sale (subject matter of Civil Case No. U-4733), or issuance of a writ of possession in favor of Banco Filipino (subject matter of Pet. Case No. U-822) insofar as Lot No. 356-A is concerned. Such would only be superfluous. Banco Filipino, however, is not left without any recourse should the foreclosure and sale of the two other mortgaged properties be insufficient to cover Dr. Rosario’s loan, for the bank may still bring a proper suit against Dr. Rosario to collect the unpaid balance. The rules on accession shall govern the improvements on Lot No. 356-A and the rents thereof. The accessory follows the principal. The right of accession is recognized under Article 440 of the Civil Code which states that "[t]he ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially." There is no question that Dr. Rosario is the builder of the improvements on Lot No. 356-A. The Torbela siblings themselves alleged that they allowed Dr. Rosario to register Lot No. 356-A in his name so he could obtain a loan from DBP, using said parcel of land as security; and with the proceeds of the loan, Dr. Rosario had a building constructed on Lot No. 356-A, initially used as a hospital, and then later for other commercial purposes. Dr. Rosario supervised the construction of the building, which began in 1965; fully liquidated the loan from DBP; and maintained and administered the building, as well as collected the rental income therefrom, until the Torbela siblings instituted Civil Case No. U-4359 before the RTC on February 13, 1986. When it comes to the improvements on Lot No. 356-A, both the Torbela siblings (as landowners) and Dr. Rosario (as builder) are deemed in bad faith. The Torbela siblings were aware of the construction of a building by Dr. Rosario on Lot No. 356-A, while Dr. Rosario proceeded with the said construction despite his knowledge that Lot No. 356-A belonged to the Torbela siblings. This is the case contemplated under Article 453 of the Civil Code, which reads: ART. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith. It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part. (Emphasis supplied.) When both the landowner and the builder are in good faith, the following rules govern: 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. ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.

ART. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended. 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. 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 co-ownership," 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. 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.85 The landowner has to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. But even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to remove the building from the land without first exercising either option. It is only if the owner chooses to sell his land, and the builder or planter fails to purchase it where its value is not more than the value of the improvements, that the owner may remove the improvements from the land. The owner is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same.86 This case then must be remanded to the RTC for the determination of matters necessary for the proper application of Article 448, in relation to Article 546, of the Civil Code. Such matters include the option that the Torbela siblings will choose; the amount of indemnity that they will pay if they decide to appropriate the improvements on Lot No. 356-A; the value of Lot No. 356-A if they prefer to sell it to Dr. Rosario; or the reasonable rent if they opt to sell Lot No. 356-A to Dr. Rosario but the value of the land is considerably more than the improvements. The determination made by the Court of Appeals in its Decision dated June 29, 1999 that the current value of Lot No. 356-A is P1,200,000.00 is not supported by any evidence on record. Should the Torbela siblings choose to appropriate the improvements on Lot No. 356-A, the following ruling of the Court in Pecson v. Court of Appeals87 is relevant in the determination of the amount of indemnity under Article 546 of the Civil Code: Article 546 does not specifically state how the value of the useful improvements should be determined. The respondent court and the private respondents espouse the belief that the cost of construction of the apartment building in 1965, and not its current market value, is sufficient reimbursement for necessary and useful improvements made by the petitioner. This position is, however, not in consonance with previous rulings of this Court in similar cases. In Javier vs. Concepcion, Jr., this Court pegged the value of the useful improvements consisting of various fruits, bamboos, a house and camarin made of strong material based on the market value of the said improvements. In Sarmiento vs. Agana, despite the finding that the useful improvement, a residential house, was built in 1967 at a cost of between eight thousand pesos (P8,000.00) to ten thousand pesos (P10,000.00), the landowner was ordered to reimburse the builder in the amount of forty thousand pesos (P40,000.00), the value of the house at the time of the trial. In the same way, the

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landowner was required to pay the "present value" of the house, a useful improvement, in the case of De Guzman vs. De la Fuente, cited by the petitioner. The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila that the said provision was formulated in trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to both of them in such a way as neither one nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of reimbursement. A contrary ruling would unjustly enrich the private respondents who would otherwise be allowed to acquire a highly valued income-yielding four-unit apartment building for a measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the present market value of the apartment building upon which the trial court should base its finding as to the amount of reimbursement to be paid by the landowner.88 (Emphases supplied.) Still following the rules of accession, civil fruits, such as rents, belong to the owner of the building.89 Thus, Dr. Rosario has a right to the rents of the improvements on Lot No. 356-A and is under no obligation to render an accounting of the same to anyone. In fact, it is the Torbela siblings who are required to account for the rents they had collected from the lessees of the commercial building and turn over any balance to Dr. Rosario. Dr. Rosario’s right to the rents of the improvements on Lot No. 356-A shall continue until the Torbela siblings have chosen their option under Article 448 of the Civil Code. And in case the Torbela siblings decide to appropriate the improvements, Dr. Rosario shall have the right to retain said improvements, as well as the rents thereof, until the indemnity for the same has been paid.90 Dr. Rosario is liable for damages to the Torbela siblings. The Court of Appeals ordered Dr. Rosario to pay the Torbela siblings P300,000.00 as moral damages;P200,000.00 as exemplary damages; and P100,000.00 as attorney’s fees. Indeed, Dr. Rosario’s deceit and bad faith is evident when, being fully aware that he only held Lot No. 356-A in trust for the Torbela siblings, he mortgaged said property to PNB and Banco Filipino absent the consent of the Torbela siblings, and caused the irregular cancellation of the Torbela siblings’ adverse claim on TCT No. 52751. Irrefragably, Dr. Rosario’s betrayal had caused the Torbela siblings (which included Dr. Rosario’s own mother, Eufrosina Torbela Rosario) mental anguish, serious anxiety, and wounded feelings. Resultantly, the award of moral damages is justified, but the amount thereof is reduced to P200,000.00. In addition to the moral damages, exemplary damages may also be imposed given that Dr. Rosario’s wrongful acts were accompanied by bad faith. However, judicial discretion granted to the courts in the assessment of damages must always be exercised with balanced restraint and measured objectivity. The circumstances of the case call for a reduction of the award of exemplary damages to P100,000.00. As regards attorney's fees, they may be awarded when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. Because of Dr. Rosario’s acts, the Torbela siblings were constrained to institute several cases against Dr. Rosario and his spouse, Duque-Rosario, as well as Banco Filipino, which had lasted for more than 25 years. Consequently, the Torbela siblings are entitled to an award of attorney's fees and the amount of P100,000.00 may be considered rational, fair, and reasonable. Banco Filipino is entitled to a writ of possession for Lot No. 5-F-8-C-2-B-2-A.

The Court emphasizes that Pet. Case No. U-822, instituted by Banco Filipino for the issuance of a writ of possession before the RTC of Urdaneta, included only Lot No. 5-F-8-C-2-B-2-A and Lot No. 356-A (Lot No. 4489, the third property mortgaged to secure Dr. Rosario’s loan from Banco Filipino, is located in Dagupan City, Pangasinan, and the petition for issuance of a writ of possession for the same should be separately filed with the RTC of Dagupan City). Since the Court has already granted herein the reconveyance of Lot No. 356-A from Banco Filipino to the Torbela siblings, the writ of possession now pertains only to Lot No. 5-F-8-C-2-B-2-A. To recall, the Court of Appeals affirmed the issuance by the RTC of a writ of possession in favor of Banco Filipino. Dr. Rosario no longer appealed from said judgment of the appellate court. Already legally separated from Dr. Rosario, Duque-Rosario alone challenges the writ of possession before this Court through her Petition in G.R. No. 140553. Duque-Rosario alleges in her Petition that Lot No. 5-F-8-C-2-B-2-A had been registered in her name under TCT No. 104189. Yet, without a copy of TCT No. 104189 on record, the Court cannot give much credence to Duque-Rosario’s claim of sole ownership of Lot No. 5-F-8-C-2-B-2-A. Also, the question of whether Lot No. 5-F-8-C-2-B-2-A was the paraphernal property of Duque-Rosario or the conjugal property of the spouses Rosario would not alter the outcome of Duque-Rosario’s Petition. The following facts are undisputed: Banco Filipino extrajudicially foreclosed the mortgage constituted on Lot No. 5-F-8-C-2-B-2-A and the two other properties after Dr. Rosario defaulted on the payment of his loan; Banco Filipino was the highest bidder for all three properties at the foreclosure sale on April 2, 1987; the Certificate of Sale dated April 2, 1987 was registered in April 1987; and based on the Certificate of Final Sale dated May 24, 1988 and Affidavit of Consolidation dated May 25, 1988, the Register of Deeds cancelled TCT No. 104189 and issued TCT No. 165812 in the name of Banco Filipino for Lot No. 5-F-8-C-2-B-2-A on June 7, 1988. The Court has consistently ruled that the one-year redemption period should be counted not from the date of foreclosure sale, but from the time the certificate of sale is registered with the Registry of Deeds.91 No copy of TCT No. 104189 can be found in the records of this case, but the fact of annotation of the Certificate of Sale thereon was admitted by the parties, only differing on the date it was made: April 14, 1987 according to Banco Filipino and April 15, 1987 as maintained by Duque-Rosario. Even if the Court concedes that the Certificate of Sale was annotated on TCT No. 104189 on the later date, April 15, 1987, the one-year redemption period already expired on April 14, 1988.92 The Certificate of Final Sale and Affidavit of Consolidation were executed more than a month thereafter, on May 24, 1988 and May 25, 1988, respectively, and were clearly not premature. It is true that the rule on redemption is liberally construed in favor of the original owner of the property. The policy of the law is to aid rather than to defeat him in the exercise of his right of redemption.93 However, the liberal interpretation of the rule on redemption is inapplicable herein as neither Duque-Rosario nor Dr. Rosario had made any attempt to redeem Lot No. 5-F-8-C-2-B-2-A. Duque-Rosario could only rely on the efforts of the Torbela siblings at redemption, which were unsuccessful. While the Torbela siblings made several offers to redeem Lot No. 356-A, as well as the two other properties mortgaged by Dr. Rosario, they did not make any valid tender of the redemption price to effect a valid redemption. The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement of intention must be accompanied by an actual and simultaneous tender of payment. The redemption price

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should either be fully offered in legal tender or else validly consigned in court. Only by such means can the auction winner be assured that the offer to redeem is being made in good faith.94 In case of disagreement over the redemption price, the redemptioner may preserve his right of redemption through judicial action, which in every case, must be filed within the one-year period of redemption. The filing of the court action to enforce redemption, being equivalent to a formal offer to redeem, would have the effect of preserving his redemptive rights and "freezing" the expiration of the one-year period.95But no such action was instituted by the Torbela siblings or either of the spouses Rosario. Duque-Rosario also cannot bar the issuance of the writ of possession over Lot No. 5-F-8-C-2-B-2-A in favor of Banco Filipino by invoking the pendency of Civil Case No. U-4359, the Torbela siblings’ action for recovery of ownership and possession and damages, which supposedly tolled the period for redemption of the foreclosed properties. Without belaboring the issue of Civil Case No. U-4359 suspending the redemption period, the Court simply points out to Duque-Rosario that Civil Case No. U-4359 involved Lot No. 356-A only, and the legal consequences of the institution, pendency, and resolution of Civil Case No. U-4359 apply to Lot No. 356-A alone. Equally unpersuasive is Duque-Rosario’s argument that the writ of possession over Lot No. 5-F-8-C-2-B-2-A should not be issued given the defects in the conduct of the foreclosure sale (i.e., lack of personal notice to Duque-Rosario) and consolidation of title (i.e., failure to provide Duque-Rosario with copies of the Certificate of Final Sale). The right of the purchaser to the possession of the foreclosed property becomes absolute upon the expiration of the redemption period. The basis of this right to possession is the purchaser's ownership of the property. After the consolidation of title in the buyer's name for failure of the mortgagor to redeem, the writ of possession becomes a matter of right and its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function.961avvphi1 The judge with whom an application for a writ of possession is filed need not look into the validity of the mortgage or the manner of its foreclosure. Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for the refusal to issue a writ of possession. Regardless of whether or not there is a pending suit for the annulment of the mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession, without prejudice, of course, to the eventual outcome of the pending annulment case. The issuance of a writ of possession in favor of the purchaser in a foreclosure sale is a ministerial act and does not entail the exercise of discretion.97 WHEREFORE, in view of the foregoing, the Petition of the Torbela siblings in G.R. No. 140528 is GRANTED, while the Petition of Lena Duque-Rosario in G.R. No. 140553 is DENIED for lack of merit. The Decision dated June 29, 1999 of the Court of Appeals in CA-G.R. CV No. 39770, which affirmed with modification the Amended Decision dated January 29, 1992 of the RTC in Civil Case Nos. U-4359 and U-4733 and Pet. Case No. U-822, is AFFIRMED WITH MODIFICATIONS, to now read as follows:

(1) Banco Filipino is ORDERED to reconvey Lot No. 356-A to the Torbela siblings; (2) The Register of Deeds of Pangasinan is ORDERED to cancel TCT No. 165813 in the name of Banco Filipino and to issue a new certificate of title in the name of the Torbela siblings for Lot No. 356-A; (3) The case is REMANDED to the RTC for further proceedings to determine the facts essential to the proper application of Articles 448 and 546 of the Civil Code, particularly: (a) the present fair market value of Lot No. 356-A; (b) the present fair market value of the improvements thereon; (c) the option of the Torbela

siblings to appropriate the improvements on Lot No. 356-A or require Dr. Rosario to purchase Lot No. 356-A; and (d) in the event that the Torbela siblings choose to require Dr. Rosario to purchase Lot No. 356-A but the value thereof is considerably more than the improvements, then the reasonable rent of Lot No. 356-A to be paid by Dr. Rosario to the Torbela siblings; (4) The Torbela siblings are DIRECTED to submit an accounting of the rents of the improvements on Lot No. 356-A which they had received and to turn over any balance thereof to Dr. Rosario; (5) Dr. Rosario is ORDERED to pay the Torbela siblings P200,000.00 as moral damages, P100,000.00 as exemplary damages, and P100,000.00 as attorney’s fees; and (6) Banco Filipino is entitled to a writ of possession over Lot-5-F-8-C-2-B-2-A, covered by TCT No. 165812. The RTC Branch Clerk of Court is ORDERED to issue a writ of possession for the said property in favor of Banco Filipino.

SO ORDERED. TERESITA J. LEONARDO-DE CASTRO Associate Justice WE CONCUR:

RENATO C. CORONA Chief Justice Chairperson

LUCAS P. BERSAMIN Associate Justice

MARIANO C. DEL CASTILLO Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

C E R T I F I C A T I O N Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division. RENATO C. CORONA Chief Justice

THIRD DIVISION

[G.R. No. 108894. February 10, 1997] TECNOGAS PHILIPPINES MANUFACTURING CORPORATION, petitioner, vs. COURT OF

APPEALS (FORMER SPECIAL SEVENTEENTH DIVISION) and EDUARDO UY, respondents.

D E C I S I O N PANGANIBAN, J.:

The parties in this case are owners of adjoining lots in Paraaque, 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?

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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 attorneys fees; 6. Costs against appellee.

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: 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.

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, Paraaque, Metro Manila known as Lot 4331-A (should be 4531-A) of Lot 4531 of the Cadastral Survey of Paraaque, 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 Paraaque, 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 plaintiffs land was purchased by defendant from a certain Enrile Antonio also in 1970; that in 1971, defendant purchased another lot also adjoining plaintiffs land from a certain Miguel Rodriguez and the same was registered in defendants 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 defendants adjoining land; that upon learning of the encroachment or occupation by its buildings and wall of a portion of defendants land, plaintiff offered to buy from defendant that particular portion of defendants 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 Malacaang, 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 plaintiffs wall; that defendant later filed a complaint before the office of Municipal Engineer of Paraaque, Metro Manila as well as before the Office of the Provincial Fiscal of Rizal against plaintiff in

connection with the encroachment or occupation by plaintiffs 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 plaintiffs 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 defendants 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.

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 plaintiffs buildings and wall at the price of P2,000.00 per square meter and to pay the former: 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 attorneys fees; and 3. The costs of this suit.

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 respondents 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 supple-mental complaint in the Regional Trial Court.

In its Memorandum, petitioner poses the following issues: 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

32

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 courts 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 Uys 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 quowas 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 nothave 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 vs. Lumanlan case citing also Tuason vs. Macalindong case (Supra).

2. Assuming that the doctrine in the alleged Co Tao vs. Chico case is contradictory to the doctrine in Tuason vs. Lumanlan and Tuason vs. Macalindong, the two cases being more current, the same should prevail.

Further, private respondent contends that the following unmistakably point to the bad faith of petitioner: (1) private respondents 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 Courts Ruling

The petition should be granted. Good Faith or Bad Faith

Respondent Court, citing the cases of J. M. Tuason & Co., Inc. vs. Vda. de Lumanlan[17] and J. M. Tuason & Co., Inc. vs. 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]

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 neighbors 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 vs. 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.

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 petitioners 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 respondents 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 Parizs 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 petitioners 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: 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

33

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 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 petitioners 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 respondents right over the disputed property. It held that by undertaking to demolish the fence under said settlement, petitioner recognized private respondents 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.

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 electroplating 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 Osmea vs. 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. xxx xxx xxx 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. x x x.

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 landowners 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 vs. Dumlao,[32] to wit: 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 vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan

34

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).

The private respondents 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 petitioners 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 petitioners 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 vs. 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 vs. 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 attorneys 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 vs. 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: The trial court shall determine: a) the present fair price of private respondents 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:

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 respondents 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 latters 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 respondents 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.

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No costs. SO ORDERED. Narvasa, C.J., (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

Republic of the Philippines SUPREME COURT

Manila FIRST DIVISION

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

36

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

37

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. Teehankee, Actg. C.J., Plana, Relova, De la Fuente and Alampay, JJ., concur. Gutierrez, Jr., * J., took no part.

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Republic of the Philippines Supreme Court

Manila FIRST DIVISION

THE HEIRS OF PROTACIO GO, SR. and MARTA BAROLA, namely: LEONOR, SIMPLICIO, PROTACIO, JR., ANTONIO, BEVERLY ANN LORRAINNE, TITA, CONSOLACION, LEONORA and ASUNCION, all surnamed GO, represented by LEONORA B. GO, Petitioners, -versus - ESTER L. SERVACIO and RITO B. GO, Respondents.

G.R. No. 157537 Present:

CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN, DEL CASTILLO, and VILLARAMA, JR., JJ.

Promulgated: September 7, 2011

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

D E C I S I O N BERSAMIN, J.: The disposition by sale of a portion of the conjugal property by the surviving spouse without the prior liquidation mandated by Article 130 of the Family Code is not necessarily void if said portion has not yet been allocated by judicial or extrajudicial partition to another heir of the deceased spouse. At any rate, the requirement of prior liquidation does not prejudice vested rights.

Antecedents On February 22, 1976, Jesus B. Gaviola sold two parcels of land with a total area of 17,140 square meters situated in Southern Leyte to Protacio B. Go, Jr. (Protacio, Jr.). Twenty three years later, or on March 29, 1999, Protacio, Jr. executed an Affidavit of Renunciation and Waiver,[1] whereby he affirmed under oath that it was his father, Protacio Go, Sr. (Protacio, Sr.), not he, who had purchased the two parcels of land (the property).

On November 25, 1987, Marta Barola Go died. She was the wife of Protacio, Sr. and mother of the petitioners.[2] On December 28, 1999, Protacio, Sr. and his son Rito B. Go (joined by Ritos wife Dina B. Go) sold a portion of the property with an area of 5,560 square meters to Ester L. Servacio (Servacio) for ₱5,686,768.00.[3]On March 2, 2001, the petitioners demanded the return of the property,[4] but Servacio refused to heed their demand. After barangay proceedings failed to resolve the dispute,[5] they sued Servacio and Rito in the Regional Trial Court in Maasin City, Southern Leyte (RTC) for the annulment of the sale of the property. The petitioners averred that following Protacio, Jr.s renunciation, the property became conjugal property; and that the sale of the property to Servacio without the prior liquidation of the community property between Protacio, Sr. and Marta was null and void.[6]

Servacio and Rito countered that Protacio, Sr. had exclusively owned the property because he had purchased it with his own money.[7] On October 3, 2002,[8] the RTC declared that the property was the conjugal property of Protacio, Sr. and Marta, not the exclusive property of Protacio, Sr., because there were three vendors in the sale to Servacio (namely: Protacio, Sr., Rito, and Dina); that the participation of Rito and Dina as vendors had been by virtue of their being heirs of the late Marta; that under Article 160 of the Civil Code, the law in effect when the property was acquired, all property acquired by either spouse during the marriage was conjugal unless there was proof that the property thus acquired pertained exclusively to the husband or to the wife; and that Protacio, Jr.s renunciation was grossly insufficient to rebut the legal presumption.[9] Nonetheless, the RTC affirmed the validity of the sale of the property, holding that: xxx As long as the portion sold, alienated or encumbered will not be allotted to the other heirs in the final partition of the property, or to state it plainly, as long as the portion sold does not encroach upon the legitimate (sic) of other heirs, it is valid.[10]Quoting Tolentinos commentary on the matter as authority,[11] the RTC opined:

In his comment on Article 175 of the New Civil Code regarding the dissolution of the conjugal partnership, Senator Arturo Tolentino, says [sic]

Alienation by the survivor. After the death of one of the

spouses, in case it is necessary to sell any portion of the community property in order to pay outstanding obligation of the partnership, such sale must be made in the manner and with the formalities established by the Rules of Court for the sale of the property of the deceased persons. Any sale, transfer, alienation or disposition of said property affected without said formalities shall be null and void, except as regards the portion that belongs to the vendor as determined in the liquidation and partition. Pending the liquidation, the disposition must be considered as limited

39

only to the contingent share or interest of the vendor in the particular property involved, but not to the corpus of the property.

This rule applies not only to sale but also to mortgages. The alienation, mortgage or disposal of the conjugal property without the required formality, is not however, null ab initio, for the law recognizes their validity so long as they do not exceed the portion which, after liquidation and partition, should pertain to the surviving spouse who made the contract. [underlining supplied]

It seems clear from these comments of Senator Arturo Tolentino on the provisions of the New Civil Code and the Family Code on the alienation by the surviving spouse of the community property that jurisprudence remains the same - that the alienation made by the surviving spouse of a portion of the community property is not wholly void ab initio despite Article 103 of the Family Code, and shall be valid to the extent of what will be allotted, in the final partition, to the vendor. And rightly so, because why invalidate the sale by the surviving spouse of a portion of the community property that will eventually be his/her share in the final partition? Practically there is no reason for that view and it would be absurd. Now here, in the instant case, the 5,560 square meter portion of the 17,140 square-meter conjugal lot is certainly mush (sic) less than what vendors Protacio Go and his son Rito B. Go will eventually get as their share in the final partition of the property. So the sale is still valid. WHEREFORE, premises considered, complaint is hereby DISMISSED without pronouncement as to cost and damages. SO ORDERED.[12]

The RTCs denial of their motion for reconsideration[13] prompted the petitioners to appeal directly to the Court on a pure question of law.

Issue The petitioners claim that Article 130 of the Family Code is the applicable law; and that the sale by Protacio, Sr., et al. to Servacio was void for being made without prior liquidation.

In contrast, although they have filed separate comments, Servacio and Rito both argue that Article 130 of the Family Code was inapplicable; that the want of the liquidation prior to the sale did not render the sale invalid, because the sale was valid to the extent of the portion that was finally allotted to the vendors as his share; and that the sale did not also prejudice any rights of the petitioners as heirs, considering that what the sale disposed of was within the aliquot portion of the property that the vendors were entitled to as heirs.[14]

Ruling

The appeal lacks merit. Article 130 of the Family Code reads:

Article 130. Upon the termination of the marriage by death, the

conjugal partnership property shall be liquidated in the same proceeding for the settlement of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving

spouse shall liquidate the conjugal partnership property either judicially or extra-judicially within one year from the death of the deceased spouse. If upon the lapse of the six month period no liquidation is made, any disposition or encumbrance involving the conjugal partnership property of the terminated marriage shall be void.

Should the surviving spouse contract a subsequent marriage

without compliance with the foregoing requirements, a mandatory regime of complete separation of property shall govern the property relations of the subsequent marriage.

Article 130 is to be read in consonance with Article 105 of the Family Code, viz:

Article 105. In case the future spouses agree in the marriage

settlements that the regime of conjugal partnership of gains shall govern their property relations during marriage, the provisions in this Chapter shall be of supplementary application.

The provisions of this Chapter shall also apply to conjugal

partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256. (n) [emphasis supplied] It is clear that conjugal partnership of gains established before and after the

effectivity of the Family Code are governed by the rules found in Chapter 4 (Conjugal Partnership of Gains) of Title IV (Property Relations Between Husband And Wife) of the Family Code. Hence, any disposition of the conjugal property after the dissolution of the conjugal partnership must be made only after the liquidation; otherwise, the disposition is void.

Before applying such rules, however, the conjugal partnership of gains must be

subsisting at the time of the effectivity of the Family Code. There being no dispute that Protacio, Sr. and Marta were married prior to the effectivity of the Family Code on August

40

3, 1988, their property relation was properly characterized as one of conjugal partnership governed by the Civil Code. Upon Martas death in 1987, the conjugal partnership was dissolved, pursuant to Article 175 (1) of the Civil Code,[15] and an implied ordinary co-ownership ensued among Protacio, Sr. and the other heirs of Marta with respect to her share in the assets of the conjugal partnership pending a liquidation following its liquidation.[16] The ensuing implied ordinary co-ownership was governed by Article 493 of the Civil Code,[17] to wit:

Article 493. Each co-owner shall have the full ownership of his

part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. (399)

Protacio, Sr., although becoming a co-owner with his children in respect of Martas share in the conjugal partnership, could not yet assert or claim title to any specific portion of Martas share without an actual partition of the property being first done either by agreement or by judicial decree. Until then, all that he had was an ideal or abstract quota in Martas share.[18] Nonetheless, a co-owner could sell his undivided share; hence, Protacio, Sr. had the right to freely sell and dispose of his undivided interest, but not the interest of his co-owners.[19] Consequently, the sale by Protacio, Sr. and Rito as co-owners without the consent of the other co-owners was not necessarily void, for the rights of the selling co-owners were thereby effectively transferred, making the buyer (Servacio) a co-owner of Martas share.[20] This result conforms to the well-established principle that the binding force of a contract must be recognized as far as it is legally possible to do so (quando res non valet ut ago, valeat quantum valere potest).[21]

Article 105 of the Family Code, supra, expressly provides that the applicability of the rules on dissolution of the conjugal partnership is without prejudice to vested rights already acquired in accordance with the Civil Code or other laws. This provision gives another reason not to declare the sale as entirely void. Indeed, such a declaration prejudices the rights of Servacio who had already acquired the shares of Protacio, Sr. and Rito in the property subject of the sale.

In their separate comments,[22] the respondents aver that each of the heirs had

already received a certain allotted portion at the time of the sale, and that Protacio, Sr. and Rito sold only the portions adjudicated to and owned by them. However, they did not present any public document on the allocation among her heirs, including themselves, of specific shares in Martas estate. Neither did they aver that the conjugal properties had already been liquidated and partitioned. Accordingly, pending a partition among the heirs of Marta, the efficacy of the sale, and whether the extent of the property sold adversely affected the interests of the petitioners might not yet be properly decided with finality. The appropriate recourse to bring that about is to commence an action for judicial partition, as instructed in Bailon-Casilao v. Court of Appeals,[23] to wit:

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.

The proper action in cases like this is not for the nullification of

the sale or for the recovery of possession of the thing owned in common from the third person who substituted the co-owner or co-owners who alienated their shares, but the DIVISION of the common property as if it continued to remain in the possession of the co-owners who possessed and administered it[Mainit v. Bandoy, supra].

Thus, it is now settled that the appropriate recourse of co-

owners in cases where their consent were not secured in a sale of the entire property as well as in a sale merely of the undivided shares of some of the co-owners is an action for PARTITION under Rule 69 of the Revised Rules of Court. xxx[24] In the meanwhile, Servacio would be a trustee for the benefit of the co-heirs of

her vendors in respect of any portion that might not be validly sold to her. The following observations of Justice Paras are explanatory of this result, viz:

xxx [I]f it turns out that the property alienated or mortgaged really would pertain to the share of the surviving spouse, then said transaction is valid. If it turns out that there really would be, after liquidation, no more conjugal assets then the whole transaction is null and void. But if it turns out that half of the property thus alienated or mortgaged belongs to the husband as his share in the conjugal partnership, and half should go to the estate of the wife, then that corresponding to the husband is valid, and that corresponding to the other is not. Since all these can be determined only at the time the liquidation is over, it follows logically that a disposal made by the surviving spouse is not void ab initio. Thus, it has been held that the sale of conjugal properties cannot be made by the surviving spouse without the legal requirements. The sale is void as to the share of the deceased spouse (except of course as to that portion of the husbands share inherited by her as the surviving spouse). The buyers of the property that could not be validly sold become trustees of said portion for the benefit of the husbands other heirs, the cestui que trust ent. Said heirs shall not be barred by prescription or by laches (See Cuison, et al. v. Fernandez, et al.,L-11764, Jan.31, 1959.)[25] WHEREFORE, we DENY the petition for review on certiorari;

and AFFIRM the decision of the Regional Trial Court.

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The petitioners shall pay the costs of suit. SO ORDERED.

Republic of the Philippines

SUPREME COURT Manila

THIRD DIVISION G.R. No. 165427 March 21, 2011 BETTY B. LACBAYAN, Petitioner, vs. BAYANI S. SAMOY, JR., Respondent.

D E C I S I O N VILLARAMA, JR., J.: This settles the petition for review on certiorari filed by petitioner Betty B. Lacbayan against respondent Bayani S. Samoy, Jr. assailing the September 14, 2004 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 67596. The CA had affirmed the February 10, 2000 Decision2 of the Regional Trial Court (RTC), Branch 224, of Quezon City declaring respondent as the sole owner of the properties involved in this suit and awarding to himP100,000.00 as attorney’s fees. This suit stemmed from the following facts. Petitioner and respondent met each other through a common friend sometime in 1978. Despite respondent being already married, their relationship developed until petitioner gave birth to respondent’s son on October 12, 1979.3 During their illicit relationship, petitioner and respondent, together with three more incorporators, were able to establish a manpower services company.4 Five parcels of land were also acquired during the said period and were registered in petitioner and respondent’s names, ostensibly as husband and wife. The lands are briefly described as follows:

1. A 255-square meter real estate property located at Malvar St., Quezon City covered by TCT No. 303224 and registered in the name of Bayani S. Samoy, Jr. "married to Betty Lacbayan."5 2. A 296-square meter real estate property located at Main Ave., Quezon City covered by TCT No. 23301 and registered in the name of "Spouses Bayani S. Samoy and Betty Lacbayan."6 3. A 300-square meter real estate property located at Matatag St., Quezon City covered by TCT No. RT-38264 and registered in the name of Bayani S. Samoy, Jr. "married to Betty Lacbayan Samoy."7 4. A 183.20-square meter real estate property located at Zobel St., Quezon City covered by TCT No. 335193 and registered in the name of Bayani S. Samoy, Jr. "married to Betty L. Samoy."8 5. A 400-square meter real estate property located at Don Enrique Heights, Quezon City covered by TCT No. 90232 and registered in the name of Bayani S. Samoy, Jr. "married to Betty L. Samoy."9

Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon City. In 1983, petitioner left her parents and decided to reside in the property located in Malvar St. in

Project 4, Quezon City. Later, she and their son transferred to Zobel St., also in Project 4, and finally to the 400-square meter property in Don Enrique Heights.10 Eventually, however, their relationship turned sour and they decided to part ways sometime in 1991. In 1998, both parties agreed to divide the said properties and terminate their business partnership by executing a Partition Agreement.11 Initially, respondent agreed to petitioner’s proposal that the properties in Malvar St. and Don Enrique Heights be assigned to the latter, while the ownership over the three other properties will go to respondent.12 However, when petitioner wanted additional demands to be included in the partition agreement, respondent refused.13 Feeling aggrieved, petitioner filed a complaint for judicial partition14 of the said properties before the RTC in Quezon City on May 31, 1999. In her complaint, petitioner averred that she and respondent started to live together as husband and wife in 1979 without the benefit of marriage and worked together as business partners, acquiring real properties amounting toP15,500,000.00.15 Respondent, in his Answer,16 however, denied petitioner’s claim of cohabitation and said that the properties were acquired out of his own personal funds without any contribution from petitioner.17 During the trial, petitioner admitted that although they were together for almost 24 hours a day in 1983 until 1991, respondent would still go home to his wife usually in the wee hours of the morning.18 Petitioner likewise claimed that they acquired the said real estate properties from the income of the company which she and respondent established.19 Respondent, meanwhile, testified that the properties were purchased from his personal funds, salaries, dividends, allowances and commissions.20 He countered that the said properties were registered in his name together with petitioner to exclude the same from the property regime of respondent and his legal wife, and to prevent the possible dissipation of the said properties since his legal wife was then a heavy gambler.21 Respondent added that he also purchased the said properties as investment, with the intention to sell them later on for the purchase or construction of a new building.22 On February 10, 2000, the trial court rendered a decision dismissing the complaint for lack of merit.23 In resolving the issue on ownership, the RTC decided to give considerable weight to petitioner’s own admission that the properties were acquired not from her own personal funds but from the income of the manpower services company over which she owns a measly 3.33% share.24 Aggrieved, petitioner elevated the matter to the CA asserting that she is the pro indiviso owner of one-half of the properties in dispute. Petitioner argued that the trial court’s decision subjected the certificates of title over the said properties to collateral attack contrary to law and jurisprudence. Petitioner also contended that it is improper to thresh out the issue on ownership in an action for partition.25 Unimpressed with petitioner’s arguments, the appellate court denied the appeal, explaining in the following manner: Appellant’s harping on the indefeasibility of the certificates of title covering the subject realties is, to say the least, misplaced. Rather than the validity of said certificates which was nowhere dealt with in the appealed decision, the record shows that what the trial court determined therein was the ownership of the subject realties – itself an issue correlative to and a necessary adjunct of the claim of co-ownership upon which appellant anchored her cause of action for partition. It bears emphasizing, moreover, that the rule on the indefeasibility of a Torrens title applies only to original and not to subsequent

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registration as that availed of by the parties in respect to the properties in litigation. To our mind, the inapplicability of said principle to the case at bench is even more underscored by the admitted falsity of the registration of the selfsame realties in the parties’ name as husband and wife. The same dearth of merit permeates appellant’s imputation of reversible error against the trial court for supposedly failing to make the proper delineation between an action for partition and an action involving ownership. Typically brought by a person claiming to be co-owner of a specified property against a defendant or defendants whom the plaintiff recognizes to be co-owners, an action for partition may be seen to present simultaneously two principal issues, i.e., first, the issue of whether the plaintiff is indeed a co-owner of the property sought to be partitioned and, second – assuming that the plaintiff successfully hurdles the first – the issue of how the property is to be divided between plaintiff and defendant(s). Otherwise stated, the court must initially settle the issue of ownership for the simple reason that it cannot properly issue an order to divide the property without first making a determination as to the existence of co-ownership. Until and unless the issue of ownership is definitely resolved, it would be premature to effect a partition of the properties. This is precisely what the trial court did when it discounted the merit in appellant’s claim of co-ownership.26 Hence, this petition premised on the following arguments:

I. Ownership cannot be passed upon in a partition case. II. The partition agreement duly signed by respondent contains an admission against respondent’s interest as to the existence of co-ownership between the parties. III. An action for partition cannot be defeated by the mere expedience of repudiating co-ownership based on self-serving claims of exclusive ownership of the properties in dispute. IV. A Torrens title is the best evidence of ownership which cannot be outweighed by respondent’s self-serving assertion to the contrary. V. The properties involved were acquired by both parties through their actual joint contribution of money, property, or industry.27

Noticeably, the last argument is essentially a question of fact, which we feel has been squarely threshed out in the decisions of both the trial and appellate courts. We deem it wise not to disturb the findings of the lower courts on the said matter absent any showing that the instant case falls under the exceptions to the general rule that questions of fact are beyond the ambit of the Court’s jurisdiction in petitions under Rule 45 of the 1997 Rules of Civil Procedure, as amended. The issues may be summarized into only three:

I. Whether an action for partition precludes a settlement on the issue of ownership; II. Whether the Torrens title over the disputed properties was collaterally attacked in the action for partition; and III. Whether respondent is estopped from repudiating co-ownership over the subject realties.

We find the petition bereft of merit. Our disquisition in Municipality of Biñan v. Garcia28 is definitive. There, we explained that the determination as to the existence of co-ownership is necessary in the resolution of an action for partition. Thus: The first phase of a partition and/or accounting suit is taken up with the determination of whether or not a co-ownership in fact exists, and a partition is proper (i.e., not otherwise

legally proscribed) and may be made by voluntary agreement of all the parties interested in the property. This phase may end with a declaration that plaintiff is not entitled to have a partition either because a co-ownership does not exist, or partition is legally prohibited. It may end, on the other hand, with an adjudgment that a co-ownership does in truth exist, partition is proper in the premises and an accounting of rents and profits received by the defendant from the real estate in question is in order. x x x The second phase commences when it appears that "the parties are unable to agree upon the partition" directed by the court. In that event[,] partition shall be done for the parties by the [c]ourt with the assistance of not more than three (3) commissioners. This second stage may well also deal with the rendition of the accounting itself and its approval by the [c]ourt after the parties have been accorded opportunity to be heard thereon, and an award for the recovery by the party or parties thereto entitled of their just share in the rents and profits of the real estate in question. x x x29 (Emphasis supplied.) While it is true that the complaint involved here is one for partition, the same is premised on the existence or non-existence of co-ownership between the parties. Petitioner insists she is a co-owner pro indiviso of the five real estate properties based on the transfer certificates of title (TCTs) covering the subject properties. Respondent maintains otherwise. Indubitably, therefore, until and unless this issue of co-ownership is definitely and finally resolved, it would be premature to effect a partition of the disputed properties.30 More importantly, the complaint will not even lie if the claimant, or petitioner in this case, does not even have any rightful interest over the subject properties.31 Would a resolution on the issue of ownership subject the Torrens title issued over the disputed realties to a collateral attack? Most definitely, it would not. There is no dispute that a Torrens certificate of title cannot be collaterally attacked,32 but that rule is not material to the case at bar. What cannot be collaterally attacked is the certificate of title and not the title itself.33 The certificate referred to is that document issued by the Register of Deeds known as the TCT. In contrast, the title referred to by law means ownership which is, more often than not, represented by that document.34 Petitioner apparently confuses title with the certificate of title. Title as a concept of ownership should not be confused with the certificate of title as evidence of such ownership although both are interchangeably used.35 Moreover, placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title, the latter only serving as the best proof of ownership over a piece of land. The certificate cannot always be considered as conclusive evidence of ownership.36 In fact, mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate, or that the registrant may only be a trustee, or that other parties may have acquired interest over the property subsequent to the issuance of the certificate of title.37 Needless to say, registration does not vest ownership over a property, but may be the best evidence thereof.1avvphi1 Finally, as to whether respondent’s assent to the initial partition agreement serves as an admission against interest, in that the respondent is deemed to have admitted the existence of co-ownership between him and petitioner, we rule in the negative. An admission is any statement of fact made by a party against his interest or unfavorable to the conclusion for which he contends or is inconsistent with the facts alleged by

43

him.38 Admission against interest is governed by Section 26 of Rule 130 of the Rules of Court, which provides: Sec. 26. Admissions of a party. – The act, declaration or omission of a party as to a relevant fact may be given in evidence against him. To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be categorical and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the admitter’s interests, otherwise it would be self-serving and inadmissible.39 A careful perusal of the contents of the so-called Partition Agreement indicates that the document involves matters which necessitate prior settlement of questions of law, basic of which is a determination as to whether the parties have the right to freely divide among themselves the subject properties. Moreover, to follow petitioner’s argument would be to allow respondent not only to admit against his own interest but that of his legal spouse as well, who may also be lawfully entitled co-ownership over the said properties. Respondent is not allowed by law to waive whatever share his lawful spouse may have on the disputed properties. Basic is the rule that rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, good customs or prejudicial to a third person with a right recognized by law.40 Curiously, petitioner herself admitted that she did not assent to the Partition Agreement after seeing the need to amend the same to include other matters. Petitioner does not have any right to insist on the contents of an agreement she intentionally refused to sign. As to the award of damages to respondent, we do not subscribe to the trial court’s view that respondent is entitled to attorney’s fees. Unlike the trial court, we do not commiserate with respondent’s predicament. The trial court ruled that respondent was forced to litigate and engaged the services of his counsel to defend his interest as to entitle him an award of P100,000.00 as attorney’s fees. But we note that in the first place, it was respondent himself who impressed upon petitioner that she has a right over the involved properties. Secondly, respondent’s act of representing himself and petitioner as husband and wife was a deliberate attempt to skirt the law and escape his legal obligation to his lawful wife. Respondent, therefore, has no one but himself to blame the consequences of his deceitful act which resulted in the filing of the complaint against him. WHEREFORE, the petition is DENIED. The September 14, 2004 Decision of the Court of Appeals in CA-G.R. CV No. 67596 is AFFIRMED with MODIFICATION. Respondent Bayani S. Samoy, Jr. is hereby declared the sole owner of the disputed properties, without prejudice to any claim his legal wife may have filed or may file against him. The award of P100,000.00 as attorney’s fees in respondent’s favor is DELETED. No costs. SO ORDERED. MARTIN S. VILLARAMA, JR. Associate Justice WE CONCUR:

CONCHITA CARPIO MORALES Associate Justice

Chairperson

ARTURO D. BRION Associate Justice

LUCAS P. BERSAMIN Associate Justice

MARIA LOURDES P. A. SERENO Associate Justice

A T T E S T A T I O N I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division. CONCHITA CARPIO MORALES Associate Justice Chairperson, Third Division

C E R T I F I C A T I O N Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division. RENATO C. CORONA Chief Justice

Republic of the Philippines

Supreme Court Baguio City

SECOND DIVISION

CRISPIN DICHOSO, JR., EVELYN DICHOSO VALDEZ, and ROSEMARIE DICHOSO PE BENITO, Petitioners, - versus - PATROCINIO L. MARCOS, Respondent.

G.R. No. 180282 Present: CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ. Promulgated: April 11, 2011

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DECISION

NACHURA, J.:

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This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse and set aside the Court of Appeals (CA) Decision[1] dated January 31, 2007 and Resolution[2] dated October 23, 2007 in CA-G.R. CV No. 85471. The assailed Decision reversed and set aside the July 15, 2005 decision[3] of the Regional Trial Court (RTC) of Laoag City, Branch 14, in Civil Case No. 12581-14; while the assailed Resolution denied the Motion for Reconsideration filed by petitioners Crispin Dichoso, Jr., Evelyn Dichoso Valdez, and Rosemarie Dichoso Pe Benito. The facts of the case, as culled from the records, are as follows: On August 2, 2002, petitioners filed a Complaint for Easement of Right of Way[4] against respondent Patrocinio L. Marcos. In their complaint, petitioners alleged that they are the owners of Lot No. 21553 of the Cadastral Survey of Laoag City, covered by Transfer Certificate of Title No. T-31219; while respondent is the owner of Lot No. 1. As petitioners had no access to a public road to and from their property, they claimed to have used a portion of Lot No. 1 in accessing the road since 1970. Respondent, however, blocked the passageway with piles of sand. Though petitioners have been granted another passageway by the spouses Benjamin and Sylvia Arce (Spouses Arce), the owners of another adjacent lot, designated as Lot No. 21559-B, the former instituted the complaint before the RTC and prayed that:

WHEREFORE, it is respectfully prayed of this Honorable Court that judgment be rendered: 1. Granting the plaintiffs right of way over an area of 54 square meters more or less of Lot 01 by paying the defendant the amount of P54,000.00, and that the right be annotated on defendants title; 2. Ordering the defendant to pay the plaintiffs the sum of P30,000.00 as damages for attorneys fees and costs of suit; Other reliefs, just and equitable under the premises, are likewise sought.[5]

Instead of filing an Answer, respondent moved[6] for the dismissal of the complaint on the ground of lack of cause of action and noncompliance with the requisite certificate of non-forum shopping. During the hearing on respondents motion to dismiss, the parties agreed that an ocular inspection of the subject properties be conducted. After the inspection, the RTC directed the parties to submit their respective position papers. In a resolution[7] dated May 12, 2004, the RTC denied respondents motion to dismiss and required the latter to answer petitioners complaint. In his Answer,[8] respondent denied that he allowed anybody to use Lot No. 1 as passageway. He stated that petitioners claim of right of way is only due to expediency and not necessity. He also maintained that there is an existing easement of right of way

available to petitioners granted by the Spouses Arce. Thus, there is no need to establish another easement over respondents property. In an Order[9] dated July 6, 2005, the RTC declared that respondents answer failed to tender an issue, and opted to render judgment on the pleadings and thus deemed the case submitted for decision. On July 15, 2005, the RTC rendered a decision[10] in favor of petitioners, the dispositive portion of which reads, as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered, as follows:

1. granting plaintiffs a right of way over an area of 54 square meters more or less over Lot 01 owned by defendant Patrocinio L. [Marcos] appearing in the Laoag City Assessors sketch (Annex A) found on page 28 of the record of the case;

2. ordering plaintiffs to pay defendant the amount

of P54,000.00 as proper indemnity; and

3. ordering the Register of Deeds of Laoag City to duly annotate this right of way on defendants title to the property.

SO ORDERED.[11]

The RTC found that petitioners adequately established the requisites to justify an easement of right of way in accordance with Articles 649 and 650 of the Civil Code. The trial court likewise declared petitioners in good faith as they expressed their willingness to pay proper indemnity.[12]

On appeal, the CA reversed and set aside the RTC decision and consequently

dismissed petitioners complaint. Considering that a right of way had already been granted by the (other) servient estate, designated as Lot No. 21559-B and owned by the Spouses Arce, the appellate court concluded that there is no need to establish an easement over respondents property. The CA explained that, while the alternative route through the property of the Spouses Arce is longer and circuitous, said access road is adequate. It emphasized that the convenience of the dominant estate is never the gauge for the grant of compulsory right of way. Thus, the opening of another passageway is unjustified.[13]

Aggrieved, petitioners come before this Court, raising the following issues:

I. CAN PETITIONERS BE ENTITLED TO A GRANT OF LEGAL

EASEMENT OF RIGHT OF WAY FROM THEIR LANDLOCKED PROPERTY THROUGH THE PROPERTY OF PRIVATE RESPONDENT WHICH IS THE

45

SHORTEST ROUTE IN GOING TO AND FROM THEIR PROPERTY TO THE PUBLIC STREET AND WHERE THEY USED TO PASS?

II.

CAN RESPONDENT REFUSE TO GRANT A RIGHT OF WAY ON THE DESIRED PASSAGEWAY WHICH HE CLOSED SINCE THERE IS ANOTHER PASSAGEWAY WHICH IS MORE CIRCUITOUS AND BURDENSOME AND IS BELATEDLY OFFERED UNTO PETITIONERS?

III.

CAN PETITIONERS BE COMPELLED TO AVAIL OF A LEGAL EASEMENT OF RIGHT OF WAY THROUGH THE PROPERTY OF ARCE WHICH WAS BELATEDLY OFFERED BUT HAS BEEN FORECLOSED BY THE BANK AND WHEREIN THE LATTER IS NOT A PARTY TO THE CASE?[14] The petition is without merit.

It is already a well-settled rule that the jurisdiction of this Court in cases brought

before it from the CA by virtue of Rule 45 of the Rules of Court is limited to reviewing errors of law. Findings of fact of the CA are conclusive upon this Court. There are, however, recognized exceptions to the foregoing rule, namely:

(1) when the findings are grounded entirely on speculation, surmises, or conjectures;

(2) when the inference made is manifestly mistaken, absurd, or impossible;

(3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when, in making its findings, the Court of Appeals went

beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee;

(7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of

specific evidence on which they are based; (9) when the facts set forth in the petition, as well as in the

petitioner's main and reply briefs, are not disputed by the respondent; and

(10) when the findings of fact are premised on the supposed

absence of evidence and contradicted by the evidence on record.[15]

The present case falls under the 7th exception, as the RTC and the CA arrived at conflicting findings of fact and conclusions of law.

The conferment of a legal easement of right of way is governed by Articles 649 and 650 of the Civil Code, quoted below for easy reference:[16]

Article 649. The owner, or any person who by virtue of a real right may cultivate or use any immovable, which is surrounded by other immovables pertaining to other persons and without adequate outlet to a public highway, is entitled to demand a right of way through the neighboring estates, after payment of the proper indemnity. Should this easement be established in such a manner that its use may be continuous for all the needs of the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of the land occupied and the amount of the damage caused to the servient estate. In case the right of way is limited to the necessary passage for the cultivation of the estate surrounded by others and for the gathering of its crops through the servient estate without a permanent way, the indemnity shall consist in the payment of the damages caused by such encumbrance. This easement is not compulsory if the isolation of the immovable is due to the proprietors own acts. Article 650. The easement of right of way shall be established at the point least prejudicial to the servient estate, and, insofar as consistent with this rule, where the distance from the dominant estate to a public highway may be the shortest. To be entitled to an easement of right of way, the following requisites should be

met:

1. The dominant estate is surrounded by other immovables and has no adequate outlet to a public highway;

2. There is payment of proper indemnity; 3. The isolation is not due to the acts of the proprietor of the

dominant estate; and

4. The right of way claimed is at the point least prejudicial to the servient estate; and insofar as consistent with this rule, where the distance from the dominant estate to a public highway may be the shortest.[17]

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Petitioners may be correct in the theoretical reading of Articles 649 and 650 of the Civil Code, but they nevertheless failed to show sufficient factual evidence to satisfy the above-enumerated requirements.[18]

It must 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. 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 may be granted.[19] Petitioners failed in this regard.

Admittedly, petitioners had been granted a right of way through the other

adjacent lot owned by the Spouses Arce. In fact, other lot owners use the said outlet in going to and coming from the public highway. Clearly, there is an existing outlet to and from the public road.

However, petitioners claim that the outlet is longer and circuitous, and they have

to pass through other lots owned by different owners before they could get to the highway. 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 real, not fictitious or artificial, necessity for it. Mere convenience for the dominant estate is not what is required by law as the basis of 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.[20]

We quote with approval the CAs observations in this wise:

As it shows, [petitioners] had been granted a right of way through the adjacent estate of Spouses Arce before the complaint below was even filed. [Respondent] alleged that this right of way is being used by the other estates which are similarly situated as [petitioners]. [Petitioners] do not dispute this fact. There is also a reason to believe that this right of way is Spouses Arces outlet to a public road since their property, as it appears from the Sketch Map, is also surrounded by other estates. The fact that Spouses Arce are not insisting on a right of way through respondents property, although an opening on the latters property is undoubtedly the most direct and shortest distance to P. Gomez St. from the formers property, bolsters our conviction that they have adequate outlet to the highway which they are now likewise making available to [petitioners]. The convenience of the dominant estate has never been the gauge for the grant

of compulsory right of way. To be sure, 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 when the said outlet, for one reason or another, be inconvenient, the need to open up another servitude is entirely unjustified.[21]

Thus, in Cristobal v. CA,[22] the Court disallowed the easement prayed for because

an outlet already exists 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 to be sufficient for the needs of the dominant estate.

Also in Floro v. Llenado,[23] we refused to impose a right of way over petitioners

property although private respondents alternative route was admittedly inconvenient because he had to traverse several ricelands and rice paddies belonging to different persons, not to mention that said passage is impassable during the rainy season.

And in Ramos v. Gatchalian Realty, Inc.,[24] this Court refused to grant the

easement prayed for even if petitioner had to pass through lots belonging to other owners, as temporary ingress and egress, which lots were grassy, cogonal, and greatly inconvenient due to flood and mud because such grant would run counter to the prevailing jurisprudence that mere convenience for the dominant estate does not suffice to serve as basis for the easement.[25]

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated January 31, 2007 and Resolution dated October 23, 2007 in CA-G.R. CV No. 85471 are AFFIRMED.

SO ORDERED.

Republic of the Philippines

Supreme Court Manila

SECOND DIVISION

MARGARITA F. CASTRO,

Petitioner,

- versus - NAPOLEON A. MONSOD,

Respondent.

G.R. No. 183719 Present: CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ. Promulgated: February 2, 2011

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DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision[1] dated May 25, 2007 and the Resolution[2] dated July 14, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 83973.

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The antecedents of the case are as follows: Petitioner is the registered owner of a parcel of land located on Garnet Street, Manuela Homes, Pamplona, Las Pias City, and covered by Transfer Certificate of Title (TCT) No. T-36071, with an area of one hundred thirty (130) square meters (sq.m.). Respondent, on the other hand, is the owner of the property adjoining the lot of petitioner, located on Lyra Street, Moonwalk Village, Phase 2, Las Pias City. There is a concrete fence, more or less two (2) meters high, dividing Manuela Homesfrom Moonwalk Village.[3] On February 29, 2000, respondent caused the annotation of an adverse claim against sixty-five (65) sq.m. of the property of petitioner covered by TCT No. T-36071. The adverse claim was filed without any claim of ownership over the property. Respondent was merely asserting the existing legal easement of lateral and subjacent support at the rear portion of his estate to prevent the property from collapsing, since his property is located at an elevated plateau of fifteen (15) feet, more or less, above the level of petitioners property.[4] Respondent also filed a complaint for malicious mischief and malicious destruction before the office of the barangaychairman.[5] In defiance, petitioner filed a complaint for damages with temporary restraining order/writ of preliminary injunction before the Regional Trial Court (RTC) of Las Pias City. Petitioner also prayed that the Register of Deeds of Las Pias City be ordered to cancel the annotation of the adverse claim on TCT No. T-36071.[6] Prior to the filing of the case before the RTC, there were deposits of soil and rocks about two (2) meters away from the front door of the house of petitioner. As such, petitioner was not able to park her vehicle at the dead-end portion of Garnet Street. When petitioner noticed a leak that caused the front portion of her house to be slippery, she hired construction workers to see where the leak was coming from. The workers had already started digging when police officers sent by respondent came and stopped the workers from finishing their job.[7] Petitioner averred that when she bought the property from Manuela Homes in 1994, there was no annotation or existence of any easement over the property. Respondent neither asked permission nor talked to her with regard to the use of 65 sq.m. of her property as easement. Upon learning of the adverse claim, she felt disturbed and experienced sleepless nights for fear that she would not be able to sell her property. Petitioner admitted that TCT No. 36071 does not cover the open space at the dead-end portion of Garnet Street.[8] For his part, respondent claimed that he and his family had been residing in Moonwalk Village since June 1984. Adjacent to his property is the land of petitioner inManuela Homes. When he bought the property in 1983, the land elevation of Moonwalk Village was almost on the same level as Manuela Homes. However, sometime in 1985 and 1986, Pilar Development Corporation, the developer of Manuela Homes, bulldozed, excavated, and transferred portions of the elevated land to the lower portions of Manuela Homes. Thus, Manuela Homes became lower than Moonwalk Village.[9] Before the said excavation, respondent personally complained to Pilar

Development Corporation and was assured that, as provided by the National Building Code, an embankment will be retained at the boundary of Manuela Homes and Moonwalk Village, which is more or less fifteen (15) feet higher than Manuela Homes.[10] Manuela Homes retained the embankment consisting of soil and rocks. Respondent had the open space riprapped with stones as reinforcement against any potential soil erosion, earthquake, and possible digging by any person. Respondent asserted that the affidavit of adverse claim was for the annotation of the lateral and subjacent easement of his property over the property of petitioner, in view of the latters manifest determination to remove the embankment left by the developer of Manuela Homes. On October 11, 2004, the RTC rendered a decision,[11] the dispositive portion of which reads:

WHEREFORE, premises considered, this court hereby renders judgment: (1) ordering the cancellation of [respondents] adverse claim at the back of Transfer Certificate of Title No. T-36071 at the expense of [respondent] Napoleon Monsod; (2) ordering the said [respondent] to pay the herein [petitioner] the amount of Php50,000.00 as moral damages; and (3) dismissing [petitioners] claim for actual damages, attorneys fees, litigation costs and costs of suit and [respondents] compulsory counterclaim for lack of merit. SO ORDERED.[12]

The trial court ratiocinated that the adverse claim of respondent was non-registrable considering that the basis of his claim was an easement and not an interest adverse to the registered owner, and neither did he contest the title of petitioner. Furthermore, the adverse claim of respondent failed to comply with the requisites provided under Section 70 of Presidential Decree No. 1529.[13] On appeal, the CA reversed the decision of the trial court in a Decision[14] dated May 25, 2007, the fallo of which reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. The Decision of the Regional Trial Court, Branch 198, Las Pias City dated October 11, 2004 is REVERSED and SET ASIDE. The Court hereby orders the retention of the annotation at the back of Transfer Certificate of Title No. T-36071, not as an adverse claim, but a recognition of the existence of a legal easement of subjacent and lateral support constituted on the lengthwise or horizontal land support/embankment area of sixty-five (65) square meters, more or less, of the property of [petitioner] Margarita Castro. The writ of preliminary injunction issued by this Court on April 18, 2006 is hereby made permanent. [Petitioners] claim for damages is likewise DISMISSED. SO ORDERED.[15]

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The CA ruled that while respondents adverse claim could not be sanctioned because it did not fall under the requisites for registering an adverse claim, the same might be duly annotated in the title as recognition of the existence of a legal easement of subjacent and lateral support. The purpose of the annotation was to prevent petitioner from making injurious excavations on the subject embankment as to deprive the residential house and lot of respondent of its natural support and cause it to collapse. Respondent only asked that petitioner respect the legal easement already existing thereon.[16] On June 15, 2007, petitioner filed a motion for reconsideration. However, the CA denied the same in a Resolution[17] dated July 14, 2008. Hence, this petition. The issue in this case is whether the easement of lateral and subjacent support exists on the subject adjacent properties and, if it does, whether the same may be annotated at the back of the title of the servient estate. Article 437 of the Civil Code provides that the owner of a parcel of land is the owner of its surface and of everything under it, and he can construct thereon any works, or make any plantations and excavations which he may deem proper. However, such right of the owner is not absolute and is subject to the following limitations: (1)servitudes or easements,[18] (2) special laws,[19] (3) ordinances,[20] (4) reasonable requirements of aerial navigation,[21] and (5) rights of third persons.[22] Respondent filed before the RTC an affidavit of adverse claim, the pertinent portions of which read:

5. That our adverse claim consists of rights of legal or compulsory easement of lateral and subjacent support (under the Civil Code) over a portion of the above-described property of owner Margarita F. Castro, that is, covering the lengthwise or horizontal land support/embankment area of sixty-five (65) square meters, more or less. 6. That said registered owner has attempted to destroy and/or remove portions of the existing lateral/subjacent land and cement supports adjoining the said two properties. In fact, a portion of the easement was already destroyed/removed, to the continuing prejudice of herein adverse claimant, and that a formal complaint against said registered owner was filed by the herein adverse claimant before the Office of the Barangay Chairman of Talon V, Las Pias City and the same proved futile.[23]

Respondents assertion that he has an adverse claim over the 65 sq.m. property of petitioner is misplaced since he does not have a claim over the ownership of the land. The annotation of an adverse claim over registered land under Section 70 of Presidential Decree 1529[24] requires a claim on the title of the disputed land. Annotation is done to apprise third persons that there is a controversy over the ownership of the land and to preserve and protect the right of the adverse claimant during the pendency of the

controversy. It is a notice to third persons that any transaction regarding the disputed land is subject to the outcome of the dispute.[25] In reality, what respondent is claiming is a judicial recognition of the existence of the easement of subjacent and lateral support over the 65 sq. m. portion of petitioners property covering the land support/embankment area. His reason for the annotation is only to prevent petitioner from removing the embankment or from digging on the property for fear of soil erosion that might weaken the foundation of the rear portion of his property which is adjacent to the property of petitioner. An easement or servitude is an encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner.[26] There are two kinds of easements according to source. An easement is established either by law or by will of the owners.[27] The courts cannot impose or constitute any servitude where none existed. They can only declare its existence if in reality it exists by law or by the will of the owners. There are therefore no judicial easements.[28] Article 684 of the Civil Code provides that no proprietor shall make such excavations upon his land as to deprive any adjacent land or building of sufficient lateral or subjacent support. An owner, by virtue of his surface right, may make excavations on his land, but his right is subject to the limitation that he shall not deprive any adjacent land or building of sufficient lateral or subjacent support. Between two adjacent landowners, each has an absolute property right to have his land laterally supported by the soil of his neighbor, and if either, in excavating on his own premises, he so disturbs the lateral support of his neighbors land as to cause it, or, in its natural state, by the pressure of its own weight, to fall away or slide from its position, the one so excavating is liable.[29] In the instant case, an easement of subjacent and lateral support exists in favor of respondent. It was established that the properties of petitioner and respondent adjoin each other. The residential house and lot of respondent is located on an elevated plateau of fifteen (15) feet above the level of petitioners property. The embankment and the riprapped stones have been in existence even before petitioner became the owner of the property. It was proven that petitioner has been making excavations and diggings on the subject embankment and, unless restrained, the continued excavation of the embankment could cause the foundation of the rear portion of the house of respondent to collapse, resulting in the destruction of a huge part of the family dwelling.[30] We sustain the CA in declaring that a permanent injunction on the part of petitioner from making injurious excavations is necessary in order to protect the interest of respondent. However, an annotation of the existence of the subjacent and lateral support is no longer necessary. It exists whether or not it is annotated or registered in the registry of property. A judicial recognition of the same already binds the property and the owner of the same, including her successors-in-interest. Otherwise, every adjoining landowner would come to court or have the easement of subjacent and lateral support registered in order for it to be recognized and respected. WHEREFORE, in view of the foregoing, the Decision dated May 25, 2007 and the Resolution dated July 14, 2008 of the Court of Appeals in CA-G.R. CV No. 83973 are hereby AFFIRMED WITH MODIFICATION that the annotation at the back of Transfer

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Certificate of Title No. T-36071, recognizing the existence of the legal easement of subjacent and lateral support constituted on the lengthwise or horizontal land support/embankment area of sixty-five (65) square meters, more or less, of the property of petitioner Margarita F. Castro, is hereby ordered removed. SO ORDERED.

Republic of the Philippines

SUPREME COURT Manila

SECOND DIVISION G.R. No. 172804 January 24, 2011 GONZALO VILLANUEVA, represented by his heirs, Petitioner, vs. SPOUSES FROILAN and LEONILA BRANOCO, Respondents.

D E C I S I O N CARPIO, J.:

The Case This resolves the petition for review1 of the ruling2 of the Court of Appeals dismissing a suit to recover a realty.

The Facts Petitioner Gonzalo Villanueva (petitioner), here represented by his heirs,3 sued respondents, spouses Froilan and Leonila Branoco (respondents), in the Regional Trial Court of Naval, Biliran (trial court) to recover a 3,492 square-meter parcel of land in Amambajag, Culaba, Leyte (Property) and collect damages. Petitioner claimed ownership over the Property through purchase in July 1971 from Casimiro Vere (Vere), who, in turn, bought the Property from Alvegia Rodrigo (Rodrigo) in August 1970. Petitioner declared the Property in his name for tax purposes soon after acquiring it. In their Answer, respondents similarly claimed ownership over the Property through purchase in July 1983 from Eufracia Rodriguez (Rodriguez) to whom Rodrigo donated the Property in May 1965. The two-page deed of donation (Deed), signed at the bottom by the parties and two witnesses, reads in full: KNOW ALL MEN BY THESE PRESENTS: That I, ALVEGIA RODRIGO, Filipino, of legal age, widow of the late Juan Arcillas, a resident of Barrio Bool, municipality of Culaba, subprovince of Biliran, Leyte del Norte, Philippines, hereby depose and say: That as we live[d] together as husband and wife with Juan Arcillas, we begot children, namely: LUCIO, VICENTA, SEGUNDINA, and ADELAIDA, all surnamed ARCILLAS, and by reason of poverty which I suffered while our children were still young; and because my husband Juan Arcillas aware as he was with our destitution separated us [sic] and left for Cebu; and from then on never cared what happened to his family; and because of that one EUFRACIA RODRIGUEZ, one of my nieces who also suffered with our poverty, obedient as she was to all the works in our house, and because of the love and affection which I feel [for] her, I have one parcel of land located at Sitio Amambajag, Culaba, Leyte bearing Tax Decl. No. 1878 declared in the name of Alvegia Rodrigo, I give (devise) said land in favor of EUFRACIA RODRIGUEZ, her heirs, successors, and assigns together with all the

improvements existing thereon, which parcel of land is more or less described and bounded as follows: 1. Bounded North by Amambajag River; East, Benito Picao; South, Teofilo Uyvico; and West, by Public land; 2. It has an area of 3,492 square meters more or less; 3. It is planted to coconuts now bearing fruits; 4. Having an assessed value of P240.00; 5. It is now in the possession of EUFRACIA RODRIGUEZ since May 21, 1962 in the concept of an owner, but the Deed of Donation or that ownership be vested on her upon my demise. That I FURTHER DECLARE, and I reiterate that the land above described, I already devise in favor of EUFRACIA RODRIGUEZ since May 21, 1962, her heirs, assigns, and that if the herein Donee predeceases me, the same land will not be reverted to the Donor, but will be inherited by the heirs of EUFRACIA RODRIGUEZ; That I EUFRACIA RODRIGUEZ, hereby accept the land above described from Inay Alvegia Rodrigo and I am much grateful to her and praying further for a longer life; however, I will give one half (1/2) of the produce of the land to Apoy Alve during her lifetime.4 Respondents entered the Property in 1983 and paid taxes afterwards.

The Ruling of the Trial Court The trial court ruled for petitioner, declared him owner of the Property, and ordered respondents to surrender possession to petitioner, and to pay damages, the value of the Property’s produce since 1982 until petitioner’s repossession and the costs.5 The trial court rejected respondents’ claim of ownership after treating the Deed as a donation mortis causa which Rodrigo effectively cancelled by selling the Property to Vere in 1970.6 Thus, by the time Rodriguez sold the Property to respondents in 1983, she had no title to transfer. Respondents appealed to the Court of Appeals (CA), imputing error in the trial court’s interpretation of the Deed as a testamentary disposition instead of an inter vivos donation, passing title to Rodriguez upon its execution.

Ruling of the Court of Appeals The CA granted respondents’ appeal and set aside the trial court’s ruling. While conceding that the "language of the [Deed is] x x x confusing and which could admit of possible different interpretations,"7 the CA found the following factors pivotal to its reading of the Deed as donation inter vivos: (1) Rodriguez had been in possession of the Property as owner since 21 May 1962, subject to the delivery of part of the produce to Apoy Alve; (2) the Deed’s consideration was not Rodrigo’s death but her "love and affection" for Rodriguez, considering the services the latter rendered; (3) Rodrigo waived dominion over the Property in case Rodriguez predeceases her, implying its inclusion in Rodriguez’s estate; and (4) Rodriguez accepted the donation in the Deed itself, an act necessary to effectuate donations inter vivos, not devises.8 Accordingly, the CA upheld the sale between Rodriguez and respondents, and, conversely found the sale between Rodrigo and petitioner’s predecessor-in-interest, Vere, void for Rodrigo’s lack of title. In this petition, petitioner seeks the reinstatement of the trial court’s ruling. Alternatively, petitioner claims ownership over the Property through acquisitive prescription, having allegedly occupied it for more than 10 years.9 Respondents see no reversible error in the CA’s ruling and pray for its affirmance.

The Issue The threshold question is whether petitioner’s title over the Property is superior to respondents’. The resolution of this issue rests, in turn, on whether the contract between the parties’ predecessors-in-interest, Rodrigo and Rodriguez, was a donation or a devise. If the former, respondents hold superior title, having bought the Property from Rodriguez. If

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the latter, petitioner prevails, having obtained title from Rodrigo under a deed of sale the execution of which impliedly revoked the earlier devise to Rodriguez.

The Ruling of the Court We find respondents’ title superior, and thus, affirm the CA.

Naked Title Passed from Rodrigo to Rodriguez Under a Perfected Donation We examine the juridical nature of the Deed – whether it passed title to Rodriguez upon its execution or is effective only upon Rodrigo’s death – using principles distilled from relevant jurisprudence. Post-mortem dispositions typically –

(1) Convey no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; (2) That before the *donor’s+ death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; (3) That the transfer should be void if the transferor should survive the transferee.10

Further – [4] [T]he specification in a deed of the causes whereby the act may be revoked by the donor indicates that the donation is inter vivos, rather than a disposition mortis causa[;] [5] That the designation of the donation as mortis causa, or a provision in the deed to the effect that the donation is "to take effect at the death of the donor" are not controlling criteria; such statements are to be construed together with the rest of the instrument, in order to give effect to the real intent of the transferor[;] [and] (6) That in case of doubt, the conveyance should be deemed donation inter vivos rather than mortis causa, in order to avoid uncertainty as to the ownership of the property subject of the deed.11

It is immediately apparent that Rodrigo passed naked title to Rodriguez under a perfected donation inter vivos. First. Rodrigo stipulated that "if the herein Donee predeceases me, the [Property] will not be reverted to the Donor, but will be inherited by the heirs of x x x Rodriguez," signaling the irrevocability of the passage of title to Rodriguez’s estate, waiving Rodrigo’s right to reclaim title. This transfer of title was perfected the moment Rodrigo learned of Rodriguez’s acceptance of the disposition12 which, being reflected in the Deed, took place on the day of its execution on 3 May 1965. Rodrigo’s acceptance of the transfer underscores its essence as a gift in presenti, not in futuro, as only donations inter vivos need acceptance by the recipient.13 Indeed, had Rodrigo wished to retain full title over the Property, she could have easily stipulated, as the testator did in another case, that "the donor, may transfer, sell, or encumber to any person or entity the properties here donated x x x"14 or used words to that effect. Instead, Rodrigo expressly waived title over the Property in case Rodriguez predeceases her. In a bid to diffuse the non-reversion stipulation’s damning effect on his case, petitioner tries to profit from it, contending it is a fideicommissary substitution clause.15 Petitioner assumes the fact he is laboring to prove. The question of the Deed’s juridical nature, whether it is a will or a donation, is the crux of the present controversy. By treating the clause in question as mandating fideicommissary substitution, a mode of testamentary disposition by which the first heir instituted is entrusted with the obligation to preserve and to transmit to a second heir the whole or part of the inheritance,16 petitioner assumes

that the Deed is a will. Neither the Deed’s text nor the import of the contested clause supports petitioner’s theory. Second. What Rodrigo reserved for herself was only the beneficial title to the Property, evident from Rodriguez’s undertaking to "give one *half+ x x x of the produce of the land to Apoy Alve during her lifetime."17 Thus, the Deed’s stipulation that "the ownership shall be vested on [Rodriguez] upon my demise," taking into account the non-reversion clause, could only refer to Rodrigo’s beneficial title. We arrived at the same conclusion in Balaqui v. Dongso18 where, as here, the donor, while "b[inding] herself to answer to the [donor] and her heirs x x x that none shall question or disturb [the donee’s+ right," also stipulated that the donation "does not pass title to [the donee] during my lifetime; but when I die, [the donee] shall be the true owner" of the donated parcels of land. In finding the disposition as a gift inter vivos, the Court reasoned: Taking the deed x x x as a whole, x x x x it is noted that in the same deed [the donor] guaranteed to [the donee] and her heirs and successors, the right to said property thus conferred. From the moment [the donor] guaranteed the right granted by her to [the donee] to the two parcels of land by virtue of the deed of gift, she surrendered such right; otherwise there would be no need to guarantee said right. Therefore, when [the donor] used the words upon which the appellants base their contention that the gift in question is a donation mortis causa [that the gift "does not pass title during my lifetime; but when I die, she shall be the true owner of the two aforementioned parcels"] the donor meant nothing else than that she reserved of herself the possession and usufruct of said two parcels of land until her death, at which time the donee would be able to dispose of them freely.19(Emphasis supplied) Indeed, if Rodrigo still retained full ownership over the Property, it was unnecessary for her to reserve partial usufructuary right over it.20 Third. The existence of consideration other than the donor’s death, such as the donor’s love and affection to the donee and the services the latter rendered, while also true of devises, nevertheless "corroborates the express irrevocability of x x x [inter vivos] transfers."21 Thus, the CA committed no error in giving weight to Rodrigo’s statement of "love and affection" for Rodriguez, her niece, as consideration for the gift, to underscore its finding. It will not do, therefore, for petitioner to cherry-pick stipulations from the Deed tending to serve his cause (e.g. "the ownership shall be vested on [Rodriguez] upon my demise" and "devise"). Dispositions bearing contradictory stipulations are interpreted wholistically, to give effect to the donor’s intent. In no less than seven cases featuring deeds of donations styled as "mortis causa" dispositions, the Court, after going over the deeds, eventually considered the transfers inter vivos,22 consistent with the principle that "the designation of the donation as mortis causa, or a provision in the deed to the effect that the donation is ‘to take effect at the death of the donor’ are not controlling criteria *but+ x x x are to be construed together with the rest of the instrument, in order to give effect to the real intent of the transferor."23 Indeed, doubts on the nature of dispositions are resolved to favor inter vivostransfers "to avoid uncertainty as to the ownership of the property subject of the deed."24 Nor can petitioner capitalize on Rodrigo’s post-donation transfer of the Property to Vere as proof of her retention of ownership. If such were the barometer in interpreting deeds of donation, not only will great legal uncertainty be visited on gratuitous dispositions, this will give license to rogue property owners to set at naught perfected transfers of titles,

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which, while founded on liberality, is a valid mode of passing ownership. The interest of settled property dispositions counsels against licensing such practice.25 Accordingly, having irrevocably transferred naked title over the Property to Rodriguez in 1965, Rodrigo "cannot afterwards revoke the donation nor dispose of the said property in favor of another."26 Thus, Rodrigo’s post-donation sale of the Property vested no title to Vere. As Vere’s successor-in-interest, petitioner acquired no better right than him. On the other hand, respondents bought the Property from Rodriguez, thus acquiring the latter’s title which they may invoke against all adverse claimants, including petitioner.

Petitioner Acquired No Title Over the Property Alternatively, petitioner grounds his claim of ownership over the Property through his and Vere’s combined possession of the Property for more than ten years, counted from Vere’s purchase of the Property from Rodrigo in 1970 until petitioner initiated his suit in the trial court in February 1986.27 Petitioner anchors his contention on an unfounded legal assumption. The ten year ordinary prescriptive period to acquire title through possession of real property in the concept of an owner requires uninterrupted possession coupled with just title and good faith.28There is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.29 Good faith, on the other hand, consists in the reasonable belief that the person from whom the possessor received the thing was the owner thereof, and could transmit his ownership.30 Although Vere and petitioner arguably had just title having successively acquired the Property through sale, neither was a good faith possessor. As Rodrigo herself disclosed in the Deed, Rodriguez already occupied and possessed the Property "in the concept of an owner" ("como tag-iya"31) since 21 May 1962, nearly three years before Rodrigo’s donation in 3 May 1965 and seven years before Vere bought the Property from Rodrigo. This admission against interest binds Rodrigo and all those tracing title to the Property through her, including Vere and petitioner. Indeed, petitioner’s insistent claim that Rodriguez occupied the Property only in 1982, when she started paying taxes, finds no basis in the records. In short, when Vere bought the Property from Rodrigo in 1970, Rodriguez was in possession of the Property, a fact that prevented Vere from being a buyer in good faith. Lacking good faith possession, petitioner’s only other recourse to maintain his claim of ownership by prescription is to show open, continuous and adverse possession of the Property for 30 years.32 Undeniably, petitioner is unable to meet this requirement.1avvphil

Ancillary Matters Petitioner Raises Irrelevant Petitioner brings to the Court’s attention facts which, according to him, support his theory that Rodrigo never passed ownership over the Property to Rodriguez, namely, that Rodriguez registered the Deed and paid taxes on the Property only in 1982 and Rodriguez obtained from Vere in 1981 a waiver of the latter’s "right of ownership" over the Property. None of these facts detract from our conclusion that under the text of the Deed and based on the contemporaneous acts of Rodrigo and Rodriguez, the latter, already in possession of the Property since 1962 as Rodrigo admitted, obtained naked title over it upon the Deed’s execution in 1965. Neither registration nor tax payment is required to perfect donations. On the relevance of the waiver agreement, suffice it to say that Vere had nothing to waive to Rodriguez, having obtained no title from Rodrigo. Irrespective of Rodriguez’s motivation in obtaining the waiver, that document, legally a scrap of paper, added nothing to the title Rodriguez obtained from Rodrigo under the Deed.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 6 June 2005 and the Resolution dated 5 May 2006 of the Court of Appeals. SO ORDERED. ANTONIO T. CARPIO

Republic of the Philippines

Supreme Court Manila

THIRD DIVISION

JAIME ABALOS and SPOUSES FELIX SALAZAR and CONSUELO SALAZAR, GLICERIO ABALOS, HEIRS OF AQUILINO ABALOS, namely: SEGUNDA BAUTISTA, ROGELIO ABALOS, DOLORES A. ROSARIO, FELICIDAD ABALOS, ROBERTO ABALOS, JUANITO ABALOS, TITA ABALOS, LITA A. DELA CRUZ AND HEIRS OF AQUILINA ABALOS, namely: ARTURO BRAVO, PURITA B. MENDOZA, LOURDES B. AGANON, CONSUELO B. SALAZAR, PRIMA B. DELOS SANTOS, THELMA APOSTOL and GLECERIO ABALOS, Petitioners,

- versus - HEIRS OF VICENTE TORIO, namely: PUBLIO TORIO, LIBORIO TORIO, VICTORINA TORIO, ANGEL TORIO, LADISLAO TORIO, PRIMO TORIO and NORBERTO TORIO, Respondents.

G.R. No. 175444 Present: VELASCO, JR., J., Chairperson, PERALTA, ABAD, MENDOZA, and PERLAS-BERNABE, JJ. Promulgated: December 14, 2011

x-----------------------------------------------------------------------------------------x D E C I S I O N PERALTA, J.: Before the Court is a petition for review on certiorari seeking to set aside the Decision1 dated June 30, 2006 and Resolution2 dated November 13, 2006 by the Court of Appeals (CA) in CA-G.R. SP No. 91887. The assailed Decision reversed and set aside the Decision3 dated June 14, 2005 of the Regional Trial Court (RTC) of Lingayen, Pangasinan, Branch 69, while the questioned Resolution denied petitioners' Motion for Reconsideration. The factual and procedural antecedents of the case are as follows: On July 24, 1996, herein respondents filed a Complaint for Recovery of Possession and Damages with the Municipal Trial Court (MTC) of Binmaley, Pangasinan against Jaime Abalos (Jaime) and the spouses Felix and Consuelo Salazar. Respondents contended that: they are the children and heirs of one Vicente Torio (Vicente) who died intestate on September 11, 1973; at the time of the death of Vicente, he left behind a parcel of land

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measuring 2,950 square meters, more or less, which is located at San Isidro Norte, Binmaley, Pangasinan; during the lifetime of Vicente and through his tolerance, Jaime and the Spouses Salazar were allowed to stay and build their respective houses on the subject parcel of land; even after the death of Vicente, herein respondents allowed Jaime and the Spouses Salazar to remain on the disputed lot; however, in 1985, respondents asked Jaime and the Spouses Salazar to vacate the subject lot, but they refused to heed the demand of respondents forcing respondents to file the complaint.4 Jaime and the Spouses Salazar filed their Answer with Counterclaim, denying the material allegations in the Complaint and asserting in their Special and Affirmative Defenses that: respondents' cause of action is barred by acquisitive prescription; the court a quo has no jurisdiction over the nature of the action and the persons of the defendants; the absolute and exclusive owners and possessors of the disputed lot are the deceased predecessors of defendants; defendants and their predecessors-in-interest had been in actual, continuous and peaceful possession of the subject lot as owners since time immemorial; defendants are faithfully and religiously paying real property taxes on the disputed lot as evidenced by Real Property Tax Receipts; they have continuously introduced improvements on the said land, such as houses, trees and other kinds of ornamental plants which are in existence up to the time of the filing of their Answer.5 On the same date as the filing of defendants' Answer with Counterclaim, herein petitioners filed their Answer in Intervention with Counterclaim. Like the defendants, herein petitioners claimed that their predecessors-in-interest were the absolute and exclusive owners of the land in question; that petitioners and their predecessors had been in possession of the subject lot since time immemorial up to the present; they have paid real property taxes and introduced improvements thereon.6 After the issues were joined, trial ensued. On December 10, 2003, the MTC issued a Decision, the dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing consideration[s], the Court adjudged the case in favor of the plaintiffs and against the defendants and defendants-intervenors are ordered to turn over the land in question to the plaintiffs (Lot Nos. 869 and 870, Cad. 467-D. Binmaley Cadastre located in Brgy. San Isidro Norte, Binmaley, Pangasinan with an area of 2,950 sq. m., more or less, bounded and described in paragraph 3 of the Complaint[)]; ordering the defendants and defendants-intervenors to remove their respective houses standing on the land in dispute; further ordering the defendants and defendants-intervenors, either singly or jointly to pay the plaintiffs land rent in the amount of P12,000.00 per year to be reckoned starting the year 1996 until defendants and defendants-intervenors will finally vacate the premises; furthermore, defendants and defendants-intervenors are also ordered to pay, either singly or jointly, the amount ofP10,000.00 as and by way of attorney's fees and costs of suit.

SO ORDERED.7 Jaime and the Spouses Salazar appealed the Decision of the MTC with the RTC of Lingayen, Pangasinan.8 Herein petitioners, who were intervenors, did not file an appeal. In its Decision dated June 14, 2005, the RTC ruled in favor of Jaime and the Spouses Salazar, holding that they have acquired the subject property through prescription. Accordingly, the RTC dismissed herein respondents' complaint. Aggrieved, herein respondents filed a petition for review with the CA assailing the Decision of the RTC. On June 30, 2006, the CA promulgated its questioned Decision, the dispositive portion of which reads, thus:

WHEREFORE, the petition is GRANTED. The Decision dated June 14, 2005 of the Regional Trial Court, Branch 69, Lingayen, Pangasinan is hereby REVERSED and SET ASIDE. In its stead, a new one is entered reinstating the Decision dated December 10, 2003 of the Municipal Trial Court of Binmaley, Pangasinan. SO ORDERED.9

Jaime and the Spouses Salazar filed a Motion for Reconsideration, but the same was denied by the CA in its Resolution dated November 13, 2006. Hence, the instant petition based on a sole assignment of error, to wit:

THE COURT OF APPEALS ERRED IN NOT APPRECIATING THAT THE PETITIONERS HEREIN ARE NOW THE ABSOLUTE AND EXCLUSIVE OWNERS OF THE LAND IN QUESTION BY VIRTUE OF ACQUISITIVE PRESCRIPTION.10

The main issue raised by petitioners is whether they and their predecessors-in-interest possessed the disputed lot in the concept of an owner, or whether their possession is by mere tolerance of respondents and their predecessors-in-interest. Corollarily, petitioners claim that the due execution and authenticity of the deed of sale upon which respondents' predecessors-in-interest derived their ownership were not proven during trial. The petition lacks merit. Preliminarily, the Court agrees with the observation of respondents that some of the petitioners in the instant petition were the intervenors11 when the case was filed with the MTC. Records would show that they did not appeal the Decision of the MTC.12 The settled rule is that failure to perfect an appeal renders the judgment final and executory.13 Hence, insofar as the intervenors in the MTC are concerned, the judgment of the MTC had already become final and executory.

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It also bears to point out that the main issue raised in the instant petition, which is the character or nature of petitioners' possession of the subject parcel of land, is factual in nature. Settled is the rule that questions of fact are not reviewable in petitions for review on certiorari under Rule 45 of the Rules of Court.14 Section 1 of Rule 45 states that petitions for review on certiorari shall raise only questions of law which must be distinctly set forth. Doubtless, the issue of whether petitioners possess the subject property as owners, or whether they occupy the same by mere tolerance of respondents, is a question of fact. Thus, it is not reviewable. Nonetheless, the Court has, at times, allowed exceptions from the abovementioned restriction. Among the recognized exceptions are the following:

(a) When the findings are grounded entirely on speculation, surmises,

or conjectures; (b) When the inference made is manifestly mistaken, absurd, or

impossible; (c) When there is grave abuse of discretion; (d) When the judgment is based on a misapprehension of facts; (e) When the findings of facts are conflicting; (f) When in making its findings the CA went beyond the issues of the

case, or its findings are contrary to the admissions of both the appellant and the appellee;

(g) When the CAs findings are contrary to those by the trial court; (h) When the findings are conclusions without citation of specific

evidence on which they are based; (i) When the facts set forth in the petition as well as in the petitioners

main and reply briefs are not disputed by the respondent; (j) When the findings of fact are premised on the supposed absence of

evidence and contradicted by the evidence on record; or (k) When the CA manifestly overlooked certain relevant facts not

disputed by the parties, which, if properly considered, would justify a different conclusion.15

In the present case, the findings of fact of the MTC and the CA are in conflict with those of the RTC. After a review of the records, however, the Court finds that the petition must fail as it finds no error in the findings of fact and conclusions of law of the CA and the MTC. Petitioners claim that they have acquired ownership over the disputed lot through ordinary acquisitive prescription. Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary.16 Ordinary acquisitive prescription requires possession in good faith and with just title for ten (10) years.17 Without good faith and just title, acquisitive prescription

can only be extraordinary in character which requires uninterrupted adverse possession for thirty (30) years.18 Possession in good faith consists in the reasonable belief that the person from whom the thing is received has been the owner thereof, and could transmit his ownership.19There is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.20 In the instant case, it is clear that during their possession of the property in question, petitioners acknowledged ownership thereof by the immediate predecessor-in-interest of respondents. This is clearly shown by the Tax Declaration in the name of Jaime for the year 1984 wherein it contains a statement admitting that Jaime's house was built on the land of Vicente, respondents' immediate predecessor-in-interest.21 Petitioners never disputed such an acknowledgment. Thus, having knowledge that they nor their predecessors-in-interest are not the owners of the disputed lot, petitioners' possession could not be deemed as possession in good faith as to enable them to acquire the subject land by ordinary prescription. In this respect, the Court agrees with the CA that petitioners' possession of the lot in question was by mere tolerance of respondents and their predecessors-in-interest. Acts of possessory character executed due to license or by mere tolerance of the owner are inadequate for purposes of acquisitive prescription.22 Possession, to constitute the foundation of a prescriptive right, must be en concepto de dueo, or, to use the common law equivalent of the term, that possession should be adverse, if not, such possessory acts, no matter how long, do not start the running of the period of prescription.23 Moreover, the CA correctly held that even if the character of petitioners' possession of the subject property had become adverse, as evidenced by their declaration of the same for tax purposes under the names of their predecessors-in-interest, their possession still falls short of the required period of thirty (30) years in cases of extraordinary acquisitive prescription. Records show that the earliest Tax Declaration in the name of petitioners was in 1974. Reckoned from such date, the thirty-year period was completed in 2004. However, herein respondents' complaint was filed in 1996, effectively interrupting petitioners' possession upon service of summons on them.24 Thus, petitioners possession also did not ripen into ownership, because they failed to meet the required statutory period of extraordinary prescription. This Court has held that the evidence relative to the possession upon which the alleged prescription is based, must be clear, complete and conclusive in order to establish the prescription.25 In the present case, the Court finds no error on the part of the CA in holding that petitioners failed to present competent evidence to prove their alleged good faith in neither possessing the subject lot nor their adverse claim thereon. Instead, the records would show that petitioners' possession was by mere tolerance of respondents and their predecessors-in-interest. Finally, as to the issue of whether the due execution and authenticity of the deed of sale upon which respondents anchor their ownership were not proven, the Court notes that petitioners did not raise this matter in their Answer as well as in their Pre-Trial Brief. It was only in their Comment to respondents' Petition for Review filed with the CA that they

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raised this issue. Settled is the rule that points of law, theories, issues, and arguments not adequately brought to the attention of the trial court need not be, and ordinarily will not be, considered by a reviewing court.26 They cannot be raised for the first time on appeal. To allow this would be offensive to the basic rules of fair play, justice and due process.27 Even granting that the issue of due execution and authenticity was properly raised, the Court finds no cogent reason to depart from the findings of the CA, to wit:

x x x x Based on the foregoing, respondents [Jaime Abalos and the Spouses Felix and Consuelo Salazar] have not inherited the disputed land because the same was shown to have already been validly sold to Marcos Torio, who, thereupon, assigned the same to his son Vicente, the father of petitioners [herein respondents]. A valid sale was amply established and the said validity subsists because the deed evidencing the same was duly notarized. There is no doubt that the deed of sale was duly acknowledged before a notary public. As a notarized document, it has in its favor the presumption of regularity and it carries the evidentiary weight conferred upon it with respect to its due execution. It is admissible in evidence without further proof of its authenticity and is entitled to full faith and credit upon its face.28

Indeed, settled is the rule in our jurisdiction that a notarized document has in its favor the presumption of regularity, and to overcome the same, there must be evidence that is clear, convincing and more than merely preponderant; otherwise, the document should be upheld.29 In the instant case, petitioners' bare denials will not suffice to overcome the presumption of regularity of the assailed deed of sale. WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 91887 are AFFIRMED. SO ORDERED. _______________________________________________________________________

FIRST DIVISION RAMON ARANDA, Petitioner, - versus -

G.R. No. 172331 Present: CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN, VILLARAMA, JR., and PEREZ,* JJ.

REPUBLIC OF THE PHILIPPINES, Respondent.

Promulgated: August 24, 2011

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

DECISION VILLARAMA, JR., J.: On appeal is the Decision[1] dated July 26, 2005 and Resolution[2] dated April 11, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 73067 which reversed and set aside the Decision[3] dated January 31, 2001 of the Regional Trial Court (RTC) of Tanauan, Batangas, Branch 6 in Land Reg. Case No. T-335 (LRA Record No. N-69447). Subject of a petition for original registration before the RTC is a parcel of land situated in San Andres, Malvar, Batangas with an area of 9,103 square meters and designated as Lot 3730, Psc 47, Malvar Cadastre. The petition[4] was originally filed by ICTSI Warehousing, Inc. (ICTSI-WI) represented by its Chairman, Enrique K. Razon, Jr. The Republic through the Office of the Solicitor General (OSG) filed its opposition[5] on grounds that the land applied for is part of the public domain and the applicant has not acquired a registrable title thereto under the provisions of Commonwealth Act No. 141 as amended by Republic Act No. 6940. ICTSI-WI sought leave of court to amend the application citing the following reasons: (1) the petition was not accompanied by a certification of non-forum shopping; (2) the statement of technical description was based merely on the boundaries set forth in the tax declaration; and (3) due to a technicality, the sale between the vendor and applicant corporation cannot push through and consequently the tax declaration is still in the name of vendor Ramon Aranda and the land cannot be transferred and declared in the name of ICTSI-WI.[6] The trial court admitted the Amended Application for Registration of Title,[7] this time filed in the name of Ramon Aranda, herein petitioner. Petitioner prayed that should the Land Registration Act be not applicable to this case, he invokes the liberal provisions of Section 48 of Commonwealth Act No. 141, as amended, having been in continuous possession of the subject land in the concept of owner, publicly, openly and adversely for more than thirty (30) years prior to the filing of the application.[8] In support of the application, petitioners sister Merlita A. Enriquez testified that in 1965 her father Anatalio Aranda donated the subject land to his brother (petitioner), as evidenced by documents Pagpapatunay ng Pagkakaloob ng Lupa which she and her siblings executed on June 7, 2000.[9] She came to know the land for the first time in 1965 when she was eight years old and his brother Ramon has been tilling the land since then, planting it with rice and corn. His brother did not introduce any permanent improvement and also did not hire a tenant to work on the land. As to the donation made by his father to his brother Ramon, she recalled there was such a document but it was eaten by rats.[10] Another witness, Luis Olan, testified that his father Lucio Olan originally owned the land and that he had known about this property since he was six (6) years old as he used to accompany his father in going to the land. His father farmed the land and planted it first, with rice, and later corn. They had open, peaceful, continuous and adverse possession of the land in the concept of owner until his father sold the land in 1946 to Anatalio Aranda. The children of Anatalio then took over in tilling the land, planting it with rice and corn and adding a few coconut trees. He does not have any copy of the document of sale because his mother gave it to Anatalio.[11]

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On January 31, 2001, the trial court rendered its Decision[12] granting the application and ordering the issuance of a decree of registration in favor of petitioner. The Republic appealed to the CA which reversed the trial court. The CA held that petitioners evidence does not satisfactorily establish the character and duration of possession required by law, as petitioner failed to prove specific acts showing the nature of the possession by his predecessors-in-interest. The CA also did not give evidentiary weight to the documents Pagpapatunay ng Pagkakaloob ng Lupa and Pagpapatunay ng Bilihang Lampasan ng Lupa,[13] both prepared only in the year 2000 when the application for registration was filed, as factual proof of ownership by the parties to the compromise agreement. Petitioners motion for reconsideration was likewise denied by the CA. Hence, this appeal by way of a petition for review on certiorari under Rule 45 alleging that the decision of the CA is based on a misapprehension of facts with regard to compliance with the required 30 years of open, exclusive, public and adverse possession in the concept of owner. Petitioner argues that the deeds of confirmation of the 1946 sale in favor of Anatalio Aranda and the 1965 donation to petitioner are competent proof of transfer of ownership notwithstanding that these were executed only in the year 2000. He asserts that the testimonies of witnesses Merlita Aranda-Enriquez and Luis Olan on the fact of loss and destruction of copies of the aforesaid deeds constitute secondary evidence of the contents thereof based on recollection of persons who are adversely affected. Such testimonial evidence coupled with the deeds of confirmation warrants the application of the exception from the best evidence rule. Petitioner thus contends that the CA had no legal basis to doubt the veracity of the donation and sale of the subject property, and to conclude that the confirmation deeds can be treated as compromise agreement considering that the transactions had been previously completed and perfected by the parties. We deny the petition. The Property Registration Decree (P.D. No. 1529) provides for original registration of land in an ordinary registration proceeding. Under Section 14(1)[14] thereof, a petition may be granted upon compliance with the following requisites: (a) that the property in question is alienable and disposable land of the public domain; (b) that the applicants by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation; and (c) that such possession is under a bona fide claim of ownership since June 12, 1945 or earlier.

Under the Regalian doctrine which is embodied in Section 2, Article XII of the 1987 Constitution, all lands of the public domain belong to the State, which is the source of any asserted right to ownership of land. All lands not appearing to be clearly within private ownership are presumed to belong to the State. Unless public land is shown to have been reclassified or alienated to a private person by the State, it remains part of the inalienable public domain. To overcome this presumption, incontrovertible evidence must be established that the land subject of the application is alienable or disposable.[15]

To prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the government such as a presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute.[16] The applicant may also secure a certification from the Government that the lands applied for are alienable and disposable.[17]

In this case, the Assistant Regional Executive Director For Operations-Mainland Provinces of the Department of Environment and Natural Resources (DENR), in compliance with the directive of the trial court, issued a certification stating that the subject property falls within the Alienable and Disposable Land, Project No. 22-A of Lipa, Batangas per LC Map 718 certified on March 26, 1928.[18] However, in the Certification[19] dated January 14, 2000 issued by the DENR CENR Officer ofBatangas City, Pancrasio M. Alcantara, which was submitted in evidence by the petitioner, it states that:

This is to certify that based on projection from the technical reference map of this Office, Lot No. 3730, Ap-04-009883, situated at Barangay San Andres, Malvar, Batangas containing an area of NINE THOUSAND ONE HUNDRED THREE AND FORTY SEVEN (9,103.47) SQUARE METERS and shown at the reverse side hereof has been verified to be within the ALIENABLE AND DISPOSABLE ZONE under Project No. 39, Land Classification Map No. 3601 certified on 22 December 1997 except for twenty meters strip of land along the creek bounding on the northeastern portion which is to be maintained as streambank protection.

x x x x (Emphasis supplied.) Petitioner has not explained the discrepancies in the dates of classification[20] mentioned in the foregoing government certifications. Consequently, the status of the land applied for as alienable and disposable was not clearly established.

We also agree with the CA that petitioners evidence failed to show that he possessed the property in the manner and for the duration required by law. Petitioner presented tax declarations and the deeds of confirmation of the 1946 sale from the original owner (Lucio Olan) to Anatalio Aranda and the 1965 donation made by the latter in favor of petitioner. But as found by the CA, the history of the land shows that it was declared for taxation purposes for the first time only in 1981. On the other hand, the Certification issued by the Municipal Treasurer of Malvar stated that petitioner, who supposedly received the property from his father in 1965, had been paying the corresponding taxes for said land for more than five consecutive years including the current year [1999], or beginning 1994 only or just three years before the filing of the application for original registration. While, as a rule, tax declarations or realty tax payments of property are not conclusive evidence of ownership, nevertheless they are good indicia of possession in the concept of owner, for no one in his right mind would be paying taxes for a property that is not in his actual or constructive possession they constitute at least proof that the holder has a claim of title over the property.[21] Petitioner likewise failed to prove the alleged possession of his predecessors-in-interest. His witness Luis Olan testified that he had been visiting the land along with his father Lucio since he was 6 years old (he was 70 years old at the time he testified), or as early as 1936. Yet, there was no evidence that Lucio Olan declared the property for tax purposes at anytime before he sold it to Anatalio Aranda. There is also no showing that Anatalio Aranda declared the property in his name from the time he bought it from Lucio Olan. And even assuming that Lucio actually planted rice and corn on the land, such statement is not sufficient to establish possession in the concept of owner as contemplated by law. Mere casual cultivation of the land does not amount to exclusive and notorious possession that would give rise to ownership.[22] Specific acts of dominion must be clearly shown by the applicant.

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We have held that a person who seeks the registration of title to a piece of land on the basis of possession by himself and his predecessors-in-interest must prove his claim by clear and convincing evidence, i.e., he must prove his title and should not rely on the absence or weakness of the evidence of the oppositors.[23]Furthermore, the court has the bounden duty, even in the absence of any opposition, to require the petitioner to show, by a preponderance of evidence and by positive and absolute proof, so far as possible, that he is the owner in fee simple of the lands which he is attempting to register.[24] Since petitioner failed to meet the quantum of proof required by law, the CA was correct in reversing the trial court and dismissing his application for judicial confirmation of title. WHEREFORE, the present petition for review on certiorari is DENIED. The Decision dated July 26, 2005 and Resolution dated April 11, 2006 of the Court of Appeals in CA-G.R. CV No. 73067 are AFFIRMED and UPHELD. With costs against the petitioner.

SO ORDERED.

FIRST DIVISION

DCD CONSTRUCTION, INC., Petitioner, - versus -

G.R. No. 179978 Present: CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN, DEL CASTILLO, and VILLARAMA, JR., JJ.

REPUBLIC OF THE PHILIPPINES, Respondent.

Promulgated: August 31, 2011

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

DECISION

VILLARAMA, JR., J.: Before us is a petition for review on certiorari under Rule 45 which seeks to set

aside the Decision[1] dated June 25, 2007 and Resolution[2] dated September 10, 2007 of the Court of Appeals (CA) in CA-G.R. CV No. 77868. The CA reversed the Decision[3] dated August 22, 2002 of the Regional Trial Court (RTC) ofDanao City, Branch 25 in LRC No. 147 (LRA Rec. No. N-73333).

On January 19, 2001, petitioner DCD Construction, Inc., through its President and CEO Danilo D. Dira, Jr., filed a verified application for registration[4] of a parcel of land situated in Taytay, Danao City with an area of 4,493 square meters designated as Cadastral Lot No. 5331-part, CAD 681-D. It was alleged that applicant which acquired the property by purchase, together with its predecessors-in-interest, have been in continuous, open,

adverse, public, uninterrupted, exclusive and notorious possession and occupation of the property for more than thirty (30) years. Thus, petitioner prayed to have its title judicially confirmed.

After compliance with the jurisdictional requirements, the trial court through its clerk of court conducted hearings for the reception of petitioners evidence. Based on petitioners documentary and testimonial evidence, it appears that although designated as Cadastral Lot No. 5331-part, the approved technical description indicated the lot number as Lot 30186, CAD 681-D which is allegedly identical to Lot 21225-A, Csd-07-006621 consisting of 3,781 square meters. Lot 5331-part (4,493 sq. ms.) was subdivided into two (Lots 21225-A and 21225-B) so that the 712 square meters (Lot 21225-B) can be segregated as salvage zone pursuant to DENR Administrative Order No. 97-05.[5]

Andrea Batucan Enriquez, one of the six (6) children of Vivencio and Paulina Batucan, testified that her parents originally owned the subject land which was bought by her father after the Second World War. Vivencio and Paulina died on April 2, 1967 and November 11, 1980, respectively. Upon the death of their parents, she and her siblings inherited the land which they possessed and declared for tax purposes. On December 22, 1993, they executed a Deed of Extrajudicial Settlement With Absolute Sale whereby they sold the property to Danilo C. Dira, Sr., petitioners father.[6]

Danilo D. Dira, Jr. testified that the subject land declared under Tax Declaration (TD) No. 0400583 in the name of Danilo C. Dira, Sr. was among those properties which they inherited from his father, as shown in the Extrajudicial Settlement of Estate With Special Power of Attorney dated May 28, 1996 and Supplemental Extrajudicial Settlement of Estate dated February 27, 1997. On June 26, 2000, his mother, brothers and sisters executed a Deed of Absolute Sale whereby the subject land was sold to petitioner. Thereafter, petitioner declared the property for tax purposes and also paid realty taxes. His father had possessed the land beginning 1992 or 1994, and presently petitioner is in possession thereof. Petitioner also assumed the P3.8 million mortgage obligation with Land Bank of thePhilippines as evidenced by the Deed of Undertaking/Agreement dated March 30, 2000.[7]

On August 22, 2002, the trial court rendered its decision, the dispositive portion of which reads:

WHEREFORE, from all of the foregoing undisputed facts, this Court finds and so holds that the applicant DCD CONSTRUCTION INC., has a registerable title to Lot No. 5331-A with an area of 3,781 square meters as part of Lot 5331, CAD-681-D, under Csd-072223-003891 which is identical to Lot No. 21225-A as part of Lot No. 21225, CAD-681-D, under Csd-07-006621, and is covered by Tax Declaration No. 0-0400469 situated in Taytay, Danao City, hereby confirming the same and ordering its registration under Act 496, as amended by Presidential Decree No. 1529, strictly in line with the Technical Description of Lot 30186, Danao, CAD-681-D, identical to Lot 21225-A, Csd-07-006621, upon finality of this decision.

SO ORDERED.[8] On appeal by respondent Republic of the Philippines, the CA reversed the trial

court. The CA ruled that the evidence failed to show that the land applied for was alienable and disposable considering that only a notation in the survey plan was presented to show the status of the property. The CA also found that petitioners evidence was insufficient to establish the requisite possession as the land was bought by Vivencio

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Batucan only after the Second World War or in 1946, further noting that the earliest tax declaration submitted was issued only in 1988. As to the testimony of witness Andrea Batucan Enriquez, the CA held that it did not prove open, continuous, exclusive and notorious possession under a bona fide claim of ownership since June 12, 1945.

Its motion for reconsideration having been denied, petitioner is now before this Court raising the following arguments:

I IN RULING THAT PETITIONER FAILED TO PROVE THAT THE LAND APPLIED FOR IS ALIENABLE AND DISPOSABLE, THE COURT OF APPEALS COMMITTED A GROSS MISAPPREHENSION OF FACTS, WHICH WARRANTS A REVIEW BY THE HONORABLE SUPREME COURT, IN ACCORDANCE WITH THE RULING INMEGAWORLD AND HOLDINGS, INC. VS. HON. JUDGE BENEDICTO G. COBARDE, ET AL. AND SUPERLINES TRANSPORTATION COMPANY, INC. VS. PHILIPPINE NATIONAL CONSTRUCTION COMPANY, ET AL. (A) THE BUREAU OF LANDS VERIFIED AND CERTIFIED THE

SUBJECT LOT AS ALIENABLE AND DISPOSABLE. (B) THE DENR CERTIFIED THAT ITS OWN LAND CLASSIFICATION

MAP SHOWS THAT SUBJECT LOT IS WITHIN THE ALIENABLE AND DISPOSABLE AREA.

II THE COURT OF APPEALS DECIDED THE CASE IN A WAY NOT IN ACCORD WITH LAW AND SETTLED DECISION OF THE HONORABLE SUPREME COURT, WHEN IT RULED THAT PETITIONER FAILED TO PROVE THAT THE REQUIREMENT OF OPEN, CONTINUOUS, EXCLUSIVE AND NOTORIOUS POSSESSION AND OCCUPATION OF THE SUBJECT LAND FOR THE PERIOD REQUIRED BY LAW HAS BEEN COMPLIED WITH, DESPITE THE FACT THAT: (A) WITNESS ANDREA ENRIQUEZS TESTIMONY SHOWS THAT

PETITIONERS PREDECESSORS-IN-INTEREST ACQUIRED AND POSSESSED SUBJECT LOT IN 1942.

(B) IN REPUBLIC OF THE PHILS. VS. SPOUSES ENRIQUEZ, THE SUPREME COURT CATEGORICALLY RULED THAT POSSESSION FOR 34 YEARS IS SUFFICIENT COMPLIANCE WITH THE LEGAL REQUIREMENT FOR REGISTRATION.[9]

We deny the petition. In Megaworld Properties and Holdings, Inc. v. Cobarde,[10] the Court held that as

an exception to the binding effect of the trial courts factual findings which were affirmed by the CA, a review of such factual findings may be made when the judgment of the CA is premised on a misapprehension of facts or a failure to consider certain relevant facts that would lead to a completely different conclusion. In the same vein, we declared in Superlines Transportation Company, Inc. v. Philippine National Construction Company,[11] that while it is settled that this Court is not a trier of facts and does not, as a rule, undertake a re-examination of the evidence presented by the parties, a number of exceptions have nevertheless been recognized by the Court, such as when the judgment is based on a misapprehension of facts, and when the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. Petitioner invokes the foregoing exceptions urging this Court to pass

upon anew the CAs findings regarding the status of the subject land and compliance with the required character and duration of possession by an applicant for judicial confirmation of title.

After a thorough review, we find no reversible error committed by the CA in ruling that petitioner failed to establish a registrable title on the subject land.

Applicants for confirmation of imperfect title must prove the following: (a) that the land forms part of the disposable and alienable agricultural lands of the public domain and (b) that they have been in open, continuous, exclusive and notorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial or since June 12, 1945.[12]

Under Section 2, Article XII of the Constitution, which embodies the Regalian doctrine, all lands of the public domain belong to the State the source of any asserted right to ownership of land.[13] All lands not appearing to be clearly of private dominion presumptively belong to the State.[14] Accordingly, public lands not shown to have been reclassified or released as alienable and disposable agricultural land or alienated to a private person by the State remain part of the inalienable public domain.[15] Incontrovertible evidence must be presented to establish that the land subject of the application is alienable or disposable.[16]

In support of its contention that Lot 5331-A, CAD-681-D under Csd-072223-003891 is alienable and disposable, petitioner presented the following notation appearing in the survey plan which reads:

CONFORMED PER LC MAP NOTATION LC Map No. 1321, Project No. 26-A certified on June 07, 1938, verified to be within Alienable & Disposable Area (SGD.) CYNTHIA L. IBAEZ Chief, Map Projection Section[17]

Petitioner assailed the CA in refusing to give weight to the above certification, stressing that the DENR-Lands Management Services (LMS) approved the survey plan in its entirety, without any reservation as to the inaccuracy or incorrectness of Cynthia L. Ibaez[s] annotation found therein.[18] Petitioner relies on the statement of Rafaela A. Belleza, Chief, Surveys Assistance Section, DENR-LMS, who testified (direct examination) as follows:

Atty. Paylado continues: Q Before this is given to the surveyor, did these two (2) documents

pass your office? A Yes, sir. Q When you said it passed your office, it passed your office as you have

to verify all the entries in these documents whether they are correct?

A Yes, sir. Q Were you able to have a personal look and verification on these

Exhibits P and Q and will you confirm that all the entries here are true and correct?

A Yes, sir. Q Based on the records in your office?

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A As a whole. x x x x[19] (Emphasis supplied)

Petitioner contends that the foregoing declaration of Belleza conclusively proves that the LMS itself had approved and adopted the notation made by Ibaez on the survey plan as its own. Such approval amounts to a positive act of the government indicating that the land applied for is indeed alienable and disposable. We do not agree. First, it must be clarified that the survey plan (Exhibit Q) was not offered by petitioner as evidence of the lands classification as alienable and disposable. The formal offer of exhibits stated that said document and entries therein were offered for the purpose of proving the identity of the land, its metes and bounds, boundaries and adjacent lots; and that the survey has passed and was approved by the DENR-LMS. And while it was also stated therein that the evidence is also being offered as part of the testimony of Belleza, nowhere in her testimony do we find a confirmation of the notation concerning the lands classification as correct. In fact, said witness denied having any participation in the actual approval of the survey plan. This can be gleaned from her testimony on cross-examination which immediately followed the afore-quoted portion of her testimony that the survey plan passed their office, thus:

CROSS-EXAMINATION: (FISCAL KYAMKO TO THE WITNESS) Q Madam Witness, you said that Exhibits P and Q passed before your

office, now, the question is, could you possibly inform the Court whether you have some sort of an initial on the two (2) documents or the two (2) exhibits?

A Actually, sir, I am not a part of this approval because this will undergo in the isolated survey and my section is I am the Chief, Surveys Assistant Section, which concerns of the LRA, issuance of Certified Sketch Plans, issuance of certified Technical Descriptions of Untitled Lots to correct the titles for judicial purpose.

Q In other words, since Exhibits P and Q are originals, they did not actually pass your office, is it not?

A Our office, yes, but not in my section, sir. Q So it passed your office but it did not pass your section? A Yes, sir. Q In other words, you had [no] hand in re-naming or renumbering of

the subject lots, is it not? A It is in the Isolated Survey Section, sir. Q In other words, you cannot possibly testify with authority as to the

manner by which the numbering of the subject lot was renumbered, is it not?

A Yes, sir. x x x x[20] (Emphasis supplied.) Clearly, the testimony of the officer from DENR-LMS, Rafaela Belleza, did not at

all attest to the veracity of the notation made by Ibaez on the survey plan regarding the status of the subject land. Hence, no error was committed by the CA in finding that the certification made by DENR-LMS pertained only to the technical correctness of the survey plotted in the survey plan and not to the nature and character of the property surveyed.

In Republic v. Court of Appeals,[21] this Court noted that to prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the government such as a presidential proclamation or an executive order; and administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute.[22] A certification issued by a Community Environment and Natural Resources Officer in the Department of Environment and Natural Resources (DENR) stating that the lots involved were found to be within the alienable and disposable area was deemed sufficient to show the real character of the land.[23] As to notations appearing in the subdivision plan of the lot stating that it is within the alienable and disposable area, the consistent holding is that these do not constitute proof required by the law.[24] In Menguito v. Republic,[25] the Court declared:

x x x petitioners cite a surveyor-geodetic engineers notation x x x indicating that the survey was inside alienable and disposable land. Such notation does not constitute a positive government act validly changing the classification of the land in question. Verily, a mere surveyor has no authority to reclassify lands of the public domain. By relying solely on the said surveyors assertion, petitioners have not sufficiently proven that the land in question has been declared alienable.[26]

The above ruling equally applies in this case where the notation on the survey plan is supposedly made by the Chief of Map Projection Unit of the DENR-LMS. Such certification coming from an officer of the DENR-LMS is still insufficient to establish the classification of the property surveyed. It is not shown that the notation was the result of an investigation specifically conducted by the DENR-LMS to verify the status of the subject land. The certifying officer, Cynthia L. Ibaez, did not testify on her findings regarding the classification of the lot as reflected in her notation on the survey plan. As to the testimonial evidence presented by the petitioner, the CA noted that Engr. Norvic Abella who prepared the survey plan had no authority to reclassify lands of the public domain, while Rafaela A. Belleza who is the Chief of the Surveys Assistance Section, admitted on cross-examination that she had no part in the approval of the subdivision plan, and hence incompetent to testify as to the correctness of Ibaezs notation. More important, petitioner failed to establish the authority of Cynthia L. Ibaez to issue certifications on land classification status for purpose of land registration proceedings.

Our pronouncement in Republic v. T.A.N. Properties, Inc.[27] is instructive: In this case, respondent submitted two certifications issued by

the Department of Environment and Natural Resources (DENR). The 3 June 1997 Certification by the Community Environment and Natural Resources Offices (CENRO), Batangas City, certified that lot 10705, Cad-424, Sto. Tomas Cadastre situated at Barangay San Bartolome, Sto. Tomas, Batangas with an area of 596,116 square meters falls within the ALIENABLE AND DISPOSABLE ZONE under Project No. 30, Land Classification Map No. 582 certified [on] 31 December 1925. The second certification in the form of a memorandum to the trial court, which was issued by the Regional Technical Director, Forest Management Services of the DENR (FMS-DENR), stated that the subject area falls within an alienable and disposable land, Project No. 30 of Sto. Tomas, Batangas certified on Dec. 31, 1925 per LC No. 582.

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The certifications are not sufficient. DENR Administrative Order (DAO) No. 20, dated 30 May 1988, delineated the functions and authorities of the offices within the DENR. Under DAO No. 20, series of 1988, the CENRO issues certificates of land classification status for areas below 50 hectares. The Provincial Environment and Natural Resources Offices (PENRO) issues certificate of land classification status for lands covering over 50 hectares. DAO No. 38, dated 19 April 1990, amended DAO No. 20, series of 1988. DAO No. 38, series of 1990 retained the authority of the CENRO to issue certificates of land classification status for areas below 50 hectares, as well as the authority of the PENRO to issue certificates of land classification status for lands covering over 50 hectares. In this case, respondent applied for registration of Lot 10705-B. The area covered by Lot 10705-B is over 50 hectares (564,007 square meters). The CENRO certificate covered the entire Lot 10705 with an area of 596,116 square meters which, as per DAO No. 38, series of 1990, is beyond the authority of the CENRO to certify as alienable and disposable.

The Regional Technical Director, FMS-DENR, has no authority under DAO Nos. 20 and 38 to issue certificates of land classification. x x x

x x x x Hence, the certification issued by the Regional Technical Director, FMS-DENR, in the form of a memorandum to the trial court, has no probative value.

Further, it is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The applicant for land registration must prove that the DENR Secretary had approved the land classification and released the land of the public domain as alienable and disposable, and that the land subject of the application for registration falls within the approved area per verification through survey by the PENRO or CENRO. In addition, the applicant for land registration must present a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. These facts must be established to prove that the land is alienable and disposable. Respondent failed to do so because the certifications presented by respondent do not, by themselves, prove that the land is alienable and disposable.

Only Torres, respondents Operations Manager, identified the certifications submitted by respondent. The government officials who issued the certifications were not presented before the trial court to testify on their contents. The trial court should not have accepted the contents of the certifications as proof of the facts stated therein. Even if the certifications are presumed duly issued and admissible in evidence, they have no probative value in establishing that the land is alienable and disposable.

x x x x Applying Section 24 of Rule 132, the record of public documents referred to in Section 19(a), when admissible for any purpose, may be

evidenced by an official publication thereof or by a copy attested by the officer having legal custody of the record, or by his deputy x x x. The CENRO is not the official repository or legal custodian of the issuances of the DENR Secretary declaring public lands as alienable and disposable. The CENRO should have attached an official publication of the DENR Secretarys issuance declaring the land alienable and disposable.

x x x x The CENRO and Regional Technical Director, FMS-DENR, certifications do not fall within the class of public documents contemplated in the first sentence of Section 23 of Rule 132. The certifications do not reflect entries in public records made in the performance of a duty by a public officer, such as entries made by the Civil Registrar in the books of registries, or by a ship captain in the ships logbook. The certifications are not the certified copies or authenticated reproductions of original official records in the legal custody of a government office. The certifications are not even records of public documents. The certifications are conclusions unsupported by adequate proof, and thus have no probative value. Certainly, the certifications cannot be considered prima facie evidence of the facts stated therein. The CENRO and Regional Technical Director, FMS-DENR, certifications do not prove that Lot 10705-B falls within the alienable and disposable land as proclaimed by the DENR Secretary. Such government certifications do not, by their mere issuance, prove the facts stated therein. Such government certifications may fall under the class of documents contemplated in the second sentence of Section 23 of Rule 132. As such, the certifications are prima facie evidence of their due execution and date of issuance but they do not constitute prima facie evidence of the facts stated therein.

x x x x[28] (Emphasis supplied.) In the light of the foregoing, it is clear that the notation inserted in the survey plan (Exhibit Q) hardly satisfies the incontrovertible proof required by law on the classification of land applied for registration. The CA likewise correctly held that there was no compliance with the required possession under a bona fide claim of ownership since June 12, 1945. The phrase adverse, continuous, open, public, peaceful and in concept of owner, are mere conclusions of law requiring evidentiary support and substantiation. The burden of proof is on the applicant to prove by clear, positive and convincing evidence that the alleged possession was of the nature and duration required by law.[29]The bare statement of petitioners witness, Andrea Batucan Enriquez, that her family had been in possession of the subject land from the time her father bought it after the Second World War does not suffice. Moreover, the tax declaration in the name of petitioners father, TD No. 0400583 was issued only in 1994, while TD No. 0-0400469 in its own name was issued in 2000.Petitioners predecessors-in-interest were able to submit a tax declaration only for the year 1988, which was long after both spouses Vivencio and Paulina Batucan have died. Although tax declarations or realty tax payments of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of

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owner.[30] And while Andrea Batucan Enriquez claimed knowledge of their familys possession since she was just ten (10) years old although she said she was born in 1932 -- there was no clear and convincing evidence of such open, continuous, exclusive and notorious possession under a bona fide claim of ownership.She never mentioned any act of occupation, development, cultivation or maintenance over the property throughout the alleged length of possession.[31] There was no account of the circumstances regarding their fathers acquisition of the land, whether their father introduced any improvements or farmed the land, and if they established residence or built any house thereon. We have held that the bare claim of the applicant that the land applied for had been in the possession of her predecessor-in-interest for 30 years does not constitute the well-nigh inconvertible and conclusive evidence required in land registration.[32]

As the Court declared in Republic v. Alconaba:[33] The law speaks of possession and occupation. Since these

words are separated by the conjunction and, the clear intention of the law is not to make one synonymous with the other. Possession is broader than occupation because it includes constructive possession. When, therefore, the law adds the word occupation, it seeks to delimit the all-encompassing effect of constructive possession. Taken together with the words open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his possession must not be a mere fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property.[34] (Emphasis supplied.)

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated June 25, 2007 and Resolution dated September 10, 2007 of the Court of Appeals in CA-G.R. CV No. 77868 are AFFIRMED. With costs against the petitioner. SO ORDERED.

THIRD DIVISION

VICENTE YU CHANG AND SOLEDAD YU CHANG, Petitioners,

- versus - REPUBLIC OF THE PHILIPPINES, Respondent.

G.R. No. 171726 Present: BRION,* J.,

Acting Chairperson, BERSAMIN, ABAD,* VILLARAMA, JR., and SERENO, JJ.

Promulgated: February 23, 2011

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

DECISION

VILLARAMA, JR. J.: This petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assails the Decision[1] dated August 26, 2005 and the Resolution[2] dated February 13, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 67430. The CA reversed and set aside the April 28, 2000 Decision[3] of the Regional Trial Court of Pili, Camarines Sur, Branch 31, in LRC No. P-115, LRA Rec. No. N-68012, which granted petitioners application for registration of title over two parcels of land, denominated as Lots 2199 and 2200 of Cad. 291, Pili Cadastre. The antecedent facts, as culled from the records, are as follows:

On March 22, 1949, petitioners father, L. Yu Chang[4] and the Municipality of Pili, Camarines Sur, through its then Mayor, Justo Casuncad, executed an Agreement to Exchange Real Property[5] wherein the former assigned and transferred to the Municipality of Pili his 400-square-meter residential lot in Barrio San Roque, Pili, Camarines Sur, in exchange for a 400-square-meter piece of land located in San Juan, Pili. Thereafter, L. Yu Chang and his family took possession of the property thus obtained and erected a residential house and a gasoline station thereon. He also declared the property in his name under Tax Declaration No. 01794[6]and 01795[7] and paid the real property taxes thereon as evidenced by twenty-eight (28) official receipts from February 21, 1951 up to March 10, 1976. When L. Yu Chang died on September 30, 1976, his wife, Donata Sta. Ana and his seven children inherited the property and succeeded in the possession of the property.

On March 1, 1978, a Deed of Transfer and Renunciation[8] of their rights over the property was executed by L. Yu Chang's five children, Rafaela, Catalina, Flaviana, Esperanza, and Antonio, in favor of herein petitioners. After the transfer, petitioners had the subject property surveyed and subdivided into two lots, Lot 2199[9] and Lot 2200[10] of Plan SWO-05-000888, Pili Cadastre. Petitioners also declared the lots in their names for taxation purposes as shown in Tax Declaration No. 02633[11] and paid the real property taxes thereon. On February 21, 1997, petitioner Soledad Yu Chang, for herself and in representation of her brother and co-petitioner, Vicente Yu Chang, filed a petition[12] for registration of title over the aforementioned lots under the Property Registration Decree. In their petition, they declared that they are the co-owners of the subject lots; that they and their predecessors-in-interest have been in actual, physical, material, exclusive, open, occupation and possession of the above described parcels of land for more than 100 years[13]; and that allegedly, they have continuously, peacefully, and adversely possessed the property in the concept of owners. Hence, they are entitled to confirmation of ownership and issuance and registration of title in their names. In support of their application, petitioners submitted the following documents, to wit:

1. Agreement to Exchange Real Property; 2. Deed of Transfer and Renunciation; 3. Approved Plan of Lot 2199 and Lot 2200, Cad. 291, Pili Cadastre; 4. Approved Technical Description of Lot 2199; 5. Approved Technical Description of Lot 2200;

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6. Field Appraisal and Assessment Sheet (FAAS) A.R.P. No. 026-044 for Lot 2199 Cad. 291; and

7. Field Appraisal and Assessment Sheet (FAAS) A.R.P. No. 026-043 for Lot 2200 Cad. 291 Pili Cadastre.

The Republic, through the Office of the Solicitor General (OSG), filed an Opposition[14] to the application, alleging, inter alia, that: (1) neither the applicants nor their predecessors-in-interest have been in open, continuous, exclusive and notorious possession of the land since June 12, 1945 or prior thereto; (2) the muniments of title, tax declarations and tax receipts do not constitute competent and sufficient evidence of a bona fide acquisition of the land; and (3) that the parcels of land applied for are portions of the public domain and are not subject to private appropriation.

No other parties filed their opposition. Thus, on December 14, 1998, an Order of General Default[15] was issued by the trial court. After hearing, the trial court rendered a Decision granting petitioners' application. The fallo of the trial courts decision reads: WHEREFORE, in view of the foregoing, decision is hereby rendered as follows:

1. Confirming the imperfect title of the herein applicants Vicente Yu Chang and Soledad Yu Chang over the two (2) parcels of land described in paragraph two (2) page 2 of the Petition, particularly Lot 2199, Plans S0-05-000888, Cad. 291, Pili Cadastre and Lot 2200, Plan SWO-05-000888, Cad. 291, Pili Cadastre; both Filipino citizens, residents of #14 Joaquin St., Corinthian Garden, Quezon City and San Juan, Pili, Camarines Sur respectively; 2. Ordering the dismissal of the application in the Cadastral proceeding with respect to Lots 2199 and 2200, Cad. 291, Pili Cadastre under CAD Case No. N-9; 3. After finality of this decision, let the corresponding decree of registration be issued by the Administrator, Land Registration Authority to the herein applicants above-mentioned.

SO ORDERED.[16] The Republic appealed the decision to the CA on the ground that the court a quo erred in granting petitioners application for registration of Lots 2199 and 2200 despite their failure to show compliance with the requirements of the law. In addition, the Republic asserted that the land was classified as public forest land; hence, it could not be subject to appropriation and alienation. As aforesaid, the CA reversed the trial court's decision on August 26, 2005, and dismissed petitioners application for land registration. The CA considered the petition to be governed by Section 48(b) of Commonwealth Act (C.A.) No. 141 or the Public Land Act, as amended, and held that petitioners were not able to present incontrovertible evidence that the parcels of land sought to be registered are alienable and disposable.[17] The CA relied on the testimony of Lamberto Orcena, Land Management Officer III of CENRO, Iriga City, who testified that prior to October 30, 1986, the entire area encompassing the right side of the Naga-Legaspi Highway, including the subject properties, was classified as forest land. According to the CA, even if the area within which the subject properties are located is now being used for residential and commercial purposes, such fact will not convert the subject parcels of land into agricultural land.[18] The CA stressed that there must be a

positive act from the government declassifying the land as forest land before it could be deemed alienable or disposable land for agricultural or other purposes.[19] Additionally, the CA noted that the lands sought to be registered were declared disposable public land only on October 30, 1986. Thus, it was only from that time that the period of open, continuous and notorious possession commenced to toll against the State. Aggrieved, petitioners are now before this Court via the present appeal, raising the sole issue of whether the appellate court erred in dismissing their application for registration of title on the ground that they failed to prove compliance with the requirements of Section 48(b) of the Public Land Act, as amended. Petitioners insist that the subject properties could no longer be considered and classified as forest land since there are buildings, residential houses and even government structures existing and standing on the land.[20] In their Memorandum,[21] petitioners point out that the original owner and possessor of the subject land was the Municipal Government of Pili which was established in 1930. The land was originally part of the municipal ground adjacent to the Municipal Building located at the right side of the Naga-Legaspi National Highway.[22] From 1949, when L. Yu Chang acquired the property through barter and up to the filing of petitioners application in 1997, petitioners and their predecessors-in-interest had been in actual physical and material possession of the land in the concept of an owner, notorious and known to the public and adverse to the whole world. The Republic, through the OSG, for its part, maintains that petitioners failed to prove their open, continuous, exclusive and notorious possession of the subject lots for the period of time required by law. The OSG also submits that the subject lands were declared as alienable and disposable only on October 30, 1986. We deny the petition for lack of merit. Section 48(b) of the Public Land Act, as amended by P.D. 1073, under which petitioners application was filed, provides:

SEC. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Regional Trial Court of the province or city where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Property Registration Decree, to wit:

x x x x (b) Those who by themselves or through their predecessors[-

]in[-]interest have been in the open, continuous, exclusive, and notorious possession and occupation of alienable and disposable agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, since June 12, 1945, except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter. x x x x[23]

Under this provision, in order that petitioners application for registration of title may be granted, they must first establish the following: (1) that the subject land forms part of the

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disposable and alienable lands of the public domain and (2) that they have been in open, continuous, exclusive and notorious possession and occupation of the same under a bona fide claim of ownership, since June 12, 1945, or earlier.[24] Applicants must overcome the presumption that the land they are applying for is part of the public domain and that they have an interest therein sufficient to warrant registration in their names arising from an imperfect title.[25] In the instant case, petitioners did not adduce any evidence to the effect that the lots subject of their application are alienable and disposable land of the public domain. Instead, petitioners contend that the subject properties could no longer be considered and classified as forest land since there are building structures, residential houses and even government buildings existing and standing on the area. This, however, is hardly the proof required under the law. As clarified by this Court in Heirs of Jose Amunategui v. Director of Forestry,[26] a forested area classified as forest land of the public domain does not lose such classification simply because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest land may actually be covered with grass or planted with crops by kaingin cultivators or other farmers. Forest lands do not have to be on mountains or in out-of-the-way places. The classification of land is descriptive of its legal nature or status and does not have to be descriptive of what the land actually looks like.[27] Unless and until the land classified as forest land is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do not apply.[28] As aptly held by the appellate court:

[T]he fact that the area within which the subject parcels of land are located is being used for residential and commercial purposes does not serve to convert the subject parcels of land into agricultural land. It is fundamental that before any land may be declassified from the forest group and converted into alienable or disposable land for agricultural or other purposes, there must be a positive act from the government. A person cannot enter into forest land and by the simple act of cultivating a portion of that land, earn credits towards an eventual confirmation of imperfect title. The Government must first declare the forest land to be alienable and disposable agricultural land before the year of entry, cultivation and exclusive and adverse possession can be counted for purposes of an imperfect title.[29]

Moreover, during the hearing of petitioners' application, the Republic presented a Report[30] of Rene Gomez, Land Investigator/Inspector, CENRO No. V-2-3, which disclosed that the lots applied for by the petitioners were classified as alienable and disposable under Project No. 9-E, L.C. Map No. 3393 and released and certified as such only on October 30, 1986. A Compliance[31] dated January 19, 1999 submitted by OIC-CENR Officer Joaquin Ed A. Guerrero to the trial court also stated that Lots. 2199 and 2200 of Cad. 291 were verified to be within Alienable and Disposable area under Project No. 9-E, L.C. Map No. 3393, as certified on October 30, 1986 by the then Bureau of Forestry. Evidently, therefore, the subject lots were declared alienable and disposable only on October 30, 1986. Prior to that period, the same could not be the subject of confirmation of imperfect title. Petitioners possession of the subject forest land prior to the date when it was classified as alienable and disposable is inconsequential and should be excluded from the computation of the period of possession.[32] To reiterate, it is well settled that possession of forest land, prior to its

classification as alienable and disposable land, is ineffective since such possession may not be considered as possession in the concept of owner.[33]The adverse possession which can be the basis of a grant of title in confirmation of imperfect title cases cannot commence until after forest land has been declared and alienable.[34]

Much as this Court wants to conform to the States policy of encouraging and promoting the distribution of alienable public lands to spur economic growth and remain true to the ideal of social justice, our hands are tied by the laws stringent safeguards against registering imperfect titles.[35] Here, petitioners failed to present well-nigh incontrovertible evidence necessary to prove their compliance of the requirements under Section 48(b) of C.A. No. 141. Hence, the Court of Appeals did not err in dismissing their application for confirmation and registration of title. WHEREFORE, the petition is hereby DENIED. The Decision dated August 26, 2005 and the Resolution dated February 13, 2006 of the Court of Appeals in CA-G.R. CV No. 67430 are hereby AFFIRMED. With costs against the petitioners.

SO ORDERED. _________________________________________________________________________

Republic of the Philippines Supreme Court

Manila

SECOND DIVISION

SPOUSES ANSELMO[1] and PRISCILLA BULAONG, Petitioners, - versus - VERONICA GONZALES, Respondent.

G.R. No. 156318 Present:

CARPIO, J., Chairperson, BRION, PEREZ, MENDOZA,* and SERENO, JJ. Promulgated: September 5, 2011

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

D E C I S I O N

64

BRION, J.: Petitioners Anselmo Bulaong and Priscilla Bulaong collectively referred to as

the Bulaongs seek, through their petition for review on certiorari, the reversal of the decision[2] of the Court of Appeals (CA) dated July 31, 2002 in CA-G.R. SP No. 55423 and the subsequent resolution of November 27, 2002[3] reiterating this decision. These CA rulings reversed and set aside the decision[4] of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 12, that ordered the cancellation of Transfer Certificate of Title (TCT) No. T-62002 and TCT No. T-62003.

FACTUAL ANTECEDENTS

This case traces its roots to the conflicting claims of two sets of parties over two parcels of land. The first parcel of land, with an area of 237 square meters and covered by TCT No. T-249639,[5] was originally registered in the name of Fortunato E. Limpo, married to Bertha Limpo.[6] The other parcel of land, with an area of 86 square meters and covered by TCT No. T-249641,[7] was originally registered in the names of Pacifica E. Limpo, married to Nicanor C. Sincionco, and Fortunato E. Limpo, married to Bertha Limpo.[8]

These parcels of land were mortgaged by the daughter of Fortunato and Bertha Limpo, Regina Christi Limpo, upon the authority of her father,[9] to the Bulaongs, to secure a loan in the amount of P4,300,000.00. The mortgage was evidenced by a Deed of Mortgage dated January 13, 1993.[10] The Bulaongs alleged that before they executed the mortgage, Regina gave them the owners duplicates of title of the two properties. In early January 1993 (the exactdate is unknown but prior to the execution of the mortgage), Anselmo Bulaong, together with his counsel, Atty. Roberto Dionisio, allegedly went to the Office of the Register of Deeds of Bulacan to check the titles of the properties to be mortgaged. According to the Bulaongs, the Register of Deeds, Atty. Elenita Corpus, assured them that TCT Nos. T-249639 and T-249641 were completely clear of any liens or encumbrances from any party. Relying on this assurance, Anselmo Bulaong agreed to the execution of the mortgage over the two properties.[11] After the execution of the mortgage, the Bulaongs once again went to the Office of the Register of Deeds of Bulacan to register and annotate the mortgage on the titles.They learned then that the Register of Deeds copies of the two titles were among the records that were burned in the fire that destroyed the entire office of the Register of Deeds of Bulacan on March 7, 1987. Atty. Elenita Corpus convinced them to cause the reconstitution of the originals of the titles, and further assured them that the mortgage over the properties would be protected since a copy of the Deed of Mortgage had already been given to her office for annotation.[12]

On February 4, 1993, the newly reconstituted titles were issued TCT No. RT-29488 replaced TCT No. T-249639, and TCT No. RT-22489 replaced TCT No. T-249641, still in the names of Fortunato Limpo, and of Pacifica Limpo and Fortunato Limpo, respectively.

Thereafter, on February 24, 1993, new titles were again issued upon the extrajudicial settlement of the estate of Reginas parents. Thus, TCT No. RT-29488 was cancelled and TCT No. T-30395 was issued in its place, with Regina replacing her parents as the registered owner; similarly, TCT No. RT-22489 was cancelled and TCT No. T-30396 was issued in the names of Pacifica Limpo and Regina Limpo, as her parents heir.[13]

To the Bulaongs astonishment, the new titles in Reginas name now contained the

following entries:

TCT No. T-30395

Entry No. 5306; Kind: Condition: The property herein described is subject to the prov. of sec. 4, rule 74 of the rules of court. date of instrument: 1-13-93; date of inscription: 2-24-93 at10:42 a.m. (SGD.) ELENITA E. CORPUS Register of Deeds Entry No. 5484; Kind: Mortgage: Exec. In favor of: Sps. Anselmo Bulaong & Priscilla Bulaong; Condition: Covering the parcel of land herein described, for the sum of P4,300,000.00 subject to all the conditions stipulated in the deed of mortgage on file in this office. Doc. No. 428, Page 86, Book XXX, S. of 1993, N.P. Roberto Dionisio of Mal. Bul. Date of Instrument: 1-13-93; date of inscription 3-1-93 at 9:20 a.m.

(SGD.) ELENITA E. CORPUS Register of Deeds /5306 (NOTE: Proceed to Entry no. 5484)

Entry No. 7808: Kind: NOTICE OF LEVY ON EXECUTION: Conditions: Notice is hereby given that by virtue of the Writ of Execution, issued in Crim. Cases Nos. 9638 to 9646-M, entitled People of the Philippines v. Reggie Christi Schaetchen Limpo and Maria Lourdes (Bong) Diaz y Gamir, et al., Accused by the Regional Trial Court, Third Jud. Region, Branch 12, Malolos, Bulacan, under date of Dec. 29, 1992, and at the instance of the private complainant Veronica R. Gonzales, thru counsel, levy on execution is hereby made upon all the rights, shares, interests and participations of accused Reggie Christi Schaetchen[14] over the real properties described in T-249641 and T-249639, by virtue of Deeds of Absolute Sale executed by former registered owners in favor of Reggie Christi Schaetchen dated November 5, 1991, together with all the improvements existing thereon, was levied on execution preparatory to the sale of the same without prejudice to third persons having better right thereof and to any valid lien and encumbrances. Date of instrument Jan. 4, 1993; Date of inscription Jan. 4, 1993 at11:50 a.m. (SGD.) ELENITA E. CORPUS Register of Deeds/negm[15] (emphasis ours)

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TCT No. T-30396

Entry No. 5306; Kind: Condition: One-half (1/2) of the property herein described is subject to the prov. of sec. 4, rule 74 of the rules of court. date of instrument: 1-13-93; date of inscription:2-24-93 at 10:42 a.m. (SGD.) ELENITA E. CORPUS Register of Deeds Entry No. 5484; Kind: Mortgage: Exec. In favor of: Sps. Anselmo Bulaong & Priscilla Bulaong; Condition: Covering the parcel of land herein described, for the sum of P4,300,000.00 subject to all the conditions stipulated in the deed of mortgage on file in this office. Doc. No. 428, Page 86, Book XXX, S. of 1993, N.P. Roberto Dionisio of Mal. Bul. Date of Instrument: 1-13-93; date of inscription 3-1-93 at 9:20 a.m.

(SGD.) ELENITA E. CORPUS

Register of Deeds /5306 (NOTE: Proceed to Entry No. 5484)

Entry No. 7808: Kind: NOTICE OF LEVY ON EXECUTION: Conditions: Notice is hereby given that by virtue of the Writ of Execution, issued in Crim. Cases Nos. 9638 to 9646-M, entitled People of the Philippines v. Reggie Christi Schaetchen Limpo and Maria Lourdes (Bong) Diaz y Gamir, et al., Accused by the Regional Trial Court, Third Jud. Region, Branch 12, Malolos, Bulacan, under date of Dec. 29, 1992, and at the instance of the private complainant Veronica R. Gonzales, thru counsel, levy on execution is hereby made upon all the rights, shares, interests and participations of accused Reggie Christi Schaetchen over the real properties described in T-249641 and T-249639, by virtue of Deeds of Absolute Sale executed by former registered owners in favor of Reggie Christi Schaetchen dated Nov. 5, 1991, together with all the improvements existing thereon, was levied on execution preparatory to the sale of the same without prejudice to third persons having better right thereof and to any valid lien and encumbrances. Date of instrument Jan. 4, 1993; Date of inscription Jan. 4, 1993 at 11:50 a.m. (SGD.) ELENITA E. CORPUS Register of Deeds/negm[16] (emphasis ours)

It appears that a certain Veronica Gonzales had filed a criminal case for estafa against Regina with the RTC of Bulacan, Branch 12.[17] On October 28, 1991, the RTC rendered a decision acquitting Regina, but at the same time ordering her to pay Veronica

actual damages in the total amount of P275,000.00.[18] By virtue of a writ of execution issued on December 29, 1992, the above-quoted notice of levy was recorded in the Primary Entry Book of the Registry of Bulacan on January 4, 1993. However, this was not annotated on the titles themselves because at the time of the levy, the properties had not yet been transferred to Regina, but were still registered in the name of her parents.[19]

Based on the annotation referring to the notice of levy, the subject of the levy

was Reginas interest in the properties which, in turn, was anchored on a Deed of Absolute Sale allegedly executed by her parents on November 5, 1991 to transfer their interest in both properties to her. Notably, Regina never registered this sale with the Register of Deeds.

To satisfy Reginas judgment debt, the two lots were sold at public auction

on June 8, 1993 to Veronica, the only bidder, for P640,354.14.[20] The Certificate of Sale was annotated on the titles on June 8, 1993 as Entry No. 2075. Upon the lapse of the one year redemption period on June 20, 1994, Veronicas titles over the properties were consolidated. A final deed of sale was issued in Veronicas name and annotated as Entry No. 40425 on TCT Nos. T-30395 and T-30396 on June 24, 1994.[21]

On the other hand, the Bulaongs also had the mortgage extrajudicially

foreclosed, with the sheriff conducting the auction sale on August 22, 1994. The Bulaongs were the highest bidders, buying the properties for the sum of P4,300,000.00. They also paid the corresponding capital gains tax of P215,000.00, plus P64,500.00 for the documentary stamp tax, which were required before the titles to the lots could be transferred in their names. The Certificate of Sale in their favor was inscribed onAugust 23, 1994 on TCT No. T-30395 and TCT No. T-30396 as Entry No. 46739.[22]

Veronica thereafter filed a petition for the surrender to the Register of Deeds of

the owners copies of TCT Nos. T-30395 and T-30396 with the RTC of Malolos, docketed as LRC Case No. P-292. On December 16, 1994, the RTC granted the petition and ordered Regina to surrender her owners copies of the titles; should Regina fail to comply, the RTC ordered the Register of Deeds to cancel these titles and issue new ones in Veronicas name. Complying with this order, the Register of Deeds cancelled TCT Nos. T-30395 and T-30396, and issued TCT No. T-62002 in Veronicas name, and TCT No. T-62003 in the name of Veronica and Pacifica Limpo. These new titles were clean and did not contain any annotations, liens or encumbrances.

The Bulaongs thus filed a petition for mandamus with the RTC of Bulacan against

Ramon Sampana, the incumbent Register of Deeds of Bulacan, and Veronica, praying that the court order Sampana to cancel TCT Nos. T-62002 and T-62003, and issue new titles in their names; and order the respondents therein to pay them moral and exemplary damages, and attorneys fees.

On July 30, 1999, the RTC ruled in favor of the Bulaongs. According to the RTC,

allowing Veronica to levy on the properties worth at least P5,000,000.00 for a judgment of P275,000.00 would result in gross unjust enrichment. The RTC thus ordered the Register of Deeds of Bulacan to issue new titles in the name of the Bulaongs, but only after the Bulaongs had reimbursed the amount of P275,000.00 to Veronica, with interest. The RTC

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also ordered Veronica to pay the BulaongsP50,000.00 as attorneys fees. The dispositive portion of the RTC decision reads:

WHEREFORE, conformably with all the foregoing, judgment is

hereby rendered:

1. Annulling and cancelling Transfer Certificates of Title Nos. T-62002 in the name of defendant Veronica Gonzales, and T-62003 in the name of defendant Veronica Gonzales and Pacifica E. Limpo married to Nicanor C. Sincioco;

2. Ordering the Ex-Officio Sheriff of Bulacan to execute a final deed of sale in favor of petitioner spouses Anselmo Bulaong and Pr[i]scilla Bulaong on the basis of the registered Certificate of Sale executed by said court officer on August 23, 1994, in favor of said spouses-mortgagee, without the owner-mortgagors exercising the right of redemption since then;

3. Ordering the Register of Deeds of Bulacan to issue new titles, in

place of Transfer Certificate of Title Nos. T-62002 and T-62003, this time in the name of petitioner spouses Anselmo Bulaong and Pr[is]cilla Bulaong, as soon as the aforesaid final deed of sale in their favor is executed by the Ex-Officio Sheriff of Bulacan and only after said spouses shall have paid and/or reimbursed Veronica Gonzales lien as judgment creditor in the amount of P275,000.00, plus interests at the legal rate computed from November 19, 1995, until fully paid and satisfied;

4. Order[ing] herein defendants Veronica R. Gonzales and the Register of Deeds of Bulacan upon notice of this judgment, not to effect any transfer, encumbrance or any disposition whatsoever of the parcels of land covered by Transfer Certificates of Title Nos. 62002 and T-62003, or any part thereof, right or interest therein, either by sale or any form of conveyance, lien or encumbrance; and

5. Ordering only defendant Veronica R. Gonzales to pay herein

petitioners P50,000.00 as just and equitable attorneys fees, and the costs of suit, defendant Ramon C. Sampana as the Register of Deeds of Bulacan having merely performed his ministerial duty of following the court order of issuing titles to defendant Gonzales.

No pronouncement as to moral and exemplary damages

alleged in the petition but not even testified to by petitioners at the trial.[23]

Both parties appealed to the CA, with the case docketed as CA-G.R. SP No. 55423.

THE COURT OF APPEALS DECISION

In its July 31, 2002 decision, the CA upheld the validity of the Notice of Levy on Execution, noting that it created a lien in favor of the judgment creditor over the property. According to the CA, when the Bulaongs received the owners copies of TCT Nos. T-30395 and T-30396, the Notice of Levy was already annotated on the titles and, thus, should have put them on guard. As mortgagees of the lots, the Bulaongs had the option to redeem the properties within the redemption period provided by law. Since they failed to avail of this remedy, the consolidation of titles in Veronicas name was proper.

THE PETITION The Bulaongs filed the present petition, raising the following issues:

a) Whether Entry No. 7808 is valid; b) Whether Veronica has a superior right over the properties; and c) Assuming the notice of levy earlier annotated in favor of Veronica to be

valid, whether there was a valid foreclosure sale.

THE COURTS RULING

We GRANT the petition. Procedural issues

Time and again, we have stated that petitions for review on certiorari shall only raise questions of law, as questions of fact are not reviewable by this Court. The main issue of who has a better right over the disputed properties is not only a question of law but one that requires a thorough review of the presented evidence, in view particularly of the Bulaongs allegation that fraud attended the annotation of Entry No. 7808 in the titles. Thus, in the usual course, we would have denied the present petition for violation of Section 1, Rule 45 of the Rules of Court, which provides:

Section 1. Filing of petition with Supreme Court. A party

desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth. (emphasis ours) This rule, however, admits of several exceptions. Questions of fact may be

reviewed, among others, when the lower court makes inferences that are manifestly mistaken, and when the judgment of the CA is based on a misapprehension of facts.[24] As will be apparent in the discussions below, these exceptional circumstances are present in the present case. A review of the evidence, therefore, is not only allowed, but is necessary for the proper resolution of the presented issues.

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It has not escaped our attention that the Bulaongs appear to have erroneously filed a petition for mandamus for what is essentially an action to assail the validity of Veronicas certificates of title over the subject properties. This lapse, however, is not legally significant under the well-settled rule that the cause of action in a complaint is not the title or designation of the complaint, but the allegations in the body of the complaint. The designation or caption is not controlling as it is not even an indispensable part of the complaint; the allegations of the complaint control.[25] We thus proceed to resolve the case, bearing in mind that the relief the Bulaongs sought before the lower court was to nullify Veronicas certificates of title and to order the Register of Deeds to issue new titles in their name. Redemption not the proper remedy

The CA faulted the Bulaongs for not redeeming the properties from Veronica when they had the option of doing so. For failing to exercise this right, the CA concluded that the consolidation of the titles to the lots in Veronicas name thus became a matter of course.

We disagree. At the outset, we observe that this is not a simple case of determining which lien

came first. A perusal of the Bulaongs submissions to the Court shows that they have consistently maintained that the levy and the corresponding execution sale in Veronicas favor are null and void. Had the Bulaongs merely exercised the right of redemption, they would have been barred from raising these issues in court, pursuant to our ruling in Cometa v. Intermediate Appellate Court: [26]

The respondent appellate court's emphasis on the failure of

the petitioner to redeem the properties within the period required by law is misplaced because redemption, in this case, is inconsistent with the petitioner's claim of invalidity of levy and sale. Redemption is an implied admission of the regularity of the sale and would estop the petitioner from later impugning its validity on that ground.[27] (emphasis ours)

The Bulaongs were thus justified in their refusal to redeem the properties. Annotation is valid

The Bulaongs assail the validity of Entry No. 7808 (relating to the Notice of Levy

on Execution in Veronicas favor) on the two titles, asserting that it is null and void for being a fraudulent entry. In support of this contention, they note the following suspicious circumstances: (a) although Entry No. 7808 has a higher number and appears after Entry No. 5484 (corresponding to the Bulaongs mortgage) on the titles, Entry No. 7808 appeared in an earlier volume of the Book of Entries; and (b) although the Notice of Levy on Execution was purportedly presented to the Registry of Bulacan on January 4, 1993, or

prior to the date when the Bulaongs deed of mortgage was presented on January 13, 1993, the Notice of Levy on Execution, Entry No. 7808, was numbered and placed after the mortgage, Entry No. 5484, on the titles.

We agree that these circumstances render the Notice of Levy on Execution,

annotated on the titles, highly suspicious. These circumstances, however, can be sufficiently explained when the records are examined.

The records show that on January 4, 1993, Veronica went to the Registry of

Bulacan with the Notice of Levy on Execution, requesting that the notice be registered. While the Register of Deeds placed the Notice of Levy on Execution in the Primary Entry Book, she did not immediately make a registration when a question arose regarding the registrability of the notice; the question necessitated the submission of a consulta to the Land Registration Authority (LRA) on January 25, 1993.[28]

The LRA Administrator responded to the consulta only on February 10,

1993.[29] Thus, the Notice of Levy on Execution was not immediately annotated on the newly reconstituted titles, which were issued on February 4, 1993. It was only when new titles were again issued to reflect the extrajudicial settlement of the estate ofReginas parents on February 24, 1993 that the Notice of Levy on Execution appeared on the titles as Entry No. 7808.

The apparent discrepancy in the numbering of the Notice of Levy on Execution

and the date of inscription on the certificates of title is suitably explained by Section 56 of Presidential Decree No. 1529 whose pertinent portion states:

Section 56. Primary Entry Book; fees; certified copies. Each

Register of Deeds shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all instruments including copies of writs and processes filed with him relating to registered land. He shall, as a preliminary process in registration, note in such book the date, hour and minute of reception of all instruments, in the order in which they were received. They shall be regarded as registered from the time so noted, and the memorandum of each instrument, when made on the certificate of title to which it refers, shall bear the same date: Provided, that the national government as well as the provincial and city governments shall be exempt from the payment of such fees in advance in order to be entitled to entry and registration. [emphases ours] In other words, the order of entries in the Primary Entry Book determines the

priority in registration. Thus, the Register of Deeds merely complied with the law when she fixed Entry No. 7808s date of inscription as January 4, 1993, to coincide with the date when the Notice of Levy on Execution was presented and inscribed in the Primary Entry Book.

68

The late annotation of the levy on execution on the titles did not at all lessen its effectivity. Jurisprudence has already established the rule that the entry of the notice of levy on execution in the Primary Entry Book, even without the corresponding annotation on the certificate of titles, is sufficient notice to all persons that the land is already subject to the levy.[30] As we explained in Armed Forces and Police Mutual Benefit Association, Inc. v. Santiago:[31]

The notice of levy on attachment in favor of petitioner may be

annotated on TCT No. PT-94912. Levin v. Bass (91 Phil. 420 [1952]; see also Dr. Caviles, Jr. v. Bautista, 377 Phil. 25; 319 SCRA 24 [1999]; Garcia v. Court of Appeals, 184 Phil. 358; 95 SCRA 380 [19890]) provided the distinction between voluntary registration and involuntary registration. Involuntary registration, such as a sale, mortgage, lease and the like, if the owner's duplicate certificate be not surrendered and presented or if no payment of registration fees be made within fifteen (15) days, entry in the day book of the deed of sale does not operate to convey and affect the land sold. In involuntary registration, such as an attachment, levy upon execution, lis pendens and the like, entry thereof in the day book is a sufficient notice to all persons of such adverse claim.

The entry of the notice of levy on attachment in the primary

entry book or day book of the Registry of Deeds on September 14, 1994 is sufficient notice to all persons, including the respondent, that the land is already subject to an attachment. The earlier registration of the notice of levy on attachment already binds the land insofar as third persons are concerned.[32] (emphases ours)

Consequently, when the Register of Deeds placed the Notice of Levy on Execution in the Primary Entry Book on January 4, 1993, this entry already bound third persons to the notice entered. Validity of the Levy

i. Reginas interest in the properties is not established

The levy on execution for judgment is the act x x x by which an officer sets apart or appropriate[s,] for the purpose of satisfying the command of the writ, a part or the whole of the judgment debtors property.[33] Every interest which the judgment debtor may have in the property may be subjected to levy on execution.[34] As established by the Court in Reyes v. Grey:[35]

The term "property" as here applied to lands comprehends every species of title, inchoate or complete; legal or equitable. This statute authorizes the sale under execution of every kind of property, and every interest in property which is, or may be, the subject of private ownership and transfer. It deals with equitable rights and

interests as it deals with legal, without anywhere expressly recognizing or making any distinction between them. [emphases ours]

In Reyes, the Court set the standard to be applied in determining the kind of property that can be subject to attachment:

We think the real test, as to whether or not property can be attached and sold upon execution is does the judgment debtor hold such a beneficial interest in such property that he can sell or otherwise dispose of it for value? If he does, then the property is subject to execution and payment of his debts.[36] (emphasis and underscoring ours) Applying the test in Reyes, the Court, in Gotauco & Co. v. Register of Deeds of

Tayabas,[37] recognized as valid the inscription of a notice of levy on execution on the certificates of title, even though the titles were not in the name of the judgment debtor (Rafael Vilar). According to the Court, while the certificates of title were still registered in the name of Florentino Vilar, since Rafael Vilar presented a copy of a petition filed with the lower court, from which it could be inferred that Florentino Vilar was dead and Rafael Vilar was one of his heirs, Rafael had an interest in Florentinos property that could properly be the subject of attachment, even if his participation in Florentinos property was indeterminable before the final liquidation of the estate. Similarly, in Pacific Commercial Co. v. Geaga,[38] the Court held that although the Register of Deeds may properly reject an attachment where it appears that the titles involved are not registered in the name of the defendants (debtors), that rule yields to a case where there is evidence submitted to indicate that the defendants have present or future interests in the property covered by said titles, regardless of whether they still stand in the names of other persons. The fact that the present interests of the defendants are still indeterminate, and even though there was no judicial declaration of heirship yet, is of no consequence for the purpose of registering the attachment in question. This is the case since what is being attached and what may be later sold at public auction in pursuance of the attachment cannot be anything more than whatever rights, titles, interests and participations which the defendants may or might have in the property so attached. In other words, if they had actually nothing in the property, then nothing is affected and the property will remain intact.[39] This rule is expressed in Section 35, Rule 39 of the old Rules of Civil Procedure, which provides:

Upon the execution and delivery of said deed [of conveyance and possession], the purchaser, or redemptioner, or his assignee, shall be substituted to and acquire all the right, title, interest and claim of the judgment debtor to the property as of the time of the levy[.] [emphases ours]

69

Although we recognize the validity of the annotation of the levy on the execution in the present case, the question of whether the levy itself is valid remains to be determined. To do this, Reginas interest in the subject properties at the time of the levy has to be ascertained. To recall, Veronicas notice of levy on execution is based on Reginas interest in the two properties, which she acquired via the Deed of Absolute Sale purportedly executed by her parents in her favor on November 5, 1991. But is this Deed of Absolute Sale a sufficient evidence of Reginas interest in the subject properties?

After carefully reviewing the evidence on record, we rule in the negative.

To begin with, not only were the properties subject of the attachment not

registered in Reginas name, the Deed of Absolute Sale on which Regina based her interest was not even annotated on these titles. While Regina purportedly purchased her parents rights to the subject properties in 1991, she never asserted her rights over these properties by presenting the Deed of Absolute Sale to the Register of Deeds for registration and annotation on the titles. As a matter of fact, it was Veronica, and not Regina, who presented the Deed of Absolute Sale to the Register of Deeds.

More importantly, from the records, it is clear that the subject properties were

finally registered in Reginas name, not by virtue of the 1991 Deed of Absolute Sale, but by virtue of succession, specifically by the Adjudication that Regina filed with the Register of Deeds on February 24, 1993,[40] pursuant to Section 1, Rule 74 of the Rules of Court.[41] The procedure by which the properties were registered in Reginas name suggests that when Reginas parents died, the subject lots still formed part of Reginas parents estate, and were not, as Veronica claims, sold to Regina in 1991, thereby casting doubt to the validity of the Deed of Absolute Sale. As the Bulaongs reason in their memorandum, if the subject properties had already been sold to Regina as early as 1991, why would they still be considered a part of her parents estate in 1993?[42]

Another point to consider is that Regina dealt with the Bulaongs as her fathers

representative when they were negotiating the mortgage over the properties.[43] If she had already acquired her parents interest in these properties in 1991, she would not have needed any authority from her father to execute the mortgage with the Bulaongs; she would have done so in her own capacity.

These facts, taken together, lead us to doubt that Regina had any interest in the

properties at the time of the levy. Thus, unlike in the previously cited cases where the debtors, although possessing merely an inchoate interest in the properties at the time of the levy, had interests that were established with reasonable certainty and could be the subject of attachment; in the present case, the evidence on record fails to prove that Regina actually had any interest in the properties which could be the subject of levy.

The spring cannot rise higher than its source.[44] Since Regina had no established

interest in the subject properties at the time of the levy, Veronicas levy had nothing to attach to in the subject properties.

ii. Unregistered sale of land cannot bind third parties

Even assuming that the Deed of Absolute Sale in Reginas favor was valid, we still cannot uphold the validity of the levy and execution sale in Veronicas favor.

The general rule in dealing with registered land is set forth in Section 51 of P.D.

No. 1529:

Section 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or

affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. [emphases ours]

From the standpoint of third parties, a property registered under the Torrens system remains, for all legal purposes, the property of the person in whose name it is registered, notwithstanding the execution of any deed of conveyance, unless the corresponding deed is registered.[45] Simply put, if a sale is not registered, it is binding only between the seller and the buyer, but it does not affect innocent third persons.

Undoubtedly, Veronicas claim on the properties is rooted in the unregistered

Deed of Absolute Sale between Regina and her parents. The Bulaongs do not appear to have had any knowledge that this sale ever took place. To recall, Regina gave the Bulaongs the owners duplicate certificates of the properties, which showed that the properties were registered in the names of her parents, Fortunato and Bertha Limpo. It thus appears that the Bulaongs first learned about the sale betweenRegina and her parents when they received the newly issued titles in Reginas name which contained the annotation of the levy in Veronicas favor.

One of the principal features of the Torrens system of registration is that all

encumbrances on the land shall be shown, or at least intimated upon the certificate of title and a person dealing with the owner of the registered land is not bound to go behind the certificate and inquire into transactions, the existence of which is not there intimated.[46] Since the Bulaongs had no knowledge of the unregistered sale between Regina and her parents, the Bulaongs can neither be bound by it, nor can they be prejudiced by its consequences. This is but the logical corollary to the rule set forth in Section 51 of P.D. No. 1529, in keeping with the basic legal maxim that what cannot be done directly cannot be done indirectly.

70

Execution sale in Veronicas favor was highly irregular We also find that the execution sale in favor of Veronica is invalid because Reginas interest in both lots was sold together, in violation of Sections 15 and 21, Rule 39 of the old Rules of Court. The pertinent portions of these provisions provide:

Section 15. Execution of money judgments. The officer must enforce an execution of a money judgment by levying on all the property, real and personal of every name and nature whatsoever, and which may be disposed of for value, of the judgment debtor not exempt from execution, or on a sufficient amount of such property, if there be sufficient, and selling the same, and paying to the judgment creditor, or his attorney, so much of the proceeds as will satisfy the judgment. Any excess in the proceeds over the judgment and accruing costs must be delivered to the judgment debtor, unless otherwise directed by the judgment or order of the court. When there is more property of the judgment debtor than is sufficient to satisfy the judgment and accruing costs, within the view of the officer, he must levy only on such part of the property as is amply sufficient to satisfy the judgment and costs. Section 21. How property sold on execution. Who may direct manner and order of sale. All sales of property under execution must be made at public auction, to the highest bidder, between the hours of nine in the morning and five in the afternoon. After sufficient property has been sold to satisfy the execution, no more shall be sold. When the sale is of real property, consisting of several known lots, they must be sold separately; or, when a portion of such real property is claimed by a third person, he may require it to be sold separately. [emphases ours] Where the property to be sold consists of distinct lots, tracts or parcels, or is

susceptible of division without injury, it should be offered for sale in parcels and not en masse, for the reason that a sale in that manner will generally realize the best price, and will not result in taking from the debtor any more property than is necessary to satisfy the judgment. It will also enable the defendant to redeem any one or more of the parcels without being compelled to redeem all the land sold.[47] A sale of additional land or personal property after enough has been sold to satisfy the judgment is unauthorized.[48]

While the general policy of the law is to sustain execution sales, the sale may be

set aside where there is a resulting injury based on fraud, mistake and irregularity.[49] Where the properties were sold together when the sale of less than the whole would have been sufficient to satisfy the judgment debt, the sale may be set aside.[50]

In Caja v. Nanquil, [51] we took judicial notice of the fact that the value of a

property was usually bigger than the amount for which it could be mortgaged.Since the two properties, taken together, were mortgaged to the petitioners to secure a loan worth P4,300,000.00, we can easily assume that these properties are worth at least this amount. Even Veronica does not contest this assumption.

From this premise, we can logically assume that the sale of just one of the lots would have been sufficient to satisfy the judgment debt. Yet no explanation was provided as to why the sheriff sold both parcels of land at the execution sale for the paltry sum of P640,354.14. This act undoubtedly resulted in great prejudice to the Bulaongs. To our minds, this renders the execution sale defective, and provides sufficient ground for us to set the sale aside.

For the foregoing reasons, we rule and so hold that the levy and the

corresponding execution sale in Veronicas favor are invalid, and must be set aside. Veronica, however, is not without recourse, as she may still seek to enforce the judgment debt against Regina.

WHEREFORE, premises considered, we GRANT the petition and REVERSE the decision of the Court of Appeals dated July 31, 2002 in CA-G.R. SP No. 55423. We REINSTATE the decision of the Regional Trial Court, Branch 12, Malolos, Bulacan, dated July 30, 1999 in Civil Case No. 170-M-95, with theMODIFICATION that petitioners Anselmo Bulaong and Priscilla Bulaong are no longer required to reimburse Veronica Gonzales for her lien in the amount ofP275,000.00, plus interest.

SO ORDERED.

_______________________________________________________________________

FIRST DIVISION EMERITA MUOZ, Petitioner, - versus - ATTY. VICTORIANO R. YABUT, JR. and SAMUEL GO CHAN, Respondents. x - - - - - - - - - - - - - - - - - - - - - - - - x EMERITA MUOZ, Petitioner, - versus - SPOUSES SAMUEL GO CHAN and AIDA C. CHAN, and THE BANK OF THE PHILIPPINE ISLANDS, Respondents.

G.R. No. 142676 G.R. No. 146718 Present: CORONA, C.J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, DEL CASTILLO, and PEREZ, JJ. Promulgated: June 6, 2011

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

D E C I S I O N LEONARDO-DE CASTRO, J.:

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Before Us are the following consolidated petitions for review on certiorari under Rule 45 of the Rules of Court.

In G.R. No. 142676, Emerita Muoz (Muoz) is seeking the reversal, annulment, and

setting aside of the Decision[1] dated July 21, 1995 and Resolution[2] dated March 9, 2000 of the Court of Appeals in CA-G.R. SP No. 35322, which affirmed the Orders[3] dated June 10, 1994 and August 5, 1994 of the Regional Trial Court, Branch 88 (RTC-Branch 88) of Quezon City in Civil Case No. Q-94-20632. The RTC dismissed Civil Case No. 8286, the forcible entry case instituted by Muoz against Atty. Victoriano R. Yabut, Jr. (Atty. Yabut) and Samuel Go Chan before the Metropolitan Trial Court (MeTC), Branch 33 of Quezon City; and nullified the MeTC Order[4] dated May 16, 1994, granting Muozs prayer for the issuance of a writ of preliminary mandatory injunction which restored possession of the subject property to Muoz.

In G.R. No. 146718, Muoz is praying for the reversal, setting aside, and

nullification of the Decision[5] dated September 29, 2000 and Resolution[6] dated January 5, 2001 of the Court of Appeals in CA-G.R. SP No. 40019, which affirmed the Orders[7] dated August 21, 1995 and October 3, 1995 of the Quezon City RTC, Branch 95 (RTC-Branch 95) in Civil Case No. Q-28580 denying Muozs Motion for an Alias Writ of Execution and Application for Surrender of the Owners Duplicate Copy of TCT No. 53297[8] against respondents Bank of the Philippine Islands (BPI) and the spouses Samuel Go Chan and Aida C. Chan (spouses Chan).

I FACTS

The subject property is a house and lot at No. 48 Scout Madrian St.,

Diliman, Quezon City, formerly owned by Yee L. Ching. Yee L. Ching is married to Emilia M. Ching (spouses Ching), Muozs sister. Muoz lived at the subject property with the spouses Ching. As consideration for the valuable services rendered by Muoz to the spouses Chings family, Yee L. Ching agreed to have the subject property transferred to Muoz. By virtue of a Deed of Absolute Sale, seemingly executed by Yee L. Ching in favor of Muoz,[9] the latter acquired a Transfer Certificate of Title (TCT) No. 186306 covering the subject property in her name on December 22, 1972.[10]However, in a Deed of Absolute Sale dated December 28, 1972, Muoz purportedly sold the subject property to her sister, Emilia M. Ching. As a result, TCT No. 186306 was cancelled and TCT No. 186366 was issued in Emilia M. Chings name. Emilia M. Ching, in a Deed of Absolute Sale dated July 16, 1979, sold the subject property to spouses Go Song and Tan Sio Kien (spouses Go), hence, TCT No. 186366 was cancelled and replaced by TCT No. 258977 in the spouses Gos names.

On October 15, 1979, Muoz registered her adverse claim to the subject property on TCT No. 258977 of the spouses Go. The next day, on October 16, 1979, Muoz filed a complaint for the annulment of the deeds of absolute sale dated December 28, 1972 and July 16, 1979, the cancellation of TCT No. 258977 in the spouses Gos names, and the restoration and revival of TCT No. 186306 in Muozs name. The complaint was docketed as Civil Case No. Q-28580 and raffled to RTC-Branch 95. On October 17, 1979, Muoz caused

the annotation of a notice of lis pendens on TCT No. 258977 of the spouses Go. In an Order dated December 17, 1979, the RTC-Branch 95 granted the spouses Gos motion for the issuance of a writ of preliminary mandatory injunction and ordered the sheriff to put the spouses Go in possession of the subject property. The writ was implemented by the sheriff on March 26, 1980, driving Muoz and her housemates away from the subject property.

Muoz filed a petition for certiorari and prohibition before the Court of Appeals,

assailing the issuance of the writ of preliminary mandatory injunction, which was docketed as CA-G.R. SP No. 10148. The appellate court dismissed Muozs petition on January 4, 1980. Yee L. Ching and his son Frederick M. Ching filed an urgent motion for leave to intervene in CA-G.R. SP No. 10148 and for the issuance of a temporary restraining order (TRO). The Court of Appeals issued a TRO. However, in a Resolution dated March 18, 1980, the appellate court denied the motion to intervene of Yee L. Ching and Frederick M. Ching, and cancelled the TRO previously issued. Yee L. Ching and Frederick M. Ching challenged before this Court, in G.R. No. 53463, the Resolution dated March 18, 1980 of the Court of Appeals.Eventually, in a Resolution dated June 3, 1981, the Court dismissed the petition in G.R. No. 53463, for lack of merit and failure of Yee L. Ching and Frederick M. Ching to substantially show that the RTC-Branch 95 and the Court of Appeals gravely abused their discretion. In a subsequent Resolution dated June 21, 1982, the Court clarified that its Resolution of June 3, 1981 was without prejudice to the continuation of the litigation in Civil Case No. Q-28580 still pending before the trial court, in order that proper and final adjudication may be made of whether or not the deed of sale by Emerita L. Muoz in favor of Emilia M. Ching is a real, genuine and authentic transaction, thereby to settle once and for all the issue of ownership of the property herein in question.[11]

Trial in Civil Case No. Q-28580 proceeded before RTC-Branch 95. In the meantime, Muozs adverse claim and notice of lis pendens on TCT No.

258977 was cancelled on October 28, 1982 on the basis of an alleged final judgment in favor of the spouses Go.[12] The spouses Go obtained a loan of P500,000.00 from BPI Family Savings Bank (BPI Family) and to secure the same, they constituted a mortgage on the subject property on November 23, 1982.[13] When the spouses Go defaulted on the payment of their loan, BPI Family foreclosed the mortgage. BPI Family was the highest bidder at the auction sale of the subject property. The spouses Go failed to exercise their right of redemption within the prescribed period, thus, BPI Family was finally able to register the subject property in its name on October 23, 1987 under TCT No. 370364.[14] Apparently, the original copy of TCT No. 370364 was among those razed in the fire at the Quezon City Register of Deeds on June 11, 1988. As a result of the administrative reconstitution of the lost title, TCT No. RT-54376 (370364) was issued to BPI Family. On December 3, 1990, BPI Family executed in favor of the spouses Samuel Go Chan and Aida C. Chan (spouses Chan) a Deed of Absolute Sale[15] covering the subject property for and in consideration of P3,350,000.00. Consequently, TCT No. RT-54376 (370364) in the name of BPI Family was cancelled and TCT No. 53297 was issued in the spouses Chans names on January 28, 1991.[16] The spouses Chan obtained a loan from BPI Family on October 2, 1992 for the construction of a building on the subject property, and to secure the same, constituted a mortgage on the subject property in favor of BPI Family.[17]

72

On July 19, 1991, RTC-Branch 95 rendered its Decision[18] in Civil Case No. Q-28580, against Emilia M. Ching, Yee L. Ching, and the spouses Go (Emilia M. Ching, et al.). It found that Muozs signature on the Deed of Absolute Sale dated December 28, 1972 was forged; that Muoz never sold the subject property to her sister, Emilia M. Ching; and that the spouses Go were not innocent purchasers for value of the subject property. The fallo of the said decision reads:

WHEREFORE, judgment is hereby rendered dismissing for lack

of merit [Emilia M. Ching, et al.s] respective counterclaims, cross-claims, and counter-cross-claim, declaring as null and void ab initio the following documents, to wit: (a) Deed of Absolute Sale dated December 28, 1972, copy of which is marked in evidence as Exh. M; (b) TCT No. 186366 of the Registry of Deeds for Quezon City, copy of which is marked in evidence as Exh. N; (c) Deed of Absolute Sale dated July 16, 1979, copy of which is marked in evidence as Exh. 3; and, (d) TCT No. 258977 of the Registry of Deeds for Metro Manila District III, copy of which is marked in evidence as Exh. 4, and directing defendant Register of Deeds of Quezon City to cancel from the records of the subject property the registrations of all the said documents and to restore and revive, free from all liens and encumbrances, TCT No. 186306 of the Registry of Deeds for Quezon City, copy of which is marked in evidence as Exh. L, as well as ordering defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and severally to pay [Muoz] the sum ofP50,000.00 as and for attorneys fees and to pay the costs of suit. The court also hereby dismisses the rest of the claims in [Muozs] complaint, there being no satisfactory warrant therefor.[19]

Emilia M. Ching, et al.s, appeal of the foregoing judgment of the RTC-Branch 95 was docketed as CA-G.R. CV No. 33811 before the Court of Appeals. In its Decision[20] dated March 4, 1993, the appellate court not only affirmed the appealed judgment, but also ordered the spouses Go and their successors-in-interest and assigns and those acting on their behalf to vacate the subject property, to wit:

WHEREFORE, premises considered, the decision appealed

from is AFFIRMED, with costs against [Emilia M. Ching, et al.]. The writ of preliminary mandatory injunction issued on December 17, 1979 is hereby set aside and declared dissolved. Defendants-appellants Go and Tan, their successors-in-interest and assigns and those acting on their behalf, are ordered to vacate the disputed premises and to deliver the same to [Muoz] immediately upon receipt of this decision.[21] Emilia L. Ching, et al., filed before this Court a motion for extension of time to file

their petition for review, which was assigned the docket number G.R. No. 109260. However, they failed to file their intended petition within the extended period which expired on April 23, 1993. In a Resolution[22] dated July 12, 1993, the Court declared G.R. No. 109260 terminated. The Resolution dated July 12, 1993 of the Court in G.R. No.

109260 became final and executory on July 15, 1993 and was entered in the Book of Entries of Judgments on even date.[23]

More than two months later, on September 20, 1993, the RTC-Branch 95 issued a

writ of execution to implement the judgment in Civil Case No. Q-28580. The spouses Chan, who bought the subject property from BPI Family, then came forward and filed before the RTC-Branch 95 on October 22, 1993 an Urgent Motion to Stop Execution as Against Spouses Samuel Go Chan and Aida Chan,[24] opposing the writ of execution issued in Civil Case No. Q-28580. The spouses Chan asserted ownership and possession of the subject property on the basis of a clean title registered in their names under TCT No. 53297. The spouses Chan further contended that the final judgment in Civil Case No. Q-28580 could not be executed against them since they were not parties to the said case; they were not successors-in-interest, assigns, or acting on behalf of the spouses Go; and they purchased the subject property from BPI Family without any notice of defect in the latters title.

It was only at this point that Muoz, upon her own inquiry, discovered the cancellation on October 28, 1982 of her adverse claim and notice of lis pendensannotated on the spouses Gos TCT No. 258977, and the subsequent events that led to the transfer and registration of the title to the subject property from the spouses Go, to BPI Family, and finally, to the spouses Chan.

In its Order[25] dated December 28, 1993, the RTC-Branch 95 denied the spouses Chans urgent motion to stop the execution. According to the RTC-Branch 95, the photocopy of TCT No. 370364 in the name of BPI Family, submitted by the spouses Chan with their motion, could hardly be regarded as satisfactory proof that Muozs adverse claim and notice of lis pendens annotated therein were also missing from the original copy of said certificate of title. Muozs adverse claim and notice of lis pendens were annotated on TCT No. 258977 in the spouses Gos names as P.E.-8078 and P.E.-8178, respectively. So when TCT No. 258977 of the spouses Go was cancelled and TCT No. 370364 was issued to BPI Family, it could be presumed that the Register of Deeds regularly performed his official duty by carrying over Muozs adverse claim and notice of lis pendens to TCT No. 370364. In addition, the RTC-Branch 95 pointed out that in this jurisdiction, the entry of the notice of lis pendens in the day book of the Register of Deeds was already sufficient notice to the whole world of the dispute over the subject property, and there was no more need to annotate the same on the owners duplicate of the certificate of title. Finally, the RTC-Branch 95 held that TCT No. RT-54376 (370364) of BPI Family and TCT No. 53297 of the spouses Chan shall be subject to the reservation under Section 7 of Republic Act No. 26[26] [t]hat certificates of title reconstituted extrajudicially, in the manner stated in sections five and six hereof, shall be without prejudice to any party whose right or interest in the property was duly noted in the original, at the time it was lost or destroyed, but entry or notation of which has not been made on the reconstituted certificate of title. Thus, the spouses Chan were deemed to have taken the disputed property subject to the final outcome of Civil Case No. Q-28580.

On January 3, 1994, the RTC-Branch 95 issued an Alias Writ of Execution.[27] On

January 10, 1994, the writ was enforced, and possession of the subject property was taken

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from the spouses Chan and returned to Muoz.[28] In its Orders dated April 8, 1994 and June 17, 1994, the RTC-Branch 95 denied the spouses Chans motion for reconsideration and notice of appeal, respectively.[29] G.R. No. 142676

Pending resolution by the RTC-Branch 95 of the spouses Chans motion for reconsideration and notice of appeal in Civil Case No. Q-28580, Muoz instituted before the MeTC on February 4, 1994 a Complaint for Forcible Entry with Prayer for Preliminary Mandatory Injunction[30] against Samuel Go Chan and Atty. Yabut, docketed as Civil Case No. 8286. Muoz alleged in her complaint that she had been in actual and physical possession of the subject property since January 10, 1994.She hired a caretaker and two security guards for the said property. On February 2, 1994, Samuel Go Chan and Atty. Yabut, along with 20 other men, some of whom were armed, ousted Muoz of possession of the subject property by stealth, threat, force, and intimidation. Muoz prayed for the issuance of a writ of preliminary mandatory injunction directing Samuel Go Chan and Atty. Yabut and all persons claiming right under them to vacate the subject property. Muoz additionally prayed for judgment making the mandatory injunction permanent and directing Samuel Go Chan and Atty. Yabut to pay Muoz: (1) compensation for the unlawful occupation of the subject property in the amount of P50,000.00 per month, beginning February 2, 1994 until the said property is fully and completely turned over to Muoz; (2) attorneys fees in the amount of P50,000.00, plus P1,500.00 per court appearance of Muozs counsel; and (3) costs of suit.

Samuel Go Chan and Atty. Yabut denied Muozs allegations, insisting that Samuel

Go Chan is the valid, lawful, and true legal owner and possessor of the subject property. Samuel Go Chan and Atty. Yabut averred that the Turn-Over of Possession and Receipt of Possession dated January 10, 1994 attached to Muozs complaint as proof that the subject property had been placed in her possession is a falsified document. The Writ of Execution issued on September 20, 1993 in Civil Case No. Q-28580 had already expired and the Sheriffs Return on the Writ another document purporting to show that possession of the subject property was turned-over to Muoz on January 10, 1994 was then being challenged in a complaint before the Office of Deputy Court Administrator Reynaldo L. Suarez of the Supreme Court. Samuel Go Chans possession of the subject property has never been interrupted. His sister, Cely Chan, resided at the subject property and was never removed therefrom. On February 2, 1994, Atty. Yabut was at the subject property only to protect the rights and interest of his client, Samuel Go Chan, and since the latters possession of the subject property had never been interrupted, Atty. Yabut entered the same peacefully, without intimidation, force, or stealth. The other people at the subject property on February 2, 1994 were there to attend the services at the Buddhist Temple which occupied the fourth floor of the building erected by the spouses Chan on the subject property. Samuel Go Chan and Atty. Yabut, thus, asked the MeTC to dismiss Muozs complaint for lack of merit and legal basis.[31]

The MeTC received evidence from the parties on whether a writ of preliminary

injunction should be issued, as prayed for by Muoz. In its Order dated May 16, 1994, the MeTC adjudged that the final judgment in Civil Case No. Q-28580 was already executed

against the spouses Chan and there was, indeed, a turn-over of possession of the subject property to Muoz. Accordingly, the MeTC granted Muozs prayer for the issuance of a writ of preliminary mandatory injunction, restoring possession of the subject property to Muoz.

Samuel Go Chan and Atty. Yabut questioned the foregoing MeTC order through a

Petition for Certiorari with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction[32] before the RTC-Branch 88, which was docketed as Civil Case No. Q-94-20632. They asserted that they were not bound by the execution of the final judgment of RTC-Branch 95 in Civil Case No. Q-28580 as they were not parties to the said case. Muoz, on the other hand, argued that the MeTC Order of May 16, 1994 was an interlocutory order, and under Section 19 of the Rules of Summary Procedure, a petition for certiorari against an interlocutory order issued by the court is one of the prohibited pleadings and motions in summary proceedings.

In its Order dated June 10, 1994, the RTC-Branch 88 issued a writ of preliminary

injunction to enjoin the implementation of the MeTC Order dated May 16, 1994. On August 5, 1994, the RTC-Branch 88 issued another Order resolving Muozs

motion to dismiss the petition for certiorari in Civil Case No. Q-94-20632, motion for reconsideration of the Order dated June 10, 1994 of RTC-Branch 88 granting the issuance of a writ of preliminary injunction, and motion to resolve with additional grounds for dismissal. According to the RTC-Branch 88, the MeTC failed to distinguish the issue of finality of the judgment of the RTC-Branch 95 in Civil Case No. Q-28580 from the assertions of Samuel Go Chan and Atty. Yabut that the spouses Chan are not covered by said final judgment because they are not successors-in-interest, assigns, or privies of the spouses Go and they are purchasers of the subject property in good faith. The issue of whether the final judgment in Civil Case No. Q-28580 extended to the spouses Chan was then still being litigated in the same case before RTC-Branch 95, where the spouses Chans motion for reconsideration of the denial of their notice of appeal was pending. The RTC-Branch 88 further found that the MeTC committed grave abuse of discretion in not dismissing Muozs complaint for forcible entry on the ground of lis pendens, as the issue as to who between Muoz and the spouses Chan had the better right to possession of the subject property was the subject of the pending proceeding in Civil Case No. Q-28580 before the RTC-Branch 95. In the end, the RTC-Branch 88 decreed:

WHEREFORE, premises considered, the Court renders

judgment (a) Denying the motion to dismiss of respondent Muoz for lack

of merit; (b) Denying the motion for reconsideration of respondent

Muoz for the recall and/or setting aside of the writ of preliminary injunction granted to petitioners;

(c) Declaring the Order dated May 16, 1994 of Public

respondent Hon. Elsa de Guzman in Civil Case No. 8286 illegal and therefore null and void; and

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(d) Dismissing the ejectment suit in Civil Case No. 8286 on

ground of lis pendens. Without pronouncement as to costs.[33]

Muoz appealed the Orders dated June 10, 1994 and August 5, 1994 of RTC-Branch 88 before the Court of Appeals. Her appeal was docketed as CA-G.R. SP No. 35322. Aside from the nullification of the two orders, Muoz additionally prayed for the dismissal from the service of the RTC-Branch 88 presiding judge and the disbarment of Atty. Yabut.

The Court of Appeals, in its Decision dated July 21, 1995, sustained the appealed

orders of RTC-Branch 88. The Court of Appeals held that the MeTC should have dismissed the forcible entry case on the ground of lis pendens; that the spouses Chan were not parties in Civil Case No. Q-28580, and impleading them only in the execution stage of said case vitiated their right to due process; that the order of the RTC-Branch 95 involving the spouses Chan in Civil Case No. Q-28580 was null and void, considering that they are strangers to the case, and they are innocent purchasers for value of the subject property; that the notice of lis pendens was already cancelled from the spouses Gos certificate of title at the time they mortgaged the subject property to BPI Family; and that the title to the subject property was already free of any and all liens and encumbrances when the spouses Chan purchased the said property from BPI Family. The Court of Appeals, in its Resolution dated March 9, 2000, denied Muozs motion for reconsideration. G.R. No. 146718 Meanwhile, Muoz filed before the RTC-Branch 95 in Civil Case No. Q-28580 a Motion to Cite the Register of Deeds in Contempt of Court for the failure of the Register of Deeds to restore Muozs TCT No. 186306 despite having been served with a copy of the writ of execution on October 11, 1993. In its Judgment (on the Contempt Proceedings against the Register of Deeds of Quezon City Samuel C. Cleofe)[34] dated March 18, 1994, the RTC-Branch 95 denied Muozs motion, convinced that the Register of Deeds had a valid excuse for his inability to implement the served writ. The Register of Deeds could not cancel the spouses Chans TCT No. 53297, the subsisting certificate of title over the subject property, absent any authority or directive for him to do so. The directive in the final judgment in Civil Case No. Q-28580 and the writ of execution for the same only pertained to the cancellation of the spouses Gos TCT No. 258977.

Thereafter, Muoz filed a Motion for Contempt against the spouses Chan and a Second Motion for Contempt against Samuel Go Chan and Atty. Yabut. Muoz also filed a Motion for an Alias Writ of Execution and Application for Surrender of the Owners Duplicate Copy of TCT No. 53297,[35] in which she prayed for the issuance of an alias writ of execution directing the Register of Deeds not only to cancel TCT No. 258977 and all documents declared null and void ab initio in the dispositive portion of the Decision[36] dated July 19, 1991 of RTC-Branch 95 in Civil Case No. Q-28580, and to restore

and revive, free from all liens and encumbrances Muozs TCT No. 186306, but likewise to cancel the present certificate of title covering the subject property, TCT No. 53297.

In its Order dated August 21, 1995, the RTC-Branch 95 denied all of Muozs

aforementioned motions. The RTC-Branch 95 was of the view that Samuel Go Chans title should be litigated in another forum, not in Civil Case No. Q-28580 where the judgment had already become final and executory. The RTC-Branch 95 also stressed that since the judgment in Civil Case No. Q-28580 had long become final and executory, it could no longer be changed or amended except for clerical error or mistake. Accordingly, the RTC-Branch 95 resolved as follows:

1. Ordering, as it hereby orders, the denial of [Muozs] first and

second motions for contempt and hereby absolves respondents Samuel Go Chan, Celia Chan, Atty. Victoriano R. Yabut, Jr., and several John Does of the Contempt Charges against them.

2. Ordering, as it hereby orders, the issuance of an alias writ of

execution directing the Courts Deputy Sheriff: (a) Defendants Go Song and Tan Sio Kien, their

successors-in-interest and assigns and those acting on their behalf to vacate the disputed premises and deliver the same to [Muoz];

(b) Defendant Register of Deeds of Quezon City to

cancel from the records of the subject property the registration of all the following documents, to wit: (1) Deed of Absolute Sale dated December 28, 1972; (2) Transfer Certificate of Title (TCT) No. 186366 of the Register of Deeds of Quezon City; (3) Deed of Absolute Sale dated July 16, 1979; and (4) TCT No. 258977 of the Registry of Deeds for Metro Manila II, and to restore and revive, free from all liens and encumbrances TCT No. 186306 of the Registry of Deeds for Quezon City; and

(c) Defendants Emilia M. Ching, Go Song and Tan Sio

Kien jointly and severally to pay [Muoz] the sum of P50,000.00 as and for attorneys fees and to pay the cost of suit.[37]

Unrelenting, Muoz filed a Motion for Clarificatory Order, pointing out that the spouses Chan are the present occupants of the subject property. The Order dated August 21, 1995 of the RTC-Branch 95 directed the deputy sheriff to deliver the subject property to Muoz, and this could not be done unless the spouses Chan are evicted therefrom. Resultantly, Muoz prayed that a clarificatory order be made categorically

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stating that the spouses Samuel Go Chan and Aida C. Chan, and all persons claiming right under them, are likewise evicted from the subject premises pursuant to the Order of 21 August 1995.[38]

Once more, the RTC-Branch 95 denied Muozs motion in its Order dated October

3, 1995. The RTC-Branch 95 reiterated the rule that after the judgment had become final, only clerical errors, as distinguished from substantial errors, can be amended by the court. Furthermore, when the decision or judgment sought to be amended is promulgated by an appellate court, it is beyond the power of the trial court to change, amplify, enlarge, alter, or modify. Ultimately, the RTC-Branch 95 pronounced that it was restrained x x x to consider as mere clerical error the exclusion of spouses Samuel Go Chan and Aida C. Chan in the Decision of the Court dated July 19, 1991, a final judgment, which judgment cannot now be made to speak a different language.[39]

Attributing grave abuse of discretion on the part of the RTC-Branch 95 in issuing its Orders dated August 21, 1995 and October 3, 1995, Muoz filed before this Court a Petition for Certiorari and Mandamus, which was remanded to the Court of Appeals in observance of the hierarchy of courts, where it was docketed as CA-G.R. SP No. 40019. The Court of Appeals promulgated its Decision on September 29, 2000 dismissing Muozs petition. The Court of Appeals agreed with the RTC-Branch 95 that the spouses Chan could not be covered by the alias writ of execution considering that they were not impleaded in Civil Case No. Q-28580. The cancellation of TCT No. 53297 in the spouses Chans names could not be done apart from a separate action exclusively for that matter. The spouses Chan are deemed buyers in good faith and for value as the certificate of title delivered to them by BPI Family was free from any liens or encumbrances or any mark that would have raised the spouses Chans suspicions. Every person dealing with registered lands may safely rely on the correctness of the certificate of title of the vendor/transferor, and he is not required to go beyond the certificate and inquire into the circumstances culminating in the vendors acquisition of the property. The Court of Appeals denied Muozs motion for reconsideration in a Resolution dated January 5, 2001.

Muoz comes before this Court via the present consolidated petitions. Muoz posits that the final judgment and writ of execution of RTC-Branch 95 in

Civil Case No. Q-28580 bind not only Emilia M. Ching and the spouses Go, but also their successors-in-interest, assigns, or persons acting on their behalf, namely, BPI Family and spouses Chan. The spouses Chan cannot be deemed innocent purchasers for value of the property since the cancellation of the adverse claim and notice of lis pendens on the spouses Gos TCT No. 258977 is completely null and void.

Muoz further argues that the MeTC Order dated May 16, 1994 in Civil Case No.

8286 correctly ordered the issuance of a writ of preliminary mandatory injunction restoring possession of the subject property to her, as she had already acquired prior possession of the said property upon the execution of the final judgment in Civil Case No. Q-28580. Also, the spouses Chans petition for certiorari before the RTC-Branch 88, docketed as Civil Case No. Q-94-20632, challenging the Order dated May 16, 1994 of the MeTC in Civil Case No. 8286, is a prohibited pleading under the Rules of Summary Procedure; and the RTC-Branch 88 and the Court of Appeals should be faulted for giving due course to the said petition even in the absence of jurisdiction.

On the other hand, in their comments to the two petitions at bar, the spouses

Chan, Atty. Yabut, and BPI Family assert that given the peculiar factual circumstances of the case, RTC-Branch 88 was justified in taking cognizance of Samuel Go Chan and Atty. Yabuts petition for certiorari in Civil Case No. Q-94-20632; that Muoz is estopped from questioning the jurisdiction of RTC-Branch 88 after participating in the proceedings in Civil Case No. Q-94-20632; that the spouses Chans title to the subject property is not affected by the final judgment of RTC-Branch 95 in Civil Case No. Q-28580, and the said judgment cannot be executed against the spouses Chan since they are neither parties to the case, nor are they the successors-in-interest, assigns, or persons acting on behalf of Emilia M. Ching or the spouses Go; that BPI Family and consequently, the spouses Chan, obtained title to the subject property as innocent purchasers for value, there being no notice of any infirmity in said title; and that Muoz is guilty of forum shopping for filing her petition in G.R. No. 146718 even while her petition in G.R. No. 142676 is still pending.

II RULING

For the sake of expediency, we will be discussing first the merits of the petition in G.R. No. 146718. G.R. No. 146718

Civil Case No. Q-28580 involved Muozs complaint for the annulment of the deeds of absolute sale dated December 28, 1972[40] and July 16, 1979,[41] the cancellation of the spouses Gos TCT No. 258977, and the restoration and revival of Muozs TCT No. 186306. The final judgment of RTC-Branch 95 in Civil Case No. Q-28580 was in favor of Muoz and against Emilia M. Ching and the spouses Go. The problem arose when during the pendency of the said case, title and possession of the subject property were transferred from the spouses Go, to BPI Family, and finally, to the spouses Chan. BPI Family and the spouses Chan were never impleaded as parties and were not referred to in the dispositive portion of the final judgment in Civil Case No. Q-28580. Muoz questions in G.R. No. 146718: (1) the Order dated August 21, 1995 denying her Motion for Contempt against the spouses Chan, Second Motion for Contempt against Samuel Go Chan and Atty. Yabut, and Motion for an Alias Writ of Execution and Application for Surrender of the Owners Duplicate Copy of TCT No. 53297; and (2) the Order dated October 3, 1995 denying her Motion for Clarificatory Order, both issued by the RTC-Branch 95 in Civil Case No. Q-28580, and upheld by the Court of Appeals in CA-G.R. SP No. 40019. In sum, Muoz was seeking in her aforementioned motions: (1) a categorical order from the RTC-Branch 95 that the final judgment in Civil Case No. Q-28580 be executed against the spouses Chan; and (2) the surrender and cancellation of the spouses Chans TCT No. 53297 and restoration of Muozs TCT No. 186306.

There is no merit in Muozs petition in G.R. No. 146718.

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Civil Case No. Q-28580 is an action for reconveyance of real property. In Heirs of Eugenio Lopez, Sr. v. Enriquez,[42] we described an action for reconveyance as follows:

An action for reconveyance is an action in personam available

to a person whose property has been wrongfully registered under the Torrens system in anothers name. Although the decree is recognized as incontrovertible and no longer open to review, the registered owner is not necessarily held free from liens. As a remedy, an action for reconveyance is filed as an ordinary action in the ordinary courts of justice and not with the land registration court. Reconveyance is always available as long as the property has not passed to an innocent third person for value. A notice of lis pendens may thus be annotated on the certificate of title immediately upon the institution of the action in court. The notice of lis pendens will avoid transfer to an innocent third person for value and preserve the claim of the real owner.[43] (Emphases ours.)

The rule is that: (1) a judgment in rem is binding upon the whole world, such as a judgment in a land registration case or probate of a will; and (2) a judgment in personam is binding upon the parties and their successors-in-interest but not upon strangers. A judgment directing a party to deliver possession of a property to another is in personam; it is binding only against the parties and their successors-in-interest by title subsequent to the commencement of the action. An action for declaration of nullity of title and recovery of ownership of real property, or re-conveyance, is a real action but it is an action in personam, for it binds a particular individual only although it concerns the right to a tangible thing. Any judgment therein is binding only upon the parties properly impleaded.[44]

Since they were not impleaded as parties and given the opportunity to

participate in Civil Case No. Q-28580, the final judgment in said case cannot bind BPI Family and the spouses Chan. The effect of the said judgment cannot be extended to BPI Family and the spouses Chan by simply issuing an alias writ of execution against them. No man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by any judgment rendered by the court. In the same manner, a writ of execution can be issued only against a party and not against one who did not have his day in court. Only real parties in interest in an action are bound by the judgment therein and by writs of execution issued pursuant thereto.[45]

A similar situation existed in Dino v. Court of Appeals,[46] where we resolved that:

As the registered owner of the subject property, petitioners

are not bound by decision in Civil Case No. R-18073 for they were never summoned in said case and the notice of lis pendens annotated on TCT No. 73069 was already cancelled at the time petitioners purchased the subject property. While it is true that petitioners are indispensable parties in Civil Case No. R-18073, without whom no complete relief could be accorded to the private respondents, the fact still remains that

petitioners were never actually joined as defendants in said case. Impleading petitioners as additional defendants only in the execution stage of said case violated petitioners right to due process as no notice of lis pendens was annotated on the existing certificate of title of said property nor were petitioners given notice of the pending case, therefore petitioners remain strangers in said case and the Order of the trial court involving them is null and void, considering that petitioners are innocent purchasers of the subject property for value.[47]

We further stress that Section 48 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, clearly provides that [a] certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled except in a direct proceeding in accordance with law. Herein, several Torrens titles were already issued after the cancellation of Muozs. Certificates of title had been successively issued to Emilia M. Ching, spouses Go, BPI Family, and spouses Chan. Civil Case No. Q-28580, in which a final judgment had already been rendered, specifically challenged the validity of the certificates of title of Emilia M. Ching and the spouses Go only. To have the present certificate of title of the spouses Chan cancelled, Muoz must institute another case directly attacking the validity of the same.

The fact that the titles to the subject property of Emilia M. Ching and the spouses Go were already declared null and void ab initio by final judgment in Civil Case No. Q-28580 is not enough, for it does not automatically make the subsequent titles of BPI Family and the spouses Chan correspondingly null and void ab initio.

It has long been ingrained in our jurisprudence that a void title may become the

root of a valid title if the derivative title was obtained in good faith and for value.Following the principle of indefeasibility of a Torrens title, every person dealing with registered lands may safely rely on the correctness of the certificate of title of the vendor/transferor, and he is not required to go beyond the certificate and inquire into the circumstances culminating in the vendors acquisition of the property. The rights of innocent third persons who relied on the correctness of the certificate of title and acquired rights over the property covered thereby cannot be disregarded and the courts cannot order the cancellation of such certificate for that would impair or erode public confidence in the Torrens system of land registration.[48]

Hence, we pronounced in Republic v. Agunoy, Sr.[49]:

Here, it bears stressing that, by petitioner's own judicial

admission, the lots in dispute are no longer part of the public domain, and there are numerous third, fourth, fifth and more parties holding Torrens titles in their favor and enjoying the presumption of good faith. This brings to mind what we have reechoed in Pino v. Court of Appeals and the cases therein cited:

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[E]ven on the supposition that the sale was void, the general rule that the direct result of a previous illegal contract cannot be valid (on the theory that the spring cannot rise higher than its source) cannot apply here for We are confronted with the functionings of the Torrens System of Registration. The doctrine to follow is simple enough: a fraudulent or forged document of sale may become the ROOT of a valid title if the certificate of title has already been transferred from the name of the true owner to the name of the forger or the name indicated by the forger.[50] (Emphases ours.)

Although the RTC-Branch 95 had declared with finality in Civil Case No. Q-28580 that the titles of Emilia M. Ching and the spouses Go were null and void, there is yet no similar determination on the titles of BPI Family and the spouses Chan. The question of whether or not the titles to the subject property of BPI Family and the spouses Chan are null and void, since they are merely the successors-in-interest, assigns, or privies of Emilia M. Ching and the spouses Go, ultimately depends on the issue of whether or not BPI Family and the spouses Chan obtained their titles to the subject property in bad faith, i.e., with notice of Muozs adverse claim and knowledge of the pendency of Civil Case No. Q-28580. The latter is a factual issue on which we cannot rule in the present petition, not only because we are not a trier of facts, but more importantly, because it was not among the issues raised and tried in Civil Case No. Q-28580.

In support of her prayer for an alias writ of execution against BPI Family and the

spouses Go, Muoz cites our ruling in Calalang v. Register of Deeds of Quezon City,[51] in relation to De la Cruz v. De la Cruz.[52]

De la Cruz is an action for reconveyance of Lot 671 founded on breach of trust

filed by Augustina de la Cruz, et al., against Lucia dela Cruz (Lucia) and Iglesia Ni Kristo (INK). We upheld the validity of the sale of Lot 671 by Lucia to INK, and thereby validated the title of INK to the said property.

Calalang actually involved two petitions: (1) a special civil action

for certiorari and prohibition originally filed by Virginia Calalang (Calalang) before this Court, and (2) a petition for injunction with damages originally filed by Augusto M. de Leon (De Leon), et al., before the RTC and docketed as Civil Case No. Q-45767.Calalang and De Leon, et al., assert titles that were adverse to that of INK. De Leon, et al., in particular, claim that their titles to Lot 671 were derived from Amando Clemente. Calalang and De Leon, et al., sought from the court orders enjoining INK from building a fence to enclose Lot 671; requiring the Administrator of the National Land Titles and Deeds Registration Administration (NLTDRA) to conduct an investigation of the anomaly regarding Lucias reconstituted title to Lot 671; and dismissing the proceedings instituted by the Register of Deeds for the cancellation of their titles. We dismissed the petitions of Calalang and De Leon, et al., on the ground of res judicata, the legality or validity of the title of INK over Lot 671 had been settled with finality in De la Cruz. De la Cruz was applied to Calalang

and De Leon, et al., since the facts on which such decision was predicated continued to be the facts on which the petitions of Calalang and De Leon, et al., were based.

Muozs reliance on Calalang is misplaced. There are substantial differences in the

facts and issues involved in Calalang and the present case. In Calalang, there is duplication or overlapping of certificates of title issued to

different persons over the same property. We already upheld in De la Cruz the validity of the certificate of title of INK over Lot 671, which effectively prevents us from recognizing the validity of any other certificate of title over the same property.In addition, Lucia, the predecessor-in-interest of INK, had her certificate of title judicially reconstituted. The judicial reconstitution of title is a proceeding in rem, constituting constructive notice to the whole world. Hence, we rejected the petitions of Calalang and De Leon, et al., to enjoin INK from building a fence enclosing Lot 671, and the concerned public authorities from instituting appropriate proceedings to have all other certificates of title over Lot 671 annulled and cancelled.

In the instant case, there has been no duplication or overlapping of certificates of

title. The subject property has always been covered by only one certificate of title at a time, and at present, such certificate is in the spouses Chans names. As we have previously discussed herein, Muoz cannot have the spouses Chans TCT No. 53297 cancelled by a mere motion for the issuance of an alias writ of execution in Civil Case No. Q-28580, when the spouses Chan were not parties to the case. Civil Case No. Q-28580 was a proceeding in personam, and the final judgment rendered therein declaring null and void the titles to the subject property of Emilia M. Ching and the spouses Go should bind only the parties thereto. Furthermore, despite the void titles of Emilia M. Ching and the spouses Go, the derivative titles of BPI Family and the spouses Chan may still be valid provided that they had acquired the same in good faith and for value.

More in point with the instant petition is Pineda v. Santiago.[53] Pineda still

involved Lot 671. INK sought from the RTC a second alias writ of execution to implement the judgment in Calalang against Conrado Pineda (Pineda), et. al. In opposing the issuance of such writ, Pineda, et al., asserted that they held titles to Lot671 adverse to those of Lucia and INK and that they were not parties in De la Cruz or in Calalang. In its assailed order, the RTC granted the second alias writ of execution on the basis that the issue of ownership of Lot 671 was already determined with finality in favor of Lucia and INK. The writ ordered the deputy sheriff to eject Pineda, et al., from Lot 671. When the matter was brought before us, we annulled the assailed order as the writ of execution issued was against Pineda, et al., who were not parties to Civil Case No. Q-45767, the ejectment suit instituted by De Leon, et al. We elaborated in Pineda that:

Being a suit for injunction, Civil Case No. Q-45767 partakes of

an action in personam. In Domagas v. Jensen, we have explained the nature of an action in personam and enumerated some actions and proceedings which are in personam, viz:

The settled rule is that the aim and object

of an action determine its character. Whether a

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proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him.An action in personam is said to be one which has for its object a judgment against the person, as distinguished from a judgment against the propriety to determine its state. It has been held that an action in personam is a proceeding to enforce personal rights or obligations; such action is brought against the person. As far as suits for injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In Combs v. Combs, the appellate court held that proceedings to enforce personal rights and obligations and in which personal judgments are rendered adjusting the rights and obligations between the affected parties is in personam. Actions for recovery of real property are in personam. The respondent judge's jurisdiction is, therefore, limited to the

parties in the injunction suit. To stress, the petition for injunction, docketed as Civil Case No. Q-45767, was filed only by therein petitioners Augusto M. de Leon, Jose de Castro, Jose A. Panlilio, Felicidad Vergara Vda. De Pineda, Fernando L. Vitug I, Fernando M. Vitug II, Fernando M. Vitug III, and Faustino Tobia, and later amended to include Elena Ostrea and Feliza C. Cristobal-Generoso as additional petitioners therein, against Bishop Erao Manalo, in his capacity as titular and spiritual head of I.N.K. Herein petitioners Conrado Pineda, et al. never became parties thereto. Any and all orders and writs of execution, which the respondent judge may issue in that case can, therefore, be enforced only against those parties and not against the herein petitioners Conrado Pineda, et al. In issuing the assailed Order dated 22 April 1998, which directed the issuance of the 2nd Alias Writ of Execution to eject non-parties (herein petitioners), the respondent

judge clearly went out of bounds and committed grave abuse of discretion.

The nature of the injunction suit Civil Case No. Q-45767 as an action in personam in the RTC remains to be the same whether it is elevated to the CA or to this Court for review. An action in personam does not become an action in rem just because a pronouncement confirming I.N.K.'s title to Lot 671 was made by this Court in the Calalang decision. Final rulings may be made by this Court, as the Highest Court of the Land, in actions in personam but such rulings are binding only as against the parties therein and not against the whole world. Here lies another grave abuse of discretion on the part of the respondent judge when he relied on the Calalang decision in his assailed Order dated 07 May 1998 as if it were binding against the whole world, saying:

After evaluating the arguments of both

parties, decisive on the incident is the decision of the Supreme Court in favor of the respondent I.N.K., represented by its titular and spiritual head Bishop Erao G. Manalo, sustaining its ownership over the subject Lot 671. This Court could do no less but to follow and give substantial meaning to its ownership which shall include all dominical rights by way of a Writ of Execution. To delay the issuance of such writ is a denial of justice due the I.N.K. As a final word, this decision shall not be misinterpreted as

disturbing or modifying our ruling in Calalang. The final ruling on I.N.K.'s ownership and title is not at all affected. Private respondent I.N.K., as the true and lawful owner of Lot 671 as ruled by the Court in Calalang, simply has to file the proper action against the herein petitioners to enforce its property rights within the bounds of the law and our rules. I.N.K.'s recourse of asking for the issuance of an alias writ of execution against the petitioners inCivil Case No. Q-45767 and the respondent judge's orders in said case, granting I.N.K.'s prayer and enforcing the alias writ of execution against the present petitioners, constitutes blatant disregard of very fundamental rules and must therefore be stricken down.[54] (Emphases ours.)

Consistent with Pineda, and as appositely recommended by the RTC-Branch 95 and the Court of Appeals in the present case, Muozs legal remedy is to directly assail in a separate action the validity of the certificates of title of BPI Family and the spouses Chan.

G.R. No. 142676

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G.R. No. 142676 is Muozs appeal of the dismissal of Civil Case No. 8286, the forcible entry case she instituted against Samuel Go Chan and Atty. Yabut before the MeTC.

There is forcible entry or desahucio when one is deprived of physical possession

of land or building by means of force, intimidation, threat, strategy or stealth. In such cases, the possession is illegal from the beginning and the basic inquiry centers on who has the prior possession de facto. In filing forcible entry cases, the law tells us that two allegations are mandatory for the municipal court to acquire jurisdiction: first, the plaintiff must allege prior physical possession of the property, and second, he must also allege that he was deprived of his possession by any of the means provided for in Section 1, Rule 70 of the Rules of Court, i.e., by force, intimidation, threat, strategy, or stealth. It is also settled that in the resolution thereof, what is important is determining who is entitled to the physical possession of the property. Indeed, any of the parties who can prove prior possession de facto may recover such possession even from the owner himself since such cases proceed independently of any claim of ownership and the plaintiff needs merely to prove prior possession de facto and undue deprivation thereof.[55]

Title is never in issue in a forcible entry case, the court should base its decision on

who had prior physical possession. The main thing to be proven in an action for forcible entry is prior possession and that same was lost through force, intimidation, threat, strategy, and stealth, so that it behooves the court to restore possession regardless of title or ownership.[56]

We more extensively discussed in Pajuyo v. Court of Appeals[57] that:

Ownership or the right to possess arising from ownership is

not at issue in an action for recovery of possession. The parties cannot present evidence to prove ownership or right to legal possession except to prove the nature of the possession when necessary to resolve the issue of physical possession. The same is true when the defendant asserts the absence of title over the property. The absence of title over the contested lot is not a ground for the courts to withhold relief from the parties in an ejectment case.

The only question that the courts must resolve in ejectment

proceedings is - who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the possession de jure. It does not even matter if a partys title to the property is questionable, or when both parties intruded into public land and their applications to own the land have yet to be approved by the proper government agency. Regardless of the actual condition of the title to the property, the party in peaceable quiet possession shall not be thrown out by a strong hand, violence or terror. Neither is the unlawful withholding of property allowed. Courts will always uphold respect for prior possession.

Thus, a party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his favor prior possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects him. To repeat, the only issue that the court has to settle in an ejectment suit is the right to physical possession.[58] (Emphases ours.)

Based on the foregoing, we find that the RTC-Branch 88 erred in ordering the dismissal of Civil Case No. 8286 even before completion of the proceedings before the MeTC. At the time said case was ordered dismissed by RTC-Branch 88, the MeTC had only gone so far as holding a hearing on and eventually granting Muozs prayer for the issuance of a writ of preliminary mandatory injunction.

Muoz alleges in her complaint in Civil Case No. 8286 that she had been in prior

possession of the subject property since it was turned-over to her by the sheriff on January 10, 1994, pursuant to the Alias Writ of Execution issued by the RTC-Branch 95 to implement the final judgment in Civil Case No. Q-28580. The factual issue of who was in prior possession of the subject property should be litigated between the parties regardless of whether or not the final judgment in Civil Case No. Q-28580 extended to the spouses Chan. Hence, the pendency of the latter issue in Civil Case No. Q-28580 before the RTC-Branch 95 did not warrant the dismissal of Civil Case No. 8286 before the MeTC on the ground of litis pendentia. The two cases could proceed independently of one another.

Samuel Go Chan and Atty. Yabut aver that the spouses Chan have never lost

possession of the subject property since acquiring the same from BPI Family in 1990. This is a worthy defense to Muozs complaint for forcible entry, which Samuel Go Chan and Atty. Yabut should substantiate with evidence in the continuation of the proceedings in Civil Case No. 8286 before the MeTC.

In addition, Civil Case No. 8286, a forcible entry case, is governed by the Revised Rule on Summary Procedure, Section 19 whereof provides:

SEC. 19. Prohibited pleadings and motions. The following

pleadings, motions, or petitions shall not be allowed in the cases covered by this Rule:

x x x x (g) Petition for certiorari, mandamus, or prohibition against

any interlocutory order issued by the court.

The purpose of the Rule on Summary Procedure is to achieve an expeditious and inexpensive determination of cases without regard to technical rules. Pursuant to this objective, the Rule prohibits petitions for certiorari, like a number of other pleadings, in order to prevent unnecessary delays and to expedite the disposition of cases.[59]

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Interlocutory orders are those that determine incidental matters that do not

touch on the merits of the case or put an end to the proceedings.[60] An order granting a preliminary injunction, whether mandatory or prohibitory, is interlocutory and unappealable.[61]

The writ of preliminary mandatory injunction issued by the MeTC in its Order

dated May 16, 1994, directing that Muoz be placed in possession of the subject property during the course of Civil Case No. 8286, is an interlocutory order. Samuel Go Chan and Atty. Yabut assailed the said order before the RTC-Branch 88 via a petition for certiorari, docketed as Civil Case No. Q-94-20632. The RTC-Branch 88 gave due course to said petition, and not only declared the MeTC Order dated May 16, 1994 null and void, but went further by dismissing Civil Case No. 8286.

The prohibition in Section 19(g) of the Revised Rule on Summary Procedure is

plain enough. Its further exposition is unnecessary verbiage.[62] The petition forcertiorari of Samuel Go Chan and Atty. Yabut in Civil Case No. Q-94-20632 is clearly covered by the said prohibition, thus, it should have been dismissed outright by the RTC-Branch 88. While the circumstances involved in Muozs forcible entry case against Samuel Go Chan and Atty. Yabut are admittedly very peculiar, these are insufficient to except the petition for certiorari of Samuel Go Chan and Atty. Yabut in Civil Case No. Q-94-20632 from the prohibition. The liberality in the interpretation and application of the rules applies only in proper cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice.[63]

Nonetheless, even though the peculiar circumstances extant herein do not justify

the dismissal of Civil Case No. 8286, they do require limiting pro hac vice the reliefs the MeTC may accord to Muoz in the event that she is able to successfully prove forcible entry by Samuel Go Chan and Atty. Yabut into the subject property (i.e., that the sheriff actually turned-over to Muoz the possession of the subject property on January 10, 1994, and that she was deprived of such possession by Samuel Go Chan and Atty. Yabut on February 2, 1994 by means of force, intimidation, threat, strategy, and stealth). Taking into account our ruling in G.R. No. 146718 that the final judgment in Civil Case No. Q-28580 does not extend to the spouses Chan, who were not impleaded as parties to the said case the MeTC is precluded from granting to Muoz relief, whether preliminary or final, that will give her possession of the subject property. Otherwise, we will be perpetuating the wrongful execution of the final judgment in Civil Case No. Q-28580. Based on the same reason, Muoz can no longer insist on the reinstatement of the MeTC Order dated May 16, 1994 granting a preliminary mandatory injunction that puts her in possession of the subject property during the course of the trial. Muoz though may recover damages if she is able to prove wrongful deprivation of possession of the subject property from February 2, 1994 until the finality of this decision in G.R. No. 146718. WHEREFORE, in view of the foregoing, we:

(1) GRANT Emerita Muozs petition in G.R. No. 142676. We REVERSE and SET ASIDE the Decision dated July 21, 1995 and Resolution dated March 9, 2000 of the Court of Appeals in CA-G.R. SP No. 35322, which affirmed the Orders dated June 10, 1994 and August 5, 1994 of the Regional Trial Court, Branch 88 of Quezon City in Civil Case No. Q-94-20632. We DIRECT the Metropolitan Trial Court, Branch 33 of Quezon City to reinstate Emerita Muozs complaint for forcible entry in Civil Case No. 8286 and to resume the proceedings only to determine whether or not Emerita Muoz was forcibly deprived of possession of the subject property from February 2, 1994 until finality of this judgment, and if so, whether or not she is entitled to an award for damages for deprivation of possession during the aforementioned period of time; and (2) DENY Emerita Munozs petition in G.R. No. 146718 for lack of merit, and AFFIRM the Decision dated September 29, 2000 and Resolution dated January 5, 2001 of the Court of Appeals in CA-G.R. SP No. 40019, which in turn, affirmed the Orders dated August 21, 1995 and October 3, 1995 of the Regional Trial Court, Branch 95 of Quezon City in Civil Case No. Q-28580. No pronouncement as to costs.

SO ORDERED. _______________________________________________________________________

Republic of the Philippines Supreme Court

Manila

FIRST DIVISION

JOSE FERNANDO, JR., ZOILO FERNANDO, NORMA FERNANDO BANARES, ROSARIO FERNANDO TANGKENCGO, HEIRS OF TOMAS FERNANDO, represented by ALFREDO V. FERNANDO, HEIRS OF GUILLERMO FERNANDO, represented by Ronnie H. Fernando, HEIRS OF ILUMINADA FERNANDO, represented by Benjamin Estrella and HEIRS OF GERMOGENA FERNANDO, Petitioners,

- versus - LEON ACUNA, HERMOGENES FERNANDO, HEIRS OF SPOUSES ANTONIO FERNANDO AND FELISA CAMACHO, represented by HERMOGENES FERNANDO, Respondents.

G.R. No. 161030 Present: CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN, DEL CASTILLO, and VILLARAMA, JR., JJ.

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Promulgated: September 14, 2011

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O N LEONARDO-DE CASTRO, J.: This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking to reverse and set aside the Decision[1] dated November 24, 2003 of the Court of Appeals in CA-G.R. CV No. 75773, entitled Jose Fernando, Jr., et al. v. Heirs of Germogena Fernando, et al., which reversed and set aside the Decision[2] dated May 16, 2002 of Branch 84, Regional Trial Court (RTC) of Malolos, Bulacan in Civil Case No. 256-M-97.

At the heart of this controversy is a parcel of land covered by Original Certificate

of Title (OCT) No. RO-487 (997)[3] registered in the names of Jose A. Fernando, married to Lucila Tinio, and Antonia A. Fernando, married to Felipe Galvez, and located in San Jose, Baliuag, Bulacan. When they died intestate, the property remained undivided. Petitioners herein namely, Jose Fernando, Jr., Zoilo Fernando, Norma Fernando Banares, Rosario Fernando Tangkencgo, the heirs of Tomas Fernando, the heirs of Guillermo Fernando, the heirs of Iluminada Fernando and the heirs of Germogena Fernando are the heirs and successors-in-interest of the deceased registered owners. However, petitioners failed to agree on the division of the subject property amongst themselves, even after compulsory conciliation before the Barangay Lupon.

Thus, petitioners, except for the heirs of Germogena Fernando, filed a

Complaint[4] for partition on April 17, 1997 against the heirs of Germogena Fernando. In the Complaint, plaintiffs alleged, among others, that they and defendants are common descendants and compulsory heirs of the late spouses Jose A. Fernando and Lucila Tinio, and the late spouses Antonia A. Fernando and Felipe Galvez. They further claimed that their predecessors-in-interest died intestate and without instructions as to the disposition of the property left by them covered by OCT No. RO-487 (997). There being no settlement, the heirs are asking for their rightful and lawful share because they wish to build up their homes or set up their business in the respective portions that will be allotted to them. In sum, they prayed that the subject property be partitioned into eight equal parts, corresponding to the hereditary interest of each group of heirs. In their Answer[5] filed on May 20, 1997, defendants essentially admitted all of the allegations in the complaint. They alleged further that they are not opposing the partition and even offered to share in the expenses that will be incurred in the course of the proceedings.

In his Complaint in Intervention[6] filed on January 12, 1998, respondent Leon Acuna (Acuna) averred that in the Decision[7] dated November 29, 1929 of the Cadastral Court of Baliuag, Bulacan, the portion of the property identified as Lot 1303 was already

adjudicated to: (a) Antonio Fernando, married to Felisa Camacho; (b) spouses Jose Martinez and Gregoria Sison; (c) spouses Ignacio de la Cruz and Salud Wisco; and (d) Jose Fernando, married to Lucila Tinio, the petitioners predecessor-in-interest. He likewise claimed that in a 1930 Decision of the Cadastral Court, the portion identified as Lot 1302 was also already adjudicated to other people as well.

Respondent Acuna further alleged that Salud Wisco, through her authorized attorney-in-fact, Amador W. Cruz, sold her lawful share denominated as Lot 1303-D with an area of 3,818 square meters to Simeon P. Cunanan,[8] who in turn sold the same piece of land to him as evidenced by a Deed of Sale.[9] He also belied petitioners assertion that the subject property has not been settled by the parties after the death of the original owners in view of the Decision[10] dated July 30, 1980 of the Court of First Instance (CFI) of Baliuag, Bulacan, in LRC Case No. 80-389 which ordered the Register of Deeds of Bulacan to issue the corresponding certificates of title to the claimants of the portion of the subject property designated as Lot 1302.[11] Norma Fernando, one of the petitioners in the instant case, even testified in LRC Case No. 80-389. According to respondent Acuna, this circumstance betrayed bad faith on the part of petitioners in filing the present case for partition.

Respondent Acuna likewise averred that the action for partition cannot prosper

since the heirs of the original owners of the subject property, namely Rosario, Jose Jr., Norma, Tomas, Guillermo, Leopoldo, Hermogena, Illuminada and Zoilo, all surnamed Fernando, and Lucila Tinio, purportedly had already sold their respective one-tenth (1/10) share each in the subject property to Ruperta Sto. Domingo Villasenor for the amount of P35,000.00 on January 25, 1978 as evidenced by aKasulatan sa Bilihang Patuluyan.[12] He added that he was in possession of the original copy of OCT No. RO-487 (997) and that he had not commenced the issuance of new titles to the subdivided lots because he was waiting for the owners of the other portions of the subject property to bear their respective shares in the cost of titling.

Subsequently, a Motion for Intervention[13] was filed on June 23, 1998 by

respondent Hermogenes Fernando (Hermogenes), for himself and on behalf of the heirs of the late spouses, Antonio A. Fernando and Felisa Camacho. According to him, in the July 30, 1980 Decision of the CFI of Bulacan, their predecessors-in-interest had already been adjudged owners of Lots 1302-A, 1302-F, 1302-G,[14] 1302-H and 1302-J of OCT No. RO-487 (997) and any adverse distribution of the properties would cause respondents damage and prejudice. He would also later claim, in his Answer-in-Intervention,[15] that the instant case is already barred by res judicata and, should be dismissed.

In the interest of substantial justice, the trial court allowed the respondents to

intervene in the case. The plaintiffs and defendants jointly moved to have the case submitted for

judgment on the pleadings on May 7, 1999.[16] However, the trial court denied said motion in a Resolution[17] dated August 23, 1999 primarily due to the question regarding the ownership of the property to be partitioned, in light of the intervention of respondents Acuna and Hermogenes who were claiming legal right thereto.

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In their Manifestation[18] filed on April 12, 2000, petitioners affirmed their execution of a Deed of Sale in favor of Ruperta Sto. Domingo Villasenor in 1978, wherein they sold to her 1,000 square meters from Lot 1303 for the sum of ₱35,000.00.

After the pre-trial conference, trial ensued. On September 19, 2000, petitioner

Elizabeth Alarcon testified that they (plaintiffs) are not claiming the entire property covered by OCT No. RO-487 (997) but only the area referred to as Lot 1303 and Sapang Bayan. She also admitted that Lot 1302 had already been divided into ten (10) sublots and allocated to various owners pursuant to the July 30, 1980 Decision of the CFI of Baliuag, Bulacan and these owners already have their own titles. She likewise claimed that the entire area consisting of Lot 1303 and Sapang Bayan is based on the subdivision plan of Lot 1303. She admitted that plaintiffs predecessor-in-interest was only allocated a portion of Lot 1303 based on the said plan. However, she claimed that the November 29, 1929 Decision subdividing Lot 1303 was never implemented nor executed by the parties.[19]

Petitioner Norma Fernando testified on October 3, 2000 that she is one of the

children of Jose A. Fernando and Lucila Tinio. She affirmed that plaintiffs were only claiming Lot 1303 and Sapang Bayan. She also testified that Sapang Bayan was supposedly included in Lot 1302 and was previously a river until it dried up.Unlike Lot 1302, the rest of the property was purportedly not distributed. She likewise averred that she is aware of a November 29, 1929 Decision concerning the distribution of Lot 1303 issued by the cadastral court but insisted that the basis of the claims of the petitioners over Lot 1303 is the title in the name of her ascendants and not said Decision.[20]

On November 16, 2000, as previously directed by the trial court and agreed to by

the parties, counsel for respondent Hermogenes prepared and submitted an English translation of the November 29, 1929 Decision. The same was admitted and marked in evidence as Exhibit X[21] as a common exhibit of the parties. The petitioners also presented Alfredo Borja, the Geodetic Engineer who conducted a relocation survey of the subject property.

After plaintiffs rested their case, respondent Hermogenes testified on December

7, 2000. In his testimony, he claimed to know the plaintiffs and defendants as they were allegedly his relatives and neighbors. He confirmed that according to the November 29, 1929 Decision, portions of Lot 1303 was designated as Lots 1303-A, 1303-B, 1303-C and 1303-D which were adjudicated to certain persons, including Jose Fernando, while the rest of Lot 1303 was adjudicated to his parents, Antonio A. Fernando married to Felisa Camacho. According to respondent Hermogenes, his familys tenant and the latters children occupied the portion of Lot 1303 allotted to his (Hermogenes) parents while the rest of Lot 1303 was occupied by the persons named in the said November 29, 1929 Decision. He admitted, however, that nobody among the purported possessors of Lot 1303 registered the lots assigned to them in the Decision.[22]

On January 18, 2001, respondent Hermogenes presented a witness, Engineer

Camilo Vergara who testified that the subject land is divided into Lots 1302 and 1303 with a creek dividing the two lots known as Sapang Bayan. He also identified a Sketch Plan numbered as PSD-45657 and approved on November 11, 1955.[23]During the hearing on January 30, 2001, respondent Hermogenes made an oral offer of his evidence and rested

his case. On the same date, respondent Acuna, in lieu of his testimony, offered for the parties to simply stipulate on the due execution and authenticity of the Deeds of Sale dated April 6, 1979 and December 28, 1980,showing the transfer of Lot 1303-D from Salud Wisco to Simeon Cunanan and subsequently to respondent Acuna. When counsel for plaintiffs and defendants agreed to the stipulation, albeit objecting to the purpose for which the deeds of sale were offered, the trial court admitted Acunas exhibits and Acuna rested his case.[24]

On February 15, 2001, plaintiffs recalled Norma Fernando as a rebuttal

witness. In her rebuttal testimony, she identified the tax declaration[25] over the said property in the name of Jose A. Fernando; an official receipt[26] dated October 3, 1997 issued by the Office of the Treasurer of the Municipality of Baliuag, Bulacan for payment of real property taxes from 1991 to 1997; and a real property tax clearance[27] dated October 6, 1997, to show that plaintiffs have allegedly been paying the real property taxes on the entire property covered by OCT No. RO-487 (997). However, she further testified that they were now willing to pay taxes only over the portion with an area of 44,234 square meters, which is included in their claim.[28]

In a Decision dated May 16, 2002, the trial court ruled that plaintiffs and

defendants (petitioners herein) were indeed the descendants and successors-in-interest of the registered owners, Jose A. Fernando (married to Lucila Tinio) and Antonia Fernando (married to Felipe Galvez), of the property covered by OCT No. RO-487 (997). After finding that the parties admitted that Lot 1302 was already distributed and titled in the names of third persons per the July 30, 1980 Decision of the CFI of Baliuag, Bulacan the trial court proceeded to rule on the allocation of Lot 1303 and Sapang Bayan.

With respect to Lot 1303, the trial court found that the November 29, 1929

Decision of the Cadastral Court, adjudicating said lot to different persons and limiting Jose Fernandos share to Lot 1303-C, was never implemented nor executed despite the lapse of more than thirty years. Thus, the said decision has already prescribed and can no longer be executed. The trial court ordered the reversion of Lot 1303 to the ownership of spouses Jose A. Fernando and Lucila Tinio and spouses Antonia A. Fernando and Felipe Galvez under OCT No. RO-487 (997) and allowed the partition of Lot 1303 among petitioners as successors-in-interest of said registered owners. Excluded from the partition, however, were the portions of the property which petitioners admitted had been sold or transferred to Ruperta Sto. Domingo Villasenor and respondent Acuna.

As for the ownership of Sapang Bayan, the trial court found that the same had

not been alleged in the pleadings nor raised as an issue during the pre-trial conference. Also, according to the trial court, the parties failed to clearly show whether Sapang Bayan was previously a dry portion of either Lot 1302 or Lot 1303.Neither was there any proof that Sapang Bayan was a river that just dried up or that it was an accretion which the adjoining lots gradually received from the effects of the current of water. It was likewise not established who were the owners of the lots adjoining Sapang Bayan. The trial court concluded that none of the parties had clearly and sufficiently established their claims over Sapang Bayan.

The dispositive portion of the May 16, 2002 Decision of the trial court reads:

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WHEREFORE, all the foregoing considered, judgment is hereby

rendered ordering the reversion of Lot 1303, except the portions allotted to Acuna and Ruperta Sto. Domingo Villasenor, to the ownership of Jose Fernando and Lucia Tinio and Antonia Fernando and Felipe Galvez under OCT No. 997 and thereafter allowing the partition of said Lot 1303 among the plaintiffs and the defendants as successors-in-interest of Jose and Lucia as well as Antonia and Felipe after the settlement of any inheritance tax, fees, dues and/or obligation chargeable against their estate.[29]

All the parties, with the exception of respondent Acuna, elevated this case to the Court of Appeals which rendered the assailed November 24, 2003 Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the decision dated May 16,

2002, of the Regional Trial Court of Malolos, Bulacan, Third Judicial Region, Branch 84, in Civil Case No. 256-M-97, is hereby REVERSED and SET ASIDE and the complaint dated April 17, 1997 filed by plaintiffs-appellants is dismissed. Costs against plaintiffs-appellants.[30]

Hence, plaintiffs and defendants in the court a quo elevated the matter for our review through the instant petition.

Petitioner raises the following issues for consideration: 1. Whether or not the ownership of Lot 1303 and the Sapang Bayan portion of

the piece of land covered by O.C.T. No. RO-487 (997) or Plan Psu-39080 should revert to the descendants and heirs of the late spouses Jose Fernando and Lucila Tinio and Antonia Fernando, married to Felipe Galvez;

2. Whether or not a title registered under the Torrens system, as the subject

original certificate of title is the best evidence of ownership of land and is a notice against the world.[31]

The petition is without merit. Petitioners based their claims to the disputed areas designated as Lot 1303

and Sapang Bayan on their ascendants title, OCT No. RO-487 (997), which was issued on February 26, 1927 in the name of Jose A. Fernando married to Lucila Tinio and Antonia A. Fernando married to Felipe Galvez. The Court now rules on these claims in seriatim.

Petitioners claim with respect to Lot 1303

As the records show, in the November 29, 1929 Decision of the Cadastral Court of Baliuag, Bulacan (in Cadastral Record No. 14, GLRO Cad. Record No. 781) which was written in Spanish, Lot 1303 had already been divided and adjudicated to spouses Jose A. Fernando and Lucila Tinio; spouses Antonia A. Fernando and Felipe Galvez; spouses Antonio A. Fernando and Felisa Camacho; spouses Jose Martinez and Gregoria Sison; and spouses Ignacio de la Cruz and Salud Wisco from whom respondent Acuna derived his title. The English translation of the said November 29, 1929 Decision was provided by respondent Hermogenes and was adopted by all the parties as a common exhibit designated as Exhibit X. The agreed English translation of said Decision reads:

Lot No. 1303 This lot is decreed in record No. 448, G.L.R.O.

Record No. 25414 and actually with Original Certificate No. 997 (exhibited today) in the name of Jose A. Fernando and Antonia A. Fernando, who now pray that said lot be subdivided in accordance with the answers recorded in the instant cadastral record, and the sketch, Exh. A, which is attached to the records.

A part or portion of the lot has been claimed by Antonio A.

Fernando, of legal age, married to Felisa Camacho; another portion by the spouses Jose Martinez and Gregoria Sison; another portion by Antonia A. Fernando, of legal age, married to Felipe Galvez; another portion by Jose A. Fernando, of legal age, married to Lucila Tinio; and another portion by the spouses Ignacio de la Cruz and Salud Wisco, both of legal age. The part claimed by the spouses Jose A. Martinez and Gregoria Sison is Lot 1303-A of Exh. A; the part claimed by Antonia A. Fernando is Lot 1303-B of said exhibit; the part claimed by Jose A. Fernando is Lot 1303-C of said exhibit, and the part claimed by the spouses Ignacio de la Cruz and Salud Wisco is Lot 1303-D of the aforementioned Exhibit.

The subdivision of said lot is hereby ordered, separating from

the same the portions that correspond to each of the claimants, which portions are known as Lots 1303-A, 1303-B, 1303-C, and 1303-D in the sketch, Exh. A, and once subdivided, are adjudicated in favor of the spouses, Jose Martinez and Gregoria Sison, of legal age, Lot No. 1303-A, in favor of Antonia A. Fernando, of legal age, married to Felipe Galvez, Lot No. 1303-B; in favor of Jose A. Fernando, of legal age, married to Lucila Tinio, Lot 1303-C; in favor of the spouses Ignacio de la Cruz and Salud Wisco, of legal age, Lot 1303-D; and the rest of Lot 1303 is adjudged in favor of Antonio A. Fernando married to Felisa Camacho. It is likewise ordered that once the subdivision plan is approved, the same be forwarded by the Director of Lands to this Court for its final decision.

It is ordered that the expense for mentioned subdivision, shall

be for the account of the spouses Jose Martinez and Gregoria Sison, Antonia A. Fernando, Jose A. Fernando, the spouses Ignacio de la Cruz and Salud Wisco, and Antonio A. Fernando.[32]

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From the foregoing, it would appear that petitioners ascendants themselves

petitioned for the cadastral court to divide Lot 1303 among the parties to the 1929 case and they were only allocated Lots 1303-B and 1303-C. Still, as the trial court noted, the November 29, 1929 Decision was never fully implemented in the sense that the persons named therein merely proceeded to occupy the lots assigned to them without having complied with the other directives of the cadastral court which would have led to the titling of the properties in their names. Nonetheless, it is undisputed that the persons named in the said November 29, 1929 Decision and, subsequently, their heirs and assigns have since been in peaceful and uncontested possession of their respective lots for more than seventy (70) years until the filing of the suit for partition on April 17, 1997 by petitioners which is the subject matter of this case. Respondent Hermogenes, who testified that petitioners were his relatives and neighbors, further affirmed before the trial court that the persons named in the November 29, 1929 Decision took possession of their respective lots:

ATTY. VENERACION: Q This Jose A. Fernando married to Lucila Tinio, you testified earlier are

the parents of the plaintiffs. Did they take possession of lot 1303-C?

A Yes, sir. They took possession. Q Did they take possession of the other lots? A No. Yes, the portion Q The other lots in the name of the other persons. Did they take

possession of that? A Yes, they took took possession of the other No, sir. Q I am asking you whether they took possession, the children ATTY. SANTIAGO:

The questions are already answered, your Honor. ATTY. VENERACION: What is the answer? ATTY. SANTIAGO:

Its in the record. COURT:

The persons named in the Decision already took possession of the lots allotted to them as per that Decision. So that was already answered. Anything else?

ATTY. VENERACION;

No more question, Your Honor.[33]

It is noteworthy that petitioners do not dispute that the November 29, 1929 Decision of the cadastral court already adjudicated the ownership of Lot 1303 to persons other than the registered owners thereof. Petitioners would, nonetheless, claim that respondents purported failure to execute the November 29, 1929 Decision over Lot 1303 (i.e., their failure to secure their own titles) meant that the entire Lot 1303 being still registered in the name of their ascendants rightfully belongs to them.This is on the theory that respondents right to have the said property titled in their names have long prescribed.

On this point, we agree with the appellate court. Section 47 of Presidential Decree No. 1529, otherwise known as the Property

Registration Decree, states that [n]o title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. Thus, the Court has held that the right to recover possession of registered land is imprescriptible because possession is a mere consequence of ownership.[34]

However, in Heirs of Anacleto B. Nieto v. Municipality of Meycauayan,

Bulacan,[35] the Court had recognized the jurisprudential thread regarding the exception to the foregoing doctrine that while it is true that a Torrens title is indefeasible and imprescriptible, the registered landowner may lose his right to recover possession of his registered property by reason of laches.

Thus, in Heirs of Batiog Lacamen v. Heirs of Laruan,[36] the Court had 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.

In the more recent case of Bartola M. Vda. De Tirona v. Encarnacion,[37] we

similarly held that while jurisprudence is settled on the imprescriptibility and indefeasibility of a Torrens title, there is equally an abundance of cases where we unequivocally ruled that registered owners may lose their right to recover possession of property through the equitable principle of laches.

Laches means the failure or neglect for an unreasonable and unexplained length

of time to do that which, by observance of 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 his right either has abandoned or

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declined to assert it. Laches thus operates as a bar in equity.[38] The essential elements of laches are: (a) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (b) delay in asserting complainants rights after he had knowledge of defendants acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by defendant that the complainant will assert the right on which he bases his suit; and (d) injury or prejudice to the defendant in the event the relief is accorded to the complainant.[39]

In view of respondents decades long possession and/or ownership of their

respective lots by virtue of a court judgment and the erstwhile registered owners inaction and neglect for an unreasonable and unexplained length of time in pursuing the recovery of the land, assuming they retained any right to recover the same, it is clear that respondents possession may no longer be disturbed. The right of the registered owners as well as their successors-in-interest to recover possession of the property is already a stale demand and, thus, is barred by laches.

In the same vein, we uphold the finding of the Court of Appeals that the title of

petitioners ascendants wrongfully included lots belonging to third persons.[40]Indeed, petitioners ascendants appeared to have acknowledged this fact as they were even the ones that prayed for the cadastral court to subdivide Lot 1303 as evident in the November 29, 1929 Decision. We concur with the Court of Appeals that petitioners ascendants held the property erroneously titled in their names under an implied trust for the benefit of the true owners. 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.

As aptly observed by the appellate court, the party thus aggrieved has the right to recover his or their title over the property by way of reconveyance while the same has not yet passed to an innocent purchaser for value.[41] As we held in Medizabel v. Apao,[42] the essence of an action for reconveyance is that the certificate of title is respected as incontrovertible. What is sought is the transfer of the property, in this case its title, which has been wrongfully or erroneously registered in another person's name, to its rightful owner or to one with a better right. It is settled in jurisprudence that mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate or that the registrant may only be a trustee or that other parties may have acquired interest subsequent to the issuance of the certificate of title.[43]

We cannot subscribe to petitioners argument that whatever rights or claims

respondents may have under the November 29, 1929 Decision has prescribed for their purported failure to fully execute the same. We again concur with the Court of Appeals in this regard. An action for reconveyance of registered land based on implied trust prescribes in ten (10) years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property. However, this

Court has ruled that the ten-year prescriptive period applies only when the person enforcing the trust is not in possession of the property. If a person claiming to be its owner 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. The reason is that the one who is in actual possession of the land claiming to be its owner may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right.[44]

Petitioners claim with respect to Sapang Bayan

As for the issue of the ownership of Sapang Bayan, we sustain the appellate court insofar as it ruled that petitioners failed to substantiate their ownership over said area. However, we find that the Court of Appeals erred in ruling that the principle of accretion is applicable. The said principle is embodied in Article 457 of the Civil Code which states that [t]o 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. We have held that for Article 457 to apply the following requisites must concur: (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.[45] The character of the Sapang Bayanproperty was not shown to be of the nature that is being referred to in the provision which is an accretion known as alluvion as no evidence had been presented to support this assertion.

In fact from the transcripts of the proceedings, the parties could not agree

how Sapang Bayan came about. Whether it was a gradual deposit received from the river current or a dried-up creek bed connected to the main river could not be ascertained.

Even assuming that Sapang Bayan was a dried-up creek bed, under Article 420,

paragraph 1[46] and Article 502, paragraph 1[47] of the Civil Code, rivers and their natural beds are property of public dominion. In the absence of any provision of law vesting ownership of the dried-up river bed in some other person, it must continue to belong to the State.

We ruled on this issue in Republic v. Court of Appeals,[48] to wit:

The lower court cannot validly order the registration of Lots 1

and 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.[49]

Furthermore, in Celestial v. Cachopero,[50] we similarly ruled that a dried-up creek bed is property of public dominion:

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A creek, like the Salunayan Creek, is a recess or arm extending

from a river and participating in the ebb and flow of the sea. As such, under Articles 420(1) and 502(1) of the Civil Code, the Salunayan Creek, including its natural bed, is property of the public domain which is not susceptible to private appropriation and acquisitive prescription. And, absent any declaration by the government, that a portion of the creek has dried-up does not, by itself, alter its inalienable character.[51]

Therefore, on the basis of the law and jurisprudence on the matter, Sapang Bayan cannot be adjudged to any of the parties in this case.

WHEREFORE, premises considered, the petition is hereby DENIED. The

assailed Decision dated November 24, 2003 of the Court of Appeals in CA-G.R. CV No. 75773 is hereby AFFIRMED. Costs against petitioners.

SO ORDERED. __________________________________________________________________________

Republic of the Philippines SUPREME COURT

Manila FIRST DIVISION

G.R. No. L-27088 July 31, 1975 HEIRS OF BATIOG LACAMEN, petitioners-appellants, vs. HEIRS OF LARUAN, * respondents-appellants. Leonardo A. Amores for petitioners-appellants. Reyes and Cabato for respondents-appellees. MARTIN, J.: Petition for review by certiorari of a decision of the Honorable Court of Appeals affirming the judgment of the Court of First Instance of Baguio City in Civil Case No. 738 entitled "Heirs of Batiog Lacamen vs. Heirs of Laruan" "... declaring the contract of sale between Lacamen and Laruan null and void [for lack of approval of the Director of the Bureau of Non-Christian Tribes] ..." Petitioners-appellants are the surviving heirs of Batiog Lacamen, while respondents-appellants are the heirs of Laruan. 1 Sometime on January 28, 1928, Laruan executed a Deed of Sale in favor of Batiog Lacamen 2 conveying for the sum of P300.00 his parcel of land situated in the sitio of La Trinidad, Benguet, Mountain Province, comprising 86 ares and 16 centares 3 and covered by Certificate of Title No. 420 of the Registry of Benguet. The deed was acknowledged before Antonio Rimando, a notary public in the City of Baguio. 4

Immediately after the sale, Laruan delivered the certificate of title to Lacamen. Thereupon, Lacamen entered in possession and occupancy of the land without first securing the corresponding transfer certificate of title in his name. He introduced various improvements and paid the proper taxes. His possession was open, continuous, peaceful, and adverse. After his death in 1942, his heirs remained in and continued possession and occupancy of the land. They too paid the taxes. After the last Global War, Lacamen's heirs "started fixing up the papers of all the properties" left by him 5 In or about June, 1957, they discovered that Laruan's heirs, respondents-appellants, were able to procure a new owner's copy of Certificate of Title No. 420 by a petition filed in court alleging that their copy has been lost or destroyed. Through this owner's copy, respondents-appellants caused the transfer of the title on the lot in their names. 6 Transfer Certificate of Title No. T-775 was issued to them by the Registry of Deeds of Benguet. Refused of their demands for reconveyance of the title, petitioners-appellants sued respondents-appellants in the Court of First Instance of Baguio City on December 9, 1957, prayings among other things, that they be declared owners of the subject property; that respondents-appellants be ordered to convey to them by proper instruments or documents the land in question; and that the Register of Deeds of Benguet be ordered to cancel Transfer Certificate of Title No. T-775 and issue in lieu thereof a new certificate of title in their names. 7 In answer, respondents-appellants traversed the averments in the complaint and claim absolute ownership over the land. They asserted that their deceased father, Laruan, never sold the property and that the Deed of Sale was not thumbmarked by him. 8 On 5 April 1962, the Court of First Instance of Baguio City found for respondents-appellants and against petitioners-appellants. Forthwith, petitioners-appellants appealed to the Court of Appeals. On 7 December 1966, the Court of Appeals sustained the trial court. In this review, petitioners-appellants press that the Court of Appeals erred — I

... IN DECLARING THE SALE BETWEEN LACAMEN AND LARUAN TO BE NULL AND VOID.

II ... IN APPLYING STRICTLY THE PROVISIONS OF SECTIONS 118 AND 122 OF ACT NO. 2874 AND SECTIONS 145 AND 164 OF THE CODE OF MINDANAO AND SULU.

III ... IN AFFIRMING THE DECISION OF THE COURT OF FIRST INSTANCE OF BAGUIO CITY.

which assignments could be whittled down into the pervading issue of whether the deceased Batiog Lacamen and/or his heirs, herein petitioners-appellants, have validly acquired ownership over the disputed parcel of land. The 1917 Administrative Code of Mindanao and Sulu declares in its Section 145 that no contract or agreement relating to real property shall be made by any person with any non-Christian inhabitant of the Department of Mindanao and Sulu, unless such contract shall bear the approval of the provincial governor of the province wherein the contract was executed, or his representative duly authorized for such purpose in writing endorsed upon

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it. 9 Any contract or agreement in violation of this section is "null and void" under the succeeding Section 146. 10 On 24 February 1919, Act No. 2798 was approved by the Philippine Legislature extending to the Mountain Province and the Province of Nueva Vizcaya the laws and other legal provisions pertaining to the provinces and minor political subdivisions of the Department of Mindanao and Sulu, with the specific proviso that the approval of the land transaction shall be by the Director of the Bureau of Non-Christian Tribes. 11 Then on 29 November 1919, came Act No. 2874 otherwise known as "The Public Land Act". It provided in Section 118 thereof that "Conveyances and encumbrances made by persons belonging to the so-called 'non-Christian tribes', when proper, shall not be valid unless duly approved by the Director of the Bureau of non-Christian Tribes." Any violation of this injunction would result in the nullity and avoidance of the transaction under the following Section 122. During the regime of the Commonwealth, C.A. 141 otherwise known as "The Public Land Act" was passed — November 7, 1936 — amending Act No. 2874. However, it contained a similar provision in its Section 120 that "Conveyances and encumbrances made by illiterate non-Christians shall not be valid unless duly approved by the Commissioner of Mindanao and Sulu. The contracting parties, Lacamen and Laruan, are bound by the foregoing laws, since both of them are illiterate Igorots, belonging to the "non-Christian Tribes" of the Mountain Province 12 , and the controverted land was derived from a Free Patent 13 or acquired from the public domain. 14 The trial court did show cordiality to judicial pronouncements when it avoided the realty sale between Lacamen and Laruan for want of approval of the Director of the Bureau of Non-Christian Tribes. For jurisprudence decrees that non-approved conveyances and encumbrances of realty by illiterate non-Christians are not valid, i.e., not binding or obligatory. 15 Nevertheless, the thrust of the facts in the case before Us weakens the gathered strength of the cited rule. The facts summon the equity of laches. "Laches" has been defined as "such neglect or ommission to assert a right, taken in conjunction with lapse of time and other circumstances causing prejudice to an adverse party, as will operate as a bar in equity." 16 It is a delay in the assertion of a right "which works disadvantage to another" 17 because of the "inequity founded on some change in the condition or relations of the property or parties." 18 It is based on public policy which, for the peace of society, 19 ordains that relief will be denied to a stale demand which otherwise could be a valid claim. 20 It is different from and applies independently of prescription. While prescription is concerned with the fact of delay, laches is concerned with the effect of delay. Prescription 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 a fixed time, laches is not. 21 Laruan's sale of the subject lot to Lacamen could have been valid were it not for the sole fact that it lacked the approval of the Director of the Bureau of Non-Christian Tribes. There was impressed upon its face full faith and credit after it was notarized by the notary public. 22 The non-approval was the only "drawback" of which the trial court has found the respondents-appellants to "have taken advantage as their lever to deprive [petitioners-appellants] of this land and that their motive is out and out greed." 23 As

between Laruan and Lacamen, the sale was regular, not infected with any flaw. Laruan's delivery of his certificate of title to Lacamen just after the sale symbolizes nothing more than a bared recognition and acceptance on his part that Lacamen is the new owner of the property. Thus, not any antagonistic show of ownership was ever exhibited by Laruan after that sale and until his death in May 1938. From the transfer of the land on January 28, 1928, Lacamen possessed and occupied the ceded land in concepto de dueño until his death in April 1942. Thereafter his heirs, petitioners-appellants herein, took over and exercised dominion over the property, likewise unmolested for nearly 30 years (1928-1957) until the heirs of Laruan, respondents-appellants, claimed ownership over the property and secured registration of the same in their names. At the trial, petitioners-appellants have been found to have introduced improvements on the land consisting of houses, barns, greenhouses, walls, roads, etc., and trees valued at P38,920.00. 24 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. 25 Much more should it be in the instant case where the possession of nearly 30 years or almost half a century now is in pursuance of sale which regrettably did not bear the approval of the executive authority but which the vendor never questioned during his life time. Laruan's laches extends to his heirs, the respondents-appellants herein, since they stand in privity with him. 26 Indeed, in a like case, 27 it was ruled that —

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.

For notwithstanding the invalidity of the sale, the vendor Laruan suffered the vendee Lacamen to enter, possess and occupy the property in concepto de dueño without demurrer and molestation, from 1928, until the former's death in 1938; and when respondents-appellants succeeded to the estate of their father, they too kept silent, never claiming that the lot is their own until in 1957 or after almost 30 years they took "advantage of the [non-approval of the sale] as their lever to deprive [petitioners-appellants] of this land" with a motive that was "out and out greed." Even granting, therefore, that no prescription lies against their father's recorded title, their quiescence and inaction for almost 30 years now commands the imposition of laches against their adverse claim. (Miguel, footnote 27) It results that as against Laruan and his heirs, respondents-appellants herein, the late Batiog Lacamen and his heirs, petitioners-appellants herein, have superior right and, hence, have validly acquired ownership of the litigated land. Vigilantibus non dormientibos sequitas subvenit. IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals affirming that of the trial court is hereby reversed and set aside. The petitioners-appellants are hereby declared the lawful owners of the land in question. Accordingly, Transfer Certificate of Title No. T-775 in the name of respondents-appellants

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is hereby cancelled and in lieu thereof the Register of Deeds of Benguet is ordered to issue a new transfer certificate of title in the name of petitioners-appellants. Without pronouncement as to costs. SO ORDERED. Makasiar, Esguerra and Muñoz Palma, JJ., concur. Castro, J., concurs in the result.

Republic of the Philippines

SUPREME COURT Manila

FIRST DIVISION

ANUNCIACION VDA. DE OUANO, MARIO P. OUANO, LETICIA OUANO ARNAIZ, and CIELO OUANO MARTINEZ, Petitioners, - versus - THE REPUBLIC OF THEPHILIPPINES, THE MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY, and THE REGISTER OF DEEDS FOR THE CITY OF CEBU, Respondents. x-------------------------------------------x MACTAN-CEBUINTERNATIONAL AIRPORT AUTHORITY (MCIAA),

Petitioner, - versus -

RICARDO L. INOCIAN, in his personal capacity and as Attorney-in-Fact of OLYMPIA E. ESTEVES, EMILIA E. BACALLA, RESTITUTA E. MONTANA, and RAUL L. INOCIAN; and ALETHA SUICO MAGAT, in her personal capacity and as Attorney-in-Fact of PHILIP M. SUICO, DORIS S. DELA CRUZ, JAMES M. SUICO, EDWARD M. SUICO, ROSELYN SUICO-LAWSIN, REX M. SUICO, KHARLA SUICO-GUTIERREZ, ALBERT CHIONGBIAN, and JOHNNY CHAN,

Respondents.

G.R. No. 168770 Present: CORONA, C.J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, DEL CASTILLO, PEREZ, JJ. G.R. No. 168812 Promulgated:

February 9, 2011 x-----------------------------------------------------------------------------------------x

D E C I S I O N

VELASCO, JR., J.: At the center of these two (2) Petitions for Review on Certiorari under Rule 45 is the issue of the right of the former owners of lots acquired for the expansion of theLahug Airport in Cebu City to repurchase or secure reconveyance of their respective properties.

In the first petition, docketed as G.R. No. 168770, petitioners Anunciacion vda. de Ouano, Mario Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez (the Ouanos) seek to nullify the Decision[1] dated September 3, 2004 of the Court of Appeals (CA) in CA-G.R. CV No. 78027, affirming the Order dated December 9, 2002 of the Regional Trial Court (RTC), Branch 57 in Cebu City, in Civil Case No. CEB-20743, a suit to compel the Republic of the Philippines and/or the Mactan-Cebu International Airport Authority (MCIAA) to reconvey to the Ouanos a parcel of land. The second petition, docketed as G.R. No. 168812, has the MCIAA seeking principally to annul and set aside the Decision[2] and Resolution[3] dated January 14, 2005 and June 29, 2005, respectively, of the CA in CA-G.R. CV No. 64356, sustaining the RTC, Branch 13 in Cebu City in its Decision of October 7, 1988 in Civil Case No. CEB-18370. Per its October 19, 2005 Resolution, the Court ordered the consolidation of both cases. Except for the names of the parties and the specific lot designation involved, the relevant factual antecedents which gave rise to these consolidated petitions are, for the most part, as set forth in the Courts Decision[4] of October 15, 2003, as reiterated in a Resolution[5] dated August 9, 2005, in G.R. No. 156273 entitled Heirs of Timoteo Moreno and Maria Rotea v. Mactan-Cebu International Airport Authority (Heirs of Moreno), and in other earlier related cases.[6]

In 1949, the National Airport Corporation (NAC), MCIAAs predecessor agency, pursued a program to expand the Lahug Airport in Cebu City. Through its team of negotiators, NAC met and negotiated with the owners of the properties situated around the airport, which included Lot Nos. 744-A, 745-A, 746, 747, 761-A, 762-A, 763-A, 942, and 947 of the Banilad Estate. As the landowners would later claim, the government negotiating team, as a sweetener, assured them that they could repurchase their respective lands should the Lahug Airport expansion project do not push through or once the Lahug Airport closes or its operations transferred toMactan-Cebu Airport. Some of the landowners accepted the assurance and executed deeds of sale with a right of repurchase. Others, however, including the owners of the aforementioned lots, refused to sell because the purchase price offered was viewed as way below market, forcing the hand of the Republic, represented by the then Civil Aeronautics Administration (CAA), as successor agency of the NAC, to file a complaint for the expropriation of Lot Nos. 744-A, 745-A, 746,

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747, 761-A, 762-A, 763-A, 942, and 947, among others, docketed as Civil Case No. R-1881 entitled Republic v. Damian Ouano, et al.

On December 29, 1961, the then Court of First Instance (CFI) of Cebu rendered judgment for the Republic, disposing, in part, as follows: IN VIEW OF THE FOREGOING, judgment is hereby rendered:

1. Declaring the expropriation of Lots Nos. 75, 76, 76, 89, 90, 91, 92, 105, 106, 107, 108, 104, 921-A, 88, 93, 913-B, 72, 77, 916, 777-A, 918, 919, 920, 764-A, 988, 744-A, 745-A, 746, 747, 762-A, 763-A, 951, 942, 720-A, x x x and 947, included in the Lahug Airport, Cebu City, justified in and in lawful exercise of the right of eminent domain. x x x x 3. After the payment of the foregoing financial obligation to the landowners, directing the latter to deliver to the plaintiff the corresponding Transfer Certificates of Title to their respective lots; and upon the presentation of the said titles to the Register of Deeds, ordering the latter to cancel the same and to issue, in lieu thereof, new Transfer Certificates of Title in the name of the plaintiff.[7]

In view of the adverted buy-back assurance made by the government, the

owners of the lots no longer appealed the decision of the trial court.[8] Following the finality of the judgment of condemnation, certificates of title for the covered parcels of land were issued in the name of the Republic which, pursuant to Republic Act No. 6958,[9] were subsequently transferred to MCIAA. At the end of 1991, or soon after the transfer of the aforesaid lots to MCIAA, Lahug Airport completely ceased operations, Mactan Airport having opened to accommodate incoming and outgoing commercial flights. On the ground, the expropriated lots were never utilized for the purpose they were taken as no expansion ofLahug Airport was undertaken. This development prompted the former lot owners to formally demand from the government that they be allowed to exercise their promised right to repurchase. The demands went unheeded. Civil suits followed.

G.R. No. 168812 (MCIAA Petition)

On February 8, 1996, Ricardo L. Inocian and four others (all children of Isabel Limbaga who originally owned six [6] of the lots expropriated); and Aletha Suico Magat and seven others, successors-in-interest of Santiago Suico, the original owner of two (2) of the condemned lots (collectively, the Inocians), filed before the RTC in Cebu City a complaint for reconveyance of real properties and damages against MCIAA. The complaint, docketed as Civil Case No. CEB-18370, was eventually raffled to Branch 13 of the court.

On September 29, 1997, one Albert Chiongbian (Chiongbian), alleging to be the owner of Lot Nos. 761-A and 762-A but which the Inocians were now claiming, moved and was later allowed to intervene. During the pre-trial, MCIAA admitted the following facts:

1. That the properties, which are the subject matter of Civil Case No. CEB-18370, are also the properties involved in Civil Case R-1881; 2. That the purpose of the expropriation was for the expansion of the old Lahug Airport; that the Lahug Airport was not expanded; 3. That the old Lahug Airport was closed sometime in June 1992; 4. That the price paid to the lot owners in the expropriation case is found in the decision of the court; and 5. That some properties were reconveyed by the MCIAA because the previous owners were able to secure express waivers or riders wherein the government agreed to return the properties should the expansion of the Lahug Airport not materialize.

During trial, the Inocians adduced evidence which included the testimony of

Ricardo Inocian (Inocian) and Asterio Uy (Uy). Uy, an employee of the CAA, testified that he was a member of the team which negotiated for the acquisition of certain lots in Lahug for the proposed expansion of the Lahug Airport. He recalled that he acted as the interpreter/spokesman of the team since he could speak the Cebuano dialect. He stated that the other members of the team of negotiators were Atty. Pedro Ocampo, Atty. Lansang, and Atty. Saligumba. He recounted that, in the course of the negotiation, their team assured the landowners that their landholdings would be reconveyed to them in the event the Lahug Airport would be abandoned or if its operation were transferred to the Mactan Airport. Some landowners opted to sell, while others were of a different bent owing to the inadequacy of the offered price.

Inocian testified that he and his mother, Isabel Lambaga, attended a meeting called by the NAC team of negotiators sometime in 1947 or 1949 where he and the other landowners were given the assurance that they could repurchase their lands at the same price in the event the Lahug Airport ceases to operate. He further testified that they rejected the NACs offer. However, he said that they no longer appealed the decree of expropriation due to the repurchase assurance adverted to.

The MCIAA presented Michael Bacarizas (Bacarizas), who started working for MCIAA as legal assistant in 1996. He testified that, in the course of doing research work on the lots subject of Civil Case No. CEB-18370, he discovered that the same lots were covered by the decision in Civil Case No. R-1881. He also found out that the said decision did not expressly contain any condition on the matter of repurchase.

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Ruling of the RTC

On October 7, 1998, the RTC rendered a Decision in Civil Case No. CEB-18370, the

dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered directing defendant Mactan Cebu International Airport Authority (MCIAA) to reconvey (free from liens and encumbrances) to plaintiffs Ricardo Inocian, Olimpia E. Esteves, Emilia E. Bacalla, Restituta E. Montana and Raul Inocian Lots No. 744-A, 745-A, 746, 762-A, 747, 761-A and to plaintiffs Aletha Suico Magat, Philip M. Suico, Doris S. dela Cruz, James M. Suico, Edward M. Suico, Roselyn S. Lawsin, Rex M. Suico and Kharla Suico-Gutierrez Lots No. 942 and 947, after plaintiffs shall have paid MCIAA the sums indicated in the decision in Civil Case No. R-1881. Defendant MCIAA is likewise directed to pay the aforementioned plaintiffs the sum or P50,000.00 as and for attorneys fees and P10,000.00 for litigation expenses.

Albert Chiongbians intervention should be, as it is hereby DENIED for utter lack of factual basis.

With costs against defendant MCIAA.[10]

Therefrom, MCIAA went to the CA on appeal, docketed as CA-G.R. CV No. 64356. Ruling of the CA

On January 14, 2005, the CA rendered judgment for the Inocians, declaring them entitled to the reconveyance of the questioned lots as the successors-in-interest of the late Isabel Limbaga and Santiago Suico, as the case may be, who were the former registered owners of the said lots. The decretal portion of the CAs Decision reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the appeal filed in this case and AFFFIRMING the decision rendered by the court a quo on October 7, 1998 in Civil Case No. CEB-18370. SO ORDERED.

The CA, citing and reproducing excerpts from Heirs of Moreno,[11] virtually held that the decision in Civil Case No. R-1881 was conditional, stating that the expropriation of [plaintiff-appellees] lots for the proposed expansion of the Lahug Airport was ordered by the CFI of Cebu under the impression that Lahug Airport would continue in operation.[12] The condition, as may be deduced from the CFIs decision, was that should MCIAA, or its precursor agency, discontinue altogether with the operation of Lahug Airport, then the owners of the lots expropriated may, if so minded, demand of MCIAA to make good its verbal assurance to allow the repurchase of the properties. To the CA, this

assurance, a demandable agreement of repurchase by itself, has been adequately established. On September 21, 2005, the MCIAA filed with Us a petition for review of the CAs Decision, docketed as G.R. No. 168812.

G.R. No. 168770 (Ouano Petition)

Soon after the MCIAA jettisoned the Lahug Airport expansion project, informal settlers entered and occupied Lot No. 763-A which, before its expropriation, belonged to the Ouanos. The Ouanos then formally asked to be allowed to exercise their right to repurchase the aforementioned lot, but the MCIAA ignored the demand. On August 18, 1997, the Ouanos instituted a complaint before the Cebu City RTC against the Republic and the MCIAA for reconveyance, docketed as Civil Case No. CEB-20743.

Answering, the Republic and MCIAA averred that the Ouanos no longer have enforceable rights whatsoever over the condemned Lot No. 763-A, the decision in Civil Case No. R-1881 not having found any reversionary condition.

Ruling of the RTC

By a Decision dated November 28, 2000, the RTC, Branch 57 in Cebu City ruled in

favor of the Ouanos, disposing as follows:

WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of the plaintiffs, Anunciacion Vda. De Ouano, Mario P. Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez and against the Republic of the Philippines and Mactan Cebu International Airport Authority (MCIAA) to restore to plaintiffs, the possession and ownership of their land, Lot No. 763-A upon payment of the expropriation price to defendants; and 2. Ordering the Register of Deeds to effect the transfer of the Certificate of Title from defendant Republic of the Philippines on Lot 763-A, canceling TCT No. 52004 in the name of defendant Republic of the Philippines and to issue a new title on the same lot in the names of Anunciacion Vda. De Ouano, Mario P. Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez. No pronouncement as to costs.[13]

Acting on the motion of the Republic and MCIAA for reconsideration, however, the RTC, Branch 57 in Cebu City, presided this time by Judge Enriqueta L. Belarmino, issued, on December 9, 2002, an Order[14] that reversed its earlier decision of November 28, 2000 and dismissed the Ouanos complaint.

Ruling of the CA

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In time, the Ouanos interposed an appeal to the CA, docketed as CA-G.R. CV No. 78027. Eventually, the appellate court rendered a Decision[15] dated September 3, 2004, denying the appeal, thus:

WHEREFORE, premises considered, the Order dated December 9, 2002, of the Regional Trial Court, 7th Judicial Region, Branch 57, Cebu City, in Civil Case No. CEB-20743, is hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.

Explaining its case disposition, the CA stated that the decision in Civil Case No. R-1881 did not state any condition that Lot No. 763-A of the Ouanosand all covered lots for that matterwould be returned to them or that they could repurchase the same property if it were to be used for purposes other than for the Lahug Airport. The appellate court also went on to declare the inapplicability of the Courts pronouncement in MCIAA v. Court of Appeals, RTC, Branch 9, Cebu City, Melba Limbago, et al.,[16] to support the Ouanos cause, since the affected landowners in that case, unlike the Ouanos, parted with their property not through expropriation but via a sale and purchase transaction.

The Ouanos filed a motion for reconsideration of the CAs Decision, but was denied per the CAs May 26, 2005 Resolution.[17] Hence, they filed this petition in G.R. No. 168770.

The Issues G.R. No. 168812

GROUNDS FOR ALLOWANCE OF THE PETITION l. THE ASSAILED ISSUANCES ILLEGALLY STRIPPED THE REPUBLIC OF ITS ABSOLUTE AND UNCONDITIONAL TITLE TO THE SUBJECT EXPROPRIATED PROPERTIES. ll. THE IMPUNGED DISPOSITIONS INVALIDLY OVERTURNED THIS HONORABLE COURTS FINAL RULINGS IN FERY V. MUNICIPALITY OF CABANATUAN, MCIAA V. COURT OF APPEALS AND REYES V. NATIONAL HOUSING AUTHORITY. lll. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THIS HONORABLE COURTS RULING IN MORENO, ALBEIT IT HAS NOT YET ATTAINED FINALITY.[18]

G.R. No. 168770

Questions of law presented in this Petition

Whether or not the testimonial evidence of the petitioners proving the promises, assurances and representations by the airport officials and lawyers are inadmissbale under the Statute of Frauds. Whether or not under the ruling of this Honorable Court in the heirs of Moreno Case, and pursuant to the principles enunciated therein, petitioners herein are entitiled to recover their litigated property.

Reasons for Allowances of this Petition

Respondents did not object during trial to the admissibility of petitioners testimonial evidence under the Statute of Frauds and have thus waived such objection and are now barred from raising the same. In any event, the Statute of Frauds is not applicable herein. Consequently, petitioners evidence is admissible and should be duly given weight and credence, as initially held by the trial court in its original Decision.[19]

While their respective actions against MCIAA below ended differently, the Ouanos and the Inocians proffered arguments presented before this Court run along parallel lines, both asserting entitlement to recover the litigated property on the strength of the Courts ruling in Heirs of Moreno. MCIAA has, however, formulated in its Consolidated Memorandum the key interrelated issues in these consolidated cases, as follows:

I WHETHER ABANDONMENT OF THE PUBLIC USE FOR WHICH THE SUBJECT PROPERTIES WERE EXPROPRIATED ENTITLES PETITIONERS OUANOS, ET AL. AND RESPONDENTS INOCIAN, ET AL. TO REACQUIRE THEM.

II

WHETHER PETITIONERS OUANOS, ET AL. AND RESPONDENTS INOCIAN, ET AL. ARE ENTITLED TO RECONVEYANCE OF THE SUBJECT PROPERTIES SIMPLY ON THE BASIS OF AN ALLEGED VERBAL PROMISE OR ASSURANCE OF SOME NAC OFFICIALS THAT THE SUBJECT PROPERTIES WILL BE RETUNRED IF THE AIRPORT PROJECT WOULD BE ABANDONED.

The Courts Ruling

The Republic and MCIAAs petition in G.R. No. 168812 is bereft of merit, while the Ouano petition in G.R. No. 168770 is meritorious. At the outset, three (3) fairly established factual premises ought to be emphasized: First, the MCIAA and/or its predecessor agency had not actually used the lots subject of the final decree of expropriation in Civil Case No. R-1881 for the purpose they were

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originally taken by the government, i.e., for the expansion and development of Lahug Airport.

Second, the Lahug Airport had been closed and abandoned. A significant portion of it had, in fact, been purchased by a private corporation for development as a commercial complex.[20]

Third, it has been preponderantly established by evidence that the NAC, through its team of negotiators, had given assurance to the affected landowners that they would be entitled to repurchase their respective lots in the event they are no longer used for airport purposes.[21] No less than Asterio Uy, the Court noted in Heirs of Moreno, one of the members of the CAA Mactan Legal Team, which interceded for the acquisition of the lots for the Lahug Airports expansion, affirmed that persistent assurances were given to the landowners to the effect that as soon as the Lahug Airport is abandoned or transferred to Mactan, the lot owners would be able to reacquire their properties.[22] In Civil Case No. CEB-20743, Exhibit G, the transcript of the deposition[23] of Anunciacion vda. de Ouano covering the assurance made had been formally offered in evidence and duly considered in the initial decision of the RTC Cebu City. In Civil Case No. CEB-18370, the trial court, on the basis of testimonial evidence, and later the CA, recognized the reversionary rights of the suing former lot owners or their successors in interest[24] and resolved the case accordingly. In point with respect to the representation and promise of the government to return the lots taken should the planned airport expansion do not materialize is what the Court said in Heirs of Moreno, thus:

This is a difficult case calling for a difficult but just solution. To begin with there exists an undeniable historical narrative that the predecessors of respondent MCIAA had suggested to the landowners of the properties covered by the Lahug Airport expansion scheme that they could repurchase their properties at the termination of the airports venue. Some acted on this assurance and sold their properties; other landowners held out and waited for the exercise of eminent domain to take its course until finally coming to terms with respondents predecessors that they would not appeal nor block further judgment of condemnation if the right of repurchase was extended to them. A handful failed to prove that they acted on such assurance when they parted with ownership of their land.[25] (Emphasis supplied; citations omitted.)

For perspective, Heirs of Morenolater followed by MCIAA v. Tudtud (Tudtud)[26] and the consolidated cases at baris cast under the same factual setting and centered on the expropriation of privately-owned lots for the public purpose of expanding the Lahug Airport and the alleged promise of reconveyance given by the negotiating NAC officials to the private lot owners. All the lots being claimed by the former owners or successors-in-interest of the former owners in the Heirs of Moreno, Tudtud,and the present cases were similarly adjudged condemned in favor of the Republic in Civil Case No. R-1881. All the claimants sought was or is to have the condemned lots reconveyed to them upon the payment of the condemnation price since the public purpose of

the expropriation was never met. Indeed, the expropriated lots were never used and were, in fact, abandoned by the expropriating government agencies.

In all then, the issues and supporting arguments presented by both sets of petitioners in these consolidated cases have already previously been passed upon, discussed at length, and practically peremptorily resolved in Heirs of Moreno and the November 2008 Tudtud ruling. The Ouanos, as petitioners in G.R. No. 168770, and the Inocians, as respondents in G.R. No. 168812, are similarly situated as the heirs of Moreno in Heirs of Moreno and Benjamin Tudtud in Tudtud. Be that as it may, there is no reason why the ratio decidendi in Heirs of Moreno and Tudtud should not be made to apply to petitioners Ouanos and respondents Inocians such that they shall be entitled to recover their or their predecessors respective properties under the same manner and arrangement as the heirs of Moreno and Tudtud. Stare decisis et non quieta movere (to adhere to precedents, and not to unsettle things which are established).[27]

Just like in Tudtud and earlier in Heirs of Moreno, MCIAA would foist the theory that the judgment of condemnation in Civil Case No. R-1881 was without qualification and was unconditional. It would, in fact, draw attention to the fallo of the expropriation courts decision to prove that there is nothing in the decision indicating that the government gave assurance or undertook to reconvey the covered lots in case the Lahug airport expansion project is aborted. Elaborating on this angle, MCIAA argues that the claim of the Ouanos and the Inocians regarding the alleged verbal assurance of the NAC negotiating team that they can reacquire their landholdings is barred by the Statute of Frauds.[28]

Under the rule on the Statute of Frauds, as expressed in Article 1403 of the Civil Code, a contract for the sale or acquisition of real property shall be unenforceable unless the same or some note of the contract be in writing and subscribed by the party charged. Subject to defined exceptions, evidence of the agreement cannot be received without the writing, or secondary evidence of its contents.

MCIAAs invocation of the Statute of Frauds is misplaced primarily because the statute applies only to executory and not to completed, executed, or partially consummated contracts.[29] Carbonnel v. Poncio, et al., quoting Chief Justice Moran, explains the rationale behind this rule, thusly:

x x x The reason is simple. In executory contracts there is a wide field for fraud because unless they may be in writing there is no palpable evidence of the intention of the contracting parties.The statute has been precisely been enacted to prevent fraud. x x x However, if a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant to keep the benefits already derived by him from the transaction in litigation, and at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby.[30] (Emphasis in the original.)

Analyzing the situation of the cases at bar, there can be no serious objection to

the proposition that the agreement package between the government and the private lot

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owners was already partially performed by the government through the acquisition of the lots for the expansion of the Lahug airport. The parties, however, failed to accomplish the more important condition in the CFI decision decreeing the expropriation of the lots litigated upon: the expansion of the Lahug Airport. The projectthe public purpose behind the forced property takingwas, in fact, never pursued and, as a consequence, the lots expropriated were abandoned. Be that as it may, the two groups of landowners can, in an action to compel MCIAA to make good its oral undertaking to allow repurchase, adduce parol evidence to prove the transaction.

At any rate, the objection on the admissibility of evidence on the basis of the Statute of Frauds may be waived if not timely raised. Records tend to support the conclusion that MCIAA did not, as the Ouanos and the Inocians posit, object to the introduction of parol evidence to prove its commitment to allow the former landowners to repurchase their respective properties upon the occurrence of certain events.

In a bid to deny the lot owners the right to repurchase, MCIAA, citing cases,[31] points to the dispositive part of the decision in Civil Case R-1881 which, as couched, granted the Republic absolute title to the parcels of land declared expropriated. The MCIAA is correct about the unconditional tone of the dispositive portion of the decision, but that actuality would not carry the day for the agency. Addressing the matter of the otherwise absolute tenor of the CFIs disposition in Civil Case No. R-1881, the Court, in Heirs of Moreno, after taking stock of the ensuing portion of the body of the CFIs decision, said:

As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although Mactan Airport is being constructed, it does not take away the actual usefulness and importance of the Lahug Airport: it is handling the air traffic of both civilian and military. From it aircrafts fly to Mindanao and Visayas and pass thru it on their flights to the North and Manila. Then, no evidence was adduced to show how soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will be closed immediately thereafter. It is up to the other departments of the Government to determine said matters. The Court cannot substitute its judgments for those of the said departments or agencies. In the absence of such showing, the court will presume that the Lahug Airport will continue to be in operation.[32] (Emphasis supplied.)

We went on to state as follows:

While the trial court in Civil Case No. R-1881 could have simply acknowledged the presence of public purpose for the exercise of eminent domain regardless of the survival of the Lahug Airport, the trial court in its Decision chose not to do so but instead prefixed its finding of public purpose upon its understanding that Lahug Airport will continue to be in operation. Verily, these meaningful statements in the body of the Decision warrant the conclusion that the expropriated properties

would remain to be so until it was confirmed that Lahug Airport was no longerin operation. This inference further implies two (2) things: (a) after the Lahug Airport ceased its undertaking as such and the expropriated lots were not being used for any airport expansion project, the rights vis--vis the expropriated lots x x x as between the State and their former owners, petitioners herein, must be equitably adjusted; and (b) the foregoing unmistakable declarations in the body of the Decision should merge with and become an intrinsic part of the fallo thereof which under the premises is clearly inadequate since the dispositive portion is not in accord with the findings as contained in the body thereof.[33]

Not to be overlooked of course is what the Court said in its Resolution disposing

of MCIAAs motion to reconsider the original ruling in Heirs of Moreno. In that resolution, We stated that the fallo of the decision in Civil Case R-1881 should be viewed and understood in connection with the entire text, which contemplated a return of the property taken if the airport expansion project were abandoned. For ease of reference, following is what the Court wrote:

Moreover, we do not subscribe to the [MCIAAs] contention that since the possibility of the Lahug Airports closure was actually considered by the trial court, a stipulation on reversion or repurchase was so material that it should not have been discounted by the court a quo in its decision in Civil Case No. R-1881, if, in fact, there was one. We find it proper to cite, once more, this Courts ruling that the fallo of the decision in Civil Case No. R-1881 must be read in reference to the other portions of the decision in which it forms a part. A reading of the Courts judgment must not be confined to the dispositive portion alone; rather it should be meaningfully construed in unanimity with the ratio decidendi thereof to grasp the true intent and meaning of a decision.[34]

The Court has, to be sure, taken stock of Fery v. Municipality of Cabanatuan,[35] a case MCIAA cites at every possible turn, where the Court made these observations:

If, for example, land is expropriated for a particular purpose, with the condition that when that purpose is ended or abandoned the property shall return to its former owner, then of course, when the purpose is terminated or abandoned, the former owner reacquires the property so expropriated. x x x If, upon the contrary, however the decree of expropriation gives to the entity a fee simple title, then, of course, the land becomes the absolute property of the expropriator x x x and in that case the non-user does not have the effect of defeating the title acquired by the expropriation proceedings x x x.

Fery notwithstanding, MCIAA cannot really rightfully say that it has absolute title to the lots decreed expropriated in Civil Case No. R-1881. The correct lesson of Feryis captured by what the Court said in that case, thus: the government acquires only such rights in expropriated parcels of land as may be allowed by the character of its title over the

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properties. In light of our disposition in Heirs of Moreno and Tudtud, the statement immediately adverted to means that in the event the particular public use for which a parcel of land is expropriated is abandoned, the owner shall not be entitled to recover or repurchase it as a matter of right, unless such recovery or repurchase is expressed in or irresistibly deducible from the condemnation judgment. But as has been determined below, the decision in Civil Case No. R-1881 enjoined MCIAA, as a condition of approving expropriation, to allow recovery or repurchase upon abandonment of the Lahug airport project. To borrow from our underlying decision in Heirs of Moreno, [n]o doubt, the return or repurchase of the condemned properties of petitioners could readily be justified as the manifest legal effect of consequence of the trial courts underlying presumption that Lahug Airport will continue to be in operation when it granted the complaint for eminent domain and the airport discontinued its activities.[36] Providing added support to the Ouanos and the Inocians right to repurchase is what in Heirs of Moreno was referred to as constructive trust, one that is akin to the implied trust expressed in Art. 1454 of the Civil Code,[37] the purpose of which is to prevent unjust enrichment.[38] In the case at bench, the Ouanos and the Inocians parted with their respective lots in favor of the MCIAA, the latter obliging itself to use the realties for the expansion of Lahug Airport; failing to keep its end of the bargain, MCIAA can be compelled by the former landowners to reconvey the parcels of land to them, otherwise, they would be denied the use of their properties upon a state of affairs that was not conceived nor contemplated when the expropriation was authorized. In effect, the government merely held the properties condemned in trust until the proposed public use or purpose for which the lots were condemned was actually consummated by the government. Since the government failed to perform the obligation that is the basis of the transfer of the property, then the lot owners Ouanos and Inocians can demand the reconveyance of their old properties after the payment of the condemnation price. Constructive trusts are fictions of equity that courts use as devices to remedy any situation in which the holder of the legal title, MCIAA in this case, may not, in good conscience, retain the beneficial interest. We add, however, as in Heirs of Moreno, that the party seeking the aid of equitythe landowners in this instance, in establishing the trustmust himself do equity in a manner as the court may deem just and reasonable. The Court, in the recent MCIAA v. Lozada, Sr., revisited and abandoned the Fery ruling that the former owner is not entitled to reversion of the property even if the public purpose were not pursued and were abandoned, thus:

On this note, we take this opportunity to revisit our ruling in Fery, which involved an expropriation suit commenced upon parcels of land to be used as a site for a public market. Instead of putting up a public market, respondent Cabanatuan constructed residential houses for lease on the area. Claiming that the municipality lost its right to the property taken since it did not pursue its public purpose, petitioner Juan Fery, the former owner of the lots expropriated, sought to recover his properties. However, as he had admitted that, in 1915, respondent Cabanatuan acquired a fee simple title to the lands in question, judgment was rendered in favor of the municipality, following

American jurisprudence, particularly City of Fort Wayne v. Lake Shore & M.S. RY. Co., McConihay v. Theodore Wright, and Reichling v. Covington Lumber Co., all uniformly holding that the transfer to a third party of the expropriated real property, which necessarily resulted in the abandonment of the particular public purpose for which the property was taken, is not a ground for the recovery of the same by its previous owner, the title of the expropriating agency being one of fee simple.

Obviously, Fery was not decided pursuant to our now sacredly

held constitutional right that private property shall not be taken for public use without just compensation. It is well settled that the taking of private property by the Governments power of eminent domain is subject to two mandatory requirements: (1) that it is for a particular public purpose; and (2) that just compensation be paid to the property owner. These requirements partake of the nature of implied conditions that should be complied with to enable the condemnor to keep the property expropriated.

More particularly, with respect to the element of public use,

the expropriator should commit to use the property pursuant to the purpose stated in the petition for expropriation filed, failing which, it should file another petition for the new purpose. If not, it is then incumbent upon the expropriator to return the said property to its private owner, if the latter desires to reacquire the same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the proper exercise of the power of eminent domain, namely, the particular public purpose for which the property will be devoted. Accordingly, the private property owner would be denied due process of law, and the judgment would violate the property owners right to justice, fairness, and equity.

In light of these premises, we now expressly hold that the

taking of private property, consequent to the Governments exercise of its power of eminent domain, is always subject to the condition that the property be devoted to the specific public purpose for which it was taken. Corollarily, if this particular purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the former owners, if they so desire, may seek the reversion of the property, subject to the return of the amount of just compensation received. In such a case, the exercise of the power of eminent domain has become improper for lack of the required factual justification.[39] (Emphasis supplied.)

Clinging to Fery, specifically the fee simple concept underpinning it, is no longer compelling, considering the ensuing inequity such application entails. Too, the Court resolved Fery not under the cover of any of the Philippine Constitutions, each decreeing that private property shall not be taken for public use without just compensation. The twin

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elements of just compensation and public purpose are, by themselves, direct limitations to the exercise of eminent domain, arguing, in a way, against the notion of fee simple title. The fee does not vest until payment of just compensation.[40] In esse, expropriation is forced private property taking, the landowner being really without a ghost of a chance to defeat the case of the expropriating agency. In other words, in expropriation, the private owner is deprived of property against his will. Withal, the mandatory requirement of due process ought to be strictly followed, such that the state must show, at the minimum, a genuine need, an exacting public purpose to take private property, the purpose to be specifically alleged or least reasonably deducible from the complaint. Public use, as an eminent domain concept, has now acquired an expansive meaning to include any use that is of usefulness, utility, or advantage, or what is productive of general benefit [of the public].[41] If the genuine public necessitythe very reason or condition as it wereallowing, at the first instance, the expropriation of a private land ceases or disappears, then there is no more cogent point for the governments retention of the expropriated land. The same legal situation should hold if the government devotes the property to another public use very much different from the original or deviates from the declared purpose to benefit another private person. It has been said that the direct use by the state of its power to oblige landowners to renounce their productive possession to another citizen, who will use it predominantly for that citizens own private gain, is offensive to our laws.[42]

A condemnor should commit to use the property pursuant to the purpose stated in the petition for expropriation, failing which it should file another petition for the new purpose. If not, then it behooves the condemnor to return the said property to its private owner, if the latter so desires. The government cannot plausibly keep the property it expropriated in any manner it pleases and, in the process, dishonor the judgment of expropriation. This is not in keeping with the idea of fair play,

The notion, therefore, that the government, via expropriation proceedings,

acquires unrestricted ownership over or a fee simple title to the covered land, is no longer tenable. We suggested as much in Heirs of Moreno and in Tudtud and more recently in Lozada, Sr. Expropriated lands should be differentiated from a piece of land, ownership of which was absolutely transferred by way of an unconditional purchase and sale contract freely entered by two parties, one without obligation to buy and the other without the duty to sell. In that case, the fee simple concept really comes into play. There is really no occasion to apply the fee simple concept if the transfer is conditional. The taking of a private land in expropriation proceedings is always conditioned on its continued devotion to its public purpose. As a necessary corollary, once the purpose is terminated or peremptorily abandoned, then the former owner, if he so desires, may seek its reversion, subject of course to the return, at the very least, of the just compensation received.

To be compelled to renounce dominion over a piece of land is, in itself, an already bitter pill to swallow for the owner. But to be asked to sacrifice for the common good and yield ownership to the government which reneges on its assurance that the private property shall be for a public purpose may be too much. But it would be worse if the power of eminent domain were deliberately used as a subterfuge to benefit another with influence and power in the political process, including development firms. The

mischief thus depicted is not at all far-fetched with the continued application of Fery. Even as the Court deliberates on these consolidated cases, there is an uncontroverted allegation that the MCIAA is poised to sell, if it has not yet sold, the areas in question to Cebu Property Ventures, Inc. This provides an added dimension to abandon Fery.

Given the foregoing disquisitions, equity and justice demand the reconveyance

by MCIAA of the litigated lands in question to the Ouanos and Inocians. In the same token, justice and fair play also dictate that the Ouanos and Inocian return to MCIAA what they received as just compensation for the expropriation of their respective properties plus legal interest to be computed from default, which in this case should run from the time MCIAA complies with the reconveyance obligation.[43] They must likewise pay MCIAA the necessary expenses it might have incurred in sustaining their respective lots and the monetary value of its services in managing the lots in question to the extent that they, as private owners, were benefited thereby.

In accordance with Art. 1187 of the Civil Code on mutual compensation, MCIAA may keep whatever income or fruits it may have obtained from the parcels of land expropriated. In turn, the Ouanos and Inocians need not require the accounting of interests earned by the amounts they received as just compensation.[44]

Following Art. 1189 of the Civil Code providing that [i]f the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor x x x, the Ouanos and Inocians do not have to settle the appreciation of the values of their respective lots as part of the reconveyance process, since the value increase is merely the natural effect of nature and time.

Finally, We delete the award of PhP 50,000 and PhP 10,000, as attorneys fees and litigation expenses, respectively, made in favor of the Inocians by the Cebu City RTC in its judgment in Civil Case No. CEB-18370, as later affirmed by the CA. As a matter of sound policy, no premium should be set on the right to litigate where there is no doubt about the bona fides of the exercise of such right,[45] as here, albeit the decision of MCIAA to resist the former landowners claim eventually turned out to be untenable.

WHEREFORE, the petition in G.R. No. 168770 is GRANTED. Accordingly, the CA Decision dated September 3, 2004 in CA-G.R. CV No. 78027 isREVERSED and SET ASIDE. Mactan-Cebu International Airport Authority is ordered to reconvey subject Lot No. 763-A to petitioners Anunciacion vda. de Ouano, Mario P. Ouano, Leticia Ouano Arnaiz, and Cielo Ouano Martinez. The Register of Deeds of Cebu City is ordered to effect the necessary cancellation of title and transfer it in the name of the petitioners within fifteen (15) days from finality of judgment.

The petition of the Mactan-Cebu International Airport Authority in G.R. No. 168812 is DENIED, and the CAs Decision and Resolution dated January 14, 2005 and June 29, 2005, respectively, in CA-G.R. CV No. 64356 are AFFIRMED, except insofar as they awarded attorneys fees and litigation expenses that are herebyDELETED. Accordingly, Mactan-Cebu International Airport Authority is ordered to reconvey to respondents Ricardo L. Inocian, Olympia E. Esteves, Emilia E. Bacalla, Restituta E. Montana, and Raul L. Inocian the litigated Lot Nos. 744-A, 745-A, 746, 762-A, 747, and 761-A; and to respondents Aletha Suico Magat, Philip M. Suico, Dolores S. dela Cruz, James M. Suico,

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Edward M. Suico, Roselyn S. Lawsin, Rex M. Suico, and Kharla Suico-Gutierrez the litigated Lot Nos. 942 and 947. The Register of Deeds of Cebu City is ordered to effect the necessary cancellation of title and transfer it in the name of respondents within a period of fifteen (15) days from finality of judgment.

The foregoing dispositions are subject to QUALIFICATIONS, to apply to these consolidated petitions, when appropriate, as follows:

(1) Petitioners Ouano, et al. in G.R. No. 168770 and respondents Ricardo L Inocian, et al. in G.R. No. 168812 are ordered to return to the MCIAA the just compensation they or their predecessors-in-interest received for the expropriation of their respective lots as stated in Civil Case No. R-1881, within a period of sixty (60) days from finality of judgment;

(2) The MCIAA shall be entitled to RETAIN whatever fruits and income it may have obtained from the subject expropriated lots without any obligation to refund the same to the lot owners; and

(3) Petitioners Ouano, et al. in G.R. No. 168770 and respondents Ricardo L. Inocian, et al. in G.R. No. 168812 shall RETAIN whatever interests the amounts they received as just compensation may have earned in the meantime without any obligation to refund the same to MCIAA.

SO ORDERED.

Republic of the Philippines Supreme Court

Manila

THIRD DIVISION

EMILIANA G. PEŇA, AMELIA C. MAR, and CARMEN REYES, Petitioners, -versus - SPOUSES ARMANDO TOLENTINO AND LETICIA TOLENTINO, Respondents.

G.R. No. 155227-28 Present: CARPIO MORALES, Chairperson, BRION, PERALTA,* BERSAMIN, VILLARAMA, JR., JJ. Promulgated: February 9, 2011

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D E C I S I O N

BERSAMIN, J.:

By petition for review on certiorari, the petitioners appeal the adverse decision promulgated by the Court of Appeals (CA) on March 31, 2000, [1] and the resolution issued on August 28, 2002 (denying their motion for reconsideration).[2]

Antecedents

The petitioners are lessees of three distinct and separate parcels of land owned by the respondents, located in the following addresses, to wit: Carmen Reyes, 1460 Velasquez, Tondo, Manila; for Amelia Mar, 479 Perla, Tondo, Manila; and for Emiliana Pea, 1461 Sta. Maria, Tondo, Manila.

Based on the parties oral lease agreements, the petitioners agreed to pay monthly rents, pegged as of October 9, 1995 at the following rates, namely: for Carmen Reyes, P570.00; for Amelia Mar, P840.00; and for Emiliana Pea, P480.00.

On August 15, 1995, the respondents wrote a demand letter to each of the petitioners, informing that they were terminating the respective month-to-month lease contracts effective September 15, 1995; and demanding that the petitioners vacate and remove their houses from their respective premises, with warning that should they not heed the demand, the respondents would charge them P3,000.00/month each as reasonable compensation for the use and occupancy of the premises from October 1, 1995 until they would actually vacate. After the petitioners refused to vacate within the period allowed, the respondents filed on October 9, 1995 three distinct complaints for ejectment against the petitioners in the Metropolitan Trial Court (MeTC) of Manila. The three cases were consolidated upon the respondents motion. In their respective answers, the petitioners uniformly contended that the respondents could not summarily eject them from their leased premises without circumventing Presidential Decree (P.D.) No. 20 and related laws. During the preliminary conference, the parties agreed on the following issues:[3]

1. Whether or not each of the petitioners could be ejected on the ground that the verbal contract of lease had expired; and

2. Whether or not the reasonable compensation demanded by the

respondents was exorbitant or unconscionable.

Ruling of the MeTC

On May 17, 1996, the MeTC ruled in favor of the respondents,[4] viz:

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WHEREFORE, judgment is rendered in favor of the plaintiff

spouses: 1. Ordering defendant Emiliana Pea in Civil Case No. 149598-

CV to immediately vacate the lot located at 1461 Sta. Maria, Tondo, Manila, and surrender the possession thereof to the plaintiff spouses; to pay the latter the amount of P2,000.00 a month as reasonable compensation for the use and occupancy of the premises from 1 October 1995 until the same is finally vacated; to pay the plaintiff spouses the amount of P5,000.00 as attorneys fees; and to pay the costs of suit;

2. Ordering the defendant Amelia Mar in Civil Case No.

149599-CV to immediately vacate the lot situated at 479 Perla St., Tondo, Manila, and surrender possession thereof to the plaintiff spouses; to pay the latter the amount of P2,500.00 per month as reasonable compensation for the use and occupancy of the premises from 1 October 1995 until the same is finally vacated; to pay the plaintiff spouses the amount of P5,000.00 as attorneys fees; and to pay the costs of suit; and

3. Ordering the defendant Carmen Reyes in Civil Case No.

149601-CV to immediately vacate the lot with address at 1460 Velasquez Street, Tondo, Manila, and surrender possession thereof to the plaintiff spouses; to pay the latter the amount of P2,0500.00 a month as reasonable compensation for the use and occupancy of the leased premises from 1 October 1995 until the same is finally vacated; to pay the plaintiff-spouses the amount of P5,000.00 as attorneys fees; and to pay the costs of suit; and

SO ORDERED.

The MeTC explained in its decision:

Defendants themselves categorically state that the rentals on

the respective lots leased to them were paid every month. xxx Pertinent to the cases, thus, is the Supreme Court ruling in the case of Acab, et. al. vs Court of Appeals (G.R. No. 112285, 21 February 1995) that lease agreements with no specified period, but in which rentals are paid monthly, are considered to be on a month-to-month basis. They are for a definite period and expire after the last day of any given thirty day period of lease, upon proper demand and notice of lessor to vacate, and in which case, there is sufficient cause for ejectment under Sec. 5(f) of Batas Pambansa 877, that is, the expiration of the period of the lease contract.

Ruling of the RTC

On appeal, the Regional Trial Court (RTC) modified the MeTCs decision,[5] viz:

WHEREFORE, premises considered, judgment is hereby rendered modifying the decision appealed from as follows:

a. Defendants having stayed in the leased premises for not less than thirty (30) years, instead of being on a month-to-month basis, the lease is fixed for a term of two (2) years reckoned from the date of this decision.

b. Upon expiration of the term of the lease, defendants shall demolish their respective houses at their own expense and vacate the leased premises;

c. The lease being covered by the Rent Control Law, defendants shall continue to pay the old monthly rental to be gradually increased in accordance with said law;

d. Both parties shall pay their respective counsels the required attorney's fees; and

e. To pay the costs of the suit. SO ORDERED.

The RTC affirmed the MeTCs holding that the leases expired at the end of every month, upon demand to vacate by the respondents; but decreed based on the authority of the court under Article 1687 of the Civil Code to fix a longer term that the leases were for two years reckoned from the date of its decision, unless extended by the parties pursuant to the law and in keeping with equity and justice, considering that the respondents had allowed the petitioners to construct their own houses of good materials on the premises, and that the petitioners had been occupants for over 30 years.

Ruling of the CA

Both parties appealed by petition for review.[6]

The petitioners petition for review was docketed as C.A.-G.R. SP NO. 44172; that of the respondents was docketed as C.A.-G.R. SP No. 44192. Nonetheless, the separate appeals were consolidated on November 20, 1997.[7]

On March 31, 2000, the CA promulgated its decision,[8] thus:

WHEREFORE, judgment is rendered SETTING ASIDE the decision of the RTC, Branch 26, Manila and REINSTATING the decision of the MTC, Branch 3, Manila with the modification that the defendants shall pay their respective agreed rentals which may be gradually increased in accordance with the Rent Control Law for the use and occupancy of the premises from 1 October 1995 until the same is finally vacated.

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SO ORDERED.

The petitioners sought reconsideration, but the CA denied their motion for

reconsideration on August 28, 2002, and granted the respondents motion for execution pending appeal and ordered the MeTC to issue a writ of execution to enforce the judgment pending appeal.

Issues

Hence, this appeal to the Court, whereby the petitioners urge the following grounds,[9] to wit:

I. THE EJECTMENT OF HEREIN PETITIONERS FROM THE SAID LEASED PREMISES IS VIOLATIVE OF P.D. NO. 20

II. HEREIN PETITIONER CANNOT BE EJECTED FROM THE SUBJECT

LEASED PROPERTY WITHOUT CLEARLY VIOLATING THE URBAN LAND REFORM CODE (P.D. 1517) AND R.A. 3516.

Ruling of the Court

The petition lacks merit.

1. Were the contracts of lease

for an indefinite period?

The petitioners contend that their lease contracts were covered by P.D. No. 20,[10] which suspended paragraph 1 of Article 1673,[11] Civil Code; that as a result, the expiration of the period of their leases was no longer a valid ground to eject them; and that their leases should be deemed to be for an indefinite period. In refutation, the respondents argue that P.D. 20 suspended only Article 1673, not Article 1687,[12] Civil Code; that under Article 1687, a lease on a month-to-month basis was a lease with a definite period; and that the petitioners could be ejected from the leased premises upon the expiration of the definite period, particularly as a demand to that effect was made. The petitioners contention is erroneous. First of all, the petitioners reliance on P.D. 20 is futile and misplaced because that law had no application to their cause. They ignored that Batas Pambansa Blg. 25,[13] approved on April 10, 1979 and effective immediately, had expressly repealed P.D. 20 pursuant to its Section 10.[14]

For the enlightenment of the petitioners in order to dispel their confusion, the following brief review of the rental laws that came after P.D. 20 and B.P. Blg. 25 is helpful.

B.P. Blg. 25 remained in force for five years, after which P.D. 1912[15] and B.P. Blg. 867 were enacted to extend the effectivity of B.P. Blg. 25 for eight months and six months, respectively. When the extension of B.P. Blg. 25 ended on June 30, 1985, a new rental law, B.P. Blg. 877,[16] was enacted on July 1, 1985.B.P. Blg. 877, although initially effective only until December 31, 1987, came to be extended up to December 31, 1989 by Republic Act No. 6643.[17] Subsequently, Congress passed R.A. No. 7644[18] to further extend the effectivity of B.P. Blg. 877 by three years. Finally, R.A. No. 8437[19] extended the rent control period provided in B.P. Blg. 877 from January 1, 1998 up to December 31, 2001.

It is clear, therefore, that B.P. Blg. 877 was the controlling rental law when the

complaints against the petitioners were filed on October 9, 1995.

We note that on January 1, 2002, R.A. No. 9161[20] took effect. Its Section 7(e) provided that the expiration of the period of the lease contract was still one of the grounds for judicial ejectment. Also, its Section 10 provided for the suspension of paragraph 1 of Article 1673 of the Civil Code, which was similar to Section 6 ofB.P. Blg. 877, quoted hereunder:

Sec. 6 Application of the Civil Code and Rules of Court of the Philippines Except when the lease is for a definite period, the provisions of paragraph (1) of Article 1673 of the Civil Codeof the Philippines, insofar as they refer to residential units covered by this Act shall be suspended during the effectivity of this Act, but other provisions of the Civil Code and the Rules of Court on lease contracts, insofar as they are not in conflict with the provisions of the Act shall apply.

In several rulings,[21] the Court held that Section 6 of B.P. Blg. 877 did not suspend the effects of Article 1687 of the Civil Code; and that the only effect of the suspension of paragraph 1, Article 1673 of the Civil Code was that, independently of the grounds for ejectment enumerated in B.P. Blg. 877, the owner/lessor could not eject the tenant by reason of the expiration of the period of lease as fixed or determined under Article 1687 of the Civil Code. Consequently, the determination of the period of the lease could still be made in accordance with Article 1687. Under Section 5 (f) of B.P. Blg. 877,[22] the expiration of the period of the lease is among the grounds for judicial ejectment of a lessee. In this case, because no definite period was agreed upon by the parties, their contracts of lease being oral, the leases were deemed to be for a definite period, considering that the rents agreed upon were being paid monthly, and terminated at the end of every month, pursuant to Article 1687.[23] In addition, the fact that the petitioners were notified of the expiration of the leases effective September 15, 1995 brought their right to stay in their premises to a definite end as of that date.[24]

2

May petitioners validly raise their alleged rights under P.D. 1517, R.A. 3516

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and P.D. 2016 for the first time on appeal? The petitioners contend that the decisions of the MeTC, RTC, and CA were

contrary to law; that they held the right of first refusal to purchase their leased premises pursuant to Sections 6 of P.D. 1517,[25] because they had resided on the leased lots for almost 40 years, even before the respondents purchased the properties from the former owners, and because they had erected their own apartments on the leased lots; that under Section 5 of R.A. No. 3516,[26] a lessor was prohibited from selling the leased premises to any person other than his lessee, without securing the latters written renunciation of his right of first refusal to purchase the leased property; and that Section 2 of P.D. 2016[27] likewise protected them. The respondents counter that the petitioners could not validly raise the applicability of the cited laws for the first time in this Court, without violating their right to due process. In reply, the petitioners posit that the provisions of P.D. 1517 and R.A. No. 3516, although cited for the first time only on appeal, were always presumed to be part of their affirmative or special defenses; that the lower courts were bound to take judicial notice of and should render decisions consistent with said provisions of law; that the Court was also clothed with ample authority to review matters even if not assigned as errors on appeal if it found that their consideration was necessary to arrive at a just determination of a case; and that Section 8 of Rule 51 of the Rules of Court authorizes the Court to consider and resolve a plain error, although not specifically assigned, for, otherwise, substance may be sacrificed for technicalities. We cannot side with the petitioners. Firstly, the petitioners appear to have known of their supposed right of first refusal even before the respondents came to acquire the leased premises by purchase. They implied so in their petition for review filed on May 30, 1997 in the CA:[28]

xxx It must also be borne in mind herein that the said petitioners had started occupying the said property even before the same was purchased by the herein private respondents. In fact, the said sale should even be considered as illegal if not null and void from the very beginning because the herein petitioners were not even properly informed of the said sale considering that under the Urban Land Reform Code they even have the right of first refusal over the said property. The public respondent should also consider the said fact in resolving to give a longer period of lease to the herein petitioners and certainly not for two (2) years only. Of course it would be a different matter if the public respondent himself (RTC) had at least convinced if not goaded the herein private respondents to compensate the petitioners for the value of the improvements introduced on the said leased premises in the interest of equity, fairness and justice. We submit to this Honorable Court that the herein petitioners should be allowed to enjoy their said improvements for a period of at least five (5) years before they can be ejected from the said leased premises.

Yet, the petitioners did not invoke their supposed right of first refusal from the time when the respondents filed their complaints for ejectment against them onOctober 9, 1995 until they brought the present recourse to this Court. Neither did they offer any explanation for their failure to do so. It is notable that the only defense they raised is that their eviction from the premises on the sole ground of expiration of the lease contract violated R.A. No. 9161.

Moreover, the petitioners did not also assert their supposed right of first refusal

despite the respondents informing them (through their position paper filed in the MeTC on March 21, 1996)[29] that they had terminated the petitioners leases because they were intending to sell the premises to a third person. In fact, as the records bear out, the only reliefs the petitioners prayed for in the MTC, RTC, and CA were the extension of their leases, and the reimbursement by the respondents of the values of their improvements.[30] It is inferable from the petitioners silence, therefore, that they had neither the interest nor the enthusiasm to assert the right of first refusal.

Secondly, the petitioners are precluded from invoking their supposed right of first

refusal at this very late stage after failing to assert it within a reasonable time from the respondents purchase of the respective properties where their premises were respectively located. The presumption that they had either abandoned or declined to assert their rights becomes fully warranted.[31]

Thirdly, it is clear that the petitioners are changing their theory of the case on

appeal. That change is impermissible on grounds of its elemental unfairness to the adverse parties, who would now be forced to adapt to the change and to incur additional expense in doing so. Besides, such a change would effectively deprive the lower courts of the opportunity to decide the merits of the case fairly. It is certainly a basic rule in appellate procedure that the trial court should be allowed themeaningful opportunity not only to consider and pass upon all the issues but also to avoid or correct any alleged errors before those issues or errors become the basis for an appeal.[32] In that regard, the Court has observed in Carantes v. Court of Appeals:[33]

The settled rule is that defenses not pleaded in the answer may not be raised for the first time on appeal. A party cannot, on appeal, change fundamentally the nature of the issue in the case. When a party deliberately adopts a certain theory and the case is decided upon that theory in the court below, he will not be permitted to change the same on appeal, because to permit him to do so would be unfair to the adverse party.

Indeed, the settled rule in this jurisdiction, according to Mon v. Court of

Appeals,[34] is that a party cannot change his theory of the case or his cause of action on appeal. This rule affirms that courts of justice have no jurisdiction or power to decide a question not in issue. Thus, a judgment that goes beyond the issues and purports to adjudicate something on which the court did not hear the parties is not only irregular but also extrajudicial and invalid.[35] The legal theory under which the controversy was heard and decided in the trial court should be the same theory under which the review on appeal is conducted. Otherwise, prejudice will result to the adverse

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party. We stress that points of law, theories, issues, and arguments not adequately brought to the attention of the lower court will not be ordinarily considered by a reviewing court, inasmuch as they cannot be raised for the first time on appeal.[36] This would be offensive to the basic rules of fair play, justice, and due process.[37]

Lastly, the issue of whether the leased premises were covered by P. D. 1517 or not is truly a factual question that is properly determined by the trial court, not by this Court due to its not being a trier of facts.

3 CAs reinstatement of MeTCs decision

on the ejectment of petitioners is sustained, subject to modification on rentals

Although the CA correctly reinstated the MeTCs decision as far as it ordered the petitioners ejectment from the leased premises, we cannot uphold its modification by requiring the petitioners instead to pay their respective agreed rentals which shall be gradually increased in accordance with the Rent Control Law for the use and occupancy of the premises from 1 October 1995 until the same is finally vacated without any elucidation of the reasons for ordering the payment of agreed rentals for the use and occupancy of the premises in lieu of the MeTCs requiring the petitioners to pay reasonable compensation.

It is true that the MeTC had not also given any justification for fixing reasonable compensation in the respective amounts found in the dispositive portion of its decision, instead of rentals. However, we discern that the MeTC had taken off from the demand letters of the respondents to each of the petitioners, which included the warning to them that should they refuse to vacate as demanded they would each be charged P3,000.00/month as reasonable compensation for the use and occupancy of the premises from October 1, 1995 until they would actually vacate. We opt not to disturb the MeTCs holding on reasonable compensation, in lieu of agreed rentals, considering that the petitioners did not raise any issue against it, and considering further that the CA did not find any error committed by the MeTC as to that. At any rate, it is worthy to note that the award of reasonable compensation, not rentals, is more consistent with the conclusion of the MeTC that the leases of the petitioners had expired. Indeed, to peg the respondents monetary recovery to the unadjusted rentals, instead of reasonable compensation, is not fair.

Accordingly, we modify the CAs decision by reinstating the MeTCs decision without qualification. WHEREFORE, we modify the decision promulgated on March 31, 2000 by the Court of Appeals by reinstating the decision dated May 17, 1996 by the Metropolitan Trial Court in Manila without qualification. Costs of suit to be paid by the petitioners. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila

EN BANC February 7, 1924 G.R. No. 21271 ISIDRO PENSADER, ET AL., plaintiffs-appellants, vs. ALEJANDRA PENSADER, ET AL., defendants-appellees. Lorenzo C. Campo for appellants. Marcelo T. Boncan for appellees. ROMUALDEZ, J.: In this case the partition is sought of a cocoanut land described in the complaint and which the plaintiffs allege is an undivided inheritance between them and the defendants. The court absolved the latter from the complaint and the plaintiffs took this appeal, assigning as errors of the lower court the holding that the appellants and appellees have been holding the disputed land in common; the finding that the possession exercised by the appellee Silverio P. Revelar and his predecessors in interest for more than thirty years is adverse to them, and the holding that plaintiff's action has prescribed; the finding that the decease Canuto Pensader transferred to Fr. Pablo Pajarillo the title to said land, when as a matter of fact he was commissioned only to see that the realty was distributed among the former's heirs; and finally its failure to permit the plaintiffs to introduce parol evidence concerning certain admissions made by the appellee Alejandra Pensader and her husband and by Vicente Revelar as to her title to the land. The facts proven are: Canuto Pensader, who was living maritally with Maria Revelar, acquired the land in question from Eulalio Punio. Said Canuto had several brothers whose children, nephews of said Canuto, are the herein plaintiffs and defendant Alejandra Pensader, and died without leaving any forced heir. In 1892, Canuto Pensader donated one-half of the land in dispute to his paramour Maria Revelar, and the other half to his niece Alejandra Pensader, defendant herein, mother of the other defendant, Silverio P. Revelar. By virtue of this donation and immediately after the death of Canuto Pensader, which occurred at the end of the year 1892, Maria Revelar and Alejandra Pensader, the latter being married with Vicente Revelar, entered upon the possession of the land in question and since then they have been cultivating it until the death of Vicente Revelar, whose heirs, in an extrajudicial partition and in accord with Alejandra Pensader allotted the land to the herein defendant Silverio P. Revelar. Maria Revelar in turn waived her share of the realty in favor of said Silverio P. Revelar, who has been cultivating and improving the same and enjoying its fruits since then. The possession of this Silverio P. Revelar, together with that of his parents and aunt Maria Revelar, dates back to thirty years ago, and is continuous, public, peaceful, and under claim of ownership. It was not shown that such possession was in common with the plaintiffs. As above stated, the origin of said possession is adverse to such community, namely, the donation, which although it is not established by a sufficient documentary evidence, stands in this case as a circumstance explaining the exclusive character of the possession of Maria Revelar and Alejandra Pensader and that of their common successor in interest Silverio P. Revelar. Besides, it appears that in the year 1905, the plaintiffs made an extrajudicial demand for the partition of this property, but did not obtain it, the defendants having continued in possession and exclusive enjoyment thereof.

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These facts, under the circumstances shown by the evidence as a whole, are sufficient to establish the adverse character of the possession which the defendant Silverio P. Revelar and his predecessors in interest had been exercising over the land in question, and, therefore, to justify the holding that the action brought by the plaintiffs has already prescribed. We do not find in the assignments of error sufficient merit for altering the judgment appealed from. It is, therefore, affirmed with the costs against the appellants. So ordered. Araullo, C.J., Johnson, Street, Malcolm, Avanceña, Ostrand, and Johns, JJ., concur.

EN BANC

[G.R. No. L-8029. June 28, 1956.] EMILIA ESPIQUE and SANTIAGO ESPIQUE, Plaintiffs-Appellants, vs. JACINTO

ESPIQUE,Defendant-Appellee.

D E C I S I O N BAUTISTA ANGELO, J.:

This is an action for partition of three parcels of land situated in Tayug, Pangasinan based on the claim that they are owned in common and pro indiviso by Plaintiffs and Defendant.Plaintiffs also pray for damages representing unenjoyed profits from 1916 to 1949, or a period of 33 years. The defense of Defendant is that said lands were given to him and his wife by his parents Basilio ESPIQUE and Maria Diaz as well as his grandfather Julian ESPIQUE by way of a donation propter nuptias on May 8, 1906 and since then he and his wife have been in possession and enjoyment thereof for a period of 44 years adversely and without interruption. He pleaded prescription and lack of cause of action. On the date set for hearing, the parties submitted a stipulation of facts wherein, among other things, they agreed (1) that Plaintiffs and Defendant are the legitimate children of Basilio ESPIQUE and Maria Diaz, the former being the legitimate son of Julian ESPIQUE, and (2) that the properties in question were donated propter nuptias by Julian ESPIQUE and the spouses Basilio ESPIQUE and Maria Diaz in favor of Jacinto ESPIQUE and Victorina Abenojar, but the donation was merely made in a private document executed on May 8, 1906. In view of the above stipulation of facts, Defendant submitted a motion to dismiss, to whichPlaintiffs filed a reply and, thereafter, the court rendered judgment finding that Plaintiffs’ complaint has no cause of action it appearing that the properties which are sought to be partitioned were donated to Defendant since 1906 who has been in possession thereof adversely and continuously for more than forty years and, hence, has acquired title thereto by prescription. Consequently, the court dismissed the action without pronouncement as to costs. Plaintiffs appealed from this decision in due course but the Court of Appeals certified the case to this Court on the ground that it merely involves questions of law. The question to be determined is whether the lower court erred in concluding that Plaintiffs’ complaint states no cause of action because, considering its allegations and the stipulation of facts submitted by the parties, the properties in question were donated to Defendant by his predecessors-in-interest way back in 1906 and since then he has been in possession and enjoyment thereof adversely, openly and without interruption up to 1949, or for a period of more than forty years.

Plaintiffs sustain the affirmative on the plain plea that the deed of donation which Defendantclaims as the basis of his title being one in consideration of marriage is null and void and as such could not have conveyed or transferred any title, right or interest over the lands in question to Defendant because it has not been executed in a public document. And even if said donation may be said to be the basis of acquisitive prescription, Plaintiffs contend that there is no evidence whatever showing that the possession of Defendant has been continuous, public open and adverse for more than 30 years as found by the trial court. There is no question that the donation in question is invalid because it involves an immovable property and the donation was not made in a public document as required by Article 633 of the old Civil Code, in connection with Article 1328 of the same Code (concerning gifts propter nuptias), but it does not follow that said donation may not serve as basis of acquisitive prescription when on the strength thereof the donee has taken possession of the property adversely and in the concept of owner, for, as this Court well said:chanroblesvirtuallawlibrary “While the verbal donation, under which the Defendants, and his predecessors in interest have been in possession of the lands in question, is not effective as a transfer of title, yet it is a circumstance which may explain the adverse and exclusive character of the possession” (Pensader vs. Pensader, 47 Phil., 959; chan roblesvirtualawlibrarySee also Dimaliwat vs. Dimaliwat, 55 Phil., 673-680). That is also an action for partition. It was shown that the donation of the property was made not even in a private document but only verbally. It was also shown that the Defendants, through their predecessors-in-interest, were in adverse and continuous possession of the lands for a period of over 30 years. Yet, the court decided the case in favor of Defendants on the ground of acquisitive prescription. There is also a close parallelism between the facts of this case and the present. It is true that no evidence was presented showing the character of the possession held by theDefendant of the lands in question, but such is unnecessary considering the admissions made by Plaintiffs in the complaint and in the stipulation of facts. A careful analysis of the admissions made in both pleadings would at once reveal that Defendant has been in open, adverse and continuous possession of said lands since at least 1916 up to 1949, or for a period of 33 years. Thus, it appears in paragraphs 4 and 5 of the first cause of action that Defendanthas been in possession of the lands in question and has “appropriated unto himself the whole produce of the aforementioned parcels of land, from 1916 up to the present” so much so thatPlaintiffs prayed that they be given their share of the produce during said period by way of damages in the total amount of P22,000. We do not need to stretch our mind to see that under such allegations Plaintiffs intended to convey the idea that Defendant has possessed the lands openly, adversely and without interruption from 1916 to 1949 for he is the one who has possessed them and reaped the whole benefit thereof. As to the character of the possession held by Defendant during that period one cannot also deny that it is in the concept of owner considering that the lands were donated to him by his predecessors-in-interest on the occasion of his marriage even if the same was not embodied in a public instrument. The essential elements constituting acquisitive prescription are therefore present which negative the right of Plaintiffs to ask for partition of said properties. On this point we find pertinent the following observation of the trial court. “Any person who claims right of ownership over immovable properties and does not invoke that right but instead tolerated others in possession for thirty years is guilty of laches and negligence and he must suffer the consequences of his acts.”

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With regard to the contention that the trial court dismissed the case without first receiving the evidence the Plaintiffs may desire to present in support of their contention, it is true that this right was reserved by the parties in the stipulation of facts and Plaintiffs asked in their motion for reconsideration that they be given a chance to prove some additional facts, but they failed to state clearly what those facts are and the nature of the evidence they would like to present, for which reason the court denied their request. Undoubtedly, the trial court did not deem necessary any additional evidence considering the admissions made by the Plaintiffs as above adverted to. Considering the conclusion we have reached, we hold that the trial court did not err in this respect. Wherefore, the decision appealed from is affirmed, without pronouncement as to costs. Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Concepcion, Reyes, J.B.L., and Endencia, JJ., concur.

SECOND DIVISION

GOLDCREST REALTY CORPORATION, Petitioner,

- versus -

G.R. No. 171072 Present: QUISUMBING, J., Chairperson, CARPIO MORALES, TINGA, VELASCO, JR., and BRION, JJ.

CYPRESS GARDENS CONDOMINIUM CORPORATION, Respondent.

Promulgated: April 7, 2009

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION

QUISUMBING, J.: For review on certiorari are the Decision[1] dated September 29, 2005 and the

Resolution[2] dated January 16, 2006 of the Court of Appeals in CA G.R. SP No. 79924. The antecedent facts in this case are as follows: Petitioner Goldcrest Realty Corporation (Goldcrest) is the developer

of Cypress Gardens, a ten-storey building located at Herrera Street, Legaspi Village, MakatiCity. On April 26, 1977, Goldcrest executed a Master Deed and Declaration of Restrictions[3] which constituted Cypress Gardens into a condominium project and incorporated respondent Cypress Gardens Condominium Corporation (Cypress) to manage the condominium project and to hold title to all the common areas. Title to the land on which the condominium stands was transferred to Cypress under Transfer Certificate of Title No. S-67513. But Goldcrest retained ownership of the two-level penthouse unit on the ninth and tenth floors of the

condominium registered under Condominium Certificate of Title (CCT) No. S-1079 of the Register of Deeds ofMakati City. Goldcrest and its directors, officers, and assigns likewise controlled the management and administration of the Condominium until 1995.

Following the turnover of the administration and management of the Condominium to the board of directors of Cypress in 1995, it was discovered that certain common areas pertaining to Cypress were being occupied and encroached upon by Goldcrest. Thus, in 1998, Cypress filed a complaint with damages against Goldcrest before the Housing and Land Use Regulatory Board (HLURB), seeking to compel the latter to vacate the common areas it allegedly encroached on and to remove the structures it built thereon. Cypress sought to remove the door erected by Goldcrest along the stairway between the 8th and 9th floors, as well as the door built in front of the 9th floor elevator lobby, and the removal of the cyclone wire fence on the roof deck. Cypress likewise prayed that Goldcrest pay damages for its occupation of the said areas and for its refusal to remove the questioned structures.

For its part, Goldcrest averred that it was granted the exclusive use of the roof decks limited common area by Section 4(c)[4] of the condominiums Master Deed. It likewise argued that it constructed the contested doors for privacy and security purposes, and that, nonetheless, the common areas occupied by it are unusable and inaccessible to other condominium unit owners.

Upon the directive of HLURB Arbiter San Vicente, two ocular inspections[5] were conducted on the condominium project. During the first inspection, it was found that Goldcrest enclosed and used the common area fronting the two elevators on the ninth floor as a storage room. It was likewise discovered that Goldcrest constructed a permanent structure which encroached 68.01 square meters of the roof decks common area.[6]

During the second inspection, it was noted that Goldcrest failed to secure an alteration approval for the said permanent structure.

In his Decision[7] dated December 2, 1999, Arbiter San Vicente ruled in favor of Cypress. He required Goldcrest, among other things, to: (1) remove the questioned structures, including all other structures which inhibit the free ingress to and egress from the condominiums limited and unlimited common areas; (2) vacate the roof decks common areas and to pay actual damages for occupying the same; and (3) pay an administrative fine for constructing a second penthouse and for making an unauthorized alteration of the condominium plan.

On review, the HLURB Special Division modified the decision of Arbiter San Vicente. It deleted the award for actual damages after finding that the encroached areas were not actually measured and that there was no evidentiary basis for the rate of compensation fixed by Arbiter San Vicente. It likewise held that Cypress has no cause of action regarding the use of the roof decks limited common area because only Goldcrest has the right to use the same. The dispositive portion of the decision reads:

WHEREFORE, in view of the foregoing, the decision of the office [is] modified as follows:

1. Directing respondent to immediately remove any or all structures which obstruct the use of the stairway from the eighth to tenth floor, the passage and use of the lobbies at the ninth and tenth floors of the Cypress Gardens Condominium; and to remove any or all structures that impede the use of the unlimited common areas.

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2. Ordering the respondent to pay an administrative fine of P10,000.00 for its addition of a second penthouse and/or unauthorized alteration of the condominium plan.

All other claims are hereby dismissed. SO ORDERED.[8]

Aggrieved, Cypress appealed to the Office of the President. It questioned the deletion of the award for actual damages and argued that the HLURB Special Division in effect ruled that Goldcrest could erect structures on the roof decks limited common area and lease the same to third persons.

The Office of the President dismissed the appeal. It ruled that the deletion of the award for actual damages was proper because the exact area encroached by Goldcrest was not determined. It likewise held that, contrary to the submissions of Cypress, the assailed decision did not favor the building of structures on either the condominiums limited or unlimited common areas. The Office of the President stressed that the decision did not only order Goldcrest to remove the structures impeding the use of the unlimited common areas, but also fined it for making unauthorized alteration and construction of structures on the condominiums roof deck.[9]The dispositive portion of the decision reads:

WHEREFORE, premises considered, the appeal of Cypress Gardens Corporation is hereby DISMISSED and the decision of the Board a quo dated May 11, 2000 is herebyAFFIRMED.

SO ORDERED.[10] Cypress thereafter elevated the matter to the Court of Appeals, which partly

granted its appeal. The appellate court noted that the right of Goldcrest under Section 4(c) of the Master Deed for the exclusive use of the easement covering the portion of the roof deck appurtenant to the penthouse did not include the unrestricted right to build structures thereon or to lease such area to third persons. Thus the appellate court ordered the removal of the permanent structures constructed on the limited common area of the roof deck. The dispositive portion of the decision reads:

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the Office of the President dated June 2, 2003 is hereby AFFIRMED with modification. Respondent Goldcrest Realty Corporation is further directed to remove the permanent structures constructed on the limited common area of the roof deck.

SO ORDERED.[11] The parties separately moved for partial reconsideration but both motions were

denied. Hence this petition, raising the following issues:

I. [WHETHER OR NOT] THE APPELLATE COURT ERRED IN RULING THAT GOLDCREST BUILT AN OFFICE STRUCTURE ON A SUPPOSED ENCROACHED AREA IN THE OPEN SPACE OF THE ROOF DECK.

II. [WHETHER OR NOT] THE APPELLATE COURT ERRED IN RULING THAT PETITIONER IMPAIRED THE EASEMENT ON THE PORTION OF THE ROOF DECK DESIGNATED AS A LIMITED COMMON AREA.[12] Anent the first issue, Goldcrest contends that since the areas it allegedly

encroached upon were not actually measured during the previous ocular inspections, the finding of the Court of Appeals that it built an office structure on the roof decks limited

common area is erroneous and that its directive to remove the permanent structures[13] constructed on the limited common area of the roof deck is impossible to implement.

On the other hand, Cypress counters that the Court of Appeals finding is correct. It also argues that the absence of such measurement does not make the assailed directive impossible to implement because the roof decks limited common area is specifically identified by Section 4(c) of the Master Deed, which reads:

Section. 4. The Limited Common Areas. Certain parts of the common areas are to be set aside and reserved for the exclusive use of certain units and each unit shall have appurtenant thereto as exclusive easement for the use of such limited areas:

x x x x (c) Exclusive use of the portion of the roof deck (not shaded

red in sheet 10 of Annex B) by the Penthouse unit on the roof deck.[14] x x x x

We rule in favor of Cypress. At this stage of the proceedings, the failure to measure the supposed encroached areas is no longer relevant because the award for actual damages is no longer in issue. Moreover, a perusal of the records shows that the finding of the Court of Appeals that Goldcrest built an office structure on the roof decks limited common area is supported by substantial evidence and established facts, to wit: (1) the ocular inspection reports submitted by HLURB Inspector Edwin D. Aquino; (2) the fact that the second ocular inspection of the roof deck was intended to measure the actual area encroached upon by Goldcrest;[15] (3) the fact that Goldcrest had been fined for building a structure on the limited common area;[16] and (4) the fact that Goldcrest neither denied the structures existence nor its encroachment on the roof decks limited common area.

Likewise, there is no merit in Goldcrests submission that the failure to conduct an actual measurement on the roof decks encroached areas makes the assailed directive of the Court of Appeals impossible to implement. As aptly pointed out by Cypress, the limited common area of the roof deck is specifically identified by Section 4(c) of the Master Deed.

Anent the second issue, Goldcrest essentially contends that since the roof decks common limited area is for its exclusive use, building structures thereon and leasing the same to third persons do not impair the subject easement.

For its part, Cypress insists the said acts impair the subject easement because the same are already beyond the contemplation of the easement granted to Goldcrest.

The question of whether a certain act impairs an easement is undeniably one of fact, considering that its resolution requires us to determine the acts propriety in relation to the character and purpose of the subject easement.[17] In this case, we find no cogent reason to overturn the similar finding of the HLURB, the Office of the President and the Court of Appeals that Goldcrest has no right to erect an office structure on the limited common area despite its exclusive right to use the same. We note that not only did Goldcrests act impair the easement, it also illegally altered the condominium plan, in violation of Section 22[18] of Presidential Decree No. 957.[19]

The owner of the dominant estate cannot violate any of the following prescribed restrictions on its rights on the servient estate, to wit: (1) it can only exercise rights necessary for the use of the easement;[20] (2) it cannot use the easement except for the benefit of the immovable originally contemplated;[21] (3) it cannot exercise the easement in any other manner than that previously established;[22] (4) it cannot construct anything on it which is not

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necessary for the use and preservation of the easement;[23] (5) it cannot alter or make the easement more burdensome;[24] (6) it must notify the servient estate owner of its intention to make necessary works on the servient estate;[25] and (7) it should choose the most convenient time and manner to build said works so as to cause the least convenience to the owner of the servient estate.[26] Any violation of the above constitutes impairment of the easement.

Here, a careful scrutiny of Goldcrests acts shows that it breached a number of the aforementioned restrictions. First, it is obvious that the construction and the lease of the office structure were neither necessary for the use or preservation of the roof decks limited area. Second, the weight of the office structure increased the strain on the condominiums foundation and on the roof decks common limited area, making the easement more burdensome and adding unnecessary safety risk to all the condominium unit owners. Lastly, the construction of the said office structure clearly went beyond the intendment of the easement since it illegally altered the approved condominium project plan and violated Section 4[27] of the condominiums Declaration of Restrictions.[28]

WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated September 29, 2005 of the Court of Appeals in CA G.R. SP. No. 79924 is hereby AFFIRMED. Costs against the petitioner.

SO ORDERED. _________________________________________________________________________

Republic of the Philippines SUPREME COURT

Manila EN BANC

G.R. No. L-26053 February 21, 1967 CITY OF MANILA, plaintiff-appellee, vs. GERARDO GARCIA — CARMENCITA VILLANUEVA, MODESTA PARAYNO — NARCISO PARAYNO, JUAN ASPERAS, MARIA TABIA — SIMEON DILIMAN, AQUILINO BARRIOS — LEONORA RUIZ, LAUREANO DIZO, BERNABE AYUDA — LEOGARDA DE LOS SANTOS, ISABELO OBAOB — ANDREA RIPARIP, JOSE BARRIENTOS, URBANO RAMOS,1 ELENA RAMOS, ESTEFANIA NEPACINA, MODESTA SANCHEZ, MARCIAL LAZARO, MARCIANA ALANO, HONORIO BERIÑO — SEDORA ORAYLE, GLORIA VELASCO, WILARICO RICAMATA, BENEDICTO DIAZ, ANA DEQUIZ — (MRS.) ALUNAN, LORENZO CARANDANG, JUAN PECAYO, FELICIDAD MIRANDA — EMIGDIO EGIPTO, defendants-appellants. Mauricio Z. Alunan for defendants-appellants. City Fiscal's Office for plaintiff-appellee. SANCHEZ, J.: Plaintiff City of Manila is owner of parcels of land, forming one compact area, bordering Kansas, Vermont and Singalong streets in Malate, Manila, and covered by Torrens Titles Nos. 49763, 37082 and 37558. Shortly after liberation from 1945 to 1947, defendants entered upon these premises without plaintiff's knowledge and consent. They built houses of second-class materials, again without plaintiff's knowledge and consent, and without the necessary building permits from the city. There they lived thru the years to the present. In November, 1947, the presence of defendants having previously been discovered, defendants Felicidad Miranda (Emigdio Egipto), Modesta C. Parayno, Benedicto Diaz,

Laureano Dizo, Jose Barrientos, Elena Ramos, Estefania Nepacina, Modesta Sanchez, Honorio Beriño, Gloria Velasco, Ana Dequis Alunan and Benedicto Ofiaza (predecessor of defendant Carandang) were given by Mayor Valeriano E. Fugoso written permits — each labeled "lease contract" — to occupy specific areas in the property upon conditions therein set forth. Defendants Isabelo Obaob and Gerardo Garcia (in the name of Marta A. Villanueva) received their permits from Mayor Manuel de la Fuente on January 29 and March 18, respectively, both of 1948. The rest of the 23 defendants exhibited none. For their occupancy, defendants were charged nominal rentals.1äwphï1.ñët Following are the rentals due as of February, 1962:

NAME Area

in sq.m. Monthly

Rental

Amt. due from date of delinquency

to Feb. 1962

1. Gerardo Garcia 66.00 P7.92 P1,628.97

2. Modesta C. Parayno 87.75 10.53 379.08

3. Juan Asperas 39.00 4.68 9.36

4. Maria Tabia 35.20 5.76 570.24

5. Aquilino Barrios (Leonora Ruiz)

54.00 4.32 99.36

6. Laureano Dizo 35.00 2.80 22.40

7. Bernabe Ayuda 39.60 3.17 323.34

8. Isabelo Obaob 75.52 9.06 208.38

9. Jose Barrientos 39.53 4.74 744.18

10. Cecilia Manzano in lieu of Urbano Ramos (deceased) 46.65 5.60

Paid up to Feb. 1962.

11. Elena Ramos 34.80 2.78 186.26

12. Estefania Nepacina 41.80 3.34 504.34

13. Modesta Sanchez 33.48 2.68 444.88

14. Marcial Lazaro 22.40 1.79 688.32

15. Marciana Alano 25.80 2.06 255.44

16. Honorio Beriño 24.00 1.92 188.16

17. Gloria Velasco 32.40 2.59 56.98

18. Wilarico Ricamata 45.83 3.67 739.68

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19. Benedicto Diaz 40.20 4.82 Paid up to

March 1962.

20. Ana Dequis Alunan 64.26 7.71 30.84

21. Lorenzo Carandang 45.03 5.40 437.40

22. Juan N. Pecayo 25.52 3.06 30.60

23. Felicidad Miranda 48.02 5.76 132.48

P7,580.69

Epifanio de los Santos Elementary School is close, though not contiguous, to the property. Came the need for this school's expansion; it became pressing. On September 14, 1961, plaintiff's City Engineer, pursuant to the Mayor's directive to clear squatters' houses on city property, gave each of defendants thirty (30) days to vacate and remove his construction or improvement on the premises. This was followed by the City Treasurer's demand on each defendant, made in February and March, 1962, for the payment of the amount due by reason of the occupancy and to vacate in fifteen (15) days. Defendants refused. Hence, this suit to recover possession.2 The judgment below directed defendants to vacate the premises; to pay the amounts heretofore indicated opposite their respective names; and to pay their monthly rentals from March, 1962, until they vacate the said premises, and the costs. Defendants appealed.

1. We are called upon to rule on the forefront question of whether the trial court properly found that the city needs the premises for school purposes. The city's evidence on this point is Exhibit E, the certification of the Chairman, Committee on Appropriations of the Municipal Board. That document recites that the amount of P100,000.00 had been set aside in Ordinance 4566, the 1962-1963 Manila City Budget, for the construction of an additional building of the Epifanio de los Santos Elementary School. It is indeed correct to say that the court below, at the hearing, ruled out the admissibility of said document. But then, in the decision under review, the trial judge obviously revised his views. He there declared that there was need for defendants to vacate the premises for school expansion; he cited the very document, Exhibit E, aforesaid. It is beyond debate that a court of justice may alter its ruling while the case is within its power, to make it conformable to law and justice.3 Such was done here. Defendants' remedy was to bring to the attention of the court its contradictory stance. Not having done so, this Court will not reopen the case solely for this purpose.4 Anyway, elimination of the certification, Exhibit E, as evidence, would not profit defendants. For, in reversing his stand, the trial judge could well have taken — because the was duty bound to take — judicial notice5 of Ordinance 4566. The reason being that the city charter of Manila requires all courts sitting therein to take judicial notice of all ordinances passed by the municipal board of Manila.6 And, Ordinance 4566 itself confirms the certification aforesaid that an

appropriation of P100,000.00 was set aside for the "construction of additional building" of the Epifanio de los Santos Elementary School. Furthermore, defendants' position is vulnerable to assault from a third direction. Defendants have absolutely no right to remain in the premises. The excuse that they have permits from the mayor is at best flimsy. The permits to occupy are recoverable on thirty days' notice. They have been asked to leave; they refused to heed. It is in this factual background that we say that the city's need for the premises is unimportant. The city's right to throw defendants out of the area cannot be gainsaid. The city's dominical right to possession is paramount. If error there was in the finding that the city needs the land, such error is harmless and will not justify reversal of the judgment below.7 2. But defendants insist that they have acquired the legal status of tenants. They are wrong. They entered the land, built houses of second-class materials thereon without the knowledge and consent of the city. Their homes were erected without city permits. These constructions are illegal. In a language familiar to all, defendants are squatters: Since the last global war, squatting on another's property in this country has become a widespread vice. It was and is a blight. Squatters' areas pose problems of health, sanitation. They are breeding places for crime. They constitute proof that respect for the law and the rights of others, even those of the government, are being flouted. Knowingly, squatters have embarked on the pernicious act of occupying property whenever and wherever convenient to their interests — without as much as leave, and even against the will, of the owner. They are emboldened seemingly because of their belief that they could violate the law with impunity. The pugnaciousness of some of them has tied up the hands of legitimate owners. The latter are thus prevented from recovering possession by peaceful means. Government lands have not been spared by them. They know, of course, that intrusion into property, government or private, is wrong. But, then, the mills of justice grind slow, mainly because of lawyers who, by means, fair or foul, are quite often successful in procuring delay of the day of reckoning. Rampancy of forcible entry into government lands particularly, is abetted by the apathy of some public officials to enforce the government's rights. Obstinacy of these squatters is difficult to explain unless it is spawned by official tolerance, if not outright encouragement or protection. Said squatters have become insensible to the difference between right and wrong. To them, violation of law means nothing. With the result that squatting still exists, much to the detriment of public interest. It is high time that, in this aspect, sanity and the rule of law be restored. It is in this environment that we look into the validity of the permits granted defendants herein. These permits, erroneously labeled "lease" contracts, were issued by the mayors in 1947 and 1948 when the effects of the war had simmered down and when these defendants could have very well adjusted themselves. Two decades have now elapsed since the unlawful entry. Defendants could have, if they wanted to, located permanent premises for their abode. And yet, usurpers that they are, they preferred to remain on city property.

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Defendants' entry as aforesaid was illegal. Their constructions are as illegal, without permits.8 The city charter enjoins the mayor to "safeguard all the lands" of the City of Manila.9 Surely enough, the permits granted did not "safeguard" the city's land in question. It is our considered view that the Mayor of the City of Manila cannot legalize forcible entry into public property by the simple expedient of giving permits, or, for that matter, executing leases. Squatting is unlawful and no amount of acquiescence on the part of the city officials will elevate it into a lawful act. In principle, a compound of illegal entry and official permit to stay is obnoxious to our concept of proper official norm of conduct. Because, such permit does not serve social justice; it fosters moral decadence. It does not promote public welfare; it abets disrespect for the law. It has its roots in vice; so it is an infected bargain. Official approval of squatting should not, therefore, be permitted to obtain in this country where there is an orderly form of government. We, accordingly, rule that the Manila mayors did not have authority to give permits, written or oral, to defendants, and that the permits herein granted are null and void. 3. Let us look into the houses and constructions planted by defendants on the premises. They clearly hinder and impair the use of that property for school purposes. The courts may well take judicial notice of the fact that housing school children in the elementary grades has been and still is a perennial problem in the city. The selfish interests of defendants must have to yield to the general good. The public purpose of constructing the school building annex is paramount.10 In the situation thus obtaining, the houses and constructions aforesaid constitute public nuisance per se. And this, for the reason that they hinder and impair the use of the property for a badly needed school building, to the prejudice of the education of the youth of the land.11 They shackle the hands of the government and thus obstruct performance of its constitutionally ordained obligation to establish and maintain a complete and adequate system of public education, and more, to "provide at least free public primary instruction".12 Reason dictates that no further delay should be countenanced. The public nuisance could well have been summarily abated by the city authorities themselves, even without the aid of the courts.13 4. Defendants challenge the jurisdiction of the Court of First Instance of Manila. They say that the case should have been started in the municipal court. They prop up their position by the averment that notice for them to vacate was only served in September, 1961, and suit was started in July, 1962. Their legal ground is Section 1, Rule 70 of the Rules of Court. We have reached the conclusion that their forcible entry dates back to the period from 1945 to 1947. That entry was not legalized by the permits. Their possession continued to remain illegal from incipiency. Suit was filed long after the one-year limitation set forth in Section 1 of Rule 70. And the Manila Court of First Instance has jurisdiction.14

Upon the premises, we vote to affirm the judgment under review. Costs against defendants-appellants. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Castro, JJ., concur.

Republic of the Philippines SUPREME COURT

Manila FIRST DIVISION

G.R. No. L-33213 June 29, 1979 ARTEMIO C. REYES and HILARION C. REYES, petitioners, vs. HON. ANDRES STA. MARIA, Presiding Judge, Court of First Instance of Bulacan, Branch II, HILARIA SANTOS VDA. DE LOPEZ and PILAR SANTOS, respondents. E. M. Reyes for petitioner. Ruben T. Reyes for respondents. TEEHANKEE, J.: The Court sets aside the lower court's Order which dismissed petitioners-plaintiffs' complaint filed before it for recovery of the property in the possession of respondents-defendants and for declaration of ownership thereof as against said respondents' contrary claim of ownership on the ground of alleged lack of jurisdiction. Such action was clearly an accion publiciana for the recovery of the right to possess (possesion de jure) (if not an accion reivindicatoria) falling within the lower court's jurisdiction and not a mere action for detainer to recover physical possession (possession de facto) which would fall within the jurisdiction of the municipal court (if filed within one year after unlawful deprivation or withholding of possession) as erroneously held by the lower court in its dismissal order. Petitioners as plaintiffs in the Court of First Instance of Bulacan had filed on April 1, 1968 an action which they termed as one to quiet title to a certain residential lot in Barrio San Sebastian, Hagonoy, Bulacan with an area of 368.5 square meters and to recover the possession thereof from respondents as defendants, 1 wherein they made the following averments:

2. That plaintiffs are owners pro-indiviso of a certain residential lot situated in the Barrio of San Sebastian, Hagonoy, Bulacan, and more particularly bounded and described as follows: (Description omitted) 3. That through the tolerance and goodwill of plaintiffs, thru the intervention and entreaty of one Maximo Santos, father of the defendants, the latter used and occupied said land free of charge, under the following conditions, to wit: (a) that instead of paying rentals on the premises defendants undertook to pay the corresponding real estate taxes on the land; and (b) that said defendants will leave and vacate the premises anytime the plaintiffs so demand; 4. That sometime in February, 1968, plaintiffs verbally notified defendants that said plaintiffs were in need of the land, hence, said defendants should vacate and leave the same, but said defendants unreasonably refused at the same time claiming ownership of the property, and alleging further that they bought the same from a certain Pablo Aguinaldo;

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5. That in order to quiet the title of ownership over this land, the plaintiffs have been compelled to institute the present action and, as a consequence, she suffered damages in the sum of One Thousand Pesos (P1,000.00), Philippine Currency, as attorney's fees; 6. That the defendants thru their acts stated above have therefore maliciously and unlawfully detained the land of plaintiffs since February, 1968; and 7. That for the unlawful occupation of the land, an estimate of Fifty (P50.00) Pesos monthly rental is hereby claimed as reasonable damages suffered by plaintiffs since February, 1968. 2

Petitioners accordingly prayed in their complaint for judgment (a) "declaring [them] to be the owners of the property described ... "; (b) "ordering the defendants to vacate the premises and return the possession of the same to plaintiffs;" (c) "ordering the defendants to pay plaintiffs, jointly and severally, the sum of Fifty Pesos (P50.00), Philippine Currency, rental or damages every month effective the first day of February, 1968, until the possession of the premises is finally restored in favor of plaintiffs;" and further ordering defendants to pay them (d) P1,000.00 attorney's fees and (e) costs of suit. Upon respondents' motion to dismiss the complaint on the ground that "the court has no jurisdiction over the nature of the action or suit" and that the action embodied in petitioners' complaint "is actually one for ejectment or unlawful detainer. Consequently, the case falls within the original exclusive jurisdiction of the inferior court or municipal court" as against petitioners? opposition that "plaintiffs' complaint is principally one to quiet title to property, the question of possession being merely reduced to an incidental issue," the lower court issued its appealed order of August 15, 1968, finding the motion to dismiss to be "well founded" and dismissing the case "for lack of jurisdiction".The lower court reasoned that:

A perusal of the actual averments of facts in the complaint do not reveal any allegation of ultimate facts which could sufficiently support an action to quiet title. Upon the other hand, it is plain that the allegations of facts are only constitutive of an action for unlawful detainer. The allegation in paragraph 5 of said complaint 'that in order to quiet the title of ownership over this land, the plaintiffs have been compelled to institute the present action ... is not sufficient by itself to consider this case as an action for quieting title under Article 476 of the New Civil Code. Neither does the prayer of said complaint asking that the plaintiffs be declared the owners of the property in question constitute a cause of action.

Hence, the present petition for review and setting aside of the dismissal order, which the Court finds to be meritorious. The lower court was clearly in error in issuing its dismissal order on its mistaken notion "that the allegations of facts are only constitutive of an action for unlawful detainer" since the complaint shows on its face that respondents' refusal to deliver the possession of the property was due to their adverse claim of ownership of the same property and their counter-allegation that they had bought the same from a certain Pablo Aguinaldo, and, therefore, petitioners' action was clearly one for recovery of their right to possess the property (possessionde jure) as well as to be declared the owners thereof as against the contrary claim of respondents. As restated by the late Chief Justice Moran: "There are three kinds of actions for the recovery of possession of real pro. property, namely, (1) the summary action for forcible

entry or detainer (denominated accion interdictalunder the former law of procedure, Ley de Enjuiciamiento Civil) which seeks the recovery of physical possession only and is brought within one year in the justice of the peace court; (2) the accion publiciana which is for the recovery of the right to possess and is a plenary action in an ordinary civil proceeding in a Court of First Instance; and (3) accion de reivindicacion which seeks the recovery of ownership (which of course includes the jus utendi and the jus fruendi also brought in the Court of First Instance. 3 It has been said that "(T)he only issue in forcible entry and detainer cases is the physical possession of real property possession de facto and not possession de jure If plaintiff can prove a prior possession in himself, he may recover such possession even from the owner himself. Whatever may be the character of his prior possession, if he has in his favor priority of time, he has the security that entitles him to stay on the property until he is lawfully ejected by a person having a better right by either accion publiciana or accion reivindicatoria. 4Petitioners' action was not merely for recovery of possession de facto. Their action was clearly one of accion publiciana for recovery of possession de jure if not one of accion reivindicatoria for declaration of their ownership of the land. As reaffirmed by the Court in the analogous case of Aguilon vs. Bohol 5 petitioners action is at least "an accion publiciana, which action 'correspondent al que tiene derecho a la possession, contra el que posee sin derecho o' con titulo menos firme para que se ponga la cosa en poder del actor con todas las accesiones, frutos ets' (I Enciclopedia Juridica Espanola 450)," and such accion publiciana or the plenary action in an ordinary civil proceeding to determine the better and legal right to possess (independently of title) clearly falls within the jurisdiction of the Courts of First Instance and not of the Municipal Courts. The Court further underscored therein "that an action for recovery of possession is an urgent matter which must be decided promptly to forestall breaches of peace, violence or even loss of life and, therefore, the court should act swiftly and expeditiously in cases of that nature. Petitioners, therefore, correctly filed their accion publiciana before the lower court as against respondents! claim that they should instead have filed a summary action for detainer in the municipal court. Having been fully apprised of respondents' refusal to surrender possession and their contrary claim of ownership of the same property, petitioners properly filed their accion publiciana with the Court of First Instance to avoid getting enmeshed in what would certainly have been another jurisdictional dispute, since they could reasonably foresee that if indeed they had filed a summary action for illegal detainer instead in the municipal court, respondents would then have contended, contrary to their present claim, that the municipal court is without jurisdiction over the detainer case by virtue of their contrary claim of ownership of the property. 6 ACCORDINGLY, judgment is hereby rendered, setting aside the lower court's dismissal order of August 15, 1968 and the case is remanded to respondent Court of First Instance with instructions to expedite the proceedings and trial and determination thereof on the merits. With costs against respondents. This decision is immediately executory. Makasiar, Fernandez, Guerrero, De Castro and Melencio-Herrera, JJ., concur.

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Republic of the Philippines SUPREME COURT

Manila EN BANC

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

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"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 term poles, 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; x x x x x x x x x

(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;

x x x x x x x x x (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;

x x x x x x x x x 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.

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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. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and Regala, JJ., concur. Makalintal, J., concurs in the result. Dizon, J., took no part.