G.R. No.

L-38510

March 25, 1975

SPOUSES DOLORES MEDINA and MOISES BERNAL, vs. THE

HONORABLE NELLY L. ROMERO VALDELLON OF THE COURT OF
FIRST INSTANCE OF MALOLOS, BULACAN, SPOUSES CIPRIANO
VILLANUEVA and RUFINA PANGANIBAN,
Petition to review by certiorari the order dated October 23, 1973 of the Hon. Nelly L.
Romero Valdellon, Judge of the Court of First Instance of Bulacan, Branch I, which
dismissed with costs against the plaintiffs its Civil Case No. 4353-M, entitled
"Spouses Dolores Medina and Moises Bernal, plaintiffs, vs. Spouses Cipriano
Villanueva and Rufina Panganiban, defendants."
The complaint in Civil Case No. 4353-M of the Court of First Instance of Bulacan
alleges that plaintiffs (petitioners in this case) are the owners of a parcel of land
situated at Bo. San Pascual, Hagonoy, Bulacan, with an assessed value of P800.00
which was purchased sometime in April 1967 from Margarita Punzalan, Rosal
Punzalan, Quaquin Gaddi and Paulina Gaddi; "that as defendants are family friends
of the plaintiffs, defendants were allowed to remain in the premises and to construct
their residential house, subject to the condition that defendants will return unto the
plaintiffs the premises upon demand"; "that much to the surprise of the plaintiffsspouses, on demand, defendants-spouses refused and remain obstinate in their refusal
to surrender the property in question"; that because of said defendants' unjustified
acts plaintiffs had to institute action and incur damage of P500 as expenses for court
litigation; that "the reasonable value of the use of the premises is P100 a month,
taking into consideration its commercial value"; and prayed that the defendants be
ordered "to vacate the premises and surrender unto plaintiffs" the said property and
defendants be ordered to pay plaintiffs "the amount of P500 as incidental expenses
and the amount of P100 a month from the filing of this action to the time they
surrender its possession to the plaintiffs".

A subsequent motion to amend and admit amended complaint was filed by plaintiffs,
the amendment consisting of:
4.
That as defendants-spouses are family friends of the plaintiffs, they
(defendants) were allowed to build a small house in the premises in April 1967,
subject to the condition that they will return to the plaintiffs the premises in 1969;

5.
That much to the surprise of the plaintiffs-spouses on demand, defendantsspouses refused and remains obstinate in their refusal to surrender the property in
question claiming that they are the owners thereof;

A motion to dismiss the complaint and an opposition to the motion to amend and
admit the amended complaint filed by the defendants (respondents in this case)
preceded the respondent court's questioned order of October 30, 1973, that dismissed
the complaint on the ground of "there being another case pending between the same
parties over the same property, namely Land Registration Case No. 2814 of this
Court." Petitioners' motion for reconsideration was denied by respondent court in its
order dated February 8, 1974.
The only legal issues raised are:
Whether or not the pendency of a land registration case will bar the institution of an
action for the recovery of possession; and in the negative, whether or not the
respondent judge can be countenanced in her act of dismissing the latter case in view
of the pendency of the land registration case.

When this Court (First Division) on May 10, 1974, resolved "without giving due
course to the petition, to require the respondents to comment thereon, within 10 days
from notice, and both parties to state whether or not there is any valid reason why
Civil Case No. 4353-M of the respondent court should not be tried and decided
jointly with Land Registration Case No. 2814 of Branch VI of said court, considering
that the claim of the plaintiffs in Civil Case No. 4353-M (herein petitioners) for
damages due to alleged illegal occupancy of the land involved by the defendants
(respondents herein) may not be properly passed upon and adjudicated in the land
registration case, where only the question of title to the property sought to be
registered will be decided between the applicants and oppositors," counsel for
respondents, Rosendo G. Tansinsin Jr., included in his Manifestation and/or
Comment, dated May 20, 1974, the following statement: "nevertheless, from the
reading of the resolution aforequoted, one will certainly have no doubt that there is
no need for the respondents to make any comment on the matter as the same will be
an exercise of futility since this Honorable Court has not only given due course to the
petition, but has actually decided the same, ... " By reason of the disrespectful tone of
the aforesaid statement, said counsel was required by this Court's (First Division)
resolution of May 29, 1974, to show cause why he should not be dealt with for
contempt of court.

The petitioners by way of compliance with this Court's aforementioned resolution of

May 10, 1974, requested that the order of October 30, 1973 of the respondent court
be set aside and that the Court of First instance of Bulacan (Branch I and VI) be
ordered to consolidate, try and decide Civil Case No. 4353-M of Branch I and L.R.C.
Case No. 2814 of Branch VI.
The explanation submitted by respondents' counsel, although it contained an
apology, was not considered satisfactory by this Court. Hence in its resolution of July
10, 1974, Atty. Rosendo G. Tansinsin Jr. was declared in contempt of court and
suspended from the practice of law for a period of three months. His subsequent
motion for reconsideration and personal plea for leniency, sympathy and
understanding, coupled with his repeated apology and regret and the fact that his act
appeared to be his first offense of that nature, made this Court reconsider the
suspension from the practice of law and, instead, ordered him to pay a fine of
P300.00 which he has paid.
On the principal issues raised in this case, We have no doubt that the nature of the
action embodied in the complaint in Civil Case No. 4353-M is one for recovery of
possession brought before the Court of First Instance by the alleged owners of a
piece of land against the defendants who were supposed to have unlawfully
continued in possession since 1969 when they were supposed to return it to
plaintiffs, plus damages. That the action is not for unlawful detainer contemplated in
Rule 70 of the Rules of Court, which falls under the exclusive original jurisdiction of
the city courts or municipal courts, is very apparent because an action of unlawful
detainer is defined as "withholding by a person from another for not more than one
year, of the possession of a land or building to which the latter is entitled after the
expiration or termination of the former's right to hold possession by virtue of a
contract express or implied". (Tenorio vs. Gomba 81 Phil. 54; Dikit vs. Ycasiano 89
Phil. 44) On the basis of the allegations of the complaint in Civil case No. 4363-M,
the defendants withheld possession from the plaintiffs since 1969 or very much more
than the one year period contemplated in unlawful detainer cases at the time the
complaint was filed in July of 1973. Not all cases of dispossession are covered by
Rule 70 of the Rules of Court (Forcible Entry and Unlawful Detainer cases) because
whenever the owner of property is dispossessed by any other means than those
mentioned in the aforementioned rule, he may initiate and maintain a plenary action
to recover possession in the Court of First Instance, and it is not necessary for him to
wait until the expiration of one year before commencing such action. (Gumiran vs.
Gumiran, 21 Phil. 174) It may also be brought after the expiration of said period of
one year, if no action had been initiated for forcible entry and detainer during that
time in the inferior court. This plenary action to recover possession (accion
publiciana) must be instituted in the Court of First Instance as was done in this case.

The respondent court's action in dismissing Civil Case No. 4353-M on the ground
that there is another pending case (L.R.C. No. 2814 of Branch VI of the same court)
between the same parties over the same property is to Our mind rather precipitate,
for We find sufficient merit in petitioners' contention that the rights sought to be
enforced and the reliefs prayed for in Civil Case 4353-M (recovery of possession and
damages) are entirely separate and distinct from that sought in L.R.C. Case No. 2814
(where petitioners as oppositors are seeking the exclusion of their land from that of
private respondents' claim of title over a bigger tract of land). It is likewise true that
the Court of First Instance of Bulacan (Branch VI) acting as a land registration court
has a limited and special jurisdiction confined to the determination of the legality and
propriety of the issue of title over the land subject matter of registration, and it has no
power to entertain issues of rightful possession and claim for damages emanating
from ownership. It is a fundamental principle in the law governing unlawful detainer
cases (including recovery of possession cases) that a mere plea of title or ownership
over the disputed land by the defendant cannot be used as a sound legal basis for
dismissing an action for recovery of possession because an action for recovery of
possession can be maintained even against the very owner of the property. (Prado vs.
Calpo et al, G.R. No. L-19379, April 30, 1964) In the case at bar, there is not even a
plea of title on the part of private respondents over the disputed property but a mere
allegation that there is another action (L.R.C. No. 2814 pending in Branch VI of that
court) for registration of title to that land the possession of which is being recovered
by petitioners in Civil Case No. 4353-M. An action for recovery of possession is
totally distinct and different from an action for recovery of title or ownership. In fact,
a judgment rendered in a case of recovery of possession is conclusive only on the
question of possession and not that of ownership. It does not in any way bind the title
or affect the ownership of the land or building. (Sec. 7, Rule 70, Revised Rules of
Court)
The inevitable conclusion from the foregoing is that Civil Case No. 4353-M (for
recovery of possession and damages) was arbitrarily and erroneously dismissed on
the basis of the alleged pendency of another action (L.R.C. No. 2814 pending in
Branch VI of the same court), because while identity of parties may be established in
both cases, there is no identity of cause of action or of rights asserted and relief
prayed for, so that judgment which may be rendered in one case would not
necessarily result in res judicata for the other case.
We cannot see any sufficient reason for any of the parties in this case to object to the
consolidation of the trial of both cases (L.R.C. Case No. 2814 and Civil Case No.
4353-M), since the evidence that may be presented by the parties involving

possession and ownership of the disputed parcel of land may facilitate an expeditious
termination of both cases. While the issues raised in both cases are not exactly
identical, the evidence involving the issues of possession and ownership over the
same land must be related and its presentation before one court of justice would
redound to a speedy disposition of this litigation.
WHEREFORE, the respondent court's orders of October 30, 1973, and February 8,
1974, are hereby declared null and void and set aside; the complaint and amended
complaint in Civil Case No. 4353-M revived; both the respondent Judge and the
Presiding Judge, Branch VI, of the Court of First Instance of Bulacan, being directed
to consolidate the trial of L.R.C. No. 2814 and Civil Case No. 4353-M in one branch
of that court. Costs against private respondents.
SO ORDERED

3.
That to the best of their knowledge and belief, there is no mortgage or
encumbrance of any kind whatsoever affecting said parcels of land nor is there any
person having any estate or interest thereon, legal or equitable in possession,
remainder, reversion or expectancy;
4.
That the applicants have acquired said lands by purchase from the spouses
VICTORIANO CERVO and IGNACIA GUILLERMO as evidenced by a Deed of
Sale executed by the latter in favor of the former, before Notary Public for the City
of Manila, Mr. Manuel M. Parades on the 3rd day of November, 1955, per Doc. No.
352, Page No. 42, Book No. II, Series of 1955;
5.

That the said parcels of land are not occupied by anybody;

xxx

xxx

xxx

8.
That the said lots included in this application adjoins the National Road and
the applicants do not claim any part of the said National Road;
G.R. No. L-30272

February 28, 1985

RIZAL CEMENT CO., INC., vs. CONSUELO C. VILLAREAL, ISABEL C.

VILLAREAL, FLAVIANO C. VILLAREAL, ALFREDO V. GOMEZ,
AURORA V. GOMEZ and the COURT OF APPEALS,
Petition for Review on certiorari of the decision of the defunct Court of Appeals in
CA- G.R. No. 36700 which REVERSED the decision of the then Court of First
Instance of Rizal in Land Registration Case No. 1204, LRC Rec. No. N-10480.
Sometime in December 1955, private respondents filed with the then Court of First
Instance of Rizal in Pasig, an Application for Registration, alleging, inter alia:

1.
That the said land consists of two agricultural lots bounded and described as
shown on plan Psd-147662 as Lots Nos. 1 and 2 and technical description attached
hereto and made integral part hereof;
2.
That Lots Nos. 1 and 2 of plan Psd-147662 at the last assessment for
taxation were assessed at a total amount of ONE THOUSAND FIVE HUNDRED
(P1, 500.00) PESOS per Tax Declaration Nos. 11994 and 11995 in the values of
ONE THOUSAND ONE HUNDRED NINETY (P1,190.00) PESOS and THREE
HUNDRED TEN (P 310.00) PESOS, respectively, in the Land Records of Rizal
Province;

xxx

xxx

xxx

Petitioner then prayed that the aforesaid parcels be brought under the operation of the
Land Registration Act, and to have the title thereto confirmed and registered in their
names.
Petitioner filed an OPPOSITION to said application alleging
That the Rizal Cement Co., Inc. is the owner of unregistered three (3) parcels of land
known as Lots Nos. 1, 2 and 4, located in Darangan, Binangonan Rizal, the full
technical description and bearing distance of which can be found in Plan Psu-2260
approved by the Director of lands in 1912;

That the land which is the subject of this petition for registration, full technical
description of which are found in Psu-147662 approved by the Director of Lands in
October, 1955, covers portions of Lots 1 and 4 of Psu-2260;

That Lot No. 1 under Psu-2260 contains an area of 122,982 square meters a portion
of which is designated as Lot No. 2 of Psu-147662 Containing an area of 6,133
square meters;

That Lot No. 4 of Psu-2260 contains an area of 27,530 square meters, a portion of
which is designated as Lot No. I of Psu-147662 containing an area of 19,916 square
meters; and
That the oppositor Rizal Cement Co., Inc. is in possession of said land and has been
religiously paying the real estate tax in the Municipality of Binangonan, Rizal from
the time it had acquired said property from the previous owner (Old Tax Declaration
No. 30662) now 10570.

Petitioner then prayed that the said petition be dismissed.

Private respondents, in REPLY to said OPPOSITION, countered that the whole three
(3) parcels of land known as Lots Nos. 1, 2 and 4 of Plan Psu-2260 do not belong to
the petitioner; that a portion of Lot No. 1 consisting of 6,133 square meters and
portion of Lot No. 4 consisting of 19,916 square meters belong to them; that they and
their predecessors-in-interest have been in continuous, adverse and open possession
of said portion since time immemorial; and that they have been religiously paying
the real estate taxes thereon.

After trial, judgment was rendered by the Court of First Instance on April 28, 1965
which was amended on May 21, 1965, denying the application for registration and
ordering the issuance of a decree of registration after finality of said decision in the
name of Rizal Cement Company.
Respondents appealed to the then Court of Appeals which reversed and set aside the
lower court's decision. Petitioner moved for reconsideration but the appellate court
denied the motion in its Resolution of February 11, 1969.
Hence, the present petition alleging that the Court of Appeals, in reversing the
decision of the trial court, has arrived at grossly mistaken, absurd and impossible
conclusions of law and has decided the appeal in a manner totally at war with and
entirely contrary to law and the applicable decisions of this Court. In fine, petitioner
submits the following errors allegedly committed by the appellate court for Our
review and consideration:
a)
Reliance on the Deed of Sale purporting to have been executed by Maria
Certeza in 1924 in favor of Apolonia Francisco, the due execution of which have
been duly established, and made capital of this deed of sale as having ejected the

transfer of rights over the lots in question, successively from the original vendor
down to herein private respondents;
b)
Giving much weight to private respondents evidence to the effect that
former Justice Mariano de Joya and one Gonzalo Certeza were former owners of the
property in question, and that they are the predecessors-in-interest of the applicantsrespondents. However, the Court of Appeals failed to consider the fact that these
persons who were then available and were the best witnesses to substantiate
applicants' claim, were not presented as witnesses thereby giving rise to the legal
presumption that their testimonies would have been adverse had they testified in this
case;
c)
Failure of the Court of Appeals to consider the fact that the two (2) lots
sought to be registered by private respondents were not listed in the inventory of
Maria Certeza's properties submitted to the court;
d)
Failure of the Court of Appeals to rule that private respondents were not
able to prove that the properties covered by Exhibit "H" were the same properties
covered in Exhibit "I". The Court of Appeals has acted contrary to the doctrine laid
down in land registration cases to the effect that an applicant must prove not only the
genuineness of his title but also the Identity of the land applied for;
e)
Stressing that the evidence of petitioner (then oppositor) was weak to
substantiate its claim but failed to apply the doctrine that the burden is upon the
applicant for registration of land to prove satisfactorily that he is the owner and it is
not enough to prove that the property does not belong to the opponent. The evidence
must be absolute and not merely preponderant; and
f)
In stating that applicants by themselves and their predecessors-in-interest
have an unbroken adverse possession under claim of ownership for over thirty years
thus failing to consider that petitioner has also been in possession of the properties
since 1911, while several portions thereof were only under lease to several persons.
Based on respondents-applicants' testimonial and documentary evidence, it appears
that the property applied for, designated as Lots Nos. 1 and 2 of Plan Psu-147662,
have a total area of 26,015 square meters; that these lots originally belonged to one
Maria Certeza; that upon her death, the property was involved in a litigation between
her grandchildren and Gonzalo Certeza and that the lots were given by the latter to
former Justice de Joya as the latter's attorney's fees; that the lots were then sold by de
Joya to Filomeno Sta. Ana who, in turn sold the same to spouses Victoriano Cervo
and Ignacia Guillermo in 1939; that sometime in November 1955, the said spouses
sold the said lots to the herein applicants as shown by a duly notarized deed of sale; 1

that the spouses Cervo declared the property for taxation purposes in the name of the
wife, Ignacia Guillermo, and paid for the realty taxes due thereon; that prior to the
sale, the spouses Cervo had the two parcels surveyed first in 1950 and then in 1955
Upon the other hand, oppositor, (now petitioner) Rizal Cement Company, claims to
be the owner of the subject lots, having bought the same from Maria Certeza, and to
have been in continuous and adverse possession of the property since 1911, To
substantiate its claim, petitioner submitted documentary evidence, the most
important of which are the following
(a)
Plan Psu-2260 which covers the survey of a big tract of land for the
company designated as Lots 1, 2 and 4 of the Plan with a total area of 210,644 square
meters. The survey was made in 1911 and the plan was approved in 1912;
(b)
A sketch plan of the geographical position of the real pro- parties of
Madrigal and Company;
(c)
Tax Declaration No. 1066 secured in 1949 from the Rizal Provincial
Assessor which is a consolidation of all lands of the Rizal Cement Company located
in Darangan with a total area of 2,496,712 square meters and which includes the land
in litigation;
(d)

Tax Declaration No. 10570 which cancels Tax Declaration No. 1066; and

(e)
Real estate tax receipts issued for Madrigal and Company, covering among
others the land applied for.

As to who had been in actual possession of the land in question, the Court of Appeals
gave credence to the testimony of the witnesses for respondents applicants, namely:
(a)
Santiago Picadizo one of the tenants of the land from the time it was
owned by Maria Certeza up to the present. He stated that he knew for a fact that the
lots in question were given to Justice Mariano de Joya as attorney's fees, who in turn
sold the same to Ignacia Guillermo; that from the tune he started working as tenant,
he successively gave the share of the harvests to Maria Certeza; and that during all
the time that the parcels of land were possessed by the previous owners, no other
persons ever claimed ownership of the property.
(b)
Isaac Reyes who started working on one-half of the 2 parcels of land
since 1934 up to the present, and declared that there was no other person other than
Ignacia Guillermo who claimed ownership of the parcels in litigation; and

(c)
Mr. Valentin Marqueza rebuttal witness who averred that he began to
live in Darangan, Binangonan, Rizal since 1910; that he bought a portion of his land
from Maria Certeza when he was working with Rizal Cement Company in 1924; that
the sale was evidenced by an absolute Deed of Sale; that he occupied the portion sold
to him up to 1931; that ever since he possessed the property there were no other
adverse claimants thereto; that he saw a small house on a portion of the land of
Maria Certeza built by Rizal Cement Company who intended to make a location
where it could built a factory; that after 4 to 5 months, the small house was removed,
after which, this witness purchased that portion from Maria Certeza; that during his
stay in Darangan, the company did not take possession of the land; that Maria
Certeza had the possession of the land until her death and that the tenants gave the
harvest of the land to Maria Certeza.
On this score the Court of Appeals in its assailed decision held and rightly so
Being an attribute of ownership, appellants' possession of the land in question goes
far to tip the scale in their favor. The right to possess flows from ownership. No
person wig suffer adverse possession by another of what belongs to him. Were the
oppositor- appellee rightful owner of the land in question, it would not have allowed
the tenants to cultivate the land and give the owner's share to appellants and/or their
predecessors. It would have opposed the survey for applicants' vendors on May 21
and 28, 1950 and July 31, 1955, but did not as shown in the surveyor's certificate,
Exhibit E. If oppositor really bought Lot 2 from Maria Certeza in 1909 as claimed, it
has not been explained how she could sell a portion thereof to Apolonia Francisco,
married to Valentin Marquez for P100.00 on April 15, 1924 by deed, Exhibit R,-an
ancient document -as confirmed by the husband in his deposition who as employee
of oppositor would have known of its acquisition. On the other hand, applicants'
vendors in mortgaging the two lots to Pedro Picones in 1952, Exhibits 0 and 01, for
P11, 000.00, exercised a dominical act; and Aniano Bautista's testimony that the
Cervos were not owners of the land challenges belief since Bautista was a witness to
Exhibits 0 and 0-1, being uncle of Picones.
Very significantly petitioner did not present any witness in actual possession of the
land in question.
As aptly found by the appellate court, respondents possess the property in the
concept of an owner.
Possession is acquired by the material occupation of a thing or the exercise of a right
or by the fact it is subject to the action of our will, or by the proper acts and legal
formalities established for acquiring such right.

Petitioner's evidence, consisting of tax receipts, tax declaration and survey plan are
not conclusive and indisputable basis of one's ownership of the property in question.
Assessment alone is of little value as proof of title. Mere tax declaration does not
vest ownership of the property upon the declarant. 3 Settled is the rule that neither
tax receipts nor declaration of ownership for taxation purposes alone constitutes
sufficient evidence of ownership or of the right to possess realty. They must be
supported by other effective proofs. 4 Neither can the survey plan or technical
descriptions prepared at the instance of the party concerned be considered in his
favor, the same being self-serving.
Apropos thereto is the appellate court's finding that
Against the chains of tax declarations presented by the applicants-appellants which
originated beyond 1920 from Maria Certeza, undisputably the original owner of Lots
1 and 2, the oppositor-appellee presented no tax declaration which could refer
specifically to the two lots in question. Tax Declaration No. 10570 (Exhibit 35-1949)
for the oppositor-appellee admittedly does not indicate any of the two lots in
question. Indeed, the senior deputy assessor of Rizal, as witness for the oppositorappellee, categorically declared that his office refused to issue tax declaration for the
land covered by its Plan Psu-2260, for the reason that the same had been in
possession of various persons in Darangan.
Anent the allegation of petitioner to the effect that tile subject lands, full technical
description of which are found in Psu-147662 approved in October 1955, covers
portion of Lots 1 and 4 of Psu-2260, the Court of Appeals correctly observed
The only documentary evidence which the oppositor-appellee may capitalize for its
claim of ownership is the notation in applicants' plan Exhibit D that the lots in
question are portions of a previous survey made in 1911 for oppositor, Plan Psu2260. The survey plan however has no original record in the Bureau of Lands. Be
that as it may, survey plans merely delimit areas sought to be registered. Besides, the
annotation relied upon by the lower court in its judgment in favor of the oppositor is
nothing more than what it imports - a previous survey. Neither the plan nor its
approval carried with it any adjudication of ownership. The, Director of Lands
through approval merely certifies that the survey has been made in accordance with
approved methods and regulations in force. (Philippine Executive Commission vs.
Antonio, CA-G.R. No. 8456, February 12, 1943)

A painstaking review of the evidence on record failed to disclose any evidence or

circumstance of note sufficient enough to overrule said findings and conclusions.

The jurisdiction of this Court in cases brought to Us from the Court of Appeals (now
Intermediate Appellate Court) is limited to the review of errors of law, said appellate
court's findings of fact being conclusive upon us except 6 (1) when the conclusion is
a finding grounded entirely on speculation, surmises or conjectures; (2) when the
inference made is manifestly absurd, mistaken or impossible; (3) when there is grave
abuse abuse of discretion in the appreciation of facts; (4) when the judgment is
premised on a misapprehension of facts; (5) when the findings of fact are conflicting;
and (6) when the Court of Appeals, in making its findings went beyond the issues of
the case and the same is contrary to the admissions of both appellant and appellee,
none of which obtain in the case at bar.
The appellate court did what is required of it under the law and it cannot be faulted
after reaching a conclusion adverse to herein petitioner. The decision on the merits of
the case hinges on the determination of the pertinent facts, and the findings of the
Court of Appeals when supported by substantial evidence are beyond our power of
review.
WHEREFORE, the petition is hereby DISMISSED and the decision dated January 6,
1969 of the Court of Appeals (now Intermediate Appellate Court) is hereby
AFFIRMED. Costs against petitioner.
SO ORDERED..

G.R. No. L-50264

October 21, 1991

IGNACIO WONG, vs. HON. LUCAS D. CARPIO, as Presiding Judge, Court of

First Instance of Davao del Sur, Branch V and MANUEL MERCADO,
respondents.
This is a petition for review on certiorari, certified to this Court by the Court of
Appeals as it involves purely question of law, seeking the annulment of the
September 29, 1978 decision of the then Court of First Instance ** of Davao del Sur,
Branch V, in Civil Case No. 1258 which reversed the February 20, 1978 decision of
the Municipal Court of Sta. Maria, *** Davao del Sur in an action for Forcible Entry
(Civil Case No. 13) ordering the dismissal of the complaint as well as the
counterclaim.
The undisputed facts of this case, as found by both the trial court and the then Court
of First Instance of Davao del Sur, are as follows:

On the basis of the admission of parties in their respective pleadings, the oral
testimonies of all witnesses for both plaintiff and defendants and the documentary
evidence offered and admitted this Court finds that plaintiff Manuel Mercado
acquired his rights to possess the land in litigation, particularly lot 3 (LRC) Pcs-295,
(situated at Colonga, Sta. Maria, Davao del Sur) and which is particularly described
and embraced in Transfer Certificate of title No. (T-4244) T-972 from William Giger
by virtue of a deed of sale with right to repurchase which was executed in 1972 for a
consideration of P3,500.00 (testimony of plaintiff, T.S.N., p. 3, hearing of January 7,
1977). Then, in 1973, William Giger again asked an additional amount of P2,500.00
from plaintiff and so he required William Giger to sign a new deed of Pacto de Retro
Sale (Exhibit "A") on November 5,1973 at Davao City before Notary Public
Gregorio C. Batiller (T.S.N., p. 5, hearing of January 7, 1977). In 1972, plaintiff
began harvesting only the coconut fruits and he paid the taxes on the land (Exhibits
B to E) for Mr. Giger. He went periodically to the land to make copra but he never
placed any person on the land in litigation to watch it. Neither did he reside on the
land as he is a businessman and storekeeper by occupation and resides at Lower Sta.
Maria, Davao del Sur while the land in litigation is at Colongan, Sta. Maria. Neither
did he put any sign or hut to show that he is in actual possession (p. 8, T.S.N., p. 7,
hearing of January 14, 1978). He knew defendants' laborers were in the land in suit
as early as August, 1976 and that they have a hut there but he did not do anything to
stop them. Instead plaintiff was happy that there were people and a hut on the land in
suit (p. 14, T.S.N., hearing of January 14, 1978).
Before July, 1976, defendant Ignacio Wong went to the land in litigation to find out if
there were other people residing there or claiming it besides the owner and he found
none. So, in July, 1976, defendant Ignacio Wong bought the parcel of land in
litigation from William Giger and his wife Cecilia Valenzuela (Exhibit 5). After the
execution of Exhibit 5, defendant Ignacio Wong asked for the delivery of the title to
him and so he has in his possession TCT No. (T-4244) T-974 (Exhibit 6) in the name
of William Giger. Mr. Wong declared the land in suit for taxation purposes in his
name (Exhibit 7). He tried to register the pacto de retro sale with the Register of
Deeds by paying the registration fee (Exhibit 8) but due to some technicalities, the
pacto de retro sale could not be registered. The defendant Wong placed laborers on
the land in suit, built a small farm house after making some clearings and fenced the
boundaries. He also placed signboards (T.S.N., pp. 14-15, hearing of September 15,
1977). On September 27, 1976, plaintiff Manuel Mercado again went to the land in
suit to make copras. That was the time the matter was brought to the attention of the
police of Sta. Maria, Davao del Sur and the incident entered in the police blotter
(Exhibit 11). Then on November 18, 1976, defendant Wong ordered the hooking of
the coconuts from the land in litigation and nobody disturbed him. But on November
29, 1976, defendant received a copy of plaintiff's complaint for forcible entry with

summons to answer which is the case now before the Court. During the pendency of
this instant complaint for forcible entry, spouses William Giger and Cecilia
Valenzuela filed a case for reformation of instrument with the Court of First Instance
of Digos, Davao del Sur against plaintiff Mercado (Exhibit 4). The case pertains to
Exhibit "A" of plaintiff. (pp. 1-3, CA Decision, pp. 82-84, Rollo).
On the basis of the aforestated undisputed facts, the Municipal Court of Sta. Maria,
Davao del Sur in its February 20, 1978 Decision found that herein petitioner
(defendant Ignacio Wong) had prior, actual and continuous physical possession of the
disputed property and dismissed both the complaint and the counter-claim.
On appeal, the then Court of First Instance of Davao del Sur, in its September 29,
1978 Decision drew a completely different conclusion from the same set of facts and
ruled in favor of herein private respondent (plaintiff Manuel Mercado). The decretal
portion of the said decision, reads:
WHEREFORE, the Court finds the plaintiff to have taken possession of the property
earlier in point of time and defendant is an intruder and must, as he is hereby ordered
to return, the possession of the land in question for the plaintiff, paying a monthly
rental of P400.00 from August, 1976, till the property is returned with costs against
the defendant. Judgment is reversed.
Petitioner filed the instant petition with the Court of Appeals. But the Court of
Appeals, in its March 1, 1979 Resolution **** found that the only issue is a pure
question of law the correctness of the conclusion drawn from the undisputed facts
and certified the case to this Court.
In its April 4, 1979 Resolution, the Second Division of this Court docketed the case
in this Court and considered it submitted for decision.

Petitioner alleged two (2) errors committed by respondent judge, to wit:

A)
THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT
PETITIONER IS AN INTRUDER IS WITHOUT FACTUAL AND LEGAL BASIS
FOR PURPOSES OF A FORCIBLE ENTRY.
B)
THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT
PETITIONER MUST PAY A MONTHLY RENTAL OF P400.00 FROM AUGUST,
1976 TILL THE PROPERTY IS RETURNED HAS NO LEGAL AND FACTUAL
BASIS.

The petition is without merit.

Petitioner, in claiming that the private respondent has not established prior
possession, argues that private respondent's periodic visit to the lot to gather
coconuts may have been consented to and allowed or tolerated by the owner thereof
for the purposes of paying an obligation that may be due to the person gathering said
nuts and that a person who enters a property to gather coconut fruits and convert the
same to copras may only be a hired laborer who enters the premises every harvest
season to comply with the contract of labor with the true owner of the property.

The argument is untenable.

It should be stressed that "possession is acquired by the material occupation of a
thing or the exercise of a right, or by the fact that it is subject to the action of our
will, or by the proper acts and legal formalities for acquiring such right." (Art. 531,
Civil Code; Rizal Cement Co., Inc. vs. Villareal, 135 SCRA 15 [1985]); and that the
execution of a sale thru a public instrument shall be equivalent to the delivery of the
thing, unless there is stipulation to the contrary . . . . If, however, notwithstanding the
execution of the instrument, the purchaser cannot have the enjoyment and material
tenancy of the thing and make use of it herself, because such tenancy and enjoyment
are opposed by another, then delivery has not been effected. (Paras, Civil Code of the
Philippines, Vol. II, 1989 Ed., p. 400).

Applying the above pronouncements on the instant case, it is clear that possession
passed from vendor William Giger to private respondent Manuel Mercado by virtue
of the first sale a retro (Exhibit A), and accordingly, the later sale a retro (Exhibit 5)
in favor of petitioner failed to pass the possession of the property because there is an
impediment the possession exercised by private respondent. Possession as a fact
cannot be recognized at the same time in two different personalities except in the
cases of co-possession. Should a question arise regarding the fact of possession, the
present possessor shall be preferred; if there are two possessions, the one longer in
possession, if the dates of possession are the same, the one who presents a title; and
if these conditions are equal, the thing shall be placed in judicial deposit pending
determination of its possession or ownership through proper proceedings (Art. 538,
Civil Code).

As to petitioner's query that "Is the entry of petitioner to the property characterized
by force, intimidation, threat, strategy, or stealth in order to show that private
respondent has had possession so that the case is within the jurisdiction of the
inferior court?" (p. 15, Petition; p. 16, Rollo). The same is answered in the
affirmative.
The act of entering the property and excluding the lawful possessor therefrom
necessarily implies the exertion of force over the property, and this is all that is
necessary. Under the rule, entering upon the premises by strategy or stealth is equally
as obnoxious as entering by force. The foundation of the action is really the forcible
exclusion of the original possessor by a person who has entered without right. The
words "by force, intimidation, threat, strategy, or stealth" include every situation or
condition under which one person can wrongfully enter upon real property and
exclude another who has had prior possession therefrom. If a trespasser enters upon
land in open daylight, under the very eyes of person already clothed with lawful
possession, but without the consent of the latter, and there plants himself and
excludes such prior possessor from the property, the action of forcible entry and
detainer can unquestionably be maintained, even though no force is used by the
trespasser other than such as is necessarily implied from the mere acts of planting
himself on the ground and excluding the other party. (Tolentino, Civil Code of the
Philippines, Vol. II, 1983 Ed., pp. 243-244; Drilon vs. Gaurana, 149 SCRA 342
[1987]).
Anent the award of rentals in favor of private respondent, the same is in order.
Petitioner's argument that there is no legal or factual basis for the payment of
monthly rentals because bad faith on the part of petitioner was never proved deserves
no merit.
It should be noted that possession acquired in good faith does not lose this character
except in the case and from the moment facts exist which show that the possessor is
not unaware that he possesses the thing improperly or wrongfully. (Art. 528, Civil
Code).
Possession in good faith ceases from the moment defects in the title are made known
to the possessors, by extraneous evidence or by suit for recovery of the property by
the true owner. Whatever may be the cause or the fact from which it can be deduced
that the possessor has knowledge of the defects of his title or mode of acquisition, it
must be considered sufficient to show bad faith. (Tolentino, Civil Code of the
Philippines, Vol. II, p. 226). Such interruption takes place upon service of summons

(Manotok Realty vs. Judge Tecson, 164 SCRA 587 [1988] citing Mindanao
Academy, Inc. v. Yap (13 SCRA 190 [1965]). In the latter case, this Court held:
. . . Although the bad faith of one party neutralizes that of the other and hence as
between themselves their rights would be as if both of them had acted in good faith
at the time of the transaction, this legal fiction of Yap's good faith ceased when the
complaint against him was filed, and consequently the court's declaration of liability
for the rents thereafter is correct and proper. A possessor in good faith is entitled to
the fruits only so long as his possession is not legally interrupted, and such
interruption takes place upon service of judicial summons (Arts. 544 and 1123, Civil
Code).
A perusal of the records of the case shows that petitioner received private
respondent's complaint for forcible entry with summons on November 29, 1976
(Rollo, p. 46). His good faith therefore ceased on November 29,1976. Accordingly,
the computation of the payment of monthly rental should start from December, 1976,
instead of August, 1976.
WHEREFORE, with the modification that the computation of the monthly rental
should start from December, 1976 instead of August, 1976, the September 29, 1978
decision of respondent judge is Affirmed in all other respects, with costs against
petitioner.
SO ORDERED.

G.R. No. 82680 August 15, 1994

NICANOR SOMODIO, vs. COURT OF APPEALS, EBENECER PURISIMA,
and FELOMINO AYCO,

This is a petition for review on certiorari under Rule 45 of the Revised Rules of
Court to reverse and set aside the Decision dated September 29, 1987 and the
Resolution dated February 2, 1988 of the Court of Appeals in CA-G.R. SP No.
11602.

I
On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer
of Rights, conveying to Wilfredo Mabugat the possession of a residential lot situated
at Rajah Muda, Bula, General Santos City and described in the said instrument as:
Lot No. (Unnumbered), bounded on the North by Temporary Road, on the South by
Customs Zone (Sarangani Bay), on the East by Public Land, and on the West by
Public Land.
Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On
October 22, 1974, Mabugat executed an Affidavit of Trust expressly recognizing the
right of petitioner over one-half undivided portion of the lot. Later, petitioner
discovered in the District Land Office that the lot was numbered "6328-X, Csd 2281D." Thereafter, petitioner and Mabugat partitioned the property into two portions,
with petitioner taking the western part. Immediately after the partition, petitioner
took possession of his portion and planted thereon ipil-ipil trees, coconut trees and
other fruit-bearing trees.
In 1976, petitioner began construction of a structure with a dimension of 22-by-18
feet on his lot. His employment, however, took him to Kidapawan, North Cotabato,
and he left the unfinished structure to the case of his uncle. He would visit the
property every three months or on weekened when he had time.
Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer
his hut to petitioner's lot. About six years later, petitioner demanded that Ayco vacate
the premises but such demand proved futile. Hence, on August 23, 1983, petitioner
filed an action for unlawful detainer with damages against respondent Ayco before
the Municipal Trial Court, Branch I, General Santos, docketed as Civil Case No.
2032-II.
Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the land and
constructed a house thereon. Four days later, petitioner filed against respondent
Purisima a complaint for forcible entry before the same court docketed as Civil Case
No. 2013-I. Said case was later consolidated with Civil Case No. 2032-II.
In his answer, respondent Purisima averred that the lot was a portion of the land
subject of his application for miscellaneous sales patent with the Bureau of Lands.
Purisima described the lot in question as:
Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on the
North by 6328-X; on the South by Sarangani Bay; on the East by a Municipal Road;

and on the West by Lot No. 6328-W, containing an area of 1,095 square meters and
covered by Tax Declaration No. 9647 (Rollo, p. 36; Emphasis supplied).

respondents to remove their respective houses, to deliver the land to petitioner, and
to pay attorney's fees and litigation expenses.

Respondent Purisima contended that his father, a geodetic engineer, had surveyed the
parcel of land comprising of Lots Nos. 6427 and 6328 for the Small Farmers
Fishpond Association, Inc. in February 1958, and that his father's survey plan was
approved by the Director of Lands in 1960. Respondent Ayco, on the other hand, did
not present any evidence but merely anchored his right to possess the property on the
evidence of Purisima.

On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in
toto the decision of the Municipal Trial Court. Respondent then elevated the cases on
a petition for review to the Court of Appeals, which, in its decision dated September
27, 1987, set aside the decisions of the two trial courts and ordered the dismissal of
the two complaints filed by petitioner.

On April 30, 1986, the trial court rendered a decision finding that respondent
Purisima built his house "almost on the spot where Somodio's unfinished house"
stood "thru stealth and strategy," not knowing that the house was built on Lot No.
6328-X and not on Lot No. 6328-Y, the lot said respondent was claiming (Rollo, p.
43). The court went on to state that:
. . . . He (private respondent Purisima) was a frequent visitor in Rajah Muda and had
sometimes stayed with Mrs. Maturan in Judge Purisima's house on the adjoining lots,
and could not have remained unaware of the possession of Somodio. He must have
depended on the thought that it was his father who made the subdivision survey and
had fenced an area which he had claimed. He did not exactly verify that the area
fenced by his father had an area of only 1,095 square meters, which did not include
the are Lot No. 6328-X could eventually be standing on his property, for Lot No.
6328-X is not claimed by him and has not been applied for even by his father. His
father has been abroad and has not taken steps to apply for Lot No. 6328-X. This lot
is not declared for taxation purposes in the name of any claimant-applicant. Unless
and until there would be an administrative proceedings and the title ultimately issued
in favor of an applicant, the possession of the actual claimant and occupant has to be
respected and maintained in the interest of public order . . . (Rollo, pp. 43-44).
The Municipal Trial Court further held that petitioner was the actual possessor of Lot
No. 6328-X. The court did not believe respondent Ayco's claim that the
administratrix of the estate of respondent Purisima's father authorized him to build a
hut on Lot No. 6328-X in 1976. At any rate, the court said that respondent Ayco was
willing to vacate the premises provided he be given financial assistance to do so
(Rollo, pp. 43-44).
Nothing that the ocular inspection of the area showed that the houses of respondents
Purisima and Ayco were "inside Lot No. 6328-X" and not on Lot No. 6328-Y, the
Municipal Trial Court held that the case became one which entailed mere removal of
the houses from the lot in question. Accordingly, the court ordered private

The Court of Appeals held that herein petitioner had not "clearly and conclusively
established physical, prior possession over Lot No. 6328-X."
Petitioner's motion for the reconsideration of the decision of the Court of Appeals
having been denied, he filed the instant petition for review on certiorari.

We grant the petition.

II
The procedural issue raised by private respondents should first be resolved. The issue
is whether the instant petition is proper considering that petitioner "merely touch(es)
upon questions of fact which had been carefully considered" by the Court of Appeals
(Rollo, p. 92). As a general rule, the findings of fact of the Court of Appeals are
binding on this Court. This rule, however, is not without exceptions, one of which is
when the factual findings of the Court of Appeals and the trial court are contrary to
each other. In such a case, this Court may scrutinize the evidence on record in order
to arrive at the correct findings based on the record (Valenzuela v. Court of Appeals,
191 SCRA 1 [1990]; Roman Catholic Bishop of Malolos, Inc. v. Intermediate
Appellate Court, 191 SCRA 411 [1990]).
Upon a review of the records, we are convinced that petitioner indeed enjoyed
priority of possession over Lot No. 6328-X, notwithstanding respondent Purisima's
claim to the contrary.
In ejectment cases, the only issue for resolution is who is entitled to the physical or
material possession of the property involved, independent of any claim of ownership
set forth by any of the party-litigants. Anyone of them who can prove prior
possession de facto may recover such possession even from the owner himself. This
rule holds true regardless of the character of a party's possession, provided, that he
has in his favor priority of time which 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 (De Luna v. Court of Appeals, 212 SCRA 276 [1992]).

possession he should have over the property. Under these circumstances, priority in
time should be the pivotal cog in resolving the issue of possession.

Petitioner took possession of the property sometime in 1974 when he planted the
property to coconut trees, ipil- ipil trees and fruit trees. In 1976, he started the
construction of a building on the property. It is immaterial that the building was
unfinished and that he left for Kidapawan for employment reasons and visited the
property only intermittently. Possession in the eyes of the law does not mean that a
man has to have his feet on every square meter of ground before it can be said that he
is in possession (Ramos v. Director of Lands, 39 Phil. 175 [1918]). It is sufficient
that petitioner was able to subject the property to the action of his will.

The Court of Appeals opined that petitioner had not properly identified the lot he had
occupied. The matter of identification of the land, however, had been resolved by
respondent Purisima's admission in his pleadings, as well as by two ocular
inspections.

Article 531 of the Civil Code of the Philippines provides:

Possession is acquired by the material occupation of a thing or the exercise of a right,
or by the fact that it is subject to the action of our will, or by the proper acts and legal
formalities established for acquiring such right.

Even if the Court of Appeals is correct in its finding that petitioner started
introducing improvements on the land only in 1981, he still enjoyed priority of
possession because respondent Purisima entered the premises only in 1983.
It should be emphasized that the Court of Appeals noted that none of the parties had
produced tax declarations or applications as public land claimants. As such, what
should have been scrutinized is who between the claimants had priority of
possession.
Moreover, neither is the fact that respondent Purisima's father surveyed the property
of help to his cause. As the Court of Appeals found, respondent Purisima's father
surveyed the land for the Small Farmers Fishpond Association, Inc., not for himself.
Although respondent Purisima now claims that Lot No. 6328-X was in payment of
his fee for the services of his father and that he caused the construction of a
perimeter wall in the area, these facts do not mean that respondent Purisima himself
had prior possession. He did not present any proof that his father had authorized him
to enter the land as his successor-in-interest. Neither did he present proof that
between 1958, when his father allegedly took possession of the land, and 1983, when
said respondent himself entered the land, his father ever exercised whatever right of

In his answer to the complaint, respondent Purisima claimed possession over Lot No.
6328-Y, while petitioner identified the lot adjacent to it, Lot
NO. 6328-X, as the area where private respondents built their houses. That these two
lots are distinct from one another was resolved by the ocular inspection conducted by
a Senior Geodetic Engineer of the Office of the City Engineer, who found that "south
of lot 6328-H across a 10 meter wide road is lot 6328-Y and from thence to the south
is lot 6328-X." On June 13, 1985, the Municipal Trial Court judge himself went to
the premises in question and discovered that aside from the houses of respondents
Purisima and Ayco, five other houses had been built on Lot No. 6328-X.
Petitioner's prior possession over the property, however, is not synonymous with his
right of ownership over the same. As earlier stated, resolution of the issue of
possession is far from the resolution of the issue of ownership. Forcible entry is
merely a quieting process and never determines the actual title to an estate (German
Management & Services, Inc. v. Court of Appeals, 177 SCRA 495 [1989]; Manuel v.
Court of Appeals, 199 SCRA 603 [1991].
WHEREFORE, the decision of the Court of Appeals is REVERSED and SET
ASIDE and that of the trial courts REINSTATED. Costs against private respondents.

SO ORDERED.

[G.R. No. 132518. March 28, 2000]

GAVINA MAGLUCOT-AW, CATALINA ORCULLO, RICHARD ESTANO,
NIDA MAGLUCOT, MELANIA MAGLUCOT-CATUBIG, EMILIANO
CATUBIG, LADISLAO SALMA, , vs. LEOPOLDO MAGLUCOT, SEVERO
MAGLUCOT, WILFREDA MAGLUCOT-ALEJO and CONSTANCIO
ALEJO,.

This petition for review on certiorari assails the Decision, dated 11 November 1997,
of the Court of Appeals in CA-G.R. CV No. 48816 which reversed and set aside the
Decision, dated 13 December 1994, of the Regional Trial Court, Branch 30 of
Dumaguete City, Negros Oriental in an action for recovery of possession and
damages.
The core issue in this case is whether a partition of Lot No. 1639 had been effected in
1952. Petitioners contend that there was already a partition of said lot; hence, they
are entitled to exclusive possession and ownership of Lot No. 1639-D, which
originally formed part of Lot No. 1639 until its partition. Private respondents, upon
the other hand, claim that there was no partition; hence, they are co-owners of Lot
No. 1639-D. Notably, this case presents a unique situation where there is an order for
partition but there is no showing that the sketch/subdivision plan was submitted to
the then Court of First Instance for its approval or that a decree or order was
registered in the Register of Deeds.

The antecedent facts of the case are as follows:

Petitioners filed with the RTC a complaint for recovery of possession and damages
alleging, inter alia, that they are the owners of Lot No. 1639-D. Said lot was
originally part of Lot No. 1639 which was covered by Original Certificate Title No.
6775 issued in the names of Hermogenes Olis, Bartolome Maglucot, Pascual Olis,
Roberto Maglucot, Anselmo Lara and Tomas Maglucot on 16 August 1927.[1] On 19
April 1952, Tomas Maglucot, one of the registered owners and respondents
predecessor-in-interest, filed a petition to subdivide Lot No. 1639.[2] Consequently,
on 13 May 1952, then CFI of Negros Oriental issued an order[3] directing the parties
to subdivide said lot into six portions as follows:

Sometime in 1963, Guillermo Maglucot rented a portion of Lot No. 1639-D (subject
lot). Subsequently, Leopoldo and Severo, both surnamed Maglucot, rented portions
of subject lot in 1964 and 1969, respectively, and each paying rentals therefor. Said
respondents built houses on their corresponding leased lots. They paid the rental
amount of P100.00 per annum to Mrs. Ruperta Salma, who represented the heirs of
Roberto Maglucot, petitioners predecessor-in-interest. In December 1992, however,
said respondents stopped paying rentals claiming ownership over the subject lot.
Petitioners thus filed the complaint a quo. Sdaadsc

After trial, the lower court rendered judgment in favor of petitioners. The RTC found
the existence of tax declarations in the names of Hermogenes Olis and Pascual Olis
(purported owners of Lot Nos. 1639-A and 1639-B, respectively)[5] as indubitable
proof that there was a subdivision of Lot No. 1639. It likewise found that Tomas
Maglucot, respondents predecessor-in-interest, took active part in the partition as it
was he, in fact, who commenced the action for partition.[6] The court a quo cited
Article 1431 of the Civil Code which states that "[t]hrough estoppel an admission or
representation is rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon." Applying said provision
of law, it held that while there was no court order showing that Lot No. 1639 was
partitioned, its absence could not be used by Tomas Maglucot, or respondents as his
successors-in-interest, to deny the existence of an approved partition against the
other co-owners who claim that there was one.[7] Said court, likewise, ruled that the
tax declarations[8] over the houses of respondents, expressly stating that the same
are constructed on the lots of Roberto Maglucot, constitute a conclusive admission
by them of the ownership of the subject lot by the latter.[9]

a) Hermogenes Olis - lot 1639-A

b) Pascual Olis - lot 1639-B

The dispositive portion of the lower courts decision reads as follows:

c) Bartolome Maglucot - lot 1639-C

WHEREFORE, on the basis of the foregoing discussion, judgment is hereby

rendered in favor of the plaintiffs against the defendants ordering the latter:

d) Roberto (Alberto) - lot 1639-D

Maglucot
e) Anselmo Lara - lot 1639-E
f) Tomas Maglucot - lot 1639-F.[4]

1. To demolish their houses inside lot 1639-D, vacate the premises thereof and
deliver the possession of the same to Plaintiffs;
2. To jointly and solidarily pay plaintiffs the sum of P15,000.00 for attorneys fees;

3. To each pay plaintiffs the sum of P100.00 every year from 1993 for actual
damages representing the amount of unpaid rentals up to the time they actually
vacate the premises in question; Sclaw
4. To pay the costs.[10]

On appeal, the CA reversed the decision of the RTC. The appellate court ruled that
the sketch plan and tax declarations relied upon by petitioners are not conclusive
evidence of partition.[11] The CA likewise found that the prescribed procedure under
Rule 69 of the Rules of Court was not followed. It thus declared that there was no
partition of Lot No. 1639.
Petitioners filed this petition for review on certiorari alleging that the CA committed
the following reversible errors:

I
IN VIOLATING THE LAW ON ACQUISITIVE PRESCRIPTION PLAINTIFFS
HAVING POSSESSED LOT 1639-D SINCE 1946;

II
IN VIOLATING THE LAW ON ESTOPPEL; THE FACT OF PAYMENT OF
RENTALS AND OFFER TO BUY BY THE DEFENDANTS IS ADMISSION
THAT THE AREA IN LOT 1639-D, HAD LONG BEEN ADJUDICATED TO
PLAINTIFFS;

IV
IN DECLARING THAT THERE IS NO LAW OR JURISPRUDENCE
APPLICABLE UNDER THE PREMISES; THIS WOULD ONLY SHOW THAT
THE RECORD OF THE CASE WAS NOT PROPERLY SCRUTINIZED, AND
THE LAW WAS NOT PROPERLY STUDIED; ESPECIALLY IN THE CASE AT
BENCH THAT THE ORAL AND MUTUAL PARTITION HAPPENED DURING
THE REGIME OF THE OLD RULES OF PROCEDURE;[12]
Petitioners maintain that Lot No. 1639 was mutually partitioned and physically
subdivided among the co-owners and that majority of them participated in the actual
execution of the subdivision. Further, the co-owners accepted their designated shares
in 1946 as averred by Tomas Maglucot in his petition for partition.[13] Petitioners
opine that in 1952, Tomas Maglucot himself initiated a court proceeding for a formal
subdivision of Lot No. 1639. In said petition, he averred that only Hermogenes Olis
and the heirs of Pascual Olis were not agreeable to the partition.[14] Petitioners
further contend that respondents admitted in their tax declarations covering their
respective houses that they are "constructed on the land of Roberto Maglucot."[15]
Simply put, petitioners vigorously assert that respondents are estopped from claiming
to be co-owners of the subject lot in view of the mutual agreement in 1946, judicial
confirmation in 1952, and respondents acquiescence because they themselves
exclusively exercised ownership over Lot No. 1639-A beginning 1952 up to the
present.[16]
For their part, respondents posit three points in support of their position. First, they
emphasize that petitioners failed to show that the interested parties were apprised or
notified of the tentative subdivision contained in the sketch and that the CFI
subsequently confirmed the same.[17] Second, they point to the fact that petitioners
were unable to show any court approval of any partition.[18] Third, they maintain
that Lot No. 1639 remain undivided since to date, OCT No. 6275 is still an existing
and perfectly valid title, containing no annotation of any encumbrance or partition
whatsoever.[19]

III
IN DECLARING THAT THERE WAS NO PRIOR PARTITION, CONTRARY TO
THE FINDINGS OF THE TRIAL COURT, AND AGAINST THE EVIDENCE ON
RECORD, OF WHICH IF PROPERLY CONSIDERED WOULD CHANGE THE
OUTCOME OF THE CASE;

After a careful consideration of the pleadings filed by the parties and the evidence on
record, we find that the petition is meritorious. As stated earlier, the core issue in this
case is whether there was a valid partition in 1952.
Preliminarily, this Court recognizes that "the jurisdiction of this Court in cases
brought before it from the Court of Appeals via Rule 45 of the Rules of Court is
limited to reviewing errors of law. Findings of fact of the latter are conclusive,

except in the following instances: (1) when the findings are grounded entirely on
speculation, surmises, or conjectures; (2) when the inference made is manifestly
mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4)
when the judgment is based on a misapprehension of facts; (5) when the findings of
fact are conflicting; (6) when in making its findings the Court of Appeals went
beyond the issues of the case, or its findings are contrary to the admissions of both
the appellant and the appellee; (7) when the findings are contrary to those of the trial
court; (8) when the findings are conclusions without citation of specific evidence on
which they are based; (9) when the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the respondent; and (10) when
the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record."[20] This case falls under exceptions (7), (8)
and (10) in that the findings of facts of the CA are in conflict with that of the RTC,
are mere conclusions without citation of specific evidence on which they are based
and are premised on absence of evidence but are contradicted by the evidence on
record. For these reasons, we shall consider the evidence on record to determine
whether indeed there was partition.

party or parties thereto entitled of their just share in the rents and profits of the real
estate in question. Such an order is, to be sure, final and appealable.[22]

In this jurisdiction, an action for partition is comprised of two phases: first, an order
for partition which determines whether a co-ownership in fact exists, and whether
partition is proper; and, second, a decision confirming the sketch or subdivision
submitted by the parties or the commissioners appointed by the court, as the case
may be.[21] The first phase of a partition and/or accounting suit is taken up with the
determination of whether or not a co-ownership in fact exists, (i.e., not otherwise
legally proscribed) and may be made by voluntary agreement of all the parties
interested in the property. This phase may end with a declaration that plaintiff is not
entitled to have a partition either because a co-ownership does not exist, or partition
is legally prohibited. It may end, upon the other hand, with an adjudgment that a coownership does in truth exist, partition is proper in the premises and an accounting of
rents and profits received by the defendant from the real estate in question is in order.
In the latter case, the parties may, if they are able to agree, make partition among
themselves by proper instruments of conveyance, and the court shall confirm the
partition so agreed upon. In either case i.e., either the action is dismissed or partition
and/or accounting is decreed the order is a final one, and may be appealed by any
party aggrieved thereby. The second phase commences when it appears that "the
parties are unable to agree upon the partition" directed by the court. In that event,
partition shall be done for the parties by the court with the assistance of not more
than three (3) commissioners. This second stage may well also deal with the
rendition of the accounting itself and its approval by the court after the parties have
been accorded opportunity to be heard thereon, and an award for the recovery by the

However, this Court notes that the order of partition was issued when the ruling in
Fuentebella vs. Carrascoso,[26] which held that the order of partition is interlocutory,
was controlling. In addition, the reports of the commissioners not having been
confirmed by the trial court are not binding.[27] In this case, both the order of
partition and the unconfirmed sketch plan are, thus, interlocutory. Nevertheless,
where parties do not object to the interlocutory decree, but show by their conduct
that they have assented thereto, they cannot thereafter question the decree,[28]
especially, where, by reason of their conduct, considerable expense has been incurred
in the execution of the commission.[29] Respondents in this case have occupied their
respective lots in accordance with the sketch/subdivision plan. They cannot after
acquiescing to the order for more than forty (40) years be allowed to question the
binding effect thereof.

The present rule on the question of finality and appealability of a decision or order
decreeing partition is that it is final and appealable.[23] The order of partition is a
final determination of the co-ownership over Lot No. 1639 by the parties and the
propriety of the partition thereof. Hence, if the present rule were applied, the order
not having been appealed or questioned by any of the parties to the case, it has
become final and executory and cannot now be disturbed.
The true test to ascertain whether or not an order or a judgment is interlocutory or
final is: Does it leave something to be done in the trial court with respect to the
merits of the case? If it does, it is interlocutory; if it does not, it is final. The key test
to what is interlocutory is when there is something more to be done on the merits of
the case.[24] An order for partition is final and not interlocutory and, hence,
appealable because it decides the rights of the parties upon the issue submitted.[25]

This case is to be distinguished from the order in the action for partition in Arcenas
vs. Cinco.[30] In that case, the order was clearly interlocutory since it required the
parties " to submit the corresponding deed of partition to the Court for its approval."
Here, the order appointed two commissioners and directed them merely to approve
the sketch plan already existing and tentatively followed by the parties.
Under the present rule, the proceedings of the commissioners without being
confirmed by the court are not binding upon the parties.[31] However, this rule does
not apply in case where the parties themselves actualized the supposedly
unconfirmed sketch/subdivision plan. The purpose of court approval is to give effect

to the sketch/subdivision plan. In this case, the parties themselves or through their
predecessors-in-interest implemented the sketch plan made pursuant to a court order
for partition by actually occupying specific portions of Lot No. 1639 in 1952 and
continue to do so until the present until this case was filed, clearly, the purpose of the
court approval has been met. This statement is not to be taken to mean that
confirmation of the commissioners may be dispensed with but only that the parties
herein are estopped from raising this question by their own acts of ratification of the
supposedly non-binding sketch/subdivision plan.
The records of the case show that sometime in 1946 there was a prior oral agreement
to tentatively partition Lot No. 1639.[32] By virtue of this agreement, the original
co-owners occupied specific portions of Lot No. 1639.[33] It was only in 1952 when
the petition to subdivide Lot No. 1639 was filed because two of the co-owners,
namely Hermogenes Olis and heirs of Pascual Olis, refused to have said lot
subdivided and have separate certificates of title. Significantly, after the 1952
proceedings, the parties in this case by themselves and/or through their predecessorsin-interest occupied specific portions of Lot No. 1639 in accordance with the sketch
plan. Such possession remained so until this case arose, or about forty (40) years
later.
From its order in 1952, it can be gleaned that the CFI took notice of the tentative
subdivision plan by oral partition of the parties therein. Further, it appears that said
court was aware that the parties therein actually took possession of the portions in
accordance with the sketch/subdivision plan. With this factual backdrop, said court
ordered the partition and appointed two (2) commissioners to approve the tentative
sketch/subdivision plan. It would not be unreasonable to presume that the parties
therein, having occupied specific portions of Lot No. 1639 in accordance with the
sketch/subdivision plan, were aware that it was that same sketch/subdivision plan
which would be considered by the commissioners for approval. There is no showing
that respondents by themselves or through their predecessors-in-interest raised any
objections. On the contrary, the records show that the parties continued their
possession of the specific portions of Lot No. 1639 pursuant to the
sketch/subdivision plan.
It has been previously held that a co-owner, who, though not a party to a partition
accepts the partition allotted to him, and holds and conveys the same in severalty,
will not be subsequently permitted to avoid partition.[34] It follows that a party to a
partition is also barred from avoiding partition when he has received and held a
portion of the subdivided land especially in this case where respondents have
enjoyed ownership rights over their share for a long time.

Parties to a partition proceeding, who elected to take under partition, and who took
possession of the portion allotted to them, are estopped to question title to portion
allotted to another party.[35] A person cannot claim both under and against the same
instrument.[36] In other words, they accepted the lands awarded them by its
provisions, and they cannot accept the decree in part, and repudiate it in part. They
must accept all or none.[37] Parties who had received the property assigned to them
are precluded from subsequently attacking its validity of any part of it.[38] Here,
respondents, by themselves and/or through their predecessors-in-interest, already
occupied of the lots in accordance with the sketch plan. This occupation continued
until this action was filed. They cannot now be heard to question the possession and
ownership of the other co-owners who took exclusive possession of Lot 1639-D also
in accordance with the sketch plan. Exsm

In technical estoppel, the party to be estopped must knowingly have acted so as to

mislead his adversary, and the adversary must have placed reliance on the action and
acted as he would otherwise not have done. Some authorities, however, hold that
what is tantamount to estoppel may arise without this reliance on the part of the
adversary, and this is called, ratification or election by acceptance of benefits, which
arises when a party, knowing that he is not bound by a defective proceeding, and is
free to repudiate it if he will, upon knowledge, and while under no disability, chooses
to adopt such defective proceeding as his own.[39] Ratification means that one under
no disability voluntarily adopts and gives sanction to some unauthorized act or
defective proceeding, which without his sanction would not be binding on him. It is
this voluntary choice, knowingly made, which amounts to a ratification of what was
theretofore unauthorized, and becomes the authorized act of the party so making the
ratification.[40]
The records show that respondents were paying rent for the use of a portion of Lot
No. 1639-D. Had they been of the belief that they were co-owners of the entire Lot
No. 1639 they would not have paid rent. Respondents attempted to counter this point
by presenting an uncorroborated testimony of their sole witness to the effect that the
amount so paid to Roberto Maglucot and, subsequently, to Ruperta Salma were for
the payment of real property taxes. We are not persuaded. It is quite improbable that
the parties would be unaware of the difference in their treatment of their transactions
for so long a time. Moreover, no evidence was ever presented to show that a tax
declaration for the entire Lot No. 1639 has ever been made. Replete in the records
are tax declarations for specific portions of Lot 1639. It is inconceivable that
respondents would not be aware of this. With due diligence on their part, they could

have easily verified this fact. This they did not do for a period spanning more than
four decades.
The payment of rentals by respondents reveal that they are mere lessees. As such, the
possession of respondents over Lot No. 1639-D is that of a holder and not in the
concept of an owner. One who possesses as a mere holder acknowledges in another a
superior right which he believes to be ownership, whether his belief be right or
wrong.[41] Since the possession of respondents were found to be that of lessors of
petitioners, it goes without saying that the latter were in possession of Lot No. 1639D in the concept of an owner from 1952 up to the time the present action was
commenced.
Partition may be inferred from circumstances sufficiently strong to support the
presumption.[42] Thus, after a long possession in severalty, a deed of partition may
be presumed.[43] It has been held that recitals in deeds, possession and occupation of
land, improvements made thereon for a long series of years, and acquiescence for 60
years, furnish sufficient evidence that there was an actual partition of land either by
deed or by proceedings in the probate court, which had been lost and were not
recorded.[44] And where a tract of land held in common has been subdivided into
lots, and one of the lots has long been known and called by the name of one of the
tenants in common, and there is no evidence of any subsequent claim of a tenancy in
common, it may fairly be inferred that there has been a partition and that such lot
was set off to him whose name it bears.[45]
Respondents insist that the absence of any annotation in the certificate of title
showing any partition of Lot No. 1639 and that OCT No. 6725 has not been
cancelled clearly indicate that no partition took place. The logic of this argument is
that unless partition is shown in the title of the subject property, there can be no valid
partition or that the annotation in the title is the sole evidence of partition.
Again, we are not persuaded. The purpose of registration is to notify and protect the
interests of strangers to a given transaction, who may be ignorant thereof, but the
non-registration of the deed evidencing such transaction does not relieve the parties
thereto of their obligations thereunder.[46] As originally conceived, registration is
merely a species of notice. The act of registering a document is never necessary in
order to give it legal effect as between the parties.[47] Requirements for the
recording of the instruments are designed to prevent frauds and to permit and require
the public to act with the presumption that recorded instruments exist and are
genuine.[48]
It must be noted that there was a prior oral partition in 1946. Although the oral
agreement was merely tentative, the facts subsequent thereto all point to the

confirmation of said oral partition. By virtue of that agreement, the parties took
possession of specific portions of the subject lot. The action for partition was
instituted because some of the co-owners refused to have separate titles issued in lieu
of the original title. In 1952, an order for partition was issued by the cadastral court.
There is no evidence that there has been any change in the possession of the parties.
The only significant fact subsequent to the issuance of the order of partition in 1952
is that respondents rented portions of Lot No. 1639-D. It would be safe to conclude,
therefore, that the oral partition as well as the order of partition in 1952 were the
bases for the finding of actual partition among the parties. The legal consequences of
the order of partition in 1952 having been discussed separately, we now deal with
oral partition in 1946. Given that the oral partition was initially tentative, the actual
possession of specific portions of Lot No. 1639 in accordance with the oral partition
and the continuation of such possession for a very long period indicate the
permanency and ratification of such oral partition. The validity of an oral partition is
already well-settled. In Espina vs. Abaya,[49] we declared that an oral partition is
valid. In Hernandez vs. Andal,[50] reiterated in Tan vs. Lim,[51] this Court has
ruled, thus:
On general principle, independent and in spite of the statute of frauds, courts of
equity have enforce oral partition when it has been completely or partly performed.

Regardless of whether a parol partition or agreement to partition is valid and

enforceable at law, equity will proper cases where the parol partition has actually
been consummated by the taking of possession in severalty and the exercise of
ownership by the parties of the respective portions set off to each, recognize and
enforce such parol partition and the rights of the parties thereunder. Thus, it has been
held or stated in a number of cases involving an oral partition under which the parties
went into possession, exercised acts of ownership, or otherwise partly performed the
partition agreement, that equity will confirm such partition and in a proper case
decree title in accordance with the possession in severalty.
In numerous cases it has been held or stated that parol partition may be sustained on
the ground of estoppel of the parties to assert the rights of a tenant in common as to
parts of land divided by parol partition as to which possession in severalty was taken
and acts of individual ownership were exercised. And a court of equity will
recognize the agreement and decree it to be valid and effectual for the purpose of
concluding the right of the parties as between each other to hold their respective
parts in severalty.

A parol partition may also be sustained on the ground that the parties thereto have
acquiesced in and ratified the partition by taking possession in severalty, exercising
acts of ownership with respect thereto, or otherwise recognizing the existence of the
partition.

No injustice is dealt upon respondents because they are entitled to occupy a portion
of Lot No. 1639, particularly Lot No. 1639-A, in their capacity as heirs of Tomas
Maglucot, one of the original co-owners of Lot No. 1639 in accordance with the
sketch plan of said lot showing the partition into six portions.[59]

A number of cases have specifically applied the doctrine of part performance, or

have stated that a part performance is necessary, to take a parol partition out of the
operation of the statute of frauds. It has been held that where there was a partition in
fact between tenants in common, and a part performance, a court of equity would
have regard to enforce such partition agreed to by the parties.

Finally, this Court takes notice of the language utilized by counsel for petitioners in
their petition for review on certiorari. Thrice in the petition, counsel for petitioners
made reference to the researcher of the CA. First, he alluded to the lack of scrutiny
of the records and lack of study of the law "by the researcher."[60] Second, he cited
the researcher of the CA as having "sweepingly stated without reference to the
record"[61] that "[w]e have scanned the records on hand and found no evidence of
any partition." Finally, counsel for petitioners assailed the CA decision, stating that
"this will only show that there was no proper study of the case by the
researcher."[62]

Two more points have constrained this Court to rule against respondents. First,
respondents Wilfreda Maglucot-Alejo and Constancio Alejo offered to buy the share
of Roberto Maglucot. Second, the tax declarations contain statements that the houses
of respondents were built on the land owned by Roberto Maglucot.
On the first point, petitioners presented Aida Maglucot who testified that after
respondents were informed that petitioners were going to use Lot No. 1639-D
belonging to Roberto Maglucot, respondents Wilfreda Maglucot-Alejo and
Constancio Alejo went to the house of said witness and offered to buy the share of
Roberto Maglucot.[52] Aida Maglucot further testified that they refused the offer
because they also intend to use the lot for a residential purpose.[53] This testimony
of Aida Maglucot is unrebutted by respondents, and the CA did not touch upon this
finding of fact. Hence, the offer to buy has been established by the unrebutted
evidence of the petitioners. Why would they give such offer if they claim to be at
least a co-owner of the said lot? In effect, respondents impliedly admit the title of the
petitioners and that they are not co-owners, much less the sole owners, of Lot No.
1639-D.
On the second point, the existence of Tax Declaration No. 04-557 in the names of
Constancio Alejo and Godofreda Maglucot,[54] Tax Declaration No. 04-87-13 in the
names of Leopoldo Maglucot and Regina Barot,[55] Tax Declaration No. 04-593 in
the names of Severo Maglucot and Samni Posida[56] showing that the houses of the
above-mentioned persons are constructed on the land of Roberto Maglucot[57]
constitute incontrovertible evidence of admission by the same persons of the
ownership of the land by Roberto Maglucot. Tax Declarations are public documents.
Unless their veracity is directly attacked, the contents therein are presumed to be true
and accurate.[58] The lone testimony of Severo Maglucot that Roberto Maglucot was
only made to appear as owner of the land in their respective declarations because he
was the administrator of Lot No. 1639 is uncorroborated and not supported by any
other evidence.

Any court when it renders a decision does so as an arm of the justice system and as
an institution apart from the persons that comprise it. Decisions are rendered by the
courts and not the persons or personnel that may participate therein by virtue of their
office. It is highly improper and unethical for counsel for petitioners to berate the
researcher in his appeal. Counsel for petitioner should be reminded of the elementary
rules of the legal profession regarding respect for the courts by the use of proper
language in its pleadings and admonished for his improper references to the
researcher of the CA in his petition. A lawyer shall abstain from scandalous,
offensive, or menacing language or behavior before the courts.[63]
WHEREFORE, the petition is GRANTED The decision of the Court of Appeals is
SET ASIDE and the decision of the Regional Trial Court is hereby REINSTATED.
SO ORDERED.

[G.R. No. 137944. April 6, 2000]

FERNANDA MENDOZA CEQUENA and RUPERTA MENDOZA LIRIO,

petitioners, vs. HONORATA MENDOZA BOLANTE, respondent. J lexj

DECISION

PANGANIBAN, J.:

Tax receipts and declarations are prima facie proofs of ownership or possession of
the property for which such taxes have been paid. Coupled with proof of actual
possession of the property, they may become the basis of a claim for ownership. By
acquisitive prescription, possession in the concept of owner -- public, adverse,
peaceful and uninterrupted -- may be converted to ownership. On the other hand,
mere possession and occupation of land cannot ripen into ownership.

The Case
Before us is a Petition for Review on Certiorari of the March 19, 1999 Decision[1] of
the Court of Appeals[2] (CA) in CA-GR CV No. 43423. The assailed Decision
disposed as follows:[3]

"The facts not disputed revealed that prior to 1954, the land was originally declared
for taxation purposes in the name of Sinforoso Mendoza, father of [respondent] and
married to Eduarda Apiado. Sinforoso died in 1930. [Petitioners] were the daughters
of Margarito Mendoza. On the basis of an affidavit, the tax declaration in the name
of Sinforoso Mendoza of the contested lot was cancelled and subsequently declared
in the name of Margarito Mendoza. Margarito and Sinforoso are brothers.
[Respondent] is the present occupant of the land. Earlier, on October 15, 1975,
[respondent] and Miguel Mendoza, another brother of [petitioners], during the
cadastral survey had a dispute on [the] ownership of the land. Juri smis
"During the pre-trial conference, parties stipulated the following facts:
1) The land subject of the case was formerly declared for taxation purposes in the
name of Sinforoso Mendoza prior to 1954 but is now declared in the name of
Margarito Mendoza.
2) The parties agree[d] as to the identity of the land subject of instant case.
3) [Petitioners] are the daughters of Margarito Mendoza while the [respondent] is the
only daughter of Sinforoso Mendoza.
'4) Margarito Mendoza and Sinforoso Mendoza [were] brothers, now deceased.

"WHEREFORE, for all the foregoing, the decision of the trial court appealed from is
REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered declaring
x x x Honorata Mendoza Bolante the rightful owner and possessor of the parcel of
land which is the subject of this appeal." Lexj uris

5) During the cadastral survey of the property on October 15, 1979 there was already
a dispute between Honorata M. Bolante and Miguel Mendoza, brother of
[petitioners].
6) [Respondent was] occupying the property in question.

The Facts
The only issue involved [was] who [was] the lawful owner and possessor of the land
subject of the case.
The Petition herein refers to a parcel of land situated in Barangay Bangad,
Binangonan, Province of Rizal, having an area of 1,728 square meters and covered
by Tax Declaration No. 26-0027.
The undisputed antecedents of this case are narrated by the Court of Appeals as
follows:[4]

"After trial, the court a quo rendered its judgment in favor of [petitioners], the
dispositive portion of which reads as follows:
Wherefore, in view of the foregoing considerations, judgment is hereby rendered for
the [petitioners] and against the [respondent]:
1. Declaring that the parcel of land situated in Bangad, Binangonan, Rizal covered
by tax declaration no. 26-0027 in the name of Margarito Mendoza belong to his
heirs, the [petitioners] herein;

2. Ordering [respondent] to vacate the property subject of the case and deliver
possession thereof to the heirs of Margarito Mendoza. Jjj uris
3. Ordering the [respondent] to indemnify the [petitioners] in the sum of P10,000.00,
as actual damages.

"2. xxx [I]n holding that respondent has been in actual and physical possession,
coupled with xxx exclusive and continuous possession of the land since 1985, which
are evidence of the best kind of circumstance proving the claim of the title of
ownership and enjoys the presumption of preferred possessor."

4. Ordering the [respondent] to pay the costs."

The Court's Ruling: The Petition has no merit.
Ruling of the Court of Appeals
The Court of Appeals reversed the trial court because the genuineness and the due
execution of the affidavit allegedly signed by the respondent and her mother had not
been sufficiently established. The notary public or anyone else who had witnessed
the execution of the affidavit was not presented. No expert testimony or competent
witness ever attested to the genuineness of the questioned signatures.
The CA further ruled that the affidavit was insufficient to overcome the denial of
respondent and her mother. The former testified that the latter, never having attended
school, could neither read nor write. Respondent also said that she had never been
called "Leonor," which was how she was referred to in the affidavit.
Moreover, the appellate court held that the probative value of petitioners tax receipts
and declarations paled in comparison with respondents proof of ownership of the
disputed parcel. Actual, physical, exclusive and continuous possession by respondent
since 1985 indeed gave her a better title under Article 538 of the Civil Code. lex

Hence, this Petition.[5]

Issues
Insisting that they are the rightful owners of the disputed land, the petitioners allege
that the CA committed these reversible errors:[6]

"1. xxx [I]n not considering the affidavit as an exception to the general rule that an
affidavit is classified as hearsay evidence, unless the affiant is placed on the witness
stand; and

First Issue: Admissibility of the Affidavit

Petitioners dispute the CA's ruling that the affidavit was not the best evidence of
their father's ownership of the disputed land, because the "affiant was not placed on
the witness stand." They contend that it was unnecessary to present a witness to
establish the authenticity of the affidavit because it was a declaration against
respondent's interest and was an ancient document. As a declaration against interest,
it was an exception to the hearsay rule. As a necessary and trustworthy document, it
was admissible in evidence. And because it was executed on March 24, 1953, it was
a self-authenticating ancient document. Chief

We quote below the pertinent portion of the appellate court's ruling:[7]

"While it is true that the affidavit was signed and subscribed before a notary public,
the general rule is that affidavits are classified as hearsay evidence, unless affiants
are placed on the witness stand (People's Bank and Trust Company vs. Leonidas, 207
SCRA 164). Affidavits are not considered the best evidence, if affiants are available
as witnesses (Vallarta vs. Court of Appeals, 163 SCRA 587). The due execution of
the affidavit was not sufficiently established. The notary public or others who saw
that the document was signed or at least [could] confirm its recitals [were] not
presented. There was no expert testimony or competent witness who attested to the
genuineness of the questioned signatures. Worse, [respondent] denied the
genuineness of her signature and that of her mother xxx. [Respondent] testified that
her mother was an illiterate and as far as she knew her mother could not write
because she had not attended school (p. 7, ibid). Her testimony was corroborated by
Ma. Sales Bolante Basa, who said the [respondent's] mother was illiterate."
The petitioners allegations are untenable. Before a private document offered as
authentic can be received in evidence, its due execution and authenticity must be
proved first.[8] And before a document is admitted as an exception to the hearsay

rule under the Dead Man's Statute, the offeror must show (a) that the declarant is
dead, insane or unable to testify; (b) that the declaration concerns a fact cognizable
by the declarant; (c) that at the time the declaration was made, he was aware that the
same was contrary to his interest; and (d) that circumstances render improbable the
existence of any motive to falsify.[9]
In this case, one of the affiants happens to be the respondent, who is still alive and
who testified that the signature in the affidavit was not hers. A declaration against
interest is not admissible if the declarant is available to testify as a witness.[10] Such
declarant should be confronted with the statement against interest as a prior
inconsistent statement.
The affidavit cannot be considered an ancient document either. An ancient document
is one that is (1) more than 30 years old, (2) found in the proper custody, and (3)
unblemished by any alteration or by any circumstance of suspicion.[11] It must on its
face appear to be genuine. The petitioners herein failed, however, to explain how the
purported signature of Eduarda Apiado could have been affixed to the subject
affidavit if, according to the witness, she was an illiterate woman who never had any
formal schooling. This circumstance casts suspicion on its authenticity.
Not all notarized documents are exempted from the rule on authentication. Thus, an
affidavit does not automatically become a public document just because it contains a
notarial jurat. Furthermore, the affidavit in question does not state how the ownership
of the subject land was transferred from Sinforoso Mendoza to Margarito Mendoza.
By itself, an affidavit is not a mode of acquiring ownership.

Second Issue: Preference of Possession

The CA ruled that the respondent was the preferred possessor under Article 538 of
the Civil Code because she was in notorious, actual, exclusive and continuous
possession of the land since 1985. Petitioners dispute this ruling. They contend that
she came into possession through force and violence, contrary to Article 536 of the
Civil Code.
We concede that despite their dispossession in 1985, the petitioners did not lose legal
possession because possession cannot be acquired through force or violence.[12] To
all intents and purposes, a possessor, even if physically ousted, is still deemed the
legal possessor.[13] Indeed, anyone who can prove prior possession, regardless of its
character, may recover such possession.[14]

However, possession by the petitioners does not prevail over that of the respondent.
Possession by the former before 1985 was not exclusive, as the latter also acquired it
before 1985. The records show that the petitioners father and brother, as well as the
respondent and her mother were simultaneously in adverse possession of the land.
Before 1985, the subject land was occupied and cultivated by the respondent's father
(Sinforoso), who was the brother of petitioners' father (Margarito), as evidenced by
Tax Declaration No. 26425.[15] When Sinforoso died in 1930, Margarito took
possession of the land and cultivated it with his son Miguel. At the same time,
respondent and her mother continued residing on the lot.
When respondent came of age in 1948, she paid realty taxes for the years 1932-1948.
[16] Margarito declared the lot for taxation in his name in 1953[17] and paid its
realty taxes beginning 1952.[18] When he died, Miguel continued cultivating the
land. As found by the CA, the respondent and her mother were living on the land,
which was being tilled by Miguel until 1985 when he was physically ousted by the
respondent.[19]
Based on Article 538 of the Civil Code, the respondent is the preferred possessor
because, benefiting from her father's tax declaration of the subject lot since 1926, she
has been in possession thereof for a longer period. On the other hand, petitioners'
father acquired joint possession only in 1952. Ms-esm

Third Issue: Possession of Better Right

Finally, the petitioners challenge the CA ruling that "actual and physical coupled
with the exclusive and continuous possession [by respondent] of the land since 1985"
proved her ownership of the disputed land. The respondent argues that she was
legally presumed to possess the subject land with a just title since she possessed it in
the concept of owner. Under Article 541 of the Code, she could not be obliged to
show or prove such title.
The respondent's contention is untenable. The presumption in Article 541 of the Civil
Code is merely disputable; it prevails until the contrary is proven.[20] That is, one
who is disturbed in one's possession shall, under this provision, be restored thereto
by the means established by law.[21] Article 538 settles only the question of
possession, and possession is different from ownership. Ownership in this case
should be established in one of the ways provided by law.

To settle the issue of ownership, we need to determine who between the claimants
has proven acquisitive prescription.[22]

ownership.[33] In sum, the petitioners' claim of ownership of the whole parcel has
no legal basis.

Ownership of immovable property is acquired by ordinary prescription through

possession for ten years.[23] Being the sole heir of her father, respondent showed
through his tax receipt that she had been in possession of the land for more than ten
years since 1932. When her father died in 1930, she continued to reside there with
her mother. When she got married, she and her husband engaged in kaingin inside
the disputed lot for their livelihood.[24]

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution
AFFIRMED. Costs against petitioners.

Respondent's possession was not disturbed until 1953 when the petitioners' father
claimed the land. But by then, her possession, which was in the concept of owner -public, peaceful, and uninterrupted[25] -- had already ripened into ownership.
Furthermore she herself, after her father's demise, declared and paid realty taxes for
the disputed land. Tax receipts and declarations of ownership for taxation, when
coupled with proof of actual possession of the property, can be the basis of a claim
for ownership through prescription.[26]

In contrast, the petitioners, despite thirty-two years of farming the subject land, did
not acquire ownership. It is settled that ownership cannot be acquired by mere
occupation.[27] Unless coupled with the element of hostility toward the true owner,
[28] occupation and use, however long, will not confer title by prescription or
adverse possession. Moreover, the petitioners cannot claim that their possession was
public, peaceful and uninterrupted. Although their father and brother arguably
acquired ownership through extraordinary prescription because of their adverse
possession for thirty-two years (1953-1985),[29] this supposed ownership cannot
extend to the entire disputed lot, but must be limited to the portion that they actually
farmed.
We cannot sustain the petitioners' contention that their ownership of the disputed
land was established before the trial court through the series of tax declarations and
receipts issued in the name of Margarito Mendoza. Such documents prove that the
holder has a claim of title over the property. Aside from manifesting a sincere desire
to obtain title thereto, they announce the holder's adverse claim against the state and
other interested parties.[30]
However, tax declarations and receipts are not conclusive evidence of ownership.
[31] At most, they constitute mere prima facie proof of ownership or possession of
the property for which taxes have been paid.[32] In the absence of actual public and
adverse possession, the declaration of the land for tax purposes does not prove

SO ORDERED.

G.R. No. L-6019 March 25, 1911

JUAN N. ARAGON, petitioner-appellee, vs. THE INSULAR GOVERNMENT,

oppositor-appellant.

This is an appeal from a decree of the Court of Land Registration adjudicating title to
a small lot or parcel of land in the city of Manila in favor of the appellees and
ordering its registry in accordance with the provisions of "The Land Registration
Act."
The Government of the Philippine Islands , through its proper representatives,
objected to the application for registry on the ground that, as it alleges, the land in
question is a part of the public domain, as defined in subsection 1, article 339, of the
Civil Code, which is as follows:

ART. 339.

Property of public ownership is -

1.
That destined to the public use, such as roads, canals, rivers, torrents, ports,
and bridges constructed by the State, and banks, shores, roadsteads, and that of a
similar character.
and also as defined in article 1 of "The Law of Waters" (Ley de Aguas) of the 3rd of
August, 1886, which is as follows:

The following belong to the national domain and are for the public use:

xxx xxx xxx

3.
The shores. - "Shore" is understood to be that space which is alternatively
covered and uncovered by water with the movement of the tides. Its interior or
terrestial limit is marked by the lone reached by the highest tides and equinoctials.
Where the tides are not perceptible the shore begins at the line reached by the water
during tempests and ordinary storms.

The evidence of record leaves no room for doubt that, as alleged by the opponent, the
land in question, at the time when the trial was had in the court below, was so located
that at high tide it was completely covered by the waters of the Bay of Manila,
though the receding waters left it completely bare at low tide. It can not be denied,
therefore, that if there were no other evidence of record, touching the physical status
of this land or title thereto, the contention of the Government would necessarily be
sustained.
It appears, however, that in the year 1892 a possessory title to the land in question
was duly registered in favor of Inocencio Aragon, one of the predecessors in interest
of these applicants; that for a long period of years, and perhaps from a time beyond
which the memory of man runneth not to the contrary, the applicant and their
predecessors in interest have been in possession of the parcel of land in question,
under and undisputed claim of ownership; that it is located toward the center of one
of the most valuable residential sections of the city of Manila, and that for many
years a house stood upon this land, and was occupied by some of the predecessors in
interest of the applicants in these proceedings; that with some relatively small
expenditure by way of a "fill" or a "retaining wall" it would still be a valuable
building lot for residential purposes; that the adjoining lots extend toward the bay to
a line formed by the extension of the outer boundary line of the lot in question, and
that these adjoining lots would be in substantially the same physical condition, by
relation to the ebb and flow of the tide, as lot in question, but for low retaining walls
which protect them against the incoming sea; that the water which spreads over the
lot in question at high tide is of but little depth, and would be wholly excluded by a
very limited amount of "filling" materials or a low retaining wall; that there are
strong reasons to believe that the land in question was originally well above the ebb
and flow of the tide; and that only in later years have the waters risen to such a
height along the shores of the Bay of Manila at this point as to cover the land in
question completely at high tide; though it does not definitely appear whether this is
due to changes in the current and flow of the waters in the bay, or to the gradual
sinking of the land along the coast.

We think that these facts conclusively establish the right of possession and ownership
of the applicants.

Article 446 of the Civil Code is as follows:

Every possessor has a right to be respected in his possession; and should he be

disturbed therein, he must be protected or possession must be restored to him by the
means established in the laws of procedure.

Article 460 of that code is as follows:

The possessor may lose his possession -

1.

By the abandonment of the thing.

2.

By transfer to another for a good or valuable consideration.

3.
By the destruction or total loss of the thing or by the thing becoming
unmarketable.
4.
By the possession of another, even against the will of the former possessor,
if the new possession has lasted more than one year.

Under these provisions of the code it seems quite clear that if the Government is
justified in disturbing the possession of the applicants, it can only be on the ground
that they have abandoned their property, or that it has been totally destroyed and has
now become a part of the public domain by the erosive action of the sea. It is quite
clear that applicants have never abandoned their possession under a claim of
ownership of this land. And we think the facts above stated fully sustain a finding
that there has been no such destructive or total loss of the property as would justify a
holding that the owners have lost possession. Doubtless the property has been injured
by the erosive action of the sea. Doubtless the owners in order to profitably enjoy the

possession of this property will be compelled to make some relatively small

expenditures by way of a "fill" or a retaining wall. But the actual condition of the
property as it appears from the record makes a claim that it has been totally lost or
destroyed preposterous and wholly untenable. We need hardly add that if the
applicants have not lost their right of possession, the Government's claim of
ownership, on the ground that this is a part of the playa (shore) of Manila Bay,
necessarily falls to the ground.

Ferrer, Judge of the Regional Trial Court of Baguio and Benguet in Civil Case No.
3607 (419) and Civil Case No. 3655 (429), with the dispositive portion as follows:

We should not be understood, by this decision, to hold that in a case of gradual

encroachment or erosion by the ebb and flow of the tide, private property may not
become "property of public ownership," as defined in article 339 of the code, where
it appears that the owner has to all intents and purposes abandoned it and permitted it
to be totally destroyed, so as to become a part of the "playa" (shore of the sea),
"rada" (roadstead), or the like. Our ruling in this case is merely that it affirmatively
appears that the owners of the land in question have never in fact nor in intent
abandoned it, and that keeping in mind its location and actual condition it can not be
said to have been totally destroyed for the purposes for which it was held by them, so
as to have become a part of the playa (shore) of the Bay of Manila.

Respondent Court of Appeals, in affirming the trial court's decision, sustained the
trial court's conclusions that the Decision of the Court of Appeals, dated May 4,1977
in CA-G.R. No. 38830-R, in the two cases affirmed by the Supreme Court, touched
on the ownership of lots 2 and 3 in question; that the two lots were possessed by the
predecessors-in-interest of private respondents under claim of ownership in good
faith from 1906 to 1951; that petitioner had been in possession of the same lots as
bailee in commodatum up to 1951, when petitioner repudiated the trust and when it
applied for registration in 1962; that petitioner had just been in possession as owner
for eleven years, hence there is no possibility of acquisitive prescription which
requires 10 years possession with just title and 30 years of possession without; that
the principle of res judicata on these findings by the Court of Appeals will bar a
reopening of these questions of facts; and that those facts may no longer be altered.

The decree entered by the lower court should be affirmed, with the costs of this
instance against the appellant. It is so ordered.

WHEREFORE, Judgment is hereby rendered ordering the defendant, Catholic Vicar

Apostolic of the Mountain Province to return and surrender Lot 2 of Plan Psu194357 to the plaintiffs. Heirs of Juan Valdez, and Lot 3 of the same Plan to the other
set of plaintiffs, the Heirs of Egmidio Octaviano (Leonardo Valdez, et al.). For lack
or insufficiency of evidence, the plaintiffs' claim or damages is hereby denied. Said
defendant is ordered to pay costs. (p. 36, Rollo)

Petitioner's motion for reconsideration of the respondent appellate court's Decision in

the two aforementioned cases (CA G.R. No. CV-05418 and 05419) was denied.
G.R. No. 80294-95

September 21, 1988

CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE, vs.

COURT OF APPEALS, HEIRS OF EGMIDIO OCTAVIANO AND JUAN
VALDEZ,

The principal issue in this case is whether or not a decision of the Court of Appeals
promulgated a long time ago can properly be considered res judicata by respondent
Court of Appeals in the present two cases between petitioner and two private
respondents.
Petitioner questions as allegedly erroneous the Decision dated August 31, 1987 of the
Ninth Division of Respondent Court of Appeals 1 in CA-G.R. No. 05148 [Civil Case
No. 3607 (419)] and CA-G.R. No. 05149 [Civil Case No. 3655 (429)], both for
Recovery of Possession, which affirmed the Decision of the Honorable Nicodemo T.

The facts and background of these cases as narrated by the trail court are as follows

... The documents and records presented reveal that the whole controversy started
when the defendant Catholic Vicar Apostolic of the Mountain Province (VICAR for
brevity) filed with the Court of First Instance of Baguio Benguet on September 5,
1962 an application for registration of title over Lots 1, 2, 3, and 4 in Psu-194357,
situated at Poblacion Central, La Trinidad, Benguet, docketed as LRC N-91, said
Lots being the sites of the Catholic Church building, convents, high school building,
school gymnasium, school dormitories, social hall, stonewalls, etc. On March 22,
1963 the Heirs of Juan Valdez and the Heirs of Egmidio Octaviano filed their
Answer/Opposition on Lots Nos. 2 and 3, respectively, asserting ownership and title
thereto. After trial on the merits, the land registration court promulgated its Decision,
dated November 17, 1965, confirming the registrable title of VICAR to Lots 1, 2, 3,
and 4.

The Heirs of Juan Valdez (plaintiffs in the herein Civil Case No. 3655) and the Heirs
of Egmidio Octaviano (plaintiffs in the herein Civil Case No. 3607) appealed the
decision of the land registration court to the then Court of Appeals, docketed as CAG.R. No. 38830-R. The Court of Appeals rendered its decision, dated May 9, 1977,
reversing the decision of the land registration court and dismissing the VICAR's
application as to Lots 2 and 3, the lots claimed by the two sets of oppositors in the
land registration case (and two sets of plaintiffs in the two cases now at bar), the first
lot being presently occupied by the convent and the second by the women's
dormitory and the sister's convent.
On May 9, 1977, the Heirs of Octaviano filed a motion for reconsideration praying
the Court of Appeals to order the registration of Lot 3 in the names of the Heirs of
Egmidio Octaviano, and on May 17, 1977, the Heirs of Juan Valdez and Pacita
Valdez filed their motion for reconsideration praying that both Lots 2 and 3 be
ordered registered in the names of the Heirs of Juan Valdez and Pacita Valdez. On
August 12,1977, the Court of Appeals denied the motion for reconsideration filed by
the Heirs of Juan Valdez on the ground that there was "no sufficient merit to justify
reconsideration one way or the other ...," and likewise denied that of the Heirs of
Egmidio Octaviano.
Thereupon, the VICAR filed with the Supreme Court a petition for review on
certiorari of the decision of the Court of Appeals dismissing his (its) application for
registration of Lots 2 and 3, docketed as G.R. No. L-46832, entitled 'Catholic Vicar
Apostolic of the Mountain Province vs. Court of Appeals and Heirs of Egmidio
Octaviano.'
From the denial by the Court of Appeals of their motion for reconsideration the Heirs
of Juan Valdez and Pacita Valdez, on September 8, 1977, filed with the Supreme
Court a petition for review, docketed as G.R. No. L-46872, entitled, Heirs of Juan
Valdez and Pacita Valdez vs. Court of Appeals, Vicar, Heirs of Egmidio Octaviano
and Annable O. Valdez.
On January 13, 1978, the Supreme Court denied in a minute resolution both petitions
(of VICAR on the one hand and the Heirs of Juan Valdez and Pacita Valdez on the
other) for lack of merit. Upon the finality of both Supreme Court resolutions in G.R.
No. L-46832 and G.R. No. L- 46872, the Heirs of Octaviano filed with the then
Court of First Instance of Baguio, Branch II, a Motion For Execution of Judgment
praying that the Heirs of Octaviano be placed in possession of Lot 3. The Court,
presided over by Hon. Salvador J. Valdez, on December 7, 1978, denied the motion
on the ground that the Court of Appeals decision in CA-G.R. No. 38870 did not grant
the Heirs of Octaviano any affirmative relief.

On February 7, 1979, the Heirs of Octaviano filed with the Court of Appeals a
petitioner for certiorari and mandamus, docketed as CA-G.R. No. 08890-R, entitled
Heirs of Egmidio Octaviano vs. Hon. Salvador J. Valdez, Jr. and Vicar. In its decision
dated May 16, 1979, the Court of Appeals dismissed the petition.
It was at that stage that the instant cases were filed. The Heirs of Egmidio Octaviano
filed Civil Case No. 3607 (419) on July 24, 1979, for recovery of possession of Lot
3; and the Heirs of Juan Valdez filed Civil Case No. 3655 (429) on September 24,
1979, likewise for recovery of possession of Lot 2 (Decision, pp. 199-201, Orig.
Rec.).
In Civil Case No. 3607 (419) trial was held. The plaintiffs Heirs of Egmidio
Octaviano presented one (1) witness, Fructuoso Valdez, who testified on the alleged
ownership of the land in question (Lot 3) by their predecessor-in-interest, Egmidio
Octaviano (Exh. C ); his written demand (Exh. BB-4 ) to defendant Vicar for the
return of the land to them; and the reasonable rentals for the use of the land at
P10,000.00 per month. On the other hand, defendant Vicar presented the Register of
Deeds for the Province of Benguet, Atty. Nicanor Sison, who testified that the land in
question is not covered by any title in the name of Egmidio Octaviano or any of the
plaintiffs (Exh. 8). The defendant dispensed with the testimony of Mons.William
Brasseur when the plaintiffs admitted that the witness if called to the witness stand,
would testify that defendant Vicar has been in possession of Lot 3, for seventy-five
(75) years continuously and peacefully and has constructed permanent structures
thereon.
In Civil Case No. 3655, the parties admitting that the material facts are not in
dispute, submitted the case on the sole issue of whether or not the decisions of the
Court of Appeals and the Supreme Court touching on the ownership of Lot 2, which
in effect declared the plaintiffs the owners of the land constitute res judicata.
In these two cases , the plaintiffs arque that the defendant Vicar is barred from setting
up the defense of ownership and/or long and continuous possession of the two lots in
question since this is barred by prior judgment of the Court of Appeals in CA-G.R.
No. 038830-R under the principle of res judicata. Plaintiffs contend that the question
of possession and ownership have already been determined by the Court of Appeals
(Exh. C, Decision, CA-G.R. No. 038830-R) and affirmed by the Supreme Court
(Exh. 1, Minute Resolution of the Supreme Court). On his part, defendant Vicar
maintains that the principle of res judicata would not prevent them from litigating the
issues of long possession and ownership because the dispositive portion of the prior
judgment in CA-G.R. No. 038830-R merely dismissed their application for
registration and titling of lots 2 and 3. Defendant Vicar contends that only the

dispositive portion of the decision, and not its body, is the controlling
pronouncement of the Court of Appeals. 2

The alleged errors committed by respondent Court of Appeals according to petitioner

are as follows:
1.

ERROR IN APPLYING LAW OF THE CASE AND RES JUDICATA;

2.
ERROR IN FINDING THAT THE TRIAL COURT RULED THAT LOTS 2
AND 3 WERE ACQUIRED BY PURCHASE BUT WITHOUT DOCUMENTARY
EVIDENCE PRESENTED;
3.
ERROR IN FINDING THAT PETITIONERS' CLAIM IT PURCHASED
LOTS 2 AND 3 FROM VALDEZ AND OCTAVIANO WAS AN IMPLIED
ADMISSION THAT THE FORMER OWNERS WERE VALDEZ AND
OCTAVIANO;
4.
ERROR IN FINDING THAT IT WAS PREDECESSORS OF PRIVATE
RESPONDENTS WHO WERE IN POSSESSION OF LOTS 2 AND 3 AT LEAST
FROM 1906, AND NOT PETITIONER;
5.
ERROR IN FINDING THAT VALDEZ AND OCTAVIANO HAD FREE
PATENT APPLICATIONS AND THE PREDECESSORS OF PRIVATE
RESPONDENTS ALREADY HAD FREE PATENT APPLICATIONS SINCE 1906;
6.
ERROR IN FINDING THAT PETITIONER DECLARED LOTS 2 AND 3
ONLY IN 1951 AND JUST TITLE IS A PRIME NECESSITY UNDER ARTICLE
1134 IN RELATION TO ART. 1129 OF THE CIVIL CODE FOR ORDINARY
ACQUISITIVE PRESCRIPTION OF 10 YEARS;
7.
ERROR IN FINDING THAT THE DECISION OF THE COURT OF
APPEALS IN CA G.R. NO. 038830 WAS AFFIRMED BY THE SUPREME
COURT;
8.
ERROR IN FINDING THAT THE DECISION IN CA G.R. NO. 038830
TOUCHED ON OWNERSHIP OF LOTS 2 AND 3 AND THAT PRIVATE
RESPONDENTS AND THEIR PREDECESSORS WERE IN POSSESSION OF
LOTS 2 AND 3 UNDER A CLAIM OF OWNERSHIP IN GOOD FAITH FROM
1906 TO 1951;

9.
ERROR IN FINDING THAT PETITIONER HAD BEEN IN POSSESSION
OF LOTS 2 AND 3 MERELY AS BAILEE BOR ROWER) IN COMMODATUM, A
GRATUITOUS LOAN FOR USE;
10.
ERROR IN FINDING THAT PETITIONER IS A POSSESSOR AND
BUILDER IN GOOD FAITH WITHOUT RIGHTS OF RETENTION AND
REIMBURSEMENT AND IS BARRED BY THE FINALITY AND
CONCLUSIVENESS OF THE DECISION IN CA G.R. NO. 038830. 3

The petition is bereft of merit.

Petitioner questions the ruling of respondent Court of Appeals in CA-G.R. Nos.
05148 and 05149, when it clearly held that it was in agreement with the findings of
the trial court that the Decision of the Court of Appeals dated May 4,1977 in CAG.R. No. 38830-R, on the question of ownership of Lots 2 and 3, declared that the
said Court of Appeals Decision CA-G.R. No. 38830-R) did not positively declare
private respondents as owners of the land, neither was it declared that they were not
owners of the land, but it held that the predecessors of private respondents were
possessors of Lots 2 and 3, with claim of ownership in good faith from 1906 to 1951.
Petitioner was in possession as borrower in commodatum up to 1951, when it
repudiated the trust by declaring the properties in its name for taxation purposes.
When petitioner applied for registration of Lots 2 and 3 in 1962, it had been in
possession in concept of owner only for eleven years. Ordinary acquisitive
prescription requires possession for ten years, but always with just title.
Extraordinary acquisitive prescription requires 30 years. 4
On the above findings of facts supported by evidence and evaluated by the Court of
Appeals in CA-G.R. No. 38830-R, affirmed by this Court, We see no error in
respondent appellate court's ruling that said findings are res judicata between the
parties. They can no longer be altered by presentation of evidence because those
issues were resolved with finality a long time ago. To ignore the principle of res
judicata would be to open the door to endless litigations by continuous determination
of issues without end.
An examination of the Court of Appeals Decision dated May 4, 1977, First Division
5 in CA-G.R. No. 38830-R, shows that it reversed the trial court's Decision 6 finding
petitioner to be entitled to register the lands in question under its ownership, on its
evaluation of evidence and conclusion of facts.

The Court of Appeals found that petitioner did not meet the requirement of 30 years
possession for acquisitive prescription over Lots 2 and 3. Neither did it satisfy the
requirement of 10 years possession for ordinary acquisitive prescription because of
the absence of just title. The appellate court did not believe the findings of the trial
court that Lot 2 was acquired from Juan Valdez by purchase and Lot 3 was acquired
also by purchase from Egmidio Octaviano by petitioner Vicar because there was
absolutely no documentary evidence to support the same and the alleged purchases
were never mentioned in the application for registration.
By the very admission of petitioner Vicar, Lots 2 and 3 were owned by Valdez and
Octaviano. Both Valdez and Octaviano had Free Patent Application for those lots
since 1906. The predecessors of private respondents, not petitioner Vicar, were in
possession of the questioned lots since 1906.
There is evidence that petitioner Vicar occupied Lots 1 and 4, which are not in
question, but not Lots 2 and 3, because the buildings standing thereon were only
constructed after liberation in 1945. Petitioner Vicar only declared Lots 2 and 3 for
taxation purposes in 1951. The improvements oil Lots 1, 2, 3, 4 were paid for by the
Bishop but said Bishop was appointed only in 1947, the church was constructed only
in 1951 and the new convent only 2 years before the trial in 1963.
When petitioner Vicar was notified of the oppositor's claims, the parish priest offered
to buy the lot from Fructuoso Valdez. Lots 2 and 3 were surveyed by request of
petitioner Vicar only in 1962.
Private respondents were able to prove that their predecessors' house was borrowed
by petitioner Vicar after the church and the convent were destroyed. They never
asked for the return of the house, but when they allowed its free use, they became
bailors in commodatum and the petitioner the bailee. The bailees' failure to return the
subject matter of commodatum to the bailor did not mean adverse possession on the
part of the borrower. The bailee held in trust the property subject matter of
commodatum. The adverse claim of petitioner came only in 1951 when it declared
the lots for taxation purposes. The action of petitioner Vicar by such adverse claim
could not ripen into title by way of ordinary acquisitive prescription because of the
absence of just title.
The Court of Appeals found that the predecessors-in-interest and private respondents
were possessors under claim of ownership in good faith from 1906; that petitioner
Vicar was only a bailee in commodatum; and that the adverse claim and repudiation
of trust came only in 1951.

We find no reason to disregard or reverse the ruling of the Court of Appeals in CAG.R. No. 38830-R. Its findings of fact have become incontestible. This Court
declined to review said decision, thereby in effect, affirming it. It has become final
and executory a long time ago.
Respondent appellate court did not commit any reversible error, much less grave
abuse of discretion, when it held that the Decision of the Court of Appeals in CAG.R. No. 38830-R is governing, under the principle of res judicata, hence the rule, in
the present cases CA-G.R. No. 05148 and CA-G.R. No. 05149. The facts as
supported by evidence established in that decision may no longer be altered.
WHEREFORE AND BY REASON OF THE FOREGOING, this petition is DENIED
for lack of merit, the Decision dated Aug. 31, 1987 in CA-G.R. Nos. 05148 and
05149, by respondent Court of Appeals is AFFIRMED, with costs against petitioner.
SO ORDERED.

G.R. No. 80298

April 26, 1990

EDCA PUBLISHING & DISTRIBUTING CORP., vs. THE SPOUSES

LEONOR and GERARDO SANTOS, doing business under the name and style
of "SANTOS BOOKSTORE," and THE COURT OF APPEALS,

The case before us calls for the interpretation of Article 559 of the Civil Code and
raises the particular question of when a person may be deemed to have been
"unlawfully deprived" of movable property in the hands of another. The article runs
in full as follows:
Art. 559. The possession of movable property acquired in good faith is equivalent to
a title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof, may recover it from the person in possession of the same.

If the possessor of a movable lost or of which the owner has been unlawfully
deprived has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor.

The movable property in this case consists of books, which were bought from the
petitioner by an impostor who sold it to the private respondents. Ownership of the
books was recognized in the private respondents by the Municipal Trial Court, 1
which was sustained by the Regional Trial Court, 2 which was in turn sustained by
the Court of Appeals. 3 The petitioner asks us to declare that all these courts have
erred and should be reversed.

assistance of the police, which should have been the first to uphold legal and
peaceful processes, has compounded the wrong even more deplorably. Questions like
the one at bar are decided not by policemen but by judges and with the use not of
brute force but of lawful writs.

This case arose when on October 5, 1981, a person identifying himself as Professor
Jose Cruz placed an order by telephone with the petitioner company for 406 books,
payable on delivery. 4 EDCA prepared the corresponding invoice and delivered the
books as ordered, for which Cruz issued a personal check covering the purchase
price of P8,995.65. 5 On October 7, 1981, Cruz sold 120 of the books to private
respondent Leonor Santos who, after verifying the seller's ownership from the
invoice he showed her, paid him P1,700.00. 6

Now to the merits

Meanwhile, EDCA having become suspicious over a second order placed by Cruz
even before clearing of his first check, made inquiries with the De la Salle College
where he had claimed to be a dean and was informed that there was no such person
in its employ. Further verification revealed that Cruz had no more account or deposit
with the Philippine Amanah Bank, against which he had drawn the payment check. 7
EDCA then went to the police, which set a trap and arrested Cruz on October 7,
1981. Investigation disclosed his real name as Tomas de la Pea and his sale of 120
of the books he had ordered from EDCA to the private respondents. 8

On the night of the same date, EDCA sought the assistance of the police in Precinct 5
at the UN Avenue, which forced their way into the store of the private respondents
and threatened Leonor Santos with prosecution for buying stolen property. They
seized the 120 books without warrant, loading them in a van belonging to EDCA,
and thereafter turned them over to the petitioner. 9
Protesting this high-handed action, the private respondents sued for recovery of the
books after demand for their return was rejected by EDCA. A writ of preliminary
attachment was issued and the petitioner, after initial refusal, finally surrendered the
books to the private respondents. 10 As previously stated, the petitioner was
successively rebuffed in the three courts below and now hopes to secure relief from
us.
To begin with, the Court expresses its disapproval of the arbitrary action of the
petitioner in taking the law into its own hands and forcibly recovering the disputed
books from the private respondents. The circumstance that it did so with the

It is the contention of the petitioner that the private respondents have not established
their ownership of the disputed books because they have not even produced a receipt
to prove they had bought the stock. This is unacceptable. Precisely, the first sentence
of Article 559 provides that "the possession of movable property acquired in good
faith is equivalent to a title," thus dispensing with further proof.
The argument that the private respondents did not acquire the books in good faith has
been dismissed by the lower courts, and we agree. Leonor Santos first ascertained the
ownership of the books from the EDCA invoice showing that they had been sold to
Cruz, who said he was selling them for a discount because he was in financial need.
Private respondents are in the business of buying and selling books and often deal
with hard-up sellers who urgently have to part with their books at reduced prices. To
Leonor Santos, Cruz must have been only one of the many such sellers she was
accustomed to dealing with. It is hardly bad faith for anyone in the business of
buying and selling books to buy them at a discount and resell them for a profit.
But the real issue here is whether the petitioner has been unlawfully deprived of the
books because the check issued by the impostor in payment therefor was dishonored.
In its extended memorandum, EDCA cites numerous cases holding that the owner
who has been unlawfully deprived of personal property is entitled to its recovery
except only where the property was purchased at a public sale, in which event its
return is subject to reimbursement of the purchase price. The petitioner is begging
the question. It is putting the cart before the horse. Unlike in the cases invoked, it has
yet to be established in the case at bar that EDCA has been unlawfully deprived of
the books.
The petitioner argues that it was, because the impostor acquired no title to the books
that he could have validly transferred to the private respondents. Its reason is that as
the payment check bounced for lack of funds, there was a failure of consideration
that nullified the contract of sale between it and Cruz.

The contract of sale is consensual and is perfected once agreement is reached

between the parties on the subject matter and the consideration. According to the
Civil Code:
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
xxx

xxx

it from any person possessing it." We do not believe that the plaintiff has been
unlawfully deprived of the cartons of Gloco Tonic within the scope of this legal
provision. It has voluntarily parted with them pursuant to a contract of purchase and
sale. The circumstance that the price was not subsequently paid did not render illegal
a transaction which was valid and legal at the beginning.
In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist, who sold it to Sanchez,
who sold it to Jimenez. When the payment check issued to Tagatac by Feist was
dishonored, the plaintiff sued to recover the vehicle from Jimenez on the ground that
she had been unlawfully deprived of it by reason of Feist's deception. In ruling for
Jimenez, the Court of Appeals held:

xxx

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof.
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership
in the thing sold shall not pass to the buyer until full payment of the purchase only if
there is a stipulation to that effect. Otherwise, the rule is that such ownership shall
pass from the vendor to the vendee upon the actual or constructive delivery of the
thing sold even if the purchase price has not yet been paid.
Non-payment only creates a right to demand payment or to rescind the contract, or to
criminal prosecution in the case of bouncing checks. But absent the stipulation above
noted, delivery of the thing sold will effectively transfer ownership to the buyer who
can in turn transfer it to another.
In Asiatic Commercial Corporation v. Ang,11 the plaintiff sold some cosmetics to
Francisco Ang, who in turn sold them to Tan Sit Bin. Asiatic not having been paid by
Ang, it sued for the recovery of the articles from Tan, who claimed he had validly
bought them from Ang, paying for the same in cash. Finding that there was no
conspiracy between Tan and Ang to deceive Asiatic the Court of Appeals declared:
Yet the defendant invoked Article 464 12 of the Civil Code providing, among other
things that "one who has been unlawfully deprived of personal property may recover

The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been

unlawfully deprived of her car. At first blush, it would seem that she was unlawfully
deprived thereof, considering that she was induced to part with it by reason of the
chicanery practiced on her by Warner L. Feist. Certainly, swindling, like robbery, is
an illegal method of deprivation of property. In a manner of speaking, plaintiffappellant was "illegally deprived" of her car, for the way by which Warner L. Feist
induced her to part with it is illegal and is punished by law. But does this "unlawful
deprivation" come within the scope of Article 559 of the New Civil Code?
xxx

xxx

xxx

. . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a
voidable contract (Article 1390 N.C.C.). Being a voidable contract, it is susceptible
of either ratification or annulment. If the contract is ratified, the action to annul it is
extinguished (Article 1392, N.C.C.) and the contract is cleansed from all its defects
(Article 1396, N.C.C.); if the contract is annulled, the contracting parties are restored
to their respective situations before the contract and mutual restitution follows as a
consequence (Article 1398, N.C.C.).

However, as long as no action is taken by the party entitled, either that of annulment
or of ratification, the contract of sale remains valid and binding. When plaintiffappellant Trinidad C. Tagatac delivered the car to Feist by virtue of said voidable
contract of sale, the title to the car passed to Feist. Of course, the title that Feist
acquired was defective and voidable. Nevertheless, at the time he sold the car to

Felix Sanchez, his title thereto had not been avoided and he therefore conferred a
good title on the latter, provided he bought the car in good faith, for value and
without notice of the defect in Feist's title (Article 1506, N.C.C.). There being no
proof on record that Felix Sanchez acted in bad faith, it is safe to assume that he
acted in good faith.

The above rulings are sound doctrine and reflect our own interpretation of Article
559 as applied to the case before us.

Actual delivery of the books having been made, Cruz acquired ownership over the
books which he could then validly transfer to the private respondents. The fact that
he had not yet paid for them to EDCA was a matter between him and EDCA and did
not impair the title acquired by the private respondents to the books.
One may well imagine the adverse consequences if the phrase "unlawfully deprived"
were to be interpreted in the manner suggested by the petitioner. A person relying on
the seller's title who buys a movable property from him would have to surrender it to
another person claiming to be the original owner who had not yet been paid the
purchase price therefor. The buyer in the second sale would be left holding the bag,
so to speak, and would be compelled to return the thing bought by him in good faith
without even the right to reimbursement of the amount he had paid for it.
It bears repeating that in the case before us, Leonor Santos took care to ascertain first
that the books belonged to Cruz before she agreed to purchase them. The EDCA
invoice Cruz showed her assured her that the books had been paid for on delivery.
By contrast, EDCA was less than cautious in fact, too trusting in dealing with the
impostor. Although it had never transacted with him before, it readily delivered the
books he had ordered (by telephone) and as readily accepted his personal check in
payment. It did not verify his identity although it was easy enough to do this. It did
not wait to clear the check of this unknown drawer. Worse, it indicated in the sales
invoice issued to him, by the printed terms thereon, that the books had been paid for
on delivery, thereby vesting ownership in the buyer.
Surely, the private respondent did not have to go beyond that invoice to satisfy
herself that the books being offered for sale by Cruz belonged to him; yet she did.
Although the title of Cruz was presumed under Article 559 by his mere possession of
the books, these being movable property, Leonor Santos nevertheless demanded
more proof before deciding to buy them.

It would certainly be unfair now to make the private respondents bear the prejudice
sustained by EDCA as a result of its own negligence.1wphi1 We cannot see the
justice in transferring EDCA's loss to the Santoses who had acted in good faith, and
with proper care, when they bought the books from Cruz.
While we sympathize with the petitioner for its plight, it is clear that its remedy is
not against the private respondents but against Tomas de la Pea, who has apparently
caused all this trouble. The private respondents have themselves been unduly
inconvenienced, and for merely transacting a customary deal not really unusual in
their kind of business. It is they and not EDCA who have a right to complain.
WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED,
with costs against the petitioner.

G.R. No. L-20264

January 30, 1971

CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners,

vs.
HON. COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B.
GUEVARA, respondents.

Deogracias T. Reyes and Jose M. Luison for petitioners.

Tolentino and Garcia and D.R. Cruz for private respondents.

FERNANDO, J.:

This petition for certiorari to review a decision of respondent Court of Appeals was
given due course because it was therein vigorously asserted that legal questions of
gravity and of moment, there being allegations of an unwarranted departure from and
a patent misreading of applicable and controlling decisions, called for determination
by this Tribunal. The brief for petitioners-spouses, however, failed to substantiate
such imputed failings of respondent Court. The performance did not live up to the
promise. On the basis of the facts as duly found by respondent Court, which we are
not at liberty to disregard, and the governing legal provisions, there is no basis for
reversal. We affirm.

The nature of the case presented before the lower court by private respondent
Angelina D. Guevara, assisted by her spouse, Juan B. Guevara, as plaintiffs, was
noted in the decision of respondent Court of Appeals thus: "Plaintiff seeks recovery
of `one (1) lady's diamond ring 18 cts. white gold mounting, with one (1) 2.05 cts.
diamond-solitaire, and four (4) brills 0.10 cts. total weight' which she bought on
October 27, 1947 from R. Rebullida, Inc."1 Then came a summary of now
respondent Guevara of her evidence: "Plaintiff's evidence tends to show that around
October 11, 1953 plaintiff while talking to Consuelo S. de Garcia, owner of La
Bulakea restaurant recognized her ring in the finger of Mrs. Garcia and inquired
where she bought it, which the defendant answered from her comadre. Plaintiff
explained that that ring was stolen from her house in February, 1952. Defendant
handed the ring to plaintiff and it fitted her finger. Two or three days later, at the
request of plaintiff, plaintiff, her husband Lt. Col. Juan Guevara, Lt. Cementina of
Pasay PD, defendant and her attorney proceeded to the store of Mr. Rebullida to
whom they showed the ring in question. Mr. Rebullida a examined the ring with the
aid of high power lens and after consulting the stock card thereon, concluded that it
was the very ring that plaintiff bought from him in 1947. The ring was returned to
defendant who despite a written request therefor failed to deliver the ring to plaintiff.
Hence, this case. Later on when the sheriff tried to serve the writ of seizure
(replevin), defendant refused to deliver the ring which had been examined by Mr.
Rebullida, claiming it was lost."2

How the defendant, Consuelo S. de Garcia, the present petitioner before us, along
with her husband Anastacio Garcia, sought to meet plaintiff's claim was narrated
thus: "On the other hand, defendant denied having made any admission before
plaintiff or Mr. Rebullida or the sheriff. Her evidence tends to show that the ring
(Exhibit 1) was purchased by her from Mrs. Miranda who got it from Miss Angelita
Hinahon who in turn got it from the owner, Aling Petring, who was boarding in her

house; that the ring she bought could be similar to, but not the same ring plaintiff
purchased from Mr. Rebullida which was stolen; that according to a pawn-shop
owner the big diamond on Exhibit 1 was before the trial never dismantled. When
dismantled, defendant's diamond was found to weigh 2.57 cts."3

Plaintiff lost in the lower court. She elevated the matter to respondent Court of
Appeals with the judgment of the lower court being reversed. It is this decision now
under review.

These are the facts as found by respondent Court of Appeals: "That the ring brought
by the parties for examination by Rafael Rebullida on December 14, 1953 was the
same ring purchased by plaintiff from R. Rebullida, Inc. on October 27, 1947 and
stolen in February, 1952 has been abundantly established by plaintiff's evidence.
Before plaintiff lost the ring, she had been wearing it for six years and became
familiar with it. Thus, when she saw the missing ring in the finger of defendant, she
readily and definitely identified it. Her identification was confirmed by Mr. Rafael
Rebullida, whose candid testimony is entitled to great weight, with his 30 years
experience behind him in the jewelry business and being a disinterested witness
since both parties are his customers. Indeed, defendant made no comment when in
her presence Rebullida after examining the ring and stock card told plaintiff that that
was her ring, nor did she answer plaintiff's letter of demand, ... asserting ownership.
Further confirmation may be found in the extra-judicial admissions, contained in
defendant's original and first amended answers ..."4

These further facts likewise appeal therein: "The foregoing proof is not counterbalanced by the denial on the part of defendant or the presentation of the ring,
Exhibit I, which has a diamond-solitaire 2.57 cts., or much heavier than the lost
diamond weighing 2.05 cts. only. It is noteworthy that defendant gave a rather
dubious source of her ring. Aling Petring from whom the ring supposedly came
turned out to be a mysterious and ephemeral figure. Miss Hinahon did not even know
her true and full name, nor her forwarding address. She appeared from nowhere,
boarded three months in the house of Miss Hinahon long enough to sell her diamond
ring, disappearing from the scene a week thereafter. Indeed, the case was terminated
without any hearing on the third-party and fourth-party complaints, which would
have shown up the falsity of defendant's theory. Moreover, Mrs. Baldomera Miranda,
third-party defendant, who tried to corroborate defendant on the latter's alleged

attempt to exchange the ring defendant bought through her, is [belied] by her judicial
admission in her Answer that appellee `suggested that she would make alterations to
the mounting and structural design of the ring to hide the true identity and
appearance of the original one' (Cunanan vs. Amparo, 45 O.G. 3796). Finally,
defendant is refuted by her own extra-judicial admissions ... although made by
defendant's counsel. For an attorney who acts as counsel of record and is permitted
to act such, has the authority to manage the cause, and this includes the authority to
make admission for the purpose of the litigation... Her proffered explanation that her
counsel misunderstood her is puerile because the liability to error as to the identity of
the vendor and the exchange of the ring with another ring of the same value, was
rather remote."5

It is in the light of the above facts as well as the finding that the discrepancy as to the
weight between the diamond-solitaire in Exhibit I and the lost diamond was due to
defendant having "substituted a diamond-solitaire of plaintiff with a heavier stone"
that the decision was rendered, respondent Court reversing the lower court and
ordering defendant, now petitioner Consuelo S. de Garcia, to return plaintiff's ring or
fact value of P1,000.00 and costs, as well as to pay plaintiff P1,000.00 as attorney's
fee and P1,000.00 as exemplary damages. Hence this appeal.

To repeat, there is no occasion to reverse respondent Court. It correctly applied the

law to the facts as found.

1.
The controlling provision is Article 559 of the Civil Code. It reads thus:
"The possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof
may recover it from the person in possession of the same. If the possessor of a
movable lost of which the owner has been unlawfully deprived, has acquired it in
good faith at a public sale, the owner cannot obtain its return without reimbursing the
price paid therefor." Respondent Angelina D. Guevara, having been unlawfully
deprived of the diamond ring in question, was entitled to recover it from petitioner
Consuelo S. de Garcia who was found in possession of the same. The only exception
the law allows is when there is acquisition in good faith of the possessor at a public
sale, in which case the owner cannot obtain its return without reimbursing the price.
As authoritative interpreted in Cruz v. Pahati, 6 the right of the owner cannot be
defeated even by proof that there was good faith by the acquisition by the possessor.

There is a reiteration of this principle in Aznar v. Yapdiangco.7 Thus: "Suffice it to

say in this regard that the right of the owner to recover personal property acquired in
good faith by another, is based on his being dispossessed without his consent. The
common law principle that where one of two innocent persons must suffer by a fraud
perpetrated by the another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed, cannot be applied in a
case which is covered by an express provision of the new Civil Code, specifically
Article 559. Between a common law principle and statutory provision, the latter must
prevail in this jurisdiction."8

2.
It is thus immediately apparent that there is no merit to the contention raised
in the first assigned error that her possession in good faith, equivalent to title,
sufficed to defeat respondent Guevara's claim. As the above cases demonstrate, even
on that assumption the owner can recover the same once she can show illegal
deprivation. Respondent Court of Appeals was so convinced from the evidence
submitted that the owner of the ring in litigation is such respondent. That is a factual
determination to which we must pay heed. Instead of proving any alleged departure
from legal norms by respondent Court, petitioner would stress Article 541 of the
Civil Code, which provides: 'A possessor in the concept of owner has in his favor the
legal presumption that he possesses with a just title and he cannot be obliged to show
or prove it." She would accord to it a greater legal significance than that to which
under the controlling doctrines it is entitled.lwph1.t The brief for respondents did
clearly point out why petitioner's assertion is lacking in support not only from the
cases but even from commentators. Thus: "Actually, even under the first clause,
possession in good faith does not really amount to title, for the reason that Art. 1132
of the Code provides for a period of acquisitive prescription for movables through
`uninterrupted possession for four years in good faith' (Art. 1955 of the old Spanish
Code, which provided a period of three years), so that many Spanish writers,
including Manresa, Sanchez Roman, Scaevola, De Buen, and Ramos, assert that
under Art. 464 of the Spanish Code (Art. 559 of the New Civil Code), the title of the
possessor is not that of ownership, but is merely a presumptive title sufficient to
serve as a basis of acquisitive prescription (II Tolentino, Civil Code of the Phil. p.
258: IV Manresa, Derecho Civil Espaol, 6th Ed., p. 380). And it is for the very
reason that the title established by the first clause of Art. 559 is only a presumptive
title sufficient to serve as a basis for acquisitive prescription, that the clause
immediately following provides that `one who has lost any movable or has been
unlawfully deprived thereof, may recover it from the person in possession of the
same.' As stated by the Honorable Justice Jose B. L. Reyes of this Court in Sotto vs.
Enage (C.A.), 43 Off. Gaz. 5075, Dec. 1947: `Article 559 in fact assumes that

possessor is as yet not the owner; for it is obvious that where the possessor has come
to acquire indefeasible title by, let us say, adverse possession for the necessary
period, no proof of loss or illegal deprivation could avail the former owner of the
chattel. He would no longer be entitled to recover it under any condition.' "9

The second assigned error is centered on the alleged failure to prove the identity of
the diamond ring. Clearly the question raised is one of the fact. What the Court of
Appeals found is conclusive. Again, petitioner could not demonstrate that in reaching
such a conclusion the Court of Appeals acted in an arbitrary manner. As made
mention of in the brief for respondents two disinterested witnesses, Mr. Rafael
Rebullida as well as Lt. Col. Reynaldo Cementina of the Pasay City Police
Department, both of whom could not be accused of being biased in favor of
respondent Angelina D. Guevara, did testify as to the identity of the ring.

The third assigned error of petitioners would find fault with respondent Court relying
"on the weakness of the title or evidence" of petitioner Consuelo S. de Garcia. It is
true, in the decision under review, mention was made of petitioner Consuelo S. de
Garcia making no comment when in her presence Rebullida, after examining the ring
the stock card, told respondent Angelina L. Guevara that that was her ring, nor did
petitioner answer a letter of the latter asserting ownership. It was likewise stated in
such decision that there were extra-judicial admissions in the original and first
amended answers of petitioner. In the appraisal of her testimony, respondent Court
likewise spoke of her giving a rather dubious source of her ring, the person from
whom she allegedly bought it turning out "to be a mysterious and ephemeral figure."
As a matter of fact, as set forth a few pages back, respondent Court did enumerate
the flaws in the version given by petitioner. From the weakness of the testimony
offered which, as thus made clear, petitioner, did not even seek to refute, she would
raise the legal question that respondent Court relied on the "weakness of [her] title or
evidence" rather than on the proof justifying respondent Angelina D. Guevara's claim
of ownership. Petitioner here would ignore the finding of fact of respondent Court
that such ownership on her part "has been abundantly established" by her evidence.
Again here, in essence, the question raised is one of fact, and there is no justification
for us to reverse respondent Court.

appeal as it was never put in issue by the pleadings nor the subject of reception of
evidence by both parties and not touched upon in the decision of the lower court.
Why no such question could be raised in the pleadings of respondent Angelina D.
Guevara was clarified by the fact that the substitution came after it was brought for
examination to Mr. Rebullida. After the knowledge of such substitution was gained,
however, the issue was raised at the trial according to the said respondent resulting in
that portion of the decision where the lower court reached a negative conclusion. As
a result, in the motion for reconsideration, one of the points raised as to such decision
being contrary to the evidence is the finding that there was no substitution. It is not
necessary to state that respondent Court, exercising its appellate power reversed the
lower court. What was held by it is controlling. What is clear is that there is no
factual basis for the legal arguments on which the fourth assigned error is predicated.

What is said takes care of the fifth assigned error that respondent Court was mistaken
in its finding that there was such a substitution. Again petitioner would have us pass
on a question of credibility which is left to respondent Court of Appeals. The sixth
assigned error would complain against the reversal of the lower court judgment as
well as petitioner Consuelo S. de Garcia being made to pay respondent Angelina D.
Guevara exemplary damages, attorney's fees and costs. The reversal is called for in
the light of the appraisal of the evidence of record as meticulously weighed by
respondent Court. As to the attorney's fees and exemplary damages, this is what
respondent Court said in the decision under review: "Likewise, plaintiff is entitled to
recover reasonable attorney's fees in the sum of P1,000, it being just and equitable
under the circumstances, and another P1,000 as exemplary damages for the public
good to discourage litigants from resorting to fraudulent devices to frustrate the ends
of justice, as defendant herein tried to substitute the ring, Exhibit 1, for plaintiff's
ring." 10 Considering the circumstances, the cursory discussion of the sixth assigned
error on the matter by petitioner fails to demonstrate that respondent Court's
actuation is blemished by legal defects.

WHEREFORE, the decision of respondent Court of Appeals of August 6, 1962 is

hereby affirmed. With costs.

G.R. No. L-30817

The legal question raised in the fourth assignment of error is that the matter of the
substitution of the diamond on the ring was a question raised for the first time on

September 29, 1972

DOMINADOR DIZON, doing business under the firm name "Pawnshop of

Dominador Dizon", petitioner,

interpreted by this Court in a number of decisions. The invocation of estoppel is

therefore unavailing. We affirm.

vs.
LOURDES G. SUNTAY, respondent.

Andres T. Velarde for petitioner.

Rafael G. Suntay for respondent.

FERNANDO, J.:p

In essence there is nothing novel in this petition for review of a decision of the Court
of Appeals affirming a lower court judgment sustaining the right of an owner of a
diamond ring, respondent Lourdes G. Suntay, as against the claim of petitioner
Dominador Dizon, who owns and operates a pawnshop. The diamond ring was
turned over to a certain Clarita R. Sison, for sale on commission, along with other
pieces of jewelry of respondent Suntay. It was then pledged to petitioner. Since what
was done was violative of the terms of the agency, there was an attempt on her part
to recover possession thereof from petitioner, who refused. She had to file an action
then for its recovery. She was successful, as noted above, both in the lower court and
thereafter in the Court of Appeals. She prevailed as she had in her favor the
protection accorded by Article 559 of the Civil
Code. 1 The matter was then elevated to us by petitioner. Ordinarily, our discretion
would have been exercised against giving due course to such petition for review. The
vigorous plea however, grounded on estoppel, by his counsel, Atty. Andres T.
Velarde, persuaded us to act otherwise. After a careful perusal of the respective
contentions of the parties, we fail to perceive any sufficient justification for a
departure from the literal language of the applicable codal provision as uniformly

The statement of the case as well as the controlling facts may be found in the Court
of Appeals decision penned by Justice Perez. Thus: "Plaintiff is the owner of a threecarat diamond ring valued at P5,500.00. On June 13, 1962, the plaintiff and Clarita
R. Sison entered into a transaction wherein the plaintiff's ring was delivered to
Clarita R. Sison for sale on commission. Upon receiving the ring, Clarita R. Sison
executed and delivered to the plaintiff the receipt ... . The plaintiff had already
previously known Clarita R. Sison as the latter is a close friend of the plaintiff's
cousin and they had frequently met each other at the place of the plaintiff's said
cousin. In fact, about one year before their transaction of June 13, 1962 took place,
Clarita R. Sison received a piece of jewelry from the plaintiff to be sold for P500.00,
and when it was sold, Clarita R. Sison gave the price to the plaintiff. After the lapse
of a considerable time without Clarita R. Sison having returned to the plaintiff the
latter's ring, the plaintiff made demands on Clarita R. Sison for the return of her ring
but the latter could not comply with the demands because, without the knowledge of
the plaintiff, on June 15, 1962 or three days after the ring above-mentioned was
received by Clarita R. Sison from the plaintiff, said ring was pledged by Melia Sison,
niece of the husband of Clarita R. Sison, evidently in connivance with the latter, with
the defendant's pawnshop for P2,600.00 ... ." 2 Then came this portion of the
decision under review: "Since the plaintiff insistently demanded from Clarita R.
Sison the return of her ring, the latter finally delivered to the former the pawnshop
ticket ... which is the receipt of the pledge with the defendant's pawnshop of the
plaintiff's ring. When the plaintiff found out that Clarita R. Sison pledged, she took
steps to file a case of estafa against the latter with the fiscal's office. Subsequently
thereafter, the plaintiff, through her lawyer, wrote a letter ... dated September 22,
1962, to the defendant asking for the delivery to the plaintiff of her ring pledged with
defendant's pawnshop under pawnshop receipt serial-B No. 65606, dated June 15,
1962 ... . Since the defendant refused to return the ring, the plaintiff filed the present
action with the Court of First Instance of Manila for the recovery of said ring, with
P500.00 as attorney's fees and costs. The plaintiff asked for the provisional remedy
of replevin by the delivery of the ring to her, upon her filing the requisite bond,
pending the final determination of the action. The lower court issued the writ of
replevin prayed for by plaintiff and the latter was able to take possession of the ring
during the pendency of the action upon her filing the requisite bond." 3 It was then
noted that the lower court rendered judgment declaring that plaintiff, now respondent
Suntay, had the right to the possession of the ring in question. Petitioner Dizon, as
defendant, sought to have the judgment reversed by the Court of Appeals. It did him

no good. The decision of May 19, 1969, now on review, affirmed the decision of the
lower court.

In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive
on use, with the applicable law being what it is, this petition for review cannot
prosper. To repeat, the decision of the Court of Appeals stands.

1.
There is a fairly recent restatement of the force and effect of the governing
codal norm in De Gracia v. Court of Appeals. 4 Thus: "The controlling provision is
Article 559 of the Civil Code. It reads thus: 'The possession of movable property
acquired in good faith is equivalent to a title. Nevertheless, one who has lost any
movable or has been unlawfully deprived thereof may recover it from the person in
possession of the same. If the possessor of a movable lost of which the owner has
been unlawfully deprived, has acquired it in good faith at a public sale, the owner
cannot obtain its return without reimbursing the price paid therefor.' Respondent
Angelina D. Guevara, having been unlawfully deprived of the diamond ring in
question, was entitled to recover it from petitioner Consuelo S. de Garcia who was
found in possession of the same. The only exception the law allows is when there is
acquisition in good faith of the possessor at a public sale, in which case the owner
cannot obtain its return without reimbursing the price. As authoritatively interpreted
in Cruz v. Pahati, the right of the owner cannot be defeated even by proof that there
was good faith in the acquisition by the possessor. There is a reiteration of this
principle in Aznar v. Yapdiangco. Thus: 'Suffice it to say in this regard that the right
of the owner to recover personal property acquired in good faith by another, is based
on his being dispossessed without his consent. The common law principle that were
one of two innocent persons must suffer by a fraud perpetrated by another, the law
imposes the loss upon the party who, by his misplaced confidence, has enabled the
fraud to be committed, cannot be applied in a case which is covered by an express
provision of the new Civil Code, specifically Article 559. Between a common law
principle and a statutory provision, the latter must prevail in this jurisdiction." " 5

2.
It must have been a recognition of the compulsion exerted by the above
authoritative precedents that must have caused petitioner to invoke the principle of
estoppel. There is clearly a misapprehension. Such a contention is devoid of any
persuasive force.

Estoppel as known to the Rules of Court 6 and prior to that to the Court of Civil
Procedure, 7 has its roots in equity. Good faith is its basis. 8 It is a response to the
demands of moral right and natural justice. 9 For estoppel to exist though, it is
indispensable that there be a declaration, act or omission by the party who is sought
to be bound. Nor is this all. It is equally a requisite that he, who would claim the
benefits of such a principle, must have altered his position, having been so
intentionally and deliberately led to comport himself thus, by what was declared or
what was done or failed to be done. If thereafter a litigation arises, the former would
not be allowed to disown such act, declaration or omission. The principle comes into
full play. It may successfully be relied upon. A court is to see to it then that there is
no turning back on one's word or a repudiation of one's act. So it has been from our
earliest decisions. As Justice Mapa pointed out in the first case, a 1905 decision,
Rodriguez v. Martinez, 10 a party should not be permitted "to go against his own acts
to the prejudice of [another]. Such a holding would be contrary to the most
rudimentary principles of justice and law." 11 He is not, in the language of Justice
Torres, in Irlanda v. Pitargue, 12 promulgated in 1912, "allowed to gainsay [his] own
acts or deny rights which [he had] previously recognized." 13 Some of the later cases
are to the effect that an unqualified and unconditional acceptance of an agreement
forecloses a claim for interest not therein provided. 14 Equally so the circumstance
that about a month after the date of the conveyance, one of the parties informed the
other of his being a minor, according to Chief Justice Paras, "is of no moment,
because [the former's] previous misrepresentation had already estopped him from
disavowing the contract. 15 It is easily understandable why, under the circumstances
disclosed, estoppel is a frail reed to hang on to. There was clearly the absence of an
act or omission, as a result of which a position had been assumed by petitioner, who
if such elements were not lacking, could not thereafter in law be prejudiced by his
belief in what had been misrepresented to him. 16 As was put by Justice Labrador, "a
person claimed to be estopped must have knowledge of the fact that his voluntary
acts would deprive him of some rights because said voluntary acts are inconsistent
with said rights." 17 To recapitulate, there is this pronouncement not so long ago,
from the pen of Justice Makalintal, who reaffirmed that estoppel "has its origin in
equity and, being based on moral right and natural justice, finds applicability
wherever and whenever the special circumstances of a case so demand." 18

How then can petitioner in all seriousness assert that his appeal finds support in the
doctrine of estoppel? Neither the promptings of equity nor the mandates of moral
right and natural justice come to his rescue. He is engaged in a business where

presumably ordinary prudence would manifest itself to ascertain whether or not an

individual who is offering a jewelry by way of a pledge is entitled to do so. If no
such care be taken, perhaps because of the difficulty of resisting opportunity for
profit, he should be the last to complain if thereafter the right of the true owner of
such jewelry should be recognized. The law for this sound reason accords the latter
protection. So it has always been since Varela v.
Finnick, 19 a 1907 decision. According to Justice Torres: "In the present case not
only has the ownership and the origin of the jewels misappropriated been
unquestionably proven but also that the accused, acting fraudulently and in bad faith,
disposed of them and pledged them contrary to agreement, with no right of
ownership, and to the prejudice of the injured party, who was thereby illegally
deprived of said jewels; therefore, in accordance with the provisions of article 464,
the owner has an absolute right to recover the jewels from the possession of
whosoever holds them, ... ." 20 There have been many other decisions to the same
effect since then. At least nine may be cited. 21 Nor could any other outcome be
expected, considering the civil code provisions both in the former Spanish legislation
22 and in the present Code. 23 Petitioner ought to have been on his guard before
accepting the pledge in question. Evidently there was no such precaution availed of.
He therefore, has only himself to blame for the fix he is now in. It would be to
stretch the concept of estoppel to the breaking point if his contention were to prevail.
Moreover, there should have been a realization on his part that courts are not likely
to be impressed with a cry of distress emanating from one who is in a business
authorized to impose a higher rate of interest precisely due to the greater risk
assumed by him. A predicament of this nature then does not suffice to call for less
than undeviating adherence to the literal terms of a codal provision. Moreover, while
the activity he is engaged in is no doubt legal, it is not to be lost sight of that it
thrives on taking advantage of the necessities precisely of that element of our
population whose lives are blighted by extreme poverty. From whatever angle the
question is viewed then, estoppel certainly cannot be justly invoked.

WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed,
with costs against petitioner.

[G.R. No. 86051. September 1, 1992.]

JAIME LEDESMA, v. THE HONORABLE COURT OF APPEALS and
CITIWIDE MOTORS, INC.,.

SYLLABUS
1.
CIVIL LAW; POSSESSION; REQUISITES TO MAKE POSSESSION OF
MOVABLE PROPERTY EQUIVALENT TO TITLE. It is quite clear that a party
who (a) has lost any movable or (b) has been unlawfully deprived thereof can
recover the same from the present possessor even if the latter acquired it in good
faith and has, therefore, title thereto for under the first sentence of Article 559, such
manner of acquisition is equivalent to a title. There are three (3) requisites to make
possession of movable property equivalent to title, namely: (a) the possession should
be in good faith; (b) the owner voluntarily parted with the possession of the thing;
and (c) the possession is in the concept of owner. (TOLENTINO, A.M., Civil Code
of the Philippines, Vol. II, 1983 ed., 275-276, citing 2-II Colin and Capitant 942; De
Buen: Ibid., 1009, 2 Salvat 165; 4 Manresa 339). Undoubtedly, one who has lost a
movable or who has been unlawfully deprived of it cannot be said to have
voluntarily parted with the possession thereof. This is the justification for the
exceptions found under the second sentence of Article 559 of the Civil Code.

2.
CIVIL LAW; SPECIAL CONTRACTS; CONTRACT OF SALE;
ABSENCE OF CONSIDERATION; EFFECT THEREOF. There was a perfected
unconditional contract of sale between private respondent and the original vendee.
The former voluntarily caused the transfer of the certificate of registration of the
vehicle in the name of the first vendee even if the said vendee was represented by
someone who used a fictitious name and likewise voluntarily delivered the cars
and the certificate of registration to the vendees alleged representative Title thereto
was forthwith transferred to the vendee. The subsequent dishonor of the check
because of the alteration merely amounted to a failure of consideration which does
not render the contract of sale void, but merely allows the prejudiced party to sue for
specific performance or rescission of the contract, and to prosecute the impostor for
estafa under Article 315 of the Revised Penal Code.

Petitioner impugns the Decision of 22 September 1988 of respondent Court of

Appeals 1 in C.A.-G.R. CV No. 05955 2 reversing the decision of then Branch
XVIII-B (Quezon City) of the then Court of First Instance (now Regional Trial
Court) of Rizal in a replevin case, Civil Case No. Q-24200, the dispositive portion of
which reads:

"Accordingly, the Court orders the plaintiff to return the repossessed Isuzu Gemini,
1977 Model vehicle, subject of this case to the defendant Ledesma. The incidental
claim (sic) for damages professed by the plaintiff are dismissed for lack of merit. On
defendants counterclaim, Court (sic) makes no pronouncement as to any form of
damages, particularly, moral, exemplary and nominal in view of the fact that
Citiwide has a perfect right to litigate its claim, albeit by this pronouncement, it did
not succeed."

which was supplemented by a Final Order dated 26 June 1980, the dispositive
portion of which reads:
"IN VIEW OF THE FOREGOING, the Court grants defendant Ledesma the sum of
P35,000.00 by way of actual damages recoverable upon plaintiffs replevin bond.
Plaintiff and its surety, the Rizal Surety and Insurance Co., are hereby ordered jointly
and severally to pay defendant Jaime Ledesma the sum of P10,000.00 as damages for
the wrongful issue of the writ of seizure, in line with Rule 57, Sec. 20, incorporated
in Rule 60, Sec. 10.

In conformity with the rules adverted to, this final order shall form part of the
judgment of this Court on September 5, 1979.

The motion for reconsideration of the judgment filed by the plaintiff is hereby
DENIED for lack of merit. No costs at this instance." 4

The decision of the trial court is anchored on its findings that (a) the proof on record
is not persuasive enough to show that defendant, petitioner herein, knew that the
vehicle in question was the object of a fraud and a swindle 5 and (b) that plaintiff,

private respondent herein, did not rebut or contradict Ledesmas evidence that
valuable consideration was paid for it.

The antecedent facts as summarized by the respondent Court of Appeals are as

follows:

"On September 27, 1977, a person representing himself to be Jojo Consunji,

purchased purportedly for his father, a certain Rustico T. Consunji, two (2) brand
new motor vehicles from plaintiff-appellant Citiwide Motors, Inc., more particularly
described as follows:chanrobles lawlibrary : rednad

a)
One (1) 1977 Isuzu Gemini, 2-door Model PF 50ZIK, with Engine No.
751214 valued at P42,200.00; and

b)
One (1) 1977 Holden Premier Model 8V41X with Engine No. 1981251493, valued at P58,800.00.

Said purchases are evidenced by Invoices Nos. 3054 and 3055, respectively. (See
Annexes A and B).

On September 28, 1977, plaintiff-appellant delivered the two-above described motor

vehicles to the person who represented himself as Jojo Consunji, allegedly the son of
the purported buyers Rustico T. Consunji, and said person in turn issued to plaintiffappellant Managers Check No. 066-110-0638 of the Philippine Commercial and
Industrial Bank dated September 28, 1977 for the amount of P101,000.00 as full
payment of the value of the two (2) motor vehicles.
However, when plaintiff-appellant deposited the said check, it was dishonored by the
bank on the ground that it was tampered with, the correct amount of P101.00 having
been raised to P101,000.00 per the banks notice of dishonor (Annexes F and G).

On September 30, 1977, plaintiff-appellant reported to the Philippine Constabulary

the criminal act perpetrated by the person who misrepresented himself as Jojo
Consunji and in the course of the investigation, plaintiff-appellant learned that the
real identity of the wrongdoer/impostor is Armando Suarez who has a long line of
criminal cases against him for estafa using this similar modus operandi.

II
IN HOLDING THAT THE DEFENDANT IS AN INNOCENT PURCHASER IN
GOOD FAITH AND FOR VALUE;

On October 17, 1977, plaintiff-appellant was able to recover the Holden Premier
vehicle which was found abandoned somewhere in Quezon City.

III

On the other hand, plaintiff-appellant learned that the 1977 Isuzu Gemini was
transferred by Armando Suarez to third persona and was in the possession of one
Jaime Ledesma at the time plaintiff-appellant instituted this action for replevin on
November 16, 1977.

IN RULING THAT THE PLAINTIFF SHOULD RETURN THE CAR TO

DEFENDANT, DISMISSING ITS CLAIM FOR DAMAGES, AND GRANTING
DEFENDANT P35,000.00 DAMAGES RECOVERABLE AGAINST THE
REPLEVIN BOND AND P101,000.00 DAMAGES FOR ALLEGED WRONGFUL
SEIZURE;

In his defense, Jaime Ledesma claims that he purchases (sic) and paid for the subject
vehicle in good faith from its registered owner, one Pedro Neyra, as evidenced by the
Land
Transportation
Commission
Registration
Certificate
No.
RCO1427249.chanrobles.com.ph : virtual law library

After posting the necessary bond in the amount double the value of the subject motor
vehicle, plaintiff-appellant was able to recover possession of the 1977 Isuzu Gemini
as evidenced by the Sheriffs Return dated January 23, 1978." 6
After trial on the merits, the lower court rendered the decision and subsequently
issued the Final Order both earlier adverted to, which plaintiff (private respondent
herein) appealed to the respondent Court of Appeals; it submitted the following
assignment of errors:jgc:chanrobles.com.ph

IV
IN RENDERING THE DECISION DATED SEPTEMBER 3, 1979 AND THE
FINAL ORDER DATED JUNE 26, 1980." 7

In support of its first and second assigned errors, private respondent cites Article 559
of the Civil Code which provides:jgc:chanrobles.com.ph

"ARTICLE 559. The possession of movable property acquired in good faith is

equivalent to a title. Nevertheless, one who has lost any movable or has been
unlawfully deprived thereof, may recover it from the person in possession of the
same.

"The trial court erred.

I
IN HOLDING THAT THE DEFENDANT IS ENTITLED TO THE POSSESSION
OF THE CAR;

If the possessor of a movable lost or of which the owner has been unlawfully
deprived, has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor."cralaw virtua1aw library

Without in any way reversing the findings of the trial court that herein petitioner was
a buyer in good faith and for valuable consideration, the respondent Court ruled
that:chanroblesvirtualawlibrary

"Under Article 559, Civil Code, the rule is to the effect that if the owner has lost a
thing, or if he has been unlawfully deprived of it, he has a right to recover it not only
from the finder, thief or robber, but also from third persons who may have acquired it
in good faith from such finder, thief or robber. The said article establishes two (2)
exceptions to the general rule of irrevendicability (sic), to wit: when the owner (1)
has lost the thing, or (2) has been unlawfully deprived thereof. In these cases, the
possessor cannot retain the thing as against the owner who may recover it without
paying any indemnity, except when the possessor acquired it in a public sale. (Aznar
v. Yapdiangco, 13 SCRA 486).

Put differently, where the owner has lost the thing or has been unlawfully deprived
thereof, the good faith of the possessor is not a bar to recovery of the movable unless
the possessor acquired it in a public sale of which there is no pretense in this case.
Contrary to the court a assumption, the issue is not primarily the good faith of
Ledesma for even if this were true, this may not be invoked as a valid defense, if it
be shown that Citiwide was unlawfully deprived of the vehicle.

In the case at bar, the person who misrepresented himself to be the son of the
purported buyer, Rustico T. Consunji, paid for the two (2) vehicles using a check
whose amount has been altered from P101.00 to P101,000.00. There is here a case of
estafa. Plaintiff was unlawfully deprived of the vehicle by false pretenses executed
simultaneously with the commission of fraud (Art. 315 2(a) R.P.C.). Clearly,
Citiwide would not have parted with the two (2) vehicles were it not for the false
representation that the check issued in payment thereupon (sic) is in the amount of
P101,000.00, the actual value of the two (2) vehicles."

In short, said buyer never acquired title to the property; hence, the Court rejected the
claim of herein petitioner that at least, Armando Suarez had a voidable title to the
property.
His motion for reconsideration having been denied in the resolution of the
respondent Court of 12 December 1988, 9 petitioner filed this petition alleging
therein that:

"A

In the case of Dizon v. Suntay, 47 SCRA 160, the Supreme Court had occasion to
define the phrase unlawfully deprived, to wit:chanrob1es virtual 1aw library

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE 559

OF THE NEW CIVIL CODE TO THE INSTANT CASE DESPITE THE FACT
THAT PRIVATE RESPONDENT CITIWIDE MOTORS, INC. WAS NOT
UNLAWFULLY DEPRIVED OF THE SUBJECT CAR, AS IN FACT CITIWIDE
VOLUNTARILY PARTED WITH THE TITLE AND POSSESSION OR (sic) THE
SAME IN FAVOR OF ITS IMMEDIATE TRANSFEREE.

. . . it extends to all cases where there has been no valid transmission of ownership
including depositary or lessee who has sold the same. It is believed that the owner in
such a case is undoubtedly unlawfully deprived of his property and may recover the
same from a possessor in good faith.

THE FACTUAL MILIEU OF THE INSTANT CASE FALLS WITHIN THE

OPERATIVE EFFECTS OF ARTICLES 1505 AND 1506 OF THE NEW CIVIL
CODE CONSIDERING THAT THE IMMEDIATE TRANSFEREE OF THE
PRIVATE RESPONDENT CITIWIDE MOTORS, INC., ACQUIRED A
VOIDABLE TITLE OVER THE CAR IN QUESTION WHICH TITLE WAS NOT
DECLARED VOID BY A COMPETENT COURT PRIOR TO THE ACQUISITION
BY THE PETITIONER OF THE SUBJECT CAR AND ALSO BECAUSE

PRIVATE RESPONDENT, BY ITS OWN CONDUCT, IS NOW PRECLUDED

FROM ASSAILING THE TITLE AND POSSESSION BY THE PETITIONER OF
THE SAID CAR."

There is merit in the petition. The assailed decision must be reversed.

The petitioner successfully proved that he acquired the car in question from his
vendor in good faith and for valuable consideration. According to the trial court, the
private respondents evidence was not persuasive enough to establish that petitioner
had knowledge that the car was the object of a fraud and a swindle and that it did not
rebut or contradict petitioners evidence of acquisition for valuable consideration.
The respondent Court concedes to such findings but postulates that the issue here is
not whether petitioner acquired the vehicle in that concept but rather, whether private
respondent was unlawfully deprived of it so as to make Article 559 of the Civil Code
apply.
It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully
deprived thereof can recover the same from the present possessor even if the latter
acquired it in good faith and has, therefore, title thereto for under the first sentence of
Article 559, such manner of acquisition is equivalent to a title. There are three (3)
requisites to make possession of movable property equivalent to title, namely: (a) the
possession should be in good faith; (b) the owner voluntarily parted with the
possession of the thing; and (c) the possession is in the concept of owner. 11
Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it
cannot be said to have voluntarily parted with the possession thereof. This is the
justification for the exceptions found under the second sentence of Article 559 of the
Civil Code.

The basic issue then in this case is whether private respondent was unlawfully
deprived of the cars when it sold the same to Rustico Consunji, through a person
who claimed to be Jojo Consunji, allegedly the latters son, but who nevertheless
turned out to be Armando Suarez, on the faith of a Managers Check with a face
value of P101,000.00, dishonored for being altered, the correct amount being only
P101.00.chanrobles virtual lawlibrary

Under this factual milieu, the respondent Court was of the opinion, and thus held,
that private respondent was unlawfully deprived of the car by false pretenses.

We disagree. There was a perfected unconditional contract of sale between private

respondent and the original vendee. The former voluntarily caused the transfer of the
certificate of registration of the vehicle in the name of the first vendee even if the
said vendee was represented by someone who used a fictitious name and likewise
voluntarily delivered the cars and the certificate of registration to the vendees
alleged representative Title thereto was forthwith transferred to the vendee. The
subsequent dishonor of the check because of the alteration merely amounted to a
failure of consideration which does not render the contract of sale void, but merely
allows the prejudiced party to sue for specific performance or rescission of the
contract, and to prosecute the impostor for estafa under Article 315 of the Revised
Penal Code. This is the rule enunciated in EDCA Publishing and Distributing Corp.
v. Santos, 12 the facts of which do not materially and substantially differ from those
obtaining in the instant case. In said case, a person identifying himself as Professor
Jose Cruz, dean of the De la Salle College, placed an order by telephone with
petitioner for 406 books, payable upon delivery. Petitioner agreed, prepared the
corresponding invoice and delivered the books as ordered, for which Cruz issued a
personal check covering the purchase price. Two (2) days later, Cruz sold 120 books
to private respondent Leonor Santos who, after verifying the sellers ownership from
the invoice the former had shown her, paid the purchase price of P1,700.00.
Petitioner became suspicious over a second order placed by Cruz even before his
first check had cleared, hence, it made inquiries with the De la Salle College. The
latter informed the petitioner that Cruz was not in its employ. Further verification
revealed that Cruz had no more account or deposit with the bank against which he
drew the check. Petitioner sought the assistance of the police which then set a trap
and arrested Cruz. Investigation disclosed his real name, Tomas de la Pea, and his
sale of 120 of the books to Leonor Santos. On the night of the arrest; the policemen
whose assistance the petitioner sought, forced their way into the store of Leonor and
her husband, threatened her with prosecution for the buying of stolen property,
seized the 120 books without a warrant and thereafter turned said books over to the
petitioner. The Santoses then sued for recovery of the books in the Municipal Trial
Court which decided in their favor; this decision was subsequently affirmed by the
Regional Trial Court and sustained by the Court of Appeals. Hence, the petitioner
came to this Court by way of a petition for review wherein it insists that it was
unlawfully deprived of the books because as the check bounced for lack of funds,
there was failure of consideration that nullified the contract of sale between it and the

impostor who then acquired no title over the books. We rejected said claim in this
wise:

"The contract of sale is consensual and is perfected once agreement is reached

between the parties on the subject matter and the consideration. According to the
Civil Code:

ART. 1475.
The contract of sale is perfected at the moment there is a meeting
of minds upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
x

sheets and round iron bars for P6,137.70, in payment thereof, he issued a check
drawn against the Security Bank and Trust Co. without informing Ong Shu that he
(Soto) had no sufficient funds in said bank to answer for the same. In the meantime,
however, Soto sold the sheets to, among others, petitioner Chua Hai. In the criminal
case filed against Soto, upon motion of the offended party, the respondent Judge
ordered petitioner to return the sheets which were purchased from Soto. Petitioners
motion for reconsideration having been denied, he came to this Court alleging grave
abuse of discretion and excess of jurisdiction. In answer to the petition, it is claimed
that inter alia, even if the property was acquired in good faith, the owner who has
been unlawfully deprived thereof may recover it from the person in possession of the
same unless the property was acquired in good faith at a public sale. 15 Resolving
this specific issue, this Court ruled that Ong Shu was not illegally deprived of the
possession of the property:

". . . It is not denied that Ong Shu delivered the sheets to Soto upon a perfected
contract of sale, and such delivery transferred title or ownership to the purchaser.
Says Art. 1496:chanrob1es virtual 1aw library

ART. 1477.
The ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof.

ART. 1478.
The parties may stipulate that ownership in the thing shall not pass
to the purchaser until he has fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership
in the thing sold shall not pass to the buyer until full payment of the purchase price
only if there is a stipulation to that effect. Otherwise, the rule is that such ownership
shall pass from the vendor to the vendee upon the actual or constructive delivery of
the thing sold even if the purchase price has not yet been paid.
Non-payment only creates a right to demand payment or to rescind the contract, or to
criminal prosecution in the case of bouncing checks. But absent the stipulation above
noted, delivery of the thing sold will effectively transfer ownership to the buyer who
can in turn transfer it to another."
In the early case of Chua Hai v. Hon. Kapunan, 14 one Roberto Soto purchased from
the Youngstown Hardware, owned by private respondent, corrugated galvanized iron

Art. 1496.
The 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.
The failure of the buyer to make good the price does not, in law, cause the ownership
to revest in the seller until and unless the bilateral contract of sale is first rescinded or
resolved pursuant to Article 1191 of the new Civil Code.

And, assuming that the consent of Ong Shu to the sale in favor of Soto was obtained
by the latter through fraud or deceit, the contract was not thereby rendered void ab
initio, but only voidable by reason of the fraud, and Article 1390 expressly provides
that:

ART. 1390.
The following contracts are voidable or annullable, even though
there may have been no damage to the contracting parties:chanrob1es virtual 1aw
library

(1)

Those where one of the parties is incapable of giving consent to a contract;

(2)
Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court.
They are susceptible of ratification.

Agreeably to this provision, Article 1506 prescribes:

ARTICLE 1506. Where the seller of goods has a voidable title thereto, but his title
has not been avoided at the time of the sale, the buyer acquires a good title to the
goods, provided he buys them in good faith, for value, and without notice of the
sellers defect of title.
Hence, until the contract of Ong Shu with Soto is set aside by a competent court
(assuming that the fraud is established to its satisfaction), the validity of appellants
claim to the property in question can not be disputed, and his right to the possession
thereof should be respected."
It was therefore erroneous for the respondent Court to declare that the private
respondent was illegally deprived of the car simply because the check in payment
therefor was subsequently dishonored; said Court also erred when it divested the
petitioner, a buyer in good faith who paid valuable consideration therefor, of his
possession thereof.
WHEREFORE, the challenged decision of the respondent Court of Appeals of 22
September 1988 and its Resolution of 12 December 1988 in C.A.-G.R. CV No.
05955 are hereby SET ASIDE and the Decision of the trial court of 3 September
1979 and its Final Order of 26 June 1980 in Civil Case No. Q-24200 are hereby
REINSTATED, with costs against private respondent Citiwide Motors, Inc.
SO ORDERED.

[G.R. No. L-11977. April 29, 1959.]

LEONARDO AZARCON, MANUEL AZARCON and ESTEBAN ABOBO, , v.

VICTOR EUSEBIO,

SYLLABUS

1. POSSESSION; POSSESSORS RIGHT OVER PRODUCTS PENDING

HARVEST; WHEN ORDERED TO VACATE PREMISES. Under the law a
person who is in possession and who is being ordered to leave a parcel of land while
products thereon are pending harvest, has the right to a part of the net harvest as
expressly provided by Article 545 of the Civil Code.

2. CONTEMPT; WHEN THE ORDER DOES NOT INHIBIT THE ACT

COMPLAINED OF. Where the order of execution does not expressly prohibit the
defendants-appellants from gathering fruits, which were the result of their possession
and cultivation of the land, it cannot be said that the defendants-appellants
committed an act which is a clear violation of the courts order, especially if they had
presented a motion to set aside the said order of execution which was granted and a
bond in compliance with said order and had it approved by the Court in view of
which appellants may have felt justified in entering the land and harvesting the fruits
existing thereon.

3. ID.; ID; Appellants act in harvesting the pending fruits was not only justified
by law but was not expressly prohibited by the Courts order and was even ratified
when the court ordered the suspension of the execution. There was therefore no
open, clear and contumacious refusal to obey a definite order of the court such as
would constitute contempt.

4. POSSESSION; POSSESSORS RIGHT TO TAKE WITH HIM HIS OWN

EFFECTS IF ORDERED TO VACATE. A person who has been ordered to leave
certain premises is ordinarily not prohibited from taking with him his own effects
and possession.

Appeal from an order of the Court of Appeals, Fourth Division, in CA-G. R. No.
15444-R, promulgated September 5, 1956, finding Leonardo Azarcon, Manuel
Azarcon and Esteban Abobo guilty of contempt of court, ordering each of them to
pay a fine of P100, to remove certain improvements that they have constructed on
the land etc.

The record discloses that respondent Victor Eusebio and petitioners herein had a
dispute over the possesion of a certain parcel of public land in the year 1954. Victor
Eusebio had filed a lease application, No. V-79, for a parcel of land known as lot No.
3807, containing an area of about 349 hectares. A portion thereof was occupied by
petitioners herein, Leonardo L. Azarcon and his companions, under a homestead
application. The conflict between the lessee and the homesteaders was ordered to be
investigated on May 25, 1955 by the Director of Lands and again on August 3, 1955
by the Secretary of Agriculture and Natural Resources.

Before the dispute could be settled and on April 28, 1954, Victor Eusebio filed a
complaint in the Court of First Instance of Nueva Ecija, alleging that he had acquired
a big parcel of land, 349 hectares in area, by lease from the Bureau of Lands (lease
application No. V-79); that while he was in possession thereof defendants occupied a
portion, known as lot No. 2807, containing an area of six hectares more or less. He,
therefore, prayed that defendants be ordered to vacate the six hectares occupied by
them and pay damages. Defendant Leonardo Azarcon answered the complaint
alleging that he is in actual possession of a portion of 24 hectares since 1941 by
virtue of a homestead application, No. V-42995; that the lease application of plaintiff
is subsequent to said homestead application of Leonardo Azarcon; that Azarcon had
occupied the land since 1941 with interruptions during the war and again in 1950 up
to the time of the filing of the action. He, therefore, prayed that the action be
dismissed. The answer was filed on June 2, 1954 and on motion of plaintiffs dated
March 15, 1955, the defendants were declared in default. A motion to set aside the
default was denied, and a judgment by default was entered by the court on April 26,
1955. It ordered defendants to restore possession of the land to plaintiff. Having
failed to obtain a reconsideration of the above decision, defendants appealed to the
Court of Appeals.

While the case was pending in the Court of Appeals, a writ for the execution of the
judgment of the lower court was issued on October 3, 1955. On October 8, 1955,

defendants moved and the court on October 21 ordered that the said writ of
execution be stayed upon defendants depositing of a supersedeas bond of P1,000.
The writ of execution was actually served on the defendants on October 7, 1955.
Various petitions were submitted by the parties, and among them was that of
defendants-appellants asking for the lifting of the writ of execution. This petition,
dated October 14, 1955, was granted on November 1, 1955, and the court again fixed
the supersedeas bond to stay execution in the amount of P1,000 to be filed with and
approved by the Court of First Instance of Nueva Ecija as to its sufficiency. In the
same order of November 7, the Court of Appeals denied a petition of the plaintiffappellee to file a counter-supersedeas bond as well as plaintiff appellees motion for
injunction. In the meanwhile the defendants-appellants had presented on November
21, 1955 the supersedeas bond required for the approval of the Court of First
Instance of Nueva Ecija and the said bond was filed and approved on November 21,
1955. This fact was certified to by the clerk of the Court of First Instance of Nueva
Ecija on November 14, 1955.

On December 2, 1955 the Court of Appeals on motion of plaintiff, reconsidered its

order or resolution of November 7, 1955 authorizing the stay of execution upon the
filing of the bond by the defendants-appellants, on the ground that the defendantsappellants have not filed any supersedeas bond as required. On January 19, 1956, the
Court of Appeals denied a petition of defendants-appellants to reconsider said order
of December 2, 1955 on the ground that the writ of execution issued on October 3,
1955 had already been executed.

The following appear to be clear: (a) the writ of execution dated October 3, 1955 was
furnished the defendants on October 7, 1955; (b) said order of execution was set
aside in an order of October 21, 1955, which order authorized the defendantsappellants to file a supersedeas bond in the amount of P1,000, the same to be
approved by the Court of First Instance of Nueva Ecija; (c) said supersedeas bond
was filed with the Court of First Instance on November 21, 1955, but the certificate
showing such filing of the bond was issued by the clerk of the Court of First Instance
of Nueva Ecija only on December 14, 1955; and the Court of Appeals, not having
been notified of the fact that the defendants have already secured the approval of
their supersedeas bond, set aside the order to stay execution on December 2, 1955.

The evidence shows that in spite of the receipt by the defendants of the notice of the
writ of execution of October 3, 1955, which writ of execution commanded
defendants "to forthwith remove from said premises and that plaintiff have restitution
of the same," defendants-appellants nevertheless entered the land to gather palay
which was then pending harvest. We gather further from the record that the rice
found on the disputed land at the time of the service of the order of execution had
been planted by defendants-appellants, who appear to have been in possession of the
land from 1951. While the court order of October 3, 1955 ordered the defendantappellant to move out from the premises, it did not prohibit them from gathering the
crop then existing thereon. Under the law a person who is in possession and who is
being ordered to leave a parcel of land while products thereon are pending harvest,
has the right to a part of the net harvest, as expressly provided by Article 545 of the
Civil Code.

are not ready to conclude that the defendants-appellants can be held to have
committed a clear defiance of the order of the court. Their act in harvesting the
pending fruits was not only justified by law but was not expressly prohibited by the
courts order, and was even ratified when the court ordered the suspension of the
execution. There was, therefore, no open, clear and contumacious refusal to obey a
definite order of the court such as would constitute contempt. Furthermore, a person
who has been ordered to leave certain premises is ordinarily not prohibited from
taking with him his own effects and possession, unless there is an express prohibition
to this effect. No such prohibition was contained in the order for the defendants to
leave the land. There may have been a technical violation of an order not to enter the
premises, but not of one prohibiting them from removing anything therefrom. Such
technical violation of the order cannot be considered as one amounting to a defiance
of the courts authority, punishable as contempt.

"ART. 545. If at the time the good faith ceases, there should be any natural or
industrial fruits, the possessor shall have a right to a part of the expenses of
cultivation, and to a part of the net harvest, both in proportion to the time of the
possession."cralaw virtua1aw library

For the foregoing considerations, the order appealed from should be, as it is hereby,
set aside, and the defendants-appellants acquitted of the charge against them.
Without costs.

[G.R. No. L-36789. July 25, 1983.]

x

As the order of execution did not expressly prohibit the defendants-appellants from
gathering the pending fruits, which fruits were the result of their possession and
cultivation of the land, it cannot be said that the defendants-appellants committed an
act which is a clear violation of the courts order. Besides, the defendants-appellants
had presented, after receipt of the order of execution, a motion to set aside the said
order of execution, and this motion to stay execution was granted. Defendants
furthermore presented a bond in accordance with the order of the court and had it
approved by the Court of First Instance. It was perhaps in expectation of this
resolution of the court setting aside the order of execution that defendants-appellants
may have felt justified in entering the land and harvesting the fruits existing thereon.
Again the order of the court setting aside its order to stay execution was issued in the
belief that the defendants-appellants had not presented their bond to stay execution
(which they had actually presented before the Court of First Instance of Nueva Ecija
and which said court actually approved). Under the circumstances above stated, we

FELIPA CORDERO (Deceased) MAURO OCAMPO, CASIMIRO OCAMPO and

ELISEA OCAMPO, Petitioners, v. VICTORIA P. CABRAL, ALEJANDRO
BERBOSO, DALMACIO MONTAOS and HONORABLE COURT OF APPEALS,
Respondents.

San Juan, Africa & Associates for Petitioner.

Bengzon & Associates for Private Respondent.

SYLLABUS

1.
REMEDIAL LAW; APPEAL; SCOPE; ONLY QUESTIONS RAISED
WITHIN THE ISSUES MADE BY THE PARTIES IN THE PLEADINGS IN THE
COURT BELOW; ENTERTAINED ON APPEAL. It is a well-settled rule that,
except questions on jurisdiction, no question will be entertained on appeal unless it
has been raised in the court below and it is within the issues made by the parties in
their pleadings.

2.
ID.; ID.; JUDGMENT OF APPELLATE COURT BASED ON A GROUND
NOT LITIGATED IN THE TRIAL COURT; CASE AT BAR. In this, case, the
Court of Appeals erred when it rendered a decision based on a ground which was not
litigated in the trial court and which could not have been raised on appeal. The
ground to be sure, is the supposed oral contract of sale made to the predecessors of
the defendants covering the disputed piece of land. The supposed oral contract of
sale was never an issue.

3.
CIVIL LAW; PROPERTY; POSSESSION; GOOD FAITH CEASES AND
BAD FAITH BEGINS UPON SERVICES OF SUMMONS. The defendants, by
their own admission, are in possession of the disputed land. There is no evidence that
they were possessors in bad faith. However, their good faith ceased when they were
served with summons to answer the complainant. (Art. 528, Civil Code; Tacas v.
Tobon, 53 Phil. 356 [1929]). As possessors in bad faith from the service of the
summons they "shall reimburse the fruits received and those which the legitimate
possessor could have received . . ." (Art. 549, Civil Code)

DECISION

ABAD SANTOS, J.:

Petition to review a decision of the defunct Court of Appeals.

In Civil Case No. 2323 of the defunct Court of First Instance of Bulacan, Felipa
Cordero and her children Mauro, Casimiro and Elisea all surnamed Ocampo sued
Victoria Cabral, Alejandro Berboso and Dalmacio Montaos in a Complaint which
reads as follows:chanrobles.com:cralaw:red

"1.
That the plaintiffs are all of legal age, all residing and with postal address at
Meycauayan, Bulacan; Felipa Cordero is a widow while Elisea Ocampo is single;
and the defendants are all of legal age, Victoria P. Cabral is married but she is living
apart and separate from her husband so the latter is not included herein as party
defendant, and all of them are residing and with postal address at Meycauayan,
Bulacan, where they may be served with summons;

2.
That Mr. Gregorio Z. Ocampo of Meycauayan, Bulacan, husband of the
plaintiff Felipa Cordero and father of the other plaintiffs surnamed Ocampo, died on
May 17, 1958, and that said deceased left several properties, which were inherited by
the plaintiffs, one of which is a parcel of land described as follows:chanrob1es
virtual 1aw library

A parcel of land (Lot No. 5, plan Psu. 43302), with the improvements thereon,
situated in the barrio of Saluysoy, Municipality of Meycauayan. Bounded on the N.
by Sapa and properties of Pedro Dazo and Catalino Exaltacion; on the NE. by
property of Trinidad Rodriguez & Mateo Mistica; on the SE. by properties of Vicente
Mistica, Antonio Rodriguez, Hermogenes Blanco, Lucio Sulbera and Pablo Francia;
on the SW. by properties of Concepcion Rodriguez and Alejandro de la Cruz; and on
NW. by a Sapa . . .; containing an area of Seventy-eight thousand one hundred and
eighty-one square meters (78,181), more or less. With TRANSFER CERTIFICATE
OF TITLE NO. 14513 in the name of Gregorio Z. Ocampo and has Tax Declaration
No. 2819 and is assessed at P4,290.00.

which parcel of land was originally registered in accordance with the Land
Registration Act on December 14, 1933, and was registered and/or transferred in the
name of Mr. Gregorio Z. Ocampo on July 31, 1934;

3.
That after the death of the said Mr. Gregorio Z. Ocampo the plaintiffs herein
took possession of the properties left by him, among others is the afore-described
parcel of land which is a riceland, but they found out that the southern portion of the
same with an area 4,303 square meters, more or less, upon verification, was
possessed by the defendants herein, Victoria P. Cabral, Alejandro Berboso and
Dalmacio Montaos; and that the defendant Victoria P. Cabral claimed to be the owner
of said portion while her co-defendants co-possessed the same as her tenants;

4.
That the plaintiffs demanded of the defendants to surrender to the former
possession of the afore-mentioned portion of land and/or vacate it but they refused
and failed to do so, and the defendant Victoria P. Cabral continued claiming to be the
owner of the same while her co-defendants continued recognizing her as the owner
thereof instead of the plaintiffs; that the plaintiffs had the afore-described parcel of
land (with T.C.T. No. 14513) relocated in the presence of the defendants
representatives and it was found and/or determined that the afore-said portion of land
with the area of 4,303 square meters, more or less, was a part of the plaintiffs land
with T.C.T. No. 14513; that even after the said relocation the defendant Victoria P.
Cabral persisted and still persist in her claim of ownership over the said portion and
her co-defendants persisted and still persist in recognizing her as the owner thereof
instead of the plaintiffs; that the defendants continue in possession of the same; and
that the defendants still refuse and fail to surrender and/or vacate said portion of land
inspite of demands made on them by the plaintiffs;

6.
That because of the defendants refusal to recognize plaintiffs ownership
over the afore-mentioned portion of land and also because of their refusal and failure
to surrender and/or vacate the same the plaintiffs were forced to employ the services
of the undersigned counsel to institute this action at an agreed fees of P500.00.

WHEREFORE, premises considered, the plaintiffs herein respectfully pray of this

Hon. Court to render judgment in favor of the plaintiffs and against the defendants
thus ordering them:chanrob1es virtual 1aw library

a)
To recognize the ownership of the plaintiffs over the afore-mentioned
portion of land with an area of 4,303 square meters, more or less, and to surrender it
to the plaintiffs or vacate the same;

b)
To deliver, jointly and severally, to the plaintiffs palay in the amount of ten
(10) cavanes or pay their market price at the rate of P10.00 per cavan per harvesttime beginning the year 1958 up to the time of their delivery or payment.

c)
To pay, jointly and severally, the plaintiffs lawyers fees in the amount of
P500.00; and

d)

To pay the costs of this suit.

And to grant any remedy and relief just and equitable in the premises." (Record on
Appeal, pp. 2-6.).
5.
That because of the defendants occupancy of the afore-mentioned
plaintiffs portion of land with the area of 4,303 square meters, more or less, to the
exclusion of the latter, the said plaintiffs failed to realize a yearly harvest of at least
ten (10) cavanes of palay at the rate of P10.00 per cavan, from the harvest-time of
1958 up to the present;

The
Answer
of
the
allegations:jgc:chanrobles.com.ph

defendants

contains

the

following

"I.
That defendants have no knowledge or information sufficient to form a
belief as to the truth of the allegations in paragraph 2 of the complaint;

II.
That defendants admit being in possession of the portion of land alleged in
paragraph 3 of the complaint, as said portion of land belongs to defendant Victoria P.
Cabral;

III.
That defendants deny the allegation in paragraph 4 of the complaint to the
effect that the said portion of 4,303 square meters, more or less, is a part of the
plaintiffs land;

IV.
That defendants have no knowledge or information sufficient to form a
belief as to the truth of the allegations in paragraph 5 of the complaint;

V. That defendants likewise have no knowledge or information sufficient to form a

belief as to the truth of the allegations in paragraph 5 of the complaint;

VIII.
That the deceased Gregorio Z. Ocampo and his predecessors in interest, as
well as the defendant Cabral and her predecessors in interest, have always
recognized as the boundary between their respective properties, a barrio road which
has existed since the Spanish regime and has continued to exist up to the present
time; and all the residents of the rural areas using said barrio road know for a fact
that, with respect to the respective properties of the parties hereto, said road is the
boundary between said properties;

IX.
That the inclusion of that portion claimed by the plaintiffs in their complaint
in the original registration of their property was obtained thru error or fraud by the
original applicant, but was never possessed by him nor by his successors in interest,
as they have always openly recognized the ownership of said portion as belonging to
defendant Cabral and her predecessors in interest before her;

And by way of COUNTER CLAIM, defendants allege:chanrob1es virtual 1aw

library

X.

That all the foregoing paragraphs are pleaded herein and made parts hereof;

And by way of SPECIAL DEFENSE, defendants allege:chanrobles.com : virtual law

library

VI.
That defendant Victoria P. Cabral and her predecessors in interest before her
are the real owners, and have been in actual, adverse, peaceful and continuous
possession, of that portion of land claimed by the plaintiffs in their complaint, which
portion is more particularly described as Lot 5-B of plan Psd-11496, duly approved
by the Director of Lands on December 21, 1935;

VII.
That the deceased Gregorio Z. Ocampo and/or his heirs, the herein
plaintiffs, have admitted, acknowledged and recognized the defendant Cabral and her
predecessors in said portion of land, as the real owners thereof;

XI.
That the defendant Victoria P. Cabral is the real owner of Lot No. 5-B, plan
Psd-11496, with an area of 4,303 square meters, more or less, erroneously or
fraudulently included in the property described in Transfer Certificate of Title No.
14513 of the Register of Deeds of the Province of Bulacan, registered in the name of
the deceased Gregorio Z. Ocampo and now claimed by the herein plaintiffs;

XII.
That defendant Cabral and her predecessors in interest have been in
possession of said portion of land for more than fifty years, their possession being
actual, adverse, peaceful and continuous, as owners thereof;

XIII.
That said deceased Gregorio Z. Ocampo and/or his heirs, and their
predecessors in interest have openly admitted, acknowledged and recognized the
defendant Victoria P. Cabral and her predecessors in interest as the real owners of
said portion of land, Lot 5-B plan Psd-11496, and said Gregorio Z. Ocampo and/or
his heirs and their predecessors in interest have never been in possession of said
portion of land;

XIV.
That the plaintiffs, claiming to be the heirs of the deceased Gregorio Z.
Ocampo, are therefore under obligation to execute a deed of transfer of said portion
of land in favor of the true owner thereof, the herein defendant Victoria P. Cabral, in
accordance with law;

XV.
That because of the present action filed by the plaintiffs, the defendants
have suffered damages in the amount of P1,000.00;

WHEREFORE:, defendants pray that judgment be rendered:chanrob1es virtual 1aw

library

(a)

dismissing the complaint, with costs against the plaintiffs;

(b)
declaring the defendant Victoria P. Cabral as the owner of Lot-5-B, plan
Psd-11496, which has been erroneously included in the property of the deceased
Gregorio Z. Ocampo covered by Transfer Certificate of Title No. 14513, Bulacan,
and ordering the herein plaintiffs to execute a deed of transfer of said Lot No. 5-B,
plan Psd-11496 in favor of the defendant Victoria P. Cabral; and

(c)

ordering the plaintiffs to pay to the defendants the sum of P1,000.00.

Defendants further pray for such other reliefs and remedies which may be proper and
just under the premises." (R.A., pp. 8-13.)

The plaintiffs filed a Reply

follows:jgc:chanrobles.com.ph

and

Answer

to

Counterclaim

as

"1.
That the plaintiffs deny the allegation in paragraph II of the Answer that the
portion of land now under litigation belongs to the defendant Victoria P. Cabral, and
likewise deny the allegations in paragraphs VI and XI of the same that the defendant
Victoria P. Cabral and her predecessors in interest are the real owners of this portion
(under litigation) with an area of 4,303 square meters, Lot 5-B of plan Psd-11496
with Transfer Certificate of Title No. 14513 in the name of Mr. Gregorio Z. Ocampo,
because the truth is that the said Mr. Ocampo and his successors in interest, the
plaintiffs herein, are the real owners thereof; and that said portion is a part and is
included in the plaintiffs big parcel of land known as Lot 5, Psu-43302, and covered
by the afore-mentioned Certificate;

That the defendant Victoria P. Cabral and her predecessors in interest were never the
owners of the said portion of land and in fact none of them, much less Victoria P.
Cabral, has been in possession or in possession of any title or any document either
public or private, showing his or her ownership, and not even a Tax Declaration for
taxation purposes; the truth is that when the late Mr. Antonio Rodriguez, original
owner of the land with plan Psu-100536, adjacent to that of the plaintiffs, sold said
land to his successor Segunda Prodon he did not include in the said sale this portion,
under litigation, Lot 5-B, of plan Psd-11496 with an area of 4,303 square meters,
more or less, knowing that it did not belong to him; and because of Segunda Prodon
has not acquired this portion of land with an area of 4,303 square meters, more or
less, it is clear, therefore, that she could not have transmitted it to her successors
including the herein defendant, Victoria P. Cabral;

2.
That the plaintiffs deny the defendants allegations in paragraphs VI and XII
of their Answer that the defendant Victoria P. Cabral and her predecessors in interest
have been in actual, adverse, peaceful and continuous possession of this portion of
land for a period of more than 50 years because the truth is that, if they were ever in
possession of the same, their possession was not adverse and not continuous.
When Mr. Gregorio Z. Ocampo bought the parcel of land known as Lot 5, Psu-43302
with an area of 78,181 square meters, more or less, in 1934, (wherein this portion

under litigation is included) the said Mr. Ocampo took possession of this whole land.
In the year 1935 the adjoining owner of the said property, the late Mr. Antonio
Rodriguez and predecessor of the defendant Victoria P. Cabral, requested Mr.
Ocampo to sell to him a portion of said land with an area of 4,303 square meters,
more or less, to which Mr. Ocampo agreed. As there was already a meeting of the
mind Mr. Rodriguez requested Mr. Ocampo that he be allowed to possess the said
portion as they were going to make the formal deed of sale, to which proposition Mr.
Ocampo likewise agreed. This proposed sale never materialized so if Mr. Rodriguez
ever possessed the said portion of land, now under litigation, he did not possess it as
owner but only as a prospective owner. His possession cannot, therefore, be termed
adverse. Such possession cannot also be termed continuous for 50 years because
Mr. Ocampo was in possession of the same in 1934 before Mr. Rodriguez came in
possession of the same, first, with the consent and later by toleration of Mr. Ocampo.

Granting but without admitting, that the defendant Cabral and her predecessors in
interest have been in possession of this portion of land with an area of 4,303 square
meters, more or less for more than 50 years, does she mean to imply now that she
acquires ownership over the same by virtue of prescription? She must remember
that this property is titled under Act 496 and, therefore, imprescriptible,

That, if the defendants are referring to Lot 5-B, plan Psd-11496, and the rest of the
land of the plaintiffs Lot No. 5, Psu-43302, which said Lot 5-B is a part, the plaintiffs
deny the existence of such road much less a barrio road, and that there has never
been a road therein. With the permission of the Hon. Court the existence or nonexistence of a road can be verified by an ocular inspection and if need be with the aid
of a licensed surveyor;

5.
That the plaintiffs deny the allegations in paragraphs IX and XIII of the
Answer that Mr. Gregorio Z. Ocampo and his successors in interest have never been
in possession of this portion of land now under litigation. Mr. Gregorio Z. Ocampo
took possession of said property after he bought it in 1934 and if the predecessors in
interest of the defendant Cabral happened to be in its possession it was, first, with the
consent of Mr. Ocampo and later by his toleration as we have already explained in
paragraph 2 of this Reply;

3.
That the plaintiffs deny the defendants allegations in paragraphs VI and IX
of their Answer that the plaintiffs have admitted, acknowledged and recognized the
defendant Cabral and her predecessors in said land as the real owners thereof,
because the truth is that the plaintiffs are the real owners of the same, and that they
have never admitted, acknowledged nor recognized the defendant Cabral nor any of
her predecessors in interest as the owners of said portion of land;

6.
That the plaintiffs deny the allegation in paragraph IX of the Answer that
the inclusion of this portion of property under litigation was obtained thru error or
fraud by the original applicant, and they likewise deny the allegation in paragraph
XI of the Answer that this portion with an area of 4,303 square meters, more or less,
was erroneously and fraudulently included in the property described in Transfer
Certificate of Title No. 14513 of the Register of Deeds of the Province of Bulacan,
because in truth and in fact there was no such error or fraud. The title of this property
was granted and obtained in a regular proceeding. If there was any error or fraud the
predecessor in interest of the defendant Victoria P. Cabral would have filed a petition
for review or would have sued for damages. Or the said defendant or any of her
predecessors in interest would have resorted to some legal remedy.

4.
That the plaintiffs admit the allegation in paragraph VIII of the Answer that
the defendant Victoria P. Cabral owns an adjoining property which is described in her
plan Psu-100536 but they deny there is a barrio road between her land and that of
the plaintiffs which serves as the boundary and that there has never been any road
much less a barrio road between their properties.

The fact is that the defendant Victoria P. Cabral or any of her predecessors in interest
did not sincerely and honestly believe that they were the owners of this portion of
property. In fact they did not have and do not have any kind of title or any kind of
document, either public or private, over this property and they did not even have this
property declared in their names for taxation purposes.

Granting, but without admitting, that the title to this property was obtained either by
error or fraud yet the defendant Victoria P. Cabral can have no valid claim against the
plaintiffs because she has never been the owner of said property and also because the
plaintiffs predecessor, Mr. Gregorio Z. Ocampo, acquired this property as an
innocent purchaser, in good faith and for value.

The decision of the trial court is not clear as to whether or not the disputed lot is
included in T.C.T. No. 14513. However, the decision contains the following
statement: "if it is included in their title, such title is void insofar as the portion of the
Pandayan road is concerned." (R.A., p. 30.).

The trial court gave the following judgment:

7.
That the plaintiffs deny the allegation in paragraph XIV of the Answer that
the plaintiffs are under obligation to execute a deed of transfer of the portion of land
in favor of the defendant Victoria P. Cabral because, first, the title to this land was
obtained in a regular proceeding where there was neither error nor fraud; second,
said defendant or her predecessors in interest are not the owners of said land much
less said defendant Cabral who has nothing at all in her possession to show any kind
of right over said portion of land, and third, Mr. Gregorio Z. Ocampo, the
predecessor in interest of the plaintiffs, acquire this property as an innocent
purchaser, in good faith and for value, and

8.
That the plaintiffs have no knowledge or information sufficient to form a
belief as to the truth of the allegation in paragraph XV of the defendants Answer
(Counterclaim).

WHEREFORE, it is respectfully prayed of this Hon. Court to grant the plaintiffs

Petition in their Complaint." (R.A., pp. 14-21.)

It can be seen that the thrust of the Complaint is that a piece of land covered by
T.C.T. No. 14513 in the name of Gregorio Z. Ocampo was illegally possessed by the
defendants. Upon the other hand, the thrust of the Answer is that "the defendant
Victoria P. Cabral is the real owner of Lot No. 5-B, plan Psd-11496, with an area of
4,303 square meters, more or less, erroneously or fraudulently included in the
property described in Transfer Certificate of Title No. 14513 of the Register of Deeds
of the Province of Bulacan, registered in the name of the deceased Gregorio Z.
Ocampo and now claimed by the herein plaintiffs." (Answer, par. XI.)

"WHEREFORE, plaintiffs complaint is hereby DISMISSED, without costs. For lack

of proof that plaintiffs were in bad faith in the filing of the present action,
defendants counter-claim is likewise dismissed." (R.A., p. 30.)

The plaintiffs appealed to the Court of Appeals and made the following assignment
of errors:jgc:chanrobles.com.ph

"I.
THE LOWER COURT ERRED IN HOLDING THAT THE PANDAYAN
ROAD IS LOCATED INSIDE THE PROPERTY DESCRIBED IN T.C.T. NO.
14513 AND INCONSEQUENTLY HOLDING THAT THE SAME CONSTITUTES
THE BOUNDARY LINE BETWEEN THE PROPERTIES OF PLAINTIFFSAPPELLANTS AND DEFENDANT-APPELLEE VICTORIA CABRAL.

II.
THE LOWER COURT ERRED IN HOLDING THAT T.C.T. NO. 14513 IS
VOID INSOFAR AS THE PORTION FROM THE PANDAYAN ROAD IS
CONCERNED, AND IN NOT HOLDING THAT SAID T.C.T. IS
INCONTROVERTIBLE.

III.
THE LOWER COURT ERRED IN GIVING IMPORTANCE TO
DEFENDANTS-APPELLEES ALLEGED OPEN, CONTINUOUS AND
ADVERSE POSSESSION AND IN DISMISSING PLAINTIFFS-APPELLANTS
COMPLAINT." (Brief, pp. a-b.)

The Court of Appeals found as a fact: "That disputed portion Lot 5-a is admittedly
part of the land originally registered in the name of plaintiffs predecessor in interest,

there should be no question that that title had become imprescriptible and original
registrant as well as his successors had the right to vindicate their ownership against
any body else." (Rollo, p. 54.)

But the Court of Appeals went further. Seizing a statement in the Reply and Answer
to Counterclaim filed by the plaintiffs, it held that Gregorio Z. Ocampo had by an
oral contract sold the disputed land to Antonio Rodriguez the defendants
predecessor in interest. The Court of Appeals further said "that agreement oral albeit,
became binding upon Ocampo, it was even executed in part by the actual delivery of
possession, it amounted to a supervening fact, posterior to the title, and the fact that
Ocampos title was not afterwards cancelled can not at all mean that the title could be
used as a weapon to annul that posterior agreement by Ocampo voluntarily entered
into and by reason of which he had delivered possession unto defendants
predecessor; of course, no deed of sale was formalized for a reason not clear in the
evidence, but whether or not formalized, it was a binding personal agreement upon
Ocampo." (Rollo, pp. 56-57.)

The statement upon which the Court of Appeals built its decision is as
follows:jgc:chanrobles.com.ph

"When Mr. Gregorio Z. Ocampo bought the parcel of land known as Lot 5, Psu43302 with an area of 78,181 square meters, more or less, in 1934, (wherein this
portion under litigation is included), the said Mr. Ocampo took possession of this
whole land. In the year 1935 the adjoining owner of the said property, the late Mr.
Antonio Rodriguez and predecessor of the defendant Victoria P. Cabral, requested
Mr. Ocampo to sell to him a portion of said land with an area of 4,303 square meters,
more or less, to which Mr. Ocampo agreed. As there was already a meeting of the
mind Mr. Rodriguez requested Mr. Ocampo that he be allowed to possess the said
portion as they were going to make the formal deed of sale, to which proposition Mr.
Ocampo likewise agreed. This proposed sale never materialized so if Mr. Rodriguez
ever possessed the said portion of land, now under litigation, he did not possess it as
owner but only as a prospective owner. His possession cannot, therefore, be termed
adverse. Such possession cannot also be termed continuous for 50 years because
Mr. Ocampo was in possession of the same in 1934 before Mr. Rodriguez came to
possession of the same, first, with the consent and later by toleration of Mr.
Ocampo." (R.A. pp. 15-16.)

It passes understanding why the plaintiffs mentioned a non-consummated transaction

between Gregorio Z. Ocampo and Antonio Rodriguez when the defendants made no
claim of such transaction nor was the name of Antonio Rodriguez even mentioned in
their Answer.chanrobles virtual lawlibrary

Even as the Court of Appeals found that the disputed piece of land is registered in the
name of the plaintiffs but because of the supposed oral sale of the same to the
predecessors of the defendants, it affirmed the judgment of the trial court dismissing
the complaint for the recovery of the land.

The instant petition assails the Court of Appeals for rendering a decision based on a
ground which was never raised nor discussed whether in the trial court or before it by
any of the parties. The ground to be sure, is the supposed oral contract of sale made
to the predecessors of the defendants covering the disputed piece of land.

The petition is highly impressed with merit.

It is a well-settled rule that, except questions on jurisdiction, no question will be

entertained on appeal unless it has been raised in the court below and it is within the
issues made by the parties in their pleadings. (See cases cited in II Moran, Rules of
Court, pp. 504-505 [1970].)

In this case, the Court of Appeals erred when it rendered a decision based on a
ground which was not litigated in the trial court and which could not have been
raised on appeal. That the supposed oral contract of sale was never an issue is
demonstrated by the following:chanrob1es virtual 1aw library

1.
The pleadings of the parties have been purposely reproduced in full above.
It can be seen therefrom that no issue in respect of the supposed oral sale actually
emerged.

2.
The decision of the trial court is absolutely silent on the supposed oral
contract of sale.

3.
The plaintiffs who appealed the decision of the trial court to the Court of
Appeals did not make an assignment of error in respect of the supposed oral sale.

The Court of Appeals found as a fact that the disputed piece of land is registered in
the name of the plaintiffs predecessor.

4.
The defendants, by their own admission, are in possession of the disputed
land. There is no evidence that they were possessors in bad faith. However, their
good faith ceased when they were served with summons to answer the complaint.
(Art. 528, Civil Code; Tacas v. Tobon, 53 Phil. 356 [1929].) As possessors in bad
faith from the service of the summons they "shall reimburse the fruits received and
those which the legitimate possessor could have received, . . ." (Art. 549, Civil
Code.)
WHEREFORE, the judgment of the Court of Appeals is hereby reversed and another
one rendered in that the defendants shall vacate and surrender the land in question to
the plaintiffs; and the defendants shall also account for the fruits thereof pursuant to
Article 549 of the Civil Code from the service of the summons. Costs against the
defendants.

The defendants claimed in their answer that they and their predecessors are the
owners of the land in dispute but that the plaintiffs predecessor was able to register
the same in his name through error or fraud.

SO ORDERED.

However, the trial court made no categorical finding on this claim of the defendants
otherwise it would have granted the affirmative relief which they asked, namely:" (b)
declaring the defendant Victoria P. Cabral as the owner of Lot 5-B, plan Psd-11496,
which has been erroneously included in the property of the deceased Gregorio Z.
Ocampo covered by Transfer Certificate of Title No. 14513, Bulacan, and ordering
the herein plaintiffs to execute a deed of transfer of said Lot No. 5-B, plan Psd-11496
in favor of the defendant Victoria P. Cabral." The Court of Appeals did not deal with
this
issue
because
there
was
no
appeal
made
by
the
defendants.chanroblesvirtualawlibrary

DELFIN LAMSIS, MAYNARD MONDIGUING, JOSE VALDEZ, JR. and Heirs of

AGUSTIN KITMA, represented by EUGENE KITMA, Petitioners, v.
MARGARITA SEMON DONG-E, Respondent.cralaw

The following conclusions have to be made.

1.
The disputed land is included in T.C.T. No. 14513 issued to Gregorio Z.
Ocampo, the predecessor of the plaintiffs.
2.
The original registration which includes the disputed land was not vitiated
by error or fraud.
3.
The Court of Appeals erred when it held that Gregorio Z. Ocampo had
orally sold the disputed land to the predecessors of the defendants.

DECISION

DEL CASTILLO, J.:

There is laches when a party is aware, even in the early stages of the proceedings, of
a possible jurisdictional objection, and has every opportunity to raise said objection,
but fails to do so, even on appeal.

This is a Petition for Review1cra1aw assailing the March 30, 2006 Decision2cra1aw
of the Court of Appeals (CA) in CA-G.R. CV No. 78987 as well as its May 26, 2006
Resolution3cra1aw which denied petitioners motion for reconsideration. The
dispositive portion of the assailed Decision reads:chanroblesvirtualawlibrary

WHEREFORE, in view of the foregoing, the appeal is hereby DISMISSED for lack
of merit and the judgment dated January 8, 2003 of the Regional Trial Court of
Baguio City in Civil Case No. 4140-R is AFFIRMED in toto.

SO ORDERED.4chanroblesvirtuallawlibrary

Factual antecedents

This case involves a conflict of ownership and possession over an untitled parcel of
land, denominated as Lot No. 1, with an area of 80,736 square meters. The property
is located along Km. 5 Asin Road, Baguio City and is part of a larger parcel of land
with an area of 186,090 square meters. While petitioners are the actual occupants of
Lot No. 1, respondent is claiming ownership thereof and is seeking to recover its
possession from petitioners.

According to respondent Margarita Semon Dong-E (Margarita), her familys

ownership and occupation of Lot No. 1 can be traced as far back as 1922 to her late
grandfather, Ap-ap.5cra1aw Upon Ap-aps death, the property was inherited by his
children, who obtained a survey plan in 1964 of the 186,090-square meter property,
which included Lot No. 1.6cra1aw On the same year, they declared the property for
taxation purposes in the name of "The Heirs of Ap-ap."7cra1aw The 1964 tax
declaration bears a notation that reads: "Reconstructed from an old Tax Declaration
No.
363
dated
May
10,
1922
per
true
of
same
presented."8chanroblesvirtuallawlibrary

The heirs of Ap-ap then executed, for a P500.00 consideration, a Deed of

Quitclaim9cra1aw on February 26, 1964 in favor of their brother Gilbert Semon
(Margaritas father).

Sometime between 1976 and 1978,10cra1aw Gilbert Semon together with his wife
Mary Lamsis, allowed his in-laws Manolo Lamsis and Nancy Lamsis-Kitma, to stay

on a portion of Lot No. 1 together with their respective families.11cra1aw They were
allowed to erect their houses, introduce improvements, and plant trees thereon. When
Manolo Lamsis and Nancy Lamsis-Kitma died sometime in the 1980s, their children,
petitioners Delfin Lamsis (Delfin) and Agustin Kitma (Agustin), took possession of
certain portions of Lot No. 1. Delfin possessed 4,000 square meters of Lot No. 1,
while Agustin occupied 5,000 square meters thereof.12cra1aw Nevertheless, the
heirs of Gilbert Semon tolerated the acts of their first cousins.

When Gilbert Semon died in 1983,13cra1aw his children extrajudicially partitioned

the property among themselves and allotted Lot No. 1 thereof in favor of
Margarita.14cra1aw Since then, Margarita allegedly paid the realty tax over Lot No.
115cra1aw and occupied and improved the property together with her husband;
while at the same time, tolerating her first cousins occupation of portions of the same
lot.

This state of affairs changed when petitioners Delfin and Agustin allegedly began
expanding their occupation on the subject property and selling portions
thereof.16cra1aw Delfin allegedly sold a 400-square meter portion of Lot No. 1 to
petitioner Maynard17cra1aw Mondiguing (Maynard) while Agustin sold another
portion to petitioner Jose Valdez (Jose).18chanroblesvirtuallawlibrary

With such developments, Margarita filed a complaint19cra1aw for recovery of

ownership, possession, reconveyance and damages against all four occupants of Lot
No. 1 before the Regional Trial Court (RTC) of Baguio City. The case was docketed
as Civil Case No. 4140-R and raffled to Branch 59. The complaint prayed for the
annulment of the sales to Maynard and Jose and for petitioners to vacate the portions
of the property which exceed the areas allowed to them by Margarita.20cra1aw
Margarita claimed that, as they are her first cousins, she is willing to donate to Delfin
and Agustin a portion of Lot No. 1, provided that she retains the power to choose
such portion.21chanroblesvirtuallawlibrary

Petitioners denied Margaritas claims of ownership and possession over Lot No. 1.
According to Delfin and Agustin, Lot No. 1 is a public land claimed by the heirs of
Joaquin Smith (not parties to the case).22cra1aw The Smiths gave their permission

for Delfin and Agustins parents to occupy the land sometime in 1969 or 1970. They
also presented their neighbors who testified that it was Delfin and Agustin as well as
their respective parents who occupied Lot No. 1, not Margarita and her parents.

Delfin and Agustin also assailed the muniments of ownership presented by Margarita
as fabricated, unauthenticated, and invalid. It was pointed out that the Deed of
Quitclaim, allegedly executed by all of Ap-aps children, failed to include two Rita
Bocahan and Stewart Sito.23cra1aw Margarita admitted during trial that Rita
Bocahan and Stewart Sito were her uncle and aunt, but did not explain why they
were excluded from the quitclaim.

According to Maynard and Jose, Delfin and Agustin were the ones publicly and
openly in possession of the land and who introduced improvements thereon. They
also corroborated Delfin and Agustins allegation that the real owners of the property
are the heirs of Joaquin Smith.24chanroblesvirtuallawlibrary

In order to debunk petitioners claim that the Smiths owned the subject property,
Margarita presented a certified copy of a Resolution from the Land Management
Office denying the Smiths application for recognition of the subject property as part
of their ancestral land.25cra1aw The resolution explains that the application had to
be denied because the Smiths did not "possess, occupy or utilize all or a portion of
the property x x x. The actual occupants (who were not named in the resolution)
whose improvements are visible are not in any way related to the applicant or his coheirs."26chanroblesvirtuallawlibrary

To bolster her claim of ownership and possession, Margarita introduced as evidence

an unnumbered resolution of the Community Special Task Force on Ancestral Lands
(CSTFAL) of the Department of Environment and Natural Resources (DENR),
acting favorably on her and her siblings ancestral land claim over a portion of the
186,090-square
meter
property.27cra1aw
The
said
resolution
states:chanroblesvirtualawlibrary

The land subject of the instant application is the ancestral land of the herein
applicants. Well-established is the fact that the land treated herein was first declared
for taxation purposes in 1922 under Tax Declaration No. 363 by the applicants
grandfather Ap-Ap (one name). Said application was reconstructed in 1965 after the
original got lost during the war. These tax declarations were issued and recorded in
the Municipality of Tuba, Benguet, considering that the land was then within the
territorial jurisdiction of the said municipality. That upon the death of declarant ApAp his heirs x x x transferred the tax declaration in their name, [which tax
declaration is] now with the City assessors office of Baguio.

The land consisting of four (4) lots with a total area of ONE HUNDRED EIGHTY
SIX THOUSAND NINETY (186,090) SQUARE METERS, is covered by Psu198317 duly approved by the Director of Lands on October 4, 1963 in the name of
Ap-Ap (one name). In 1964, the same land was the subject of a petition filed by
Gilbert Semon, as petitioner, before the Court of First Instance of the City of Baguio
in the reopening of Judicial Proceedings under Civil Case No. 1, GLRO Record No.
211 for the registration and the issuance of Certificate of Title of said land. The land
registration case was however overtaken by the decision of the Supreme Court
declaring such judicial proceedings null and void because the courts of law have no
jurisdiction.

It has been sufficiently substantiated by the applicants that prior to and at the time of
the pendency of the land registration case and henceforth up to and including the
present, the herein applicants by themselves and through their predecessor-in-interest
have been in exclusive, continuous, and material possession and occupation of the
said parcel of land mentioned above under claim of ownership, devoting the same for
residential and agricultural purposes. Found are the residential houses of the
applicants as well as those of their close relatives, while the other areas planted to
fruit trees, coffee and banana, and seasonal crops. Also noticeable therein are
permanent stone and earthen fences, terraces, clearings, including irrigation gadgets.

On the matter of the applicant[s] indiguinity [sic] and qualifications, there is no

doubt that they are members of the National Cultural Communities, particularly the
Ibaloi tribe. They are the legitimate grandchildren of Ap-Ap (one name) who lived
along the Asin Road area. His legal heirs are: Orani Ap-Ap, married to Calado Salda;
Rita Ap-Ap, married to Jose Bacacan; Sucdad Ap-Ap, married to Oragon Wakit; and

Gilbert Semon, a former vice-mayor of Tuba, Benguet, [who] adopted the common
name of their father Semon, as it is the customary practice among the early Ibalois. x
xx

On the matter regarding the inheritance of the heirs of Ap-Ap, it is important to state
[that] Gilbert Semon consolidated ownership thereof and became the sole heir in
1964, by way of a "Deed of Quitclaim" executed by the heirs in his favor. As to the
respective share of the applicants[] co-heirs, the same was properly adjudicated in
1989 with the execution of an "Extrajudicial Settlement/ Partition of Estate with
Waiver of Rights."

With regard to the overlapping issue, it is pertinent to state that application No. BgL-066 of Thomas Smith has already been denied by us in our Resolution dated
November 1997. As to the other adverse claims therein by reason of previous
conveyances in favor of third parties, the same were likewise excluded resulting in
the reduction of the area originally applied from ONE HUNDRED EIGHTY SIX
THOUSAND NINETY (186,090) SQUARE METERS, more or less to ONE
HUNDRED TEN THOUSAND THREE HUNDRED FORTY TWO (110,342)
SQUARE METERS, more or less. Considering the foregoing developments, we find
no legal and procedural obstacle in giving due course to the instant application.

Now therefore, we hereby [resolve] that the application for Recognition of Ancestral
Land Claim filed by the Heirs of Gilbert Semon, represented by Juanito Semon, be
granted [and] a Certificate of Ancestral Land Claim (CALC) be issued to the herein
applicants by the Secretary, Department of Environment and Natural Resources,
Visayas Avenue, Diliman, Quezon City, through the Regional Executive Director,
DENR-CAR, Diego Silang Street, Baguio City. The area of the claim stated herein
above is however subject to the outcome of the final survey to be forthwith executed.

Carried this 23rd day of June 1998.28chanroblesvirtuallawlibrary

The resolution was not signed by two members of the CSTFAL on the ground that
the signing of the unnumbered resolution was overtaken by the enactment of the

Republic Act (RA) No. 8371 or the Indigenous Peoples Rights Act of 1997 (IPRA).
The IPRA removed the authority of the DENR to issue ancestral land claim
certificates and transferred the same to the National Commission on Indigenous
Peoples (NCIP).29cra1aw The Ancestral Land Application No. Bg-L-064 of the
Heirs of Gilbert Semon was transferred to the NCIP, Cordillera Administrative
Region, La Trinidad, Benguet and re-docketed as Case No. 05-RHO-CAR03.30cra1aw The petitioners filed their protest in the said case before the NCIP. The
same has been submitted for resolution.

Ruling of the Regional Trial Court31chanroblesvirtuallawlibrary

After summarizing the evidence presented by both parties, the trial court found that it
preponderates in favor of respondents long-time possession of and claim of
ownership over the subject property.32cra1aw The survey plan of the subject
property in the name of the Heirs of Ap-ap executed way back in 1962 and the tax
declarations thereafter issued to the respondent and her siblings all support her claim
that her family and their predecessors-in-interest have all been in possession of the
property to the exclusion of others. The court likewise gave credence to the
documentary evidence of the transfer of the land from the Heirs of Ap-ap to
respondents father and, eventually to respondent herself. The series of transfers of
the property were indications of the respondents and her predecessors interest over
the property. The court opined that while these pieces of documentary evidence were
not conclusive proof of actual possession, they lend credence to respondents claim
because, "in the ordinary course of things, persons will not execute legal documents
dealing with real property, unless they believe, and have the basis to believe, that
they have an interest in the property subject of the legal documents x x
x."33chanroblesvirtuallawlibrary

In contrast, the trial court found nothing on record to substantiate the allegations of
the petititioners that they and their parents were the long-time possessors of the
subject property. Their own statements belied their assertions. Petitioner Maynard
and Jose both admitted that they could not secure title for the property from the
Bureau of Lands because there were pending ancestral land claims over the
property.34cra1aw Petitioner Agustins Townsite Sales Application over the property
was held in abeyance because of respondents own claim, which was eventually
favorably considered by the CSTFAL.35chanroblesvirtuallawlibrary

The dispositive portion of the trial courts Decision reads:chanroblesvirtualawlibrary

The sole issue resolved by the appellate court was whether the trial court erred in
ruling in favor of respondent in light of the adduced evidence. Citing the rule on
preponderance of evidence, the CA held that the respondent was able to discharge
her burden in proving her title and interest to the subject property. Her documentary
evidence were amply supported by the testimonial evidence of her witnesses.

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

[respondent] and against the [petitioners]
In contrast, petitioners only made bare allegations in their testimonies that are
insufficient to overcome respondents documentary evidence.
(1) Declaring the transfer of a portion of Lot 1 of PSU 198317 made by the
[petitioner] Delfin Lamsis to Menard Mondiguing and Jose Valdez, Jr. null and void;
Petitioners moved for a reconsideration40cra1aw of the adverse decision but the
same was denied.
(2) Ordering the [petitioners] Delfin Lamsis, Agustin Kitma, Menard Mondiguing
and Jose Valdez, Jr., to vacate the area they are presently occupying that is within Lot
1 of PSU 198317 belonging to the [respondent] and to surrender possession thereof
to the [respondent];

Hence this petition, which was initially denied for failure to show that the CA
committed any reversible error.41cra1aw Upon petitioners motion for
reconsideration,42cra1aw the petition was reinstated in the Courts January 15, 2007
Resolution.43chanroblesvirtuallawlibrary

(3) To pay [respondent] attorneys fees in the amount of P10,000.00; and

Petitioners arguments
(4) To pay the costs of suit.

SO ORDERED.36chanroblesvirtuallawlibrary

It appears that no motion for reconsideration was filed before the trial court.
Nevetheless, the trial court issued an Order37cra1aw allowing the petitioners Notice
of Appeal.38chanroblesvirtuallawlibrary

Ruling of the Court of Appeals39chanroblesvirtuallawlibrary

Petitioners assign as error the CAs appreciation of the evidence already affirmed and
considered by the trial court. They maintain that the change in the presiding judges
who heard and decided their case resulted in the appreciation of what would
otherwise be inadmissible evidence.44cra1aw Petitioners ask that the Court exempt
their petition from the general rule that a trial judges assessment of the credibility of
witnesses is accorded great respect on appeal.

To support their claim that the trial and appellate courts erred in ruling in favor of
respondent, they assailed the various pieces of evidence offered by respondent. They
maintain that the Deed of Quitclaim executed by the Heirs of Ap-ap is spurious and
lacks the parties and witnesses signatures. Moreover, it is a mere photocopy, which
was never authenticated by the notary public in court and no reasons were proferred

regarding the existence, loss, and contents of the original copy.45cra1aw Under the
best evidence rule, the Deed of Quitclaim is inadmissible in evidence and should
have been disregarded by the court.

Respondent did not prove that she and her husband possessed the subject property
since time immemorial. Petitioners argue that respondent admitted possessing and
cultivating
only
the
land
that
lies
outside
the
subject
property.46chanroblesvirtuallawlibrary

Petitioners next assail the weight to be given to respondents muniments of

ownership, such as the tax declarations and the survey plan. They insist that these are
not indubitable proofs of respondents ownership over the subject property given that
there are other claimants to the land (who are not parties to this case) who also
possess a survey plan over the subject property.47chanroblesvirtuallawlibrary

Petitioners then assert their superior right to the property as the present possessors
thereof. They cite pertinent provisions of the New Civil Code which presume good
faith possession on the part of the possessor and puts the burden on the plaintiff in an
action to recover to prove her superior title.48chanroblesvirtuallawlibrary

Petitioners next assert that they have a right to the subject property by the operation
of acquisitive prescription. They posit that they have been in possession of a public
land publicly, peacefully, exclusively and in the concept of owners for more than 30
years. Respondents assertion that petitioners are merely possessors by tolerance is
unsubstantiated.49chanroblesvirtuallawlibrary

Petitioners also maintain that the reivindicatory action should be dismissed for lack
of jurisdiction in light of the enactment of the IPRA, which gives original and
exclusive jurisdiction over disputes involving ancestral lands and domains to the
NCIP.50cra1aw They assert that the customary laws of the Ibaloi tribe of the Benguet
Province should be applied to their dispute as mandated by Section 65, Chapter IX of
RA 8371, which states: "When disputes involve ICCs/IPs,51cra1aw customary laws
and practices shall be used to resolve the dispute."

In the alternative that jurisdiction over an accion reivindicatoria is held to be vested

in the trial court, the petitioners insist that the courts should dismiss the
reivindicatory action on the ground of litis pendentia.52cra1aw They likewise argue
that NCIP has primary jurisdiction over ancestral lands, hence, the courts should not
interfere "when the dispute demands the exercise of sound administrative discretion
requiring special knowledge, experience and services of the administrative tribunal x
x x In cases where the doctrine of primary jurisdiction is clearly applicable, the court
cannot arrogate unto itself the authority to resolve a controversy, the jurisdiction over
which is initially lodged with an administrative body of special
competence."53cra1aw The courts should stand aside in order to prevent the
possibility of creating conflicting decisions.54chanroblesvirtuallawlibrary

Respondents arguments

Respondent opines that the appellate court did not commit any reversible error in
affirming the trial courts decision. The present petition is a mere dilatory tactic to
frustrate the speedy administration of justice.55chanroblesvirtuallawlibrary

Respondent also asserts that questions of fact are prohibited in a Rule 45

petition.56cra1aw Thus, the appreciation and consideration of the factual issues are
no longer reviewable.57chanroblesvirtuallawlibrary

The issue of lack of jurisdiction is raised for the first time in the petition before this
Court. It was never raised before the trial court or the CA. Thus, respondent insists
that petitioners are now barred by laches from attacking the trial courts jurisdiction
over the case. Citing Aragon v. Court of Appeals,58cra1aw respondent argues that
the jurisdictional issue should have been raised at the appellate level at the very least
so as to avail of the doctrine that the ground lack of jurisdiction over the subject
matter of the case may be raised at any stage of the proceedings even on
appeal.59chanroblesvirtuallawlibrary

Respondent maintains that there is no room for the application of litis pendentia
because the issues in the application for ancestral land claim are different from the
issue in a reivindicatory action. The issue before the NCIP is whether the
Government, as grantor, will recognize the ancestral land claim of respondent over a
public alienable land; while the issue in the reivindicatory case before the trial court
is
ownership,
possession,
and
right
to
recover
the
real
property.60chanroblesvirtuallawlibrary

4. If the trial court retains jurisdiction, whether the ancestral land claim pending
before the NCIP should take precedence over the reivindicatory
action.62chanroblesvirtuallawlibrary

Our Ruling

Whether the appellate court disregarded material facts and circumstances in

affirming the trial courts decision
Given that the elements of lis pendens are absent in case at bar, the allegation of
forum-shopping is also bereft of merit. Any judgment to be rendered by the NCIP
will not amount to res judicata in the instant case.61chanroblesvirtuallawlibrary

Issues

The
petitioners
present
the
consideration:chanroblesvirtualawlibrary

following

issues

for

our

1. Whether the appellate court disregarded material facts and circumstances in

affirming the trial courts decision;

2. Whether petitioners have acquired the subject property by prescription;

3. Whether the trial court has jurisdiction to decide the case in light of the effectivity
of RA 8371 or the Indigenous Peoples Rights Act of 1997 at the time that the
complaint was instituted;

Both the trial and the appellate courts ruled that respondent has proven her claims of
ownership and possession with a preponderance of evidence. Petitioners now argue
that the two courts erred in their appreciation of the evidence. They ask the Court to
review the evidence of both parties, despite the CAs finding that the trial court
committed no error in appreciating the evidence presented during trial. Hence,
petitioners seek a review of questions of fact, which is beyond the province of a Rule
45 petition. A question of fact exists if the uncertainty centers on the truth or falsity
of the alleged facts.63cra1aw "Such questions as whether certain items of evidence
should be accorded probative value or weight, or rejected as feeble or spurious, or
whether the proofs on one side or the other are clear and convincing and adequate to
establish a proposition in issue, are without doubt questions of
fact."64chanroblesvirtuallawlibrary

Since it raises essentially questions of fact, this assignment of error must be

dismissed for it is settled that only questions of law may be reviewed in an appeal by
certiorari.65cra1aw There is a question of law when there is doubt as to what the law
is on a certain state of facts. Questions of law can be resolved without having to reexamine the probative value of evidence presented, the truth or falsehood of facts
being admitted.66cra1aw The instant case does not present a compelling reason to
deviate from the foregoing rule, especially since both trial and appellate courts agree
that respondent had proven her claim of ownership as against petitioners claims.
Their factual findings, supported as they are by the evidence, should be accorded
great respect.

In any case, even if petitioners arguments attacking the authenticity and admissibility
of the Deed of Quitclaim executed in favor of respondents father are well-taken, it
will not suffice to defeat respondents claim over the subject property. Even without
the Deed of Quitclaim, respondents claims of prior possession and ownership were
adequately supported and corroborated by her other documentary and testimonial
evidence. We agree with the trial courts observation that, in the ordinary course of
things, people will not go to great lengths to execute legal documents and pay realty
taxes over a real property, unless they have reason to believe that they have an
interest over the same.67chanroblesvirtuallawlibrary

The fact that respondents documents traverse several decades, from the 1960s to the
1990s, is an indication that she and her family never abandoned their right to the
property and have continuously exercised rights of ownership over the same.

Moreover, respondents version of how the petitioners came to occupy the property
coincides with the same timeline given by the petitioners themselves. The only
difference is that petitioners maintain they came into possession by tolerance of the
Smith family, while respondent maintains that it was her parents who gave
permission to petitioners. Given the context under which the parties respective
statements were made, the Court is inclined to believe the respondents version, as
both the trial and appellate courts have concluded, since her version is corroborated
by the documentary evidence.

Whether petitioners have acquired the subject property by prescription

Assuming that the subject land may be acquired by prescription, we cannot accept
petitioners claim of acquisition by prescription. Petitioners admitted that they had
occupied the property by tolerance of the owner thereof. Having made this
admission, they cannot claim that they have acquired the property by prescription
unless they can prove acts of repudiation. It is settled that possession, in order to
ripen into ownership, must be in the concept of an owner, public, peaceful and
uninterrupted. Possession not in the concept of owner, such as the one claimed by
petitioners, cannot ripen into ownership by acquisitive prescription, unless the
juridical relation is first expressly repudiated and such repudiation has been

communicated to the other party. Acts of possessory character executed due to

license or by mere tolerance of the owner are inadequate for purposes of acquisitive
prescription. Possession by tolerance is not adverse and such possessory acts, no
matter how long performed, do not start the running of the period of
prescription.68chanroblesvirtuallawlibrary

In the instant case, petitioners made no effort to allege much less prove any act of
repudiation sufficient for the reckoning of the acquisitive prescription. At most, we
can find on record the sale by petitioners Delfin and Agustin of parts of the property
to petitioners Maynard and Jose; but the same was done only in 1998, shortly before
respondent filed a case against them. Hence, the 30-year period necessary for the
operation of acquisitve prescription had yet to be attained.

Whether the ancestral land claim pending before the National Commission on
Indigenous Peoples (NCIP) should take precedence over the reivindicatory action

The application for issuance of a Certificate of Ancestral Land Title pending before
the NCIP is akin to a registration proceeding. It also seeks an official recognition of
ones claim to a particular land and is also in rem. The titling of ancestral lands is for
the purpose of "officially establishing" ones land as an ancestral land.69cra1aw Just
like a registration proceeding, the titling of ancestral lands does not vest
ownership70cra1aw upon the applicant but only recognizes ownership71cra1aw that
has already vested in the applicant by virtue of his and his predecessor-in-interests
possession of the property since time immemorial. As aptly explained in another
case:chanroblesvirtualawlibrary

It bears stressing at this point that ownership should not be confused with a
certificate of title. Registering land under the Torrens system does not create or vest
title because registration is not a mode of acquiring ownership. A certificate of title is
merely an evidence of ownership or title over the particular property described
therein. Corollarily, any question involving the issue of ownership must be threshed
out in a separate suit x x x The trial court will then conduct a full-blown trial wherein
the parties will present their respective evidence on the issue of ownership of the

subject properties to enable the court to resolve the said issue. x x x72cra1aw
(Emphasis supplied)

Likewise apropos is the following explanation:chanroblesvirtualawlibrary

The fact that the [respondents] were able to secure [TCTs over the property] did not
operate to vest upon them ownership of the property. The Torrens system does not
create or vest title. It has never been recognized as a mode of acquiring ownership x
x x If the [respondents] wished to assert their ownership, they should have filed a
judicial action for recovery of possession and not merely to have the land registered
under their respective names. x x x Certificates of title do not establish
ownership.73cra1aw (Emphasis supplied)

A registration proceeding is not a conclusive adjudication of ownership. In fact, if it

is later on found in another case (where the issue of ownership is squarely
adjudicated) that the registrant is not the owner of the property, the real owner can
file a reconveyance case and have the title transferred to his
name.74chanroblesvirtuallawlibrary

Given that a registration proceeding (such as the certification of ancestral lands) is

not a conclusive adjudication of ownership, it will not constitute litis pendentia on a
reivindicatory case where the issue is ownership.75cra1aw "For litis pendentia to be
a ground for the dismissal of an action, the following requisites must concur: (a)
identity of parties, or at least such parties who represent the same interests in both
actions; (b) identity of rights asserted and relief prayed for, the relief being founded
on the same facts; and (c) the identity with respect to the two preceding particulars in
the two cases is such that any judgment that may be rendered in the pending case,
regardless of which party is successful, would amount to res judicata in the other
case."76cra1aw The third element is missing, for any judgment in the certification
case would not constitute res judicata or be conclusive on the ownership issue
involved in the reivindicatory case. Since there is no litis pendentia, there is no
reason for the reivindicatory case to be suspended or dismissed in favor of the
certification case.

Moreover, since there is no litis pendentia, we cannot agree with petitioners

contention that respondent committed forum-shopping. Settled is the rule that "forum
shopping exists where the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in the
other."77chanroblesvirtuallawlibrary

Whether the trial court has jurisdiction to decide the case in light of the effectivity of
RA 8371 or the Indigenous Peoples Rights Act of 1997 at the time that the complaint
was instituted

For the first time in the entire proceedings of this case, petitioners raise the trial
courts alleged lack of jurisdiction over the subject-matter in light of the
effectivity78cra1aw of the IPRA at the time that the complaint was filed in 1998.
They maintain that, under the IPRA, it is the NCIP which has jurisdiction over land
disputes involving indigenous cultural communities and indigenous peoples.

As a rule, an objection over subject-matter jurisdiction may be raised at any time of

the proceedings. This is because jurisdiction cannot be waived by the parties or
vested by the agreement of the parties. Jurisdiction is vested by law, which prevails
at the time of the filing of the complaint.

An exception to this rule has been carved by jurisprudence. In the seminal case of
Tijam v. Sibonghanoy,79cra1aw the Court ruled that the existence of laches will
prevent a party from raising the courts lack of jurisdiction. Laches is defined as the
"failure or neglect, for an unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable time, warranting the
presumption that the party entitled to assert it either has abandoned or declined to
assert it."80cra1aw Wisely, some cases81cra1aw have cautioned against applying
Tijam, except for the most exceptional cases where the factual milieu is similar to
Tijam.

In Tijam, the surety could have raised the issue of lack of jurisdiction in the trial
court but failed to do so. Instead, the surety participated in the proceedings and filed
pleadings, other than a motion to dismiss for lack of jurisdiction. When the case
reached the appellate court, the surety again participated in the case and filed their
pleadings therein. It was only after receiving the appellate courts adverse decision
that the surety awoke from its slumber and filed a motion to dismiss, in lieu of a
motion for reconsideration. The CA certified the matter to this Court, which then
ruled that the surety was already barred by laches from raising the jurisdiction issue.

In case at bar, the application of the Tijam doctrine is called for because the presence
of laches cannot be ignored. If the surety in Tijam was barred by laches for raising
the issue of jurisdiction for the first time in the CA, what more for petitioners in the
instant case who raised the issue for the first time in their petition before this Court.

At the time that the complaint was first filed in 1998, the IPRA was already in effect
but the petitioners never raised the same as a ground for dismissal; instead they filed
a motion to dismiss on the ground that the value of the property did not meet the
jurisdictional value for the RTC. They obviously neglected to take the IPRA into
consideration.

When the amended complaint was filed in 1998, the petitioners no longer raised the
issue of the trial courts lack of jurisdiction. Instead, they proceeded to trial, all the
time aware of the existence of the IPRA as evidenced by the crossexamination82cra1aw conducted by petitioners lawyer on the CSTFAL Chairman
Guillermo Fianza. In the cross-examination, it was revealed that the petitioners were
aware that the DENR, through the CSTFAL, had lost its jurisdiction over ancestral
land claims by virtue of the enactment of the IPRA. They assailed the validity of the
CSTFAL resolution favoring respondent on the ground that the CSTFAL had been
rendered functus officio under the IPRA. Inexplicably, petitioners still did not
question the trial courts jurisdiction.

When petitioners recoursed to the appellate court, they only raised as errors the trial
courts appreciation of the evidence and the conclusions that it derived therefrom. In
their brief, they once again assailed the CSTFALs resolution as having been rendered

functus officio by the enactment of IPRA.83cra1aw But nowhere did petitioners

assail the trial courts ruling for having been rendered without jurisdiction.

It is only before this Court, eight years after the filing of the complaint, after the trial
court had already conducted a full-blown trial and rendered a decision on the merits,
after the appellate court had made a thorough review of the records, and after
petitioners have twice encountered adverse decisions from the trial and the appellate
courts that petitioners now want to expunge all the efforts that have gone into the
litigation and resolution of their case and start all over again. This practice cannot be
allowed.

Thus, even assuming arguendo that petitioners theory about the effect of IPRA is
correct (a matter which need not be decided here), they are already barred by laches
from raising their jurisdictional objection under the circumstances.

WHEREFORE, premises considered, the petition is denied for lack of merit. The
March 30, 2006 Decision of the Court of Appeals in CA-G.R. CV No. 78987 and its
May 26, 2006 Resolution denying the motion for reconsideration are AFFIRMED.

G.R. No. 158929 : August 3, 2010

ROSARIO P. TAN, Petitioner, v. ARTEMIO G. RAMIREZ, MOISES G. RAMIREZ,
RODRIGO G. RAMIREZ, DOMINGO G. RAMIREZ, and MODESTA RAMIREZ
ANDRADE, Respondents.

We resolve in this Decision the petition for review on certiorari1cra1aw filed by

petitioner Rosario P. Tan (petitioner) who seeks to reverse and set aside the
decision2cra1aw dated January 28, 2003 and the resolution3cra1aw dated June 19,
2003 of the former Seventh Division of the Court of Appeals (CA) in CA-G.R. SP
No. 66120. The assailed CA decision declared Roberto Ramirez, father and
predecessor-in-interest of respondents Artemio G. Ramirez, Moises G. Ramirez,

Rodrigo G. Ramirez, Domingo G. Ramirez, and Modesta Ramirez Andrade

(respondents), as the lawful owner of a 86,433-square meter parcel of land in
Mahaba, Apid, Inopacan, Leyte, known as Cadastral Lot No. 3483, Case 12, CAD
637-D, Inopacan Cadastre (subject property). The assailed CA resolution denied the
petitioner's motion for reconsideration.

FACTUAL BACKGROUND

The facts of the case, gathered from the records, are briefly summarized below.

On August 11, 1998, the petitioner, representing her parents (spouses Crispo and
Nicomedesa P. Alumbro), filed with the Municipal Circuit Trial Court (MCTC) of
Hindang-Inopacan, Leyte a complaint for the recovery of ownership and possession
and/or quieting of title of a one-half portion of the subject property against the
respondents.4cra1aw

The petitioner alleged that her great-grandfather Catalino Jaca Valenzona was the
owner of the subject property under a 1915 Tax Declaration (TD) No. 2724. Catalino
had four children: Gliceria,5cra1aw Valentina, Tomasa, and Julian; Gliceria inherited
the subject property when Catalino died; Gliceria married Gavino Oyao, but their
union bore no children; when Gliceria died on April 25, 1952, Gavino inherited a
one-half portion of the subject property, while Nicomedesa acquired the other half
through inheritance, in representation of her mother, Valentina, who had predeceased
Gliceria, and through her purchase of the shares of her brothers and sisters. In 1961,
Nicomedesa constituted Roberto as tenant of her half of the subject property; on June
30, 1965, Nicomedesa bought Gavino's one-half portion of the subject property from
the latter's heirs, Ronito and Wilfredo Oyao,6cra1aw evidenced by a Deed of
Absolute Sale of Agricultural Land;7cra1aw on August 3, 1965, Nicomedesa sold to
Roberto this one-half portion in a Deed of Absolute Sale of Agricultural
Land;8cra1aw and in 1997, Nicomedesa discovered that since 1974, Roberto had
been reflecting the subject property solely in his name under TD No. 4193.

The respondents, on the other hand, traced ownership of the subject property to
Gavino who cultivated it since 1956; Roberto bought half of the subject property
from Nicomedesa on August 3, 1965,9cra1aw and the remaining half from Gavino's
heirs, Ronito and Wilfredo Oyao, on October 16, 1972.10cra1aw On January 9,
1975, a certain Santa Belacho, claiming to be Gavino's natural child, filed a
complaint with the Court of First Instance of Baybay, Leyte against Roberto,
Nicomedesa, Ronito and Wilfredo Oyao, docketed as Civil Case No. B-565, for
recovery of possession and ownership of two (2) parcels of land, including the
subject property;11cra1aw on September 16, 1977, Roberto bought the subject
property from Belacho through a Deed of Absolute Sale of Land; and on October 5,
1977, Roberto and Nicomedesa entered into a Compromise Agreement with Belacho
to settle Civil Case No. B-565. Belacho agreed in this settlement to dismiss the case
and to waive her interest over the subject property in favor of Roberto, and the other
parcel of land in favor of Nicomedesa in consideration of P1,800.00.12cra1aw

THE MCTC RULING

In a Decision dated April 2, 2001, the MCTC found that Catalino's 1915 TD No.
2724 was not the source of Gavino's 1945 TD No. 3257 because it involved the other
parcel of land subject of Civil Case No. B-565. It noted that the subject property was
the conjugal property of Gavino and Gliceria; Gliceria's death in 1952 dissolved the
conjugal partnership and entitled Gavino to a one-half portion as his conjugal share,
while Gliceria's one-half share should be equally divided among Gavino and
Gliceria's brothers and sisters or their children. It held that Roberto was entitled to
only three-fourths, as this was Gavino's entire share, while the petitioner was entitled
to one-fourth of the subject property, and gave the parties sixty days to effect the
partition.13cra1aw

The MCTC brushed aside the respondents' argument that they acquired the subject
property by ordinary acquisitive prescription, noting that bad faith attended their
possession because they were well aware of Nicomedesa's claim of ownership over a
one-half portion of the subject property, long before the property was tax declared
solely in Roberto's name in 1974. It observed that the required thirty-year period for
extraordinary acquisitive prescription was not met because the respondents had only
twenty-four years of adverse possession, counted from 1974 until the filing of the
complaint in 1998.14cra1aw

THE RTC RULING

On appeal, Judge Abraham B. Apostol15cra1aw of the Regional Trial Court (RTC),

Branch 18, Hilongos, Leyte, rendered a two-page Decision dated June 29, 2001,
which we quote in full:chan robles virtual law library

I. The Case

THIS IS A COMPLAINT FOR Recovery of Ownership And Possession And/Or

Quieting of Title With Damages filed by Plaintiffs against defendants on a parcel of
land located at Mahaba, Apid, Inopacan, Leyte presently described as follows:chan
robles virtual law library

A parcel of land situated at Mahaba, Inopacan, Leyte, bounded on the NORTH by

Camotes Sea; EAST by Camotes Sea; SOUTH by Lot 3478, 3476, 3473, WEST by
Lot 3480 covered by Tax Declaration No. 4193 in the name of Roberto Ramirez.

3. That the parties are hereby given sixty days from receipt hereof within which to
effect the actual partition among themselves observing the foregoing proportion,
proportionately sharing the expenses therefor and to submit to the court for final
approval the project of partition including the proposed subdivision plan prepared by
a geodetic engineer;

4. That should the parties be unable to voluntarily agree to make the partition, they
shall so inform the court within thirty days from receipt hereof.

5. That the parties equally share the costs of this suit.

SO ORDERED.

II. Facts of the Case:

a. Version of the Plaintiffs is extant on the rollo of the case summarized on Appeal by
a MEMORANDUM but negligently forgetting to enumerate their PRAYERS.
After a full blown hearing, a DECISION was rendered, the decretal portion
being:chan robles virtual law library
b. Version of the Defendants is also extant on the records of the case and clearly
expanded via a MEMORANDUM.
WHEREFORE, all the foregoing considered the court hereby decrees:
III. Court Findings/Ruling:chan robles virtual law library
1. That plaintiff and defendants are lawful co-owners of Lot 3483 as afore-described;

2. That the shares of the parties shall be divided and apportioned in the following
manner: plaintiff shall own one-fourth (1/4) of Lot 3483 and defendants shall
collectively own three-fourth (3/4) of Lot 3483;

THIS COURT adopts in toto the DECISION of the Court a quo, slightly correcting
no. 2 of the same to conform to the fallo of the DECISION which stated a
"proportion of 1:3[.]"

No. 2 shall therefore read as follows:chan robles virtual law library

THE PETITION

2. That the shares of the parties shall be divided and apportioned in the following
manner: plaintiff shall own ONE-THIRD (1/3) of Lot 3483 and defendants shall
collectively own TWO-THIRDS (2/3) of Lot 3483.

The petitioner contends that the CA misappreciated the legal significance of the
compromise agreement and the contract of sale, both executed by Belacho, and thus
concluded that the respondents were possessors in good faith and with just title and
could acquire the subject property through ordinary acquisitive prescription. She
argues that the parties merely entered into the compromise agreement to settle the
case. She further argues that Roberto entered the contract of sale in bad faith because
the sale took place during the pendency of Civil Case No. B-565.

SO ORDERED.16cra1aw

The respondents elevated the case to the CA via a petition for review under Rule 42
of the Rules of Court, insisting that the lower courts erred in finding that the
petitioner is a co-owner since they have already acquired the entire area of the
subject property by ordinary acquisitive prescription.

THE CA RULING

The CA decided the appeal on January 28, 2003. It set aside the Decisions dated
April 2, 2001 and June 29, 2001 of the MCTC and the RTC, respectively, and
declared Roberto as the lawful owner of the entire area of the subject property. The
appellate court found that the October 5, 1977 Compromise Agreement executed by
Belacho gave Roberto's possession of the subject property the characters of
possession in good faith and with just title; the respondents' twenty-one years of
possession, from execution of the compromise agreement in 1977 until the filing of
the case in 1998, is more than the required ten-year possession for ordinary
acquisitive prescription. The CA also noted that Roberto also enjoyed just title
because Belacho executed a contract of sale in his favor on September 16,
1977.17cra1aw

After the CA's denial18cra1aw of her motion for reconsideration,19cra1aw the

petitioner filed the present petition for review on certiorari under Rule 45 of the
Rules of Court.

The respondents submit that they are possessors in good faith and with just title
because Roberto bought the subject property from Belacho in a contract of sale dated
September 16, 1977, and the compromise agreement, executed on October 5, 1977,
recognized Roberto's ownership of the subject property.

THE ISSUE

The core issue is whether the CA erred in relying upon the compromise agreement
and the contract of sale to conclude that the respondents had been possessors in good
faith and with just title and could acquire the subject property through ordinary
acquisitive prescription.

OUR RULING

We find the petition meritorious.

This Court is not a trier of facts. However, if the inference drawn by the appellate
court from the facts is manifestly mistaken, as in the present case, we can review the

evidence to allow us to arrive at the correct factual conclusions based on the

record.20cra1aw

Prescription as a mode of acquiring ownership

Prescription, as a mode of acquiring ownership and other real rights over immovable
property,21cra1aw is concerned with lapse of time in the manner and under
conditions laid down by law, namely, that the possession should be in the concept of
an owner, public, peaceful, uninterrupted, and adverse.22cra1aw The party who
asserts ownership by adverse possession must prove the presence of the essential
elements of acquisitive prescription.23cra1aw

Acquisitive prescription of real rights may be ordinary or extraordinary.24cra1aw

Ordinary acquisitive prescription requires possession in good faith and with just title
for ten years.25cra1aw In extraordinary prescription, ownership and other real rights
over immovable property are acquired through uninterrupted adverse possession for
thirty years without need of title or of good faith.26cra1aw

In Ramnani v. Court of Appeals,29cra1aw we held that the main purpose of a

compromise agreement is to put an end to litigation because of the uncertainty that
may arise from it. Reciprocal concessions are the very heart and life of every
compromise agreement.30cra1aw By the nature of a compromise agreement, it
brings the parties to agree to something that neither of them may actually want, but
for the peace it will bring them without a protracted litigation.31cra1aw

In the present case, to avoid any conflict with Belacho, Roberto and Nicomedesa
paid P1,800.00 in consideration of Belacho's desistance from further pursuing her
claim over two (2) parcels of land, including the subject property. Thus, no right can
arise from the compromise agreement because the parties executed the same only to
buy peace and to write finis to the controversy; it did not create or transmit
ownership rights over the subject property. In executing the compromise agreement,
the parties, in effect, merely reverted to their situation before Civil Case No. B-565
was filed.

Contract of sale cannot support

claim of good faith and just title

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.27cra1aw There 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.28cra1aw

Neither can the respondents benefit from the contract of sale of the subject property,
executed by Belacho in favor of Roberto, to support their claim of possession in
good faith and with just title. In the vintage case of Leung Yee v. F.L. Strong
Machinery Co. and Williamson,32cra1aw we explained good faith in this
manner:chan robles virtual law library

Compromise agreement not a valid basis

of possession in good faith and just title

We find that the CA mistakenly relied upon the compromise agreement, executed by
Belacho to conclude that the respondents were possessors in good faith and with just
title who acquired the property through ordinary acquisitive prescription.

One who purchases real estate with knowledge of a defect or lack of title in his
vendor cannot claim that he has acquired title thereto in good faith as against the true
owner of the land or of an interest therein; and the same rule must be applied to one
who has knowledge of facts which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with the defects in the title of his
vendor.33cra1aw

Good faith, or the want of it, can be ascertained only from the acts of the one
claiming it, as it is a condition of mind that can only be judged by actual or fancied
token or signs.34cra1aw

In the present case, no dispute exists that Roberto, without Nicomedesa's knowledge
or participation, bought the subject property on September 16, 1977 or during the
pendency of Civil Case No. B-565. Roberto, therefore, had actual knowledge that
Belacho's claim to ownership of the subject property, as Gavino's purported heir, was
disputed because he (Roberto) and Nicomedesa were the defendants in Civil Case
No. B-565. Roberto even admitted that he bought the subject property from Belacho
to "avoid any trouble."35cra1aw He, thus, cannot claim that he acted in good faith
under the belief that there was no defect or dispute in the title of the vendor, Belacho.

Not being a possessor in good faith and with just title, the ten-year period required
for ordinary acquisitive prescription cannot apply in Roberto's favor. Even the thirtyyear period under extraordinary acquisitive prescription has not been met because of
the respondents' claim to have been in possession, in the concept of owner, of the
subject property for only twenty-four years, from the time the subject property was
tax declared in 1974 to the time of the filing of the complaint in 1998.

Based on the foregoing, the CA erred in finding that the respondents acquired the
petitioner's one-fourth portion of the subject property through acquisitive
prescription. As aptly found by the MCTC, the respondents are only entitled to threefourths of the subject property because this was Gavino's rightful share of the
conjugal estate that Roberto bought from Ronito and Wilfredo Oyao.

RTC Decision did not conform to the

Before closing, we cannot close our eyes to the failure of the RTC decision to
measure up to the standard set by Section 14 of Article VIII of the Constitution, as
well as Section 1 of Rule 36 and Section 1, Rule 120 of the Rules on Civil
Procedure, that a decision, judgment or final order determining the merits of the case
shall state, clearly and distinctly, the facts and the law on which it is based. Our
Administrative Circular No. 1 of January 28, 1988 reiterates this requirement and
stresses that judges should make complete findings of facts in their decisions,
scrutinize closely the legal aspects of the case in the light of the evidence presented,
and avoid the tendency to generalize and to form conclusions without detailing the
facts from which such conclusions are deduced.

In Yao v. Court of Appeals,

Faithful adherence to the requirements of Section 14, Article VIII of the Constitution
is indisputably a paramount component of due process and fair play. It is likewise
demanded by the due process clause of the Constitution. The parties to a litigation
should be informed of how it was decided, with an explanation of the factual and
legal reasons that led to the conclusions of the court. The court cannot simply say
that judgment is rendered in favor of X and against Y and just leave it at that without
any justification whatsoever for its action. The losing party is entitled to know why
he lost, so he may appeal to the higher court, if permitted, should he believe that the
decision should be reversed. A decision that does not clearly and distinctly state the
facts and the law on which it is based leaves the parties in the dark as to how it was
reached and is precisely prejudicial to the losing party, who is unable to pinpoint the
possible errors of the court for review by a higher tribunal. More than that, the
requirement is an assurance to the parties that, in reaching judgment, the judge did so
through the processes of legal reasoning. It is, thus, a safeguard against the
impetuosity of the judge, preventing him from deciding ipse dixit. Vouchsafed
neither the sword nor the purse by the Constitution but nonetheless vested with the
sovereign prerogative of passing judgment on the life, liberty or property of his
fellowmen, the judge must ultimately depend on the power of reason for sustained
public confidence in the justness of his decision.37cra1aw

requirements of the Constitution and

of the Rules of Court

The RTC decision did not distinctly and clearly set forth, nor substantiate, the factual
and legal bases for its affirmance of the MCTC decision. It contained no analysis of
the evidence of the parties nor reference to any legal basis in reaching its

conclusions. Judges must inform the parties to a case of the legal basis for their
decision so that if a party appeals, it can point out to the appellate court the points of
law to which it disagrees. Judge Apostol should have known the exacting standard
imposed on courts by the Constitution and should not have sacrificed the
constitutional standard for brevity's sake. Had he thoroughly read the body of the
MCTC decision, he would have clearly noted that the "proportion of 1:3," stated in
the penultimate paragraph of the decision, meant that the petitioner was entitled to
one-fourth, while the respondents were entitled to three-fourths, of the subject
property.

WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE
the decision dated January 28, 2003 and the resolution dated June 19, 2003 of the
former Seventh Division of the Court of Appeals in CA-G.R. SP No. 66120. The
decision dated April 2, 2001 of the Municipal Circuit Trial Court of HindangInopacan, Leyte in Civil Case No. 196 is REINSTATED. No pronouncement as to
costs.

SO ORDERED.

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court assailing the Decision1 dated September 21, 2001 of the Court of Appeals
(CA) in CA-G.R. CV No. 56568 which affirmed with modification the Decision2
dated July 10, 1997 of the Regional Trial Court, Branch 81, Quezon City (RTC) in
Civil Case No. Q-90-6439.

The factual background of the case is as follows:

Msgr. Virgilio C. Soriano (Soriano) owned a 1,600 square meter parcel of land
located in Barangay Banlat, Quezon City, covered by Transfer Certificate of Title
(TCT) No. 363471 of the Registry of Deeds of Quezon City.

Sometime in the early months of 1988, Soriano's first cousin and godson, Emmanuel
C. Celestino, Sr. (Celestino) asked Soriano to lend him TCT No. 363471 as a security
for a loan to be used in the business operation of Celestino's company, Digital
Philippines, Inc.3 Acceding to Celestino's request, Soriano executed on March 29,
1988 a Special Power of Attorney (SPA) authorizing Celestino to mortgage said
property.4

[G.R. NO. 150066 : April 13, 2007]

SPS. EMMANUEL (deceased) and EDNA CHUA and SPS. MANUEL and MARIA
CHUA, Petitioners, v. MSGR. VIRGILIO SORIANO. Substituted by Sister Mary
Virgilia Celestino Soriano, Respondent.

DECISION

Then came the June 11, 1988 fire that gutted a portion of the Quezon City Hall and
destroyed in the process the original copy of TCT No. 363471 on file with the
Registry of Deeds of Quezon City.

On August 22, 1988, Soriano executed a SPA authorizing Celestino and one Carlito
Castro to initiate administrative reconstitution proceedings of TCT No. 363471.5 On
April 17, 1990, the reconstituted title, TCT No. RT-3611 (363471) PR 1686, was
issued.6

AUSTRIA-MARTINEZ, J.:
During the pendency of the administrative reconstitution proceedings, Soriano asked
Celestino whether there was any truth to the spreading rumor that he had already
sold the subject property.7 Celestino denied the rumor but informed Soriano that the

subject property was mortgaged with a foreign bank.8 Dissatisfied with Celestino's
explanation, Soriano made inquiries with the Registry of Deeds of Quezon City9 and
discovered, to his dismay, that TCT No. 363471 had been canceled by TCT No.
1451410 in the name of spouses Emmanuel and Edna Chua and spouses Manuel and
Maria Chua (Chuas). By virtue of a SPA11 dated March 9, 1989 with Soriano's
purported signature, Celestino sold to the Chuas the property in an Absolute Deed of
Sale12 dated July 4, 1989 for P500,000.00.

Claiming that his signature in the SPA is a forgery, Soriano filed on August 20, 1990
a complaint against Celestino and the Chuas for annulment of deed of sale and
special power of attorney, cancellation of title and reconveyance with damages.13

2. Declaring Transfer Certificate of Title No. 14514 in the name of the defendants
Chuas as null and void;

3. Directing defendants Chuas to reconvey the subject property to plaintiff Soriano.

4. Ordering defendant Celestino to pay to the plaintiff the amounts of P100,000.00 as

moral damages, P20,000.00 as attorney's fees and P10,000.00 as litigation expenses;

5. Ordering defendant Celestino to pay to the defendants Chuas the amount of

P500,000.00 plus interest at the legal rate from July 4, 1989 until fully paid;
The defense of Celestino is that he was duly authorized to sell the property14 while
the Chuas contend that they are purchasers in good faith since they bought the
property from Celestino by virtue of a SPA which was duly inscribed and annotated
on the owner's duplicate of the TCT and the tax declaration and that they have duly
inspected the property before purchasing it.15

6. Ordering defendant Celestino to pay the defendants Chuas the amounts of

P20,000.00 as attorney's fees and P10,000.00 as litigation expenses.

With costs against defendant Celestino.

Soriano died during the pendency of the trial.16 He was substituted by his sister,
Florencia Celestino Soriano, also known as Sister Mary Virgilia Celestino Soriano
(Sis. Soriano).17

On July 10, 1997, the RTC rendered its Decision18 in favor of Soriano, the
dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Declaring the special power of attorney dated March 19, 1985 and the Deed of
Sale dated July 4, 1989 as without legal force and effect;

SO ORDERED.19

The RTC held that Soriano's purported signature in the SPA dated March 9, 1989 is a
forgery based on the opinion of expert witness Arcadio A. Ramos, Chief of the
Questioned Documents Division of the National Bureau of Investigation (NBI), that
a comparison of Soriano's sample signature and the one appearing on the SPA dated
March 9, 1989 revealed that they were "not written by one and the same person;"20
that the Chuas are not purchasers in good faith since they did not personally verify
the title of the subject property but relied only upon its tax declaration; that the
Chuas were placed on guard to ascertain the authenticity of the authority of Celestino
since they were not dealing with Soriano, the registered owner.

Dissatisfied, Celestino and the Chuas filed separate appeals with the CA, docketed
singly as CA-G.R. No. 56568.21 On September 21, 2001, the CA rendered its
Decision,22 the dispositive portion of which reads:

WHEREFORE, for the lack of merit, this Court DISMISSES the appeal and
AFFIRMS the appealed Decision except paragraph number 3 of the dispositive part
which is hereby completely DELETED and replaced with the following: 3. The
Register of Deeds of Quezon City is ordered to reinstate and reactivate Transfer
Certificate of Title No. RT-3611 (363471) PR-1686 in the name of appellee Soriano.

March 9, 1989 with Soriano's purported signature; that the SPA was inscribed and
annotated in the owner's duplicate title; that since verification with the original title
in the Registry of Deeds of Quezon City was not possible, they checked the tax
declaration of the property; that the SPA dated March 9, 1989 was duly annotated in
the tax declaration; that they inspected the property and found three squatter
occupants; that they paid off the two squatters and appointed the third squatter
occupant as caretaker of the property; that Soriano was responsible for his
predicament since he entrusted the owner's duplicate title to Celestino; that the fact
that Soriano's purported signature in the SPA dated March 9, 1989 was later declared
by the NBI handwriting expert as a forgery is of no moment since they are not
handwriting experts and they had the right to assume that the SPA was perfectly legal
for otherwise, it could not have been annotated at the back of the title.

SO ORDERED.23

The CA held that that there was no cogent reason to set aside the RTC's reliance on
the testimony of the expert witness since there is no contrary evidence to rebut the
same. The CA also agreed with the RTC's findings that the Chuas are not purchasers
in good faith since they failed to determine the veracity of Celestino's alleged
authority to sell the property.

No appeal was filed by Celestino. The Chuas filed the present petition anchored on
the following grounds:

THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION IN A

WAY NOT PROBABLY IN ACCORD WITH THE LAW AND WITH THE
DECISIONS OF THE HONORABLE SUPREME COURT; AND

THE HONORABLE COURT OF APPEALS HAS SO FAR DEPARTED FROM

THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS.24

The Chuas argue that they are purchasers in good faith since they dealt with
Celestino who had in his possession the owner's duplicate title and the SPA dated

Sis. Soriano, on the other hand, avers that the Chuas are not purchasers in good faith
since they failed to check the veracity of Celestino's alleged authority to sell the
property; that had the Chuas conferred with Soriano about the sale transaction
proposed by Celestino, they would have readily discovered the fraud being then
hatched by Celestino.

Emmanuel Chua died during the pendency of the present petition.25 He was
substituted by his surviving spouse and co-petitioner, Edna L. Chua, and his children,
Erlyn, Ericson, Emmanuel and Elise, all surnamed Chua.26

The sole issue to be resolved in the present petition is this: whether or not the Chuas
are purchasers in good faith.

The question of whether or not a person is a purchaser in good faith is a factual

matter that will generally be not delved into by this Court, since only questions of
law may be raised in petitions for review.27

The established rule is that in the exercise of the Supreme Court's power of review,
the Court, not being a trier of facts, does not normally embark on a re-examination of
the evidence presented by the contending parties during the trial of the case

considering that the findings of facts of the CA are conclusive and binding on the
Court.28 This rule, however, has several well-recognized exceptions: (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 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;
(10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion.29 Exception (4) is present
in the instant case.

A purchaser in good faith is one who buys property without notice that some other
person has a right to or interest in such property and pays its fair price before he has
notice of the adverse claims and interest of another person in the same property. The
honesty of intention which constitutes good faith implies a freedom from knowledge
of circumstances which ought to put a person on inquiry.30 As the Court enunciated
in Lim v. Chuatoco:31

x x x good faith consists in the possessor's belief that the person from whom he
received the thing was the owner of the same and could convey his title. Good faith,
while it is always to be presumed in the absence of proof to the contrary, requires a
well founded belief that the person from whom title was received was himself the
owner of the land, with the right to convey it. There is good faith where there is an
honest intention to abstain from taking any unconscientious advantage from another.
Otherwise stated, good faith is the opposite of fraud and it refers to the state of mind
which is manifested by the acts of the individual concerned.32

Consistently, this Court has ruled that every person dealing with registered land may
safely rely on the correctness of the certificate of title issued therefor and the law will
in no way oblige him to go beyond the certificate to determine the condition of the

property. Where there is nothing in the certificate of title to indicate any cloud or vice
in the ownership of the property, or any encumbrance thereon, the purchaser is not
required to explore further than what the Torrens Title upon its face indicates in quest
for any hidden defects or inchoate right that may subsequently defeat his right
thereto.33

However, when a person who deals with registered land through someone who is not
the registered owner, he is expected to look behind the certificate of title and
examine all the factual circumstances, in order to determine if the vendor has the
capacity to transfer any interest in the land.34 He has the duty to ascertain the
identity of the person with whom he is dealing and the latter's legal authority to
convey.35

The law "requires a higher degree of prudence from one who buys from a person
who is not the registered owner, although the land object of the transaction is
registered. While one who buys from the registered owner does not need to look
behind the certificate of title, one who buys from one who is not the registered owner
is expected to examine not only the certificate of title but all factual circumstances
necessary for him to determine if there are any flaws in the title of the transferor, or
in his capacity to transfer the land."36

The strength of buyer's inquiry on the seller's capacity or legal authority to sell
depends on the proof of capacity of the seller. If the proof of capacity consists of a
special power of attorney duly notarized, mere inspection of the face of such public
document already constitutes sufficient inquiry. If no such special power of attorney
is provided or there is one but there appear flaws in its notarial acknowledgment,
mere inspection of the document will not do; the buyer must show that his
investigation went beyond the document and into the circumstances of its
execution.37

In the present case, the Chuas were dealing with Celestino, Soriano's attorney-infact, who presented Soriano's duplicate title, a SPA dated March 9, 1989 with
Soriano's purported signature, and tax declaration.

An examination of the assailed SPA shows that it is valid and regular on its face. It
contains a notarial seal.38 A notarial seal is a mark, image or impression on a
document which would indicate that the notary public has officially signed it.39 The
long-standing rule is that documents acknowledged before a notary public have the
evidentiary weight with respect to their due execution and regularity.40 The assailed
SPA is a notarized document and therefore, presumed to be valid and duly executed.

Thus, the reliance by the Chuas on the notarial acknowledgment found in the duly
notarized SPA presented by Celestino is sufficient evidence of good faith. The Chuas
need not prove anything more for it is already the function of the notarial
acknowledgment to establish the appearance of the parties to the document, its due
execution and authenticity.41

Moreover, the SPA was accepted by the Register of Deeds. It was registered with the
Registry of Deeds of Quezon City42 and inscribed and annotated in the owner's
duplicate title,43 further bolstering the appearance of due execution and regularity.

The fact that Soriano's purported signature in the SPA dated March 9, 1989 was
declared to be a forgery does not alter the Chuas' status as purchasers in good faith.
The Court's recent pronouncements in Bautista v. Silva44 are enlightening to quote:

When the document under scrutiny is a special power of attorney that is duly
notarized, we know it to be a public document where the notarial acknowledgment is
prima facie evidence of the fact of its due execution. A purchaser presented with such
a document would have no choice between knowing and finding out whether a forger
lurks beneath the signature on it. The notarial acknowledgment has removed the
choice from him and replaced it with a presumption sanctioned by law that the
affiant appeared before the notary public and acknowledged that he executed the
document, understood its import and signed it. In reality, he is deprived of such
choice not because he is incapable of knowing and finding out but because, under
our notarial system, he has been given the luxury of merely relying on the
presumption of regularity of a duly notarized SPA. And he cannot be faulted for that
because it is precisely that fiction of regularity which holds together commercial
transactions across borders and time.45

Thus, the fact that Soriano's signature in the SPA dated March 9, 1989 was
subsequently declared by the trial court to have been falsified would not revoke the
title subsequently issued title in favor of the Chuas. With the property in question
having already passed to the hands of purchasers in good faith, it is now of no
moment that some irregularity attended the issuance of the SPA, consistent with our
pronouncement in Heirs of Spouses Benito Gavino and Juana Euste v. Court of
Appeals,46 to wit:

x x x, the general rule that the direct result of a previous void contract cannot be
valid, is inapplicable in this case as it will directly contravene the Torrens system of
registration. Where innocent third persons, relying on the correctness of the
certificate of title thus issued, acquire rights over the property, the court cannot
disregard such rights and order the cancellation of the certificate. The effect of such
outright cancellation will be to impair public confidence in the certificate of title. The
sanctity of the Torrens system must be preserved; otherwise, everyone dealing with
the property registered under the system will have to inquire in every instance as to
whether the title had been regularly or irregularly issued, contrary to the evident
purpose of the law.47

Being purchasers in good faith, the Chuas already acquired valid title to the property.
A purchaser in good faith holds an indefeasible title to the property and he is entitled
to the protection of the law. Accordingly, TCT No. 14514 issued in the name of the
Chuas is valid. The amount of P500,000.00, representing the purchase price in the
Absolute Deed of Sale48 dated July 4, 1989, which the RTC directed Celestino to
pay to the Chuas should instead be paid to Soriano as part of the actual damages
awarded to him. Such amount shall earn interest rate of 6% from August 20, 1990,
the time of the filing of the complaint until its full payment before finality of
judgment. After the judgment becomes final and executory until the obligation is
satisfied, the amount due shall earn interest at 12% per year, the interim period being
deemed equivalent to a forbearance of credit.49

For the Court to uphold the effects of a SPA that is rooted in falsity may be
disconcerting. Yet whatever sympathies may be judicially appreciated for the
deceived party must be balanced in deference to the protection afforded by law to the

purchaser in good faith. If such innocence or good faith is established by the

evidence, or insufficiently rebutted by the disputant, then the corresponding duty of
the Court is simply to affirm the rights of the purchaser in good faith. It is mischief at
worse, and error at least, for a court to misread or inflate the facts to justify a ruling
for the defrauded party, no matter how wronged he or she may be.50

WHEREFORE, the petition is GRANTED. Petitioners are hereby declared

purchasers in good faith. Accordingly, the Decision of the Court of Appeals dated
September 21, 2001 in CA-G.R. CV No. 56568 is PARTLY REVERSED and SET
ASIDE insofar as it affirms the Decision of the Regional Trial Court, Branch 81,
Quezon City dated July 10, 1997 in Civil Case No. Q-90-6439 finding the Chuas as
purchasers in bad faith.

SO ORDERED.

G.R. No. L-28721 October 5, 1928

MARTIN MENDOZA and NATALIO ENRIQUEZ, Plaintiffs-Appellees, v.

MANUEL DE GUZMAN, Defendant-Appellant.
MAX B. SOLIS, intervenor-appellant.

Juan S. Rustia for appellants.

Godofredo Reyes for appellees.

The Decision dated July 10, 1997 of the Regional Trial Court, Branch 81, Quezon
City (RTC) in Civil Case No. Q-90-6439 is MODIFIED to read as follows:
MALCOLM, J.:
1. Declaring the special power of attorney dated March 9, 1985 and the Deed of Sale
dated July 4, 1989 and the Transfer Certificate of Title No. 14514 in the name of the
defendants Chuas as valid;

2. Ordering Celestino to pay plaintiff the amount of P500,000.00 as actual damages,

with interest rate of 6% p.a. computed from the time of the filing of the complaint
until its full payment before finality of judgment; thereafter, if the amount adjudged
remains unpaid, the interest rate shall be 12% p.a. computed from the time the
judgment becomes final and executory until fully satisfied;

3. Ordering defendant Celestino to pay to the plaintiff the amounts of P100,000.00 as

moral damages, P20,000.00 as attorney's fees and P10,000.00 as litigation expenses;

With costs against defendant Celestino.

This case calls for the application of articles 361, 435, and 454 of the Civil Code to
the proven facts.chanroblesvirtualawlibrary chanrobles virtual law library

On November 6, 1916, Leandra Solis and her husband Bernardo Solis brought an
action in the Court of First Instance of Tayabas against Martin Mendoza for the
recovery of a certain piece of land. Judgment was rendered in that case absolving
Mendoza from the complaint, and this judgment was subsequently affirmed by the
Supreme Court. 1 When the case was remanded to the court of origin, the trial judge
issued an order requiring the provincial sheriff immediately to dissolve the
preliminary writ of injunction and to put Mendoza in the possession of the land. By
virtue of this order, Mendoza was in fact put in possession of the
property.chanroblesvirtualawlibrary chanrobles virtual law library

In the cadastral proceedings of the municipality of Sariaya, Tayabas, the piece of

land above-mentioned was identified as lot No. 687. In the decision rendered in the

cadastral case, this lot was adjudicated in favor of Martin Mendoza and Natalio
Enriquez in equal parts pro indiviso subject to the right of retention on the part of
Manuel de Guzman until he shall have been indemnified for the improvements
existing on the land. By virtue of this judgment, De Guzman presented a motion
requesting the issuance of a writ of possession for lot No. 687 in his favor which was
granted on June 25, 1924. From the time Leandra Solis and Bernardo Solis, as well
as Manuel de Guzman who was working on the land, were ejected therefrom, Martin
Mendoza possessed it until June 25, 1924, when de Guzman obtained the writ of
possession above- mentioned. Since then De Guzman has had dominion over the
land.chanroblesvirtualawlibrary chanrobles virtual law library

Being unable to come to an agreement as to the amount which should be allowed for
the improvements made on the land, Martin Mendoza and Natalio Enriquez began an
action requesting the court to (a) fix the value of the necessary and useful expenses
incurred by Manuel de Guzman in introducing the improvements; (b) require the
defendant to render an accounting of the fruits received by him and order that the
value of the fruits be applied to the payment of the necessary and useful expenses;
and (c) decree the restitution of the possession to the plaintiffs. To the complaint, the
defendant filed an answer in the form of a general denial with special defenses and
appended a counter-claim and crosscomplaint, in which a total of P6,000 was asked.
During the pendency of the case, Bernardo Solis, or Max. B. Solis, one of the
persons who was ejected from the land, asked leave to intervene, alleging, among
other things, that De Guzman, in consideration of the sum of P5,000, had transferred
all his rights in the improvements and in the lot to him with the exception of two
hundred coconut trees. This petition was granted by the trial
court.chanroblesvirtualawlibrary chanrobles virtual law library

2. That a decree of registration has been issued on said land in the terms set forth in
paragraph 3 of the complaint.chanroblesvirtualawlibrary chanrobles virtual law
library

3. That the defendant Manuel de Guzman is the one who has been in possession and
enjoyment of the land from June 25, 1924, up to the present time by virtue of a writ
of
possession
obtained
by
him
from
the
Court
of
Land
Registration.chanroblesvirtualawlibrary chanrobles virtual law library

4. That the defendant has made improvements on said land be planting coconut trees
thereon.chanroblesvirtualawlibrary chanrobles virtual law library

5. That the plaintiff Martin Mendoza is the one who has been in possession and
enjoyment of said property and its improvements since December 16, 1916, by virtue
of a writ of possession in civil case No. 356 until said pssession was transferred to
the defendant Manuel de Guzman.chanroblesvirtualawlibrary chanrobles virtual law
library

6. That from March 20, 1920, the plaintiff Natalio Enriquez has been in possession
and enjoyment of a portion of the land, the subject matter of the complaint herein, by
virtue of a deed of sale executed in his favor by Attorney Agustin Alvarez, who, in
turn, acquired it from the other plaintiff Martin Mendoza, until June 25,
1924.chanroblesvirtualawlibrary chanrobles virtual law library

When the case was called for trial, the parties entered into the follwing stipulation:
The parties desire to submit, as they do submit, under this stipulation of facts the
following questions:
1. That the plaintiffs are the owners and proprietors of the land described in the
second paragraph of the complaint.chanroblesvirtualawlibrary chanrobles virtual law
library

(a) The amount of the indemnity to be paid to the defendant for the improvements
made by him on said lot and the basis upon which said amount shall be
fixed.chanroblesvirtualawlibrary chanrobles virtual law library

(b) Whether or not the defendant is obliged to render an account of the fruits
received by him from June 25, 1924, until the improvements are delivered after same
have been paid for.

(c) Whether the value of said fruits and products received by the defendant shall be
applied to the indemnity to which he is entitled, or whether said defendant is obliged
to deliver to the plaintiffs the remainder in case of excess.

(d) Whether or not the defendant has the right to be paid by the plaintiffs in whole or
in part for the value of the fruits received by Martin Mendoza and Natalio Enriquez
from the respective dates that they were in possession and enjoyment of the land
until June 25, 1924.

The parties at the same time that they submit to the court for decision the questions
presented in the above stipulation reserve to themselves, whatever said decision may
be, the right to present later their evidence in support of their respective views with
respect to the amount of the indemnity.

After the preliminary questions have been decided, the parties request that
commissioners be appointed to receive said evidence with respect to the amount of
the indemnity in accordance with the views of both parties.

The trial court resolved the questions presented by holding (1) that in accordance
with the provisions of articles 435 and 454 in relation with article 361 of the Civil
Code, the value of the "indemnization" to be paid to the defendant should be fixed
according to the necessary and useful expenses incurred by him in introducing "las
plantaciones en cuestion"; (2) that the plaintiffs as the owner of the property have the
right to make their own "las plantaciones hechas por el demandado" upon payment in
the form indicated in No. 1, the defendant having the right to retain the land until the
expenditures have been refunded; (3) that the defendant is obliged to render a detail
and just account of the fruits and other profits received by him from the property for
their due application; and (4) that the value of the fruits received by the defendant
should first be applied to the payment of the "indemnizacion," and in that it exceeds

the value of the "indemnizacion," the excess shall be returned to the plaintiffs. With
respect to the last question as to whether or not the plaintiffs are obliged to return to
the defendant the value of the fruits received by them before the defendant took
possession of the land, the trial court abstained from making any pronouncement for
the reason that the circumstances under which the plaintiffs acquired possession and
the defendant again acquired it were not before him, the parties needing to submit
their evidence with respect to this point.

At the trial which followed and at the instance of the parties, two commissioners
were appinted with instructions to inspect the land and to count the number of
coconut trees planted thereon, determining the number of fruit-bearing trees and
those that are not fruit-bearing as well as the condition of the same. After trial, Judge
of First Instance Gloria rendered judgment declaring (a) that the defendant Manuel
de Guzman and the intervenor Bernardo Solis have the right to collect from the
plaintiffs Martin Mendoza and Natalio Enriquez the sum of P2,046 as compensation
for the necessary and useful expenditures in the proportion of 20 per cent for Manuel
de Guzman and 80 per cent for Bernardo Solis; and (b) that Manuel de Guzman and
Bernardo Solis are obliged to pay to the plaintiffs the sum of P666.93 per annum
from June 25, 1924, one-fifth of this amount to be paid by Manuel de Guzman and
the other four-fifths by Bernardo Solis. As on the date when this judgment was
rendered, that is on September 23, 1927, the amount that the plaintiffs were required
to pay to the defendant and intervenor exceeded the amount that the latter were to
pay the former, the defendant and intervenor were ordered to deliver the land and its
improvement as soon as the plaintiffs have paid the difference, without special
pronouncement as to costs.

The appeal of the defendant and intervenor is based on fourteen assigned errors
relating to both questions of fact and of law. The question of fact mainly concerns the
amount to be paid as "indemnizacion" in the form of necessary and useful
expenditures incurred by the defendant. The question of law mainly concerns the
interpretation of articles 361, 453, and 454 of the Civil Code. Counsel for the
appellants has presented a learned brief divided into three chapters. Counsel for the
appellees has countered with an equally helpful brief in which the fourteen assigned
errors are reduced for purposes of arguments to four fundamental questions. It would
not be profitable and it is not necessary to follow opposing counsel into all of their
refinements of fact and law.

As to the facts, the findings of the trial judge should be given effect. An examination
of the evidence shows that these findings are fully substantiated. Our only doubt has
been as to the just value for each coconut tree now found on the land. However,
everything considered, we have at last determined that we would not be justified in
changing the value per tree of P2 as fixed in the trial court. With respect to the fruits
received by the defendant while the land was in his possession, the finding in the
trial court is correct.

Based on the foregoing considerations, the judgment appealed from will be affirmed,
with the costs of this instance against the appellants.

EN BANC

G.R. No. L-16736

With the facts as above indicated, little time need be taken to discuss the points of
law. Article 361 of the Civil Code in the original Spanish text uses the word
"indemnizacion." However one may speculate as to the true meaning of the term
"indemnizacion" whether correctly translated as "compensation" or "indemnity," the
amount of the "indemnizacion" is the amount of the expenditures mentioned in
articles 453 and 454 of the Civil Code, which in the present case is the amount of the
necessary and useful expenditures incurred by the defendant. Necessary expenses
have been variously described by the Spanish commentators as those made for the
preservation of the thing (4 Manresa's Comentarios al Codigo Civil, p. 258); as those
without which the thing would deteriorate or be lost (Scaevola's Comentarios al
Codigo Civil, p.408); as those that augment the income of the things upon which
they are expanded (4 Manresa's Comentarios al Codigo Civil, p. 261; 8 Scaevola's
Comentarios al Codigo Civil, p. 416). Among the necessary expenditures are those
incurred for cultivation, production, upkeep, etc. (4 Manresa's Comentarios al
Codigo Civil, p. 257). Here the plaintiffs have chosen to take the improvements
introduced on the land and are disposed to pay the amount of the necessary and
useful expenses incurred by the defendant. Inasmuch as the retentionist, who is not
exactly a posessor in good faith with in the meaning of the law, seeks to be
reimbursed for the necessary and useful expenditures, it is only just that he should
account to the owners of the estate for any rents, fruits, or crops he has gathered from
it.

EVARISTA ROBLES and her husband ENRIQUE MARTIN, Plaintiffs-Appellees, v.

LIZARRAGA HERMANOS Defendants-Appellant.

--------------------------------------

G.R. No. L-16661

December 22, 1921

SOCIEDAD LIZARRAGA HERMANOS, Plaintiff-Appellee, vs. EVARISTA

ROBLES DE MARTIN and ENRIQUE MARTIN, Defendants-Appellants.

--------------------------------------

G.R. No. L-16662

In brief, therefore, and with special reference to the decision appealed from, the
errors assigned on appeal, and the argument of counsel as addressed to the decision
in the lower court and the assignment of errors, we may say that we are content to
make the findings of fact and law of Judge Gloria in the lower court the findings of
fact and law in the appellate court.

December 22, 1921

December 22, 1921

EVARISTA ROBLES and her husband ENRIQUE MARTIN, Plaintiff-Appellants,

vs. LIZARRAGA HERMANOS and THE REGISTER OF DEEDS OF ILOILO,
Defendants-Appellees.

Fisher & DeWitt and Francisco Lavides for appellants. (Case No. 16736.)
A. P. Seva for appellees.
A. P. Seva for appellants. (Case No. 16661.)
Fisher and DeWitt and Francisco Lavides for appellee.
A. P. Seva for appellants. (Case No. 16662.)
Fisher and DeWitt and Francisco Lavides for appellees.

ROMUALDEZ, J.:

Owing to the character of the facts in the three above entitled cases and the intimate
connection existing between them, they were, by agreement of the parties, tried
together in the court below, and on appeal this court was requested to try them at the
same time, which was done, and these three cases are jointly adjudged in the present
decision.chanroblesvirtualawlibrary chanrobles virtual law library

The following facts are undisputed:chanrobles virtual law library

Anastasia de la Rama died on the 17th of October, 1916, leaving six children, to wit,
Magdalena, Jose, Evarista, Zacarias, Felix, and Purificacion, surnamed Robles, and
some properties, among which is house No. 4 on Iznart Street in the city of Iloilo,
concerning which a controversy arose which developed into the three cases now
under consideration.chanroblesvirtualawlibrary chanrobles virtual law library

The children and heirs of Anastasia de la Rama entered into partnership with
Lizarraga Hermanos in liquidation and settlement of their accounts, by virtue of
which the competent court awarded to said partnership the properties left by the
deceased,
including
the
aforesaid
house
No.
4
on
Iznart
Street.chanroblesvirtualawlibrary chanrobles virtual law library

Evarista Robles, one of the aforesaid heirs, since before the death of her mother
Anastasia de la Rama, has been with her husband occupying the aforesaid house No.
4 on Iznart Street, at the beginning, by permission of her mother, later on by the
consent of her coheirs, and lastly by agreement with the partnership, Lizarraga
Hermanos, to whom it had been awarded, having made some improvements on the
house, the value of which is fixed at four thousand five hundred pesos (P4,500), and
paying to said partnership forty pesos (P40) monthly as rent of the upper
story.chanroblesvirtualawlibrary chanrobles virtual law library

On March 18, 1918, Lizarraga Hermanos notified Evarista Robles (Exhibit J) that
beginning April next the rent of the upper story of the house would be raised to sixty
pesos (P60) a month, and that, if she did not agree to the new rate of rent, she might
vacate the house. Evarista Robles refused to pay such a new rate of rent and to vacate
the house, and Lizarraga Hermanos brought suit against her for ejectment. Evarista
Robles sued Lizarraga Hermanos afterwards to recover the value of the
improvements, and demanded, in another action, that said value be noted on the
certificate of title as an encumbrance.chanroblesvirtualawlibrary chanrobles virtual
law library

Evarista Robles contends that the understanding with Lizarraga Hermanos by virtue
of which she continued to occupy the house and made the improvements, was a
contract whereby it was agreed to sell her the said building on Iznart Street, the deed
of sale to be executed as soon as the title deeds of the property were transferred to
the name of said partnership; that by virtue of this contract she remained in the
occupation of the building and made the improvements; that, as one of the
stipulations in the contract of sale of the estate, Evarista Robles assumed the liability
of an encumbrance of fourteen thousand pesos (P14,000)on the estate and another
one in favor of the Agricultural Bank and its successor, the National Bank, paying
the interest thereon as well as the land tax and the premiums of the five insurance, all
of which payments were made through the same firm of Lizarraga Hermanos who, as
a result of the liquidation of accounts, held funds in their possession belonging to
Exhibit A, B, C, F, H, and I. It should here be noted that Evarista Robles does not
seek the execution of the proper instrument of evidence this contract of sale, nor the
performance thereof. She only claims the cost of the improvements made at her
expense and that this be recorded in the corresponding certificate of
title.chanroblesvirtualawlibrary chanrobles virtual law library

While the firm of Lizarraga Hermanos does not question that fact that said
improvements have been made and that their value amounts to four thousand five
hundred pesos (P4,500), it denies, however, having entered into any agreement with
Evarista Robles for the sale of the building in question. In deciding the case No.
16736 of this court, the court a quo found such a verbal contract of sale to have been
proven not only by Exhibit A, which leads to such a conclusion, but by the oral
evidence, which, in its opinion, had a preponderance in favor thereof, and by the
corroborative evidence consisting in the fact of Lizarraga Hermanos having executed
the deed of sale of the warehouse mentioned in the said Exhibit A. This firm
questions the right of Evarista Robles to the improvements under
consideration.chanroblesvirtualawlibrary chanrobles virtual law library

The fundamental questions upon which hinges the controversy in these three cases
are: First, whether Evarista Robles is the owner of the aforesaid improvements and
has the right to demand payment of their value (case No. 16736); second, whether
she has any right to retain the building until the said value is paid to her (case No.
16661); and third, whether a note for the four thousand five hundred pesos (P4,500),
the value of the above-mentioned improvements, as an encumbrance on this estate
(case
No.
16662),
should
be
made
on
the
title
deeds
thereof.chanroblesvirtualawlibrary chanrobles virtual law library

Regarding the controversy in the case No. 16736, attention is called to article 453 of
the Civil Code which reads:

Necessary expenditures shall be refunded to every possessor, but only the possessor
in good faith may retain the thing until they are repaid to
him.chanroblesvirtualawlibrary chanrobles virtual law library

Useful expenditures shall be paid the possessor in good faith with the same right to
retention, the person who has defeated him in his possession having the opinion of
refunding the amount of such expenditures or paying him the increase in value which
the thing has acquired by reason thereof.

This provision of law is in force and applies to personal as well as real

property.chanroblesvirtualawlibrary chanrobles virtual law library

The expenditures incurred in these improvements were not necessary inasmuch as

without them the house would have continued to stand just as before, but were
useful, inasmuch as with them the house better serves the purpose for which it was
intended, being used as a residence, and the improvements consisting of the addition
of a dining room, kitchen, closet, and bathroom in the lower and upper stories of the
house, and a stable, suitable as a coach house and dwelling, it is beyond doubt that
such improvements are useful to the building. One of the chiefs of the firm of
Lizarraga Hermanos, on the occasion of a luncheon in the house, on noting the
improvements, could not refrain from expressing that such improvements added
much
to
the
value
of
the
building
(folio
25,
stenographic
notes).chanroblesvirtualawlibrary chanrobles virtual law library

Now then, was Evarista Robles a possessor in good faith when she made those
improvements? Article 434 provides that "good faith is always presumed and the
burden of proving bad faith on the part of the possessor rests upon the person
alleging it." Lizarraga Hermanos did not allege, nor prove in the first instance the
bad faith characterizing Evarista Robles' possession, who, as shown in the records
and heretofore stated, began to occupy the house by permission of the former owner,
her mother Anastasia de la Rama, and continued later in the occupation by the
consent of her coheirs, and afterwards by considering herself the future owner of the
building by virtue of the contract with the present owner, Lizarraga Hermanos. The
evidence shows that said improvements were begun about the end of December,
1916, after the agreement with Lizarraga Hermanos for the sale thereof to Evarista
Robles. (Folios 23, 24, 25, stenographic notes.)chanrobles virtual law library

We find that in the court below the presumption of good faith in favor of Evarista
Robles' possession at the time she made the improvements on the property was
neither disputed nor discussed, but on the contrary, there is positive evidence
sufficient to support the conclusion that when she made the improvements on the
aforesaid building she was possessing it in good faith.chanroblesvirtualawlibrary
chanrobles virtual law library

If the improvements are useful and Evarista Robles' possession was in good faith, the
conclusion set out in article 453 of the Civil Code, supra, is inevitable; Evarista
Robles is the owner of such improvements, and entitled to reimbursement therefor,
and to retain the building until the same is made.chanroblesvirtualawlibrary
chanrobles virtual law library

One of the proofs establishing the fact that Evarista Robles' possession was in good
faith is found in Exhibit A, which textually is as follows:

Value of house For

}Evarista

P16,500.00

Value of Warehouse

Evarista pays them in this way Balance in h/f owning from L. Hnos
Legacy to Evarista

500.00

Legacy to J. Robles

500.00

Legacy to Ambrosio

100.00

But the admissibility of this document as evidence is disputed by reference to section

335, case No. 5, of the Code of Civil Procedure, which in the English text, which is
clearer on this point, reads:

SEC. 335.
Agreements invalid unless made in writing. - In the following
cases an agreement hereafter made shall be unenforceable (Emphasis ours) by action
unless the same, or some note or memorandum thereof, be in writing, and subscribed
by the party charged, or by his agent; evidence, therefore, of the agreement cannot be
received without the writing, or secondary evidence of its contents:chanrobles virtual
law library

P1,424.35
No. 5. An agreement for . . . the sale of real property, etc.

Credit Agricultural Bank 14,000.00

Paid by Zacarias 16,524.35
Cash balance carried forward

which is obviously inferred from the phrases "Value of house - of warehouse - For
Evarista P16,500 - Evarista pays them in this way," that Evarista Robles was to
become the owner of the house (which is the one question) and the warehouse for
sixteen thousand five hundred pesos (P16,500), which sum she was to pay by
assuming the liability of all the amounts enumerated in the said memorandum all the
way through.chanroblesvirtualawlibrary chanrobles virtual law library

24.35

Liquidation
16,500.00
Severiano Lizarraga acknowledged having drawn this document and admitted it to be
in his own hand-writing (folios 6-8, transcript of stenographic notes taken in case
No. 16661 at the trial held December 6, 1919). Taking into consideration the
explanation he gives of the contents of this exhibit, there is the inevitable conclusion

It should be noted, first of all, that this rule of evidence does not go to the extent of
rendering invalid any verbal contract for the sale of real property (Conlu vs. Araneta
and Guanko, 15 Phil., 387), but declares inadmissible any evidence of such a
contract other than the document itself of the sale or some memorandum signed by
the party charged, in so far as the object of the action instituted is to enforce
performance of said contract of sale. But we are not dealing with that phase in any of
the cases now before us. This document was introduced only to reinforce the proofs
relative to the good faith characterizing the possession of Evarista Robles when she
made the improvements in question, to the effect that if she made then, it was
because she entertained the well-founded, may certain belief that she was making
them on a building that was to become her property by virtue of the verbal contract
of sale.chanroblesvirtualawlibrary chanrobles virtual law library

In the action wherein Evarista Robles and her husband ask that they be adjudged
owners of these improvements and that their value be paid to them, Lizarraga
Hermanos filed a general denied and a counterclaim and cross-complaint for
nineteen thousand pesos (P19,000) as compensation for damages alleged to have
been sustained by them on account of their inability to sell the house and the
warehouse, due to the fact that the buyer imposed the condition that the house should
be vacated, which the plaintiffs refused to do.chanroblesvirtualawlibrary chanrobles
virtual law library

It is a fact that the value of the improvements in question has not as yet been paid by
Lizarraga Hermanos. Wherefore, if Evarista Robles and her husband are entitled to
retain the building until the value of such improvements is paid them, Lizarraga
Hermanos have not yet any right to oust them from the building, nor, therefore, to be
indemnified for any damages caused by the refusal of the plaintiffs found on their
legitimate rights.chanroblesvirtualawlibrary chanrobles virtual law library

In regard to the ejectment sought in the case No. 16661, the suit was brought by
Lizarraga Hermanos in the justice of the peace court of Iloilo on May 6, 1918, based
on the failure of Evarista Robles and her husband to pay the rent of the upper story of
the house in question for the month of April of that year, amounting to sixty pesos
(P60), and on the refusal of said spouses to quit the building. These spouses in their
answer alleged as special defense that they had never been the tenants of Lizarraga
Hermanos until November, 1917, when they became so "under the special
circumstances" under which the plaintiff partnership sold the building, whereon they
later made, with the latter's consent, improvements amounting to four thousand five
hundred pesos (P4,500), setting out the other stipulations and conditions hereinabove
stated, which were incorporated into the contract of sale, and prayed, under their
counterclaim, that Lizarraga Hermanos be sentenced to pay the sum of four thousand
five hundred pesos (P4,500), the value of the improvements referred to, and under
their cross-complaint, that said partnership be ordered to pay then thousand pesos
(P10,000) as compensation for damages alleged to have been sustained by the
aforesaid spouses due to the aforesaid partnership's act, praying lastly, in view of the
questions raised, that the case be regarded not as one of unlawful detainer, but for the
recovery of title to real property, and that the court of the justice of the peace abstain
from taking cognizance thereof for want of jurisdiction.chanroblesvirtualawlibrary
chanrobles virtual law library

The case having been appealed to the Court of First Instance, these allegations were
reproduced.chanroblesvirtualawlibrary chanrobles virtual law library

In the Court of First Instance Lizarraga Hermanos demurred to this counterclaim and
cross-complaint, and the demurrer was sustained by the court in its decision on the
merits of the case, whereby the defendants are sentenced to return to Lizarraga
Hermanos the possession of the building, to pay the rents thereof due from April,
1918, until they vacate the house, at the rate of sixty pesos (P60) per month, and the
costs.chanroblesvirtualawlibrary chanrobles virtual law library

From this judgment Evarista Robles and her husband have appealed, assigning as
errors of the court a quo in finding the Lizarraga Hermanos were entitled to bring
action for unlawful detainer, and ordering them to return the possession of the
building.chanroblesvirtualawlibrary chanrobles virtual law library

If Evarista Robles and her husband were mere lessees of this building, the plaintiff's
action for unlawful detainer is obvious and must prosper. But, were Evarista Robles
and her husband mere lessees?chanrobles virtual law library

As above stated, we hold that there existed a contract of sale of this building
executed by Lizarraga Hermanos in favor of Evarista Robles about November, 1916,
the performance of which is not, however, sought to be enforced, nor would it be
enforceable if the evidence offered in the action instituted for the purpose be not the
document itself of the sale, or a memorandum thereof, signed by the party bound by
the contract and required in the action to fulfill it, and objection be made to said
evidence, as was done here.chanroblesvirtualawlibrary chanrobles virtual law library

The possession of these spouses was in no way begun by virtue of any lease
whatever, since it is not disputed, and is a proven fact, that they came to occupy the
building by permission of the mother of Evarista Robles. Upon said mother's death,
the continued to occupy the property by the consent of the coheirs. After the
assignment of the property of Lizarraga Hermanos was concluded, but before the
title deeds were transferred to the name of this partnership, an agreement was made

for the sale of the building to Evarista Robles and her husband, the latter agreeing in
the meantime to pay to Lizarraga Hermanos a certain sum per month - forty pesos
(P40) - by way of compensation for the occupation of the building until the
execution of the deed of sale in favor of the occupants.

Considering abstractly the naked fact that these spouses occupied the house by
paying a certain sum for its occupation, it would seem that this is indeed a case of
lease. But such was not the contract. It was simply the sense of justice of the parties
that led them to make the stipulation that, while the conveyance of the building was
being carried into effect in due form, the future owners should pay a certain sum for
its possession. This peculiar situation continued for all the time in which the said
spouses made and completed the improvements in question until Lizarraga
Hermanos changed their resolution to sell the building to Evarista Robles and her
husband. But then all the improvements in question had already been made, and
when these spouses were requested to vacate the building, they answered and gave it
to understand, that they would do so as soon as the value of the improvements was
paid to them. Up to that time they were not lessees strictly speaking. Did they
become so afterwards? Neither; for since that moment they have been as are at
present, in possession of the building by virtue of the right that they had, and do
have, to retain it until the value of the improvements is paid to them. And it was after
these spouses had manifested their intention not to leave the building until they were
reimbursed for the improvements made thereon that this action for unlawful detainer
was instituted.

Before these improvements were made, or before these spouses demanded payment
of their value, that is, while the possession was partly based on the stipulation with
color of lease, an action for unlawful detainer might have, in a sense, been
justifiable, though not entirely maintainable, owing to the fact that such possession
was based primarily on the well-founded belief of the occupants that they were to
become the owners of the house in their possession, that the monthly payment being
a provisional arrangement, an incidental and peremptory stipulation, while the
solemn formalities of the conveyance were being complied with.

But after the improvements had been made and Lizarraga Hermanos had manifested
their resolution to rescind the contract of sale and not to pay for them, then the
possession of the aforesaid spouses lost all color of lease, and turns out to be

possession based only upon the latter's right to retain the building. And these were all
the attending circumstances of said possession when the action for unlawful detainer
was commenced.

We are, therefore, of opinion, and so hold, that Lizarraga Hermanos were not, and
are not, entitled to maintain any action for unlawful detainer so long as they do not
pay the value of the improvements in question.

We will now take up the case No. 16662 wherein Evarista Robles and her husband
ask that these improvements be noted on the proper certificate of title as an
encumbrance.

These spouses pray in their complaint for the cancellation of the said certificate of
title, which is the transfer certificate No. 526, a substitute of the original No. 32 of
the office of the register of deeds of Iloilo.

If the object of these spouses is, as it cannot be otherwise, to have such an

encumbrance noted, the cancellation is not necessary, and, of course, not justifiable.
At any rate, the fraud alleged in this last action to have been committed precisely to
secure such a transfer certificate cannot be held proven.

But it having been decided that these spouses are entitled to demand payment of the
value of the improvements and to retain the building until such value is paid them, it
only remains for us to determine whether this right of retention has the character of a
real right to be regarded as one of the encumbrances referred to in section 70 and the
following sections of the Land Registration Act.

It being a burden on the building to the extent of being inseparably attached to the
possession thereof, this right of retention must necessarily be a real one. If so, as we
regard, and find, it to be, it is but just that such an encumbrance should be noted on
the transfer certificate No. 526 issued by the register of deeds of Iloilo in favor of
Lizarraga Hermanos, or on any substitute thereof.

As a consequence of all the foregoing, we affirm the judgments appealed from in the
three cases in so far as they are in harmony with the conclusions herein set out, and
reverse them in so far as they are in conflict therewith, and it is hereby adjudged and
decreed:chanrobles virtual law library

First. That Lizarraga Hermanos pay to the spouses Evarista Robles and Enrique
Martin the sum of four thousand five hundred pesos (P4,500), the value of the
improvements referred to in these cases, with right on the part of said spouses to
retain the building in question until the payment hereby ordered is
made.chanroblesvirtualawlibrary chanrobles virtual law library

Second. That said spouses Evarista Robles and Enrique Martin vacate the aforesaid
building immediately after the receipt, or the legal tender, of the payment hereby
decreed.chanroblesvirtualawlibrary chanrobles virtual law library

Third. That the said spouses Evarista Robles and Enrique Martin pay to Lizarraga
Hermanos a compensation for the occupation of the building at the rate of forty
pesos (P40) a month, beginning with the month of April, 1918, until they vacate the
aforesaid building as it is ordered herein.chanroblesvirtualawlibrary chanrobles
virtual law library

Fourth. That upon payment of his lawful fees, the register of deeds note said right of
retention on the back of the transfer certificate No. 526 issued in favor of Lizarraga
Hermanos, or of any other certificate standing in lieu thereof, concerning the said
building, which note will remain in force until the payment of the aforesaid
improvements is made as above ordered. Without pronouncement as to the costs in
this instance, so ordered.

G.R. No. 126000. October 7, 1998

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM (MWSS),

Petitioner, v. COURT OF APPEALS, HON. PERCIVAL LOPEZ, AYALA
CORPORATION and AYALA LAND, INC., Respondents.

G.R. No. 128520. October 7, 1998

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, Petitioner, v.

HON. PERCIVAL MANDAP LOPEZ, CAPITOL HILLS GOLF AND COUNTRY
CLUB INC., SILHOUETTE TRADING CORPORATION, and PABLO ROMAN
JR., Respondents.

DECISION

MARTINEZ, J.:

These are consolidated petitions for review emanating from Civil Case No. Q-9315266 of the Regional Trial Court of Quezon City, Branch 78, entitled "Metropolitan
Waterworks and Sewerage System (hereafter MWSS) vs. Capitol Hills Golf &
Country Club Inc. (hereafter, CHGCCI), STC (hereafter, SILHOUETTE), Ayala
Corporation, Ayala Land, Inc.(hereafter AYALA) Pablo Roman, Jr., Josefino Cenizal,
Jose A. Roxas, Jesus Hipolito, Alfredo Juinio, National Treasurer of the Philippines
and the Register of Deeds of Quezon City."

From the voluminous pleadings and other documents submitted by the parties and
their divergent styles in the presentation of the facts, the basic antecedents attendant
herein are as follows:

Sometime in 1965, petitioner MWSS (then known as NAWASA) leased around one
hundred twenty eight (128) hectares of its land (hereafter, subject property) to
respondent CHGCCI (formerly the International Sports Development Corporation)
for twenty five (25) years and renewable for another fifteen (15) years or until the
year 2005, with the stipulation allowing the latter to exercise a right of first refusal
should the subject property be made open for sale. The terms and conditions of
respondent CHGCCI's purchase thereof shall nonetheless be subject to presidential
approval.

Pursuant to Letter of Instruction (LOI) No. 440 issued on July 29, 1976 by then
President Ferdinand E. Marcos directing petitioner MWSS to negotiate the
cancellation of the MWSS-CHGCCI lease agreement for the disposition of the
subject property, Oscar Ilustre, then General Manager of petitioner MWSS,
sometime in November of 1980 informed respondent CHGCCI, through its president
herein respondent Pablo Roman, Jr., of its preferential right to buy the subject
property which was up for sale. Valuadation thereof was to be made by an appraisal
company of petitioner MWSS'choice, the Asian Appraisal Co., Inc. which, on
January 30, 1981, pegged a fair market value of P40.00 per square meter or a total of
P53,800,000.00 for the subject property.

Upon being informed that petitioner MWSS and respondent CHGCCI had already
agreed in principle on the purchase of the subject property, President Marcos
expressed his approval of the sale as shown in his marginal note on the letter sent by
respondents Jose Roxas and Pablo Roman, Jr. dated December 20, 1982.

The Board of Trustees of petitioner MWSS thereafter passed Resolution 36-83,

approving the sale of the subject property in favor of respondent SILHOUETTE, as
assignee of respondent CHGCCI, at the appraised value given by Asian Appraisal
Co., Inc. Said Board Resolution reads:

"NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved, that in

accordance with Section 3, Par. (g) of the MWSS Charter and subject to the approval
of the President of the Philippines, the sale of a parcel of land located in Balara,

Quezon City, covered by TCT No. 36069 of the Registry of Deeds of Quezon City,
containing an area of ONE HUNDRED TWENTY SEVEN (127.313) hectares more
or less, which is the remaining portion of the area under lease after segregating a
BUFFER ZONE already surveyed along the undeveloped area near the treatment
plant and the developed portion of the CHGCCI golf course, to SILHOUETTE
TRADING CORPORATION as Assignee of Capitol Hills Golf & Country Club,
Inc., at FORTY (P40.00) PESOS per square meter, be and is hereby approved.

"BE IT RESOLVED FURTHER, that the General Manager be authorized, as he is

hereby authorized to sign for and in behalf of the MWSS the contract papers and
other pertinent documents relative thereto."

The MWSS-SILHOUETTE sales agreement eventually pushed through. Per the

Agreement dated May 11, 1983 covering said purchase, the total price for the subject
property is P50,925,200, P25 Million of which was to be paid upon President
Marcos' approval of the contract and the balance to be paid within one (1) year from
the transfer of the title to respondent SILHOUETTE as vendee with interest at 12%
per annum. The balance was also secured by an irrevocable letter of credit. A
Supplemental Agreement was forged between petitioner MWSS and respondent
SILHOUETTE on August 11, 1983 to accurately identify the subject property.

Subsequently, respondent SILHOUETTE, under a deed of sale dated July 26, 1984,
sold to respondent AYALA about sixty-seven (67) hectares of the subject property at
P110.00 per square meter. Of the total price of around P74 Million, P25 Million was
to be paid by respondent AYALA directly to petitioner MWSS for respondent
SILHOUETTE's account and P2 Million directly to respondent SILHOUETTE.
P11,600,000 was to be paid upon the issuance of title in favor of respondent AYALA,
and the remaining balance to be payable within one (1) year with 12% per annum
interest.

Respondent AYALA developed the land it purchased into a prime residential area
now known as the Ayala Heights Subdivision.

Almost a decade later, petitioner MWSS on March 26, 1993 filed an action against
all herein named respondents before the Regional Trial Court of Quezon City
seeking for the declaration of nullity of the MWSS-SILHOUETTE sales agreement
and all subsequent conveyances involving the subject property, and for the recovery
thereof with damages.

Respondent AYALA filed its answer pleading the affirmative defenses of (1)
prescription, (2) laches, (3) waiver/estoppel/ratification, (4) no cause of action, (5)
non-joinder of indispensable parties, and (6) non-jurisdiction of the court for nonspecification of amount of damages sought.

On June 10, 1993; the trial court issued an Order dismissing the complaint of
petitioner MWSS on grounds of prescription, laches, estoppel and non-joinder of
indispensable parties.

Petitioner MWSS's motion for reconsideration of such Order was denied, forcing it
to seek relief from the respondent Court where its appeal was docketed as CA-G.R.
CV No. 50654. It assigned as errors the following:

(motion to dismiss) by dismissing the complaint without conducting a hearing or

otherwise requiring the Ayalas to present evidence on the factual moorings of their
motion.

IV. The lower court acted without jurisdiction and committed manifest error when it
resolved factual issues and made findings and conclusions of facts all in favor of the
Ayalas in the absence of any evidence presented by the parties.

V. The court a quo erred when, contrary to the rules and jurisprudence, it prematurely
ruled that laches and estoppel bar the complaint as against Ayalas or that otherwise
the alleged failure to implead indispensable parties dictates the dismissal of the
complaint."

In the meantime, respondents CHGCCI and Roman filed their own motions to hear
their affirmative defenses which were identical to those adduced by respondent
AYALA. For its part, respondent SILHOUETTE filed a similarly grounded motion to
dismiss.

"I. The court a quo committed manifest serious error and gravely abused its
discretion when it ruled that plaintiff's cause of action is for annulment of contract
which has already prescribed in the face of the clear and unequivocal recitation of six
causes of action in the complaint, none of which is for annulment.

Ruling upon these motions, the trial court issued an order dated December 13, 1993
denying all of them. The motions for reconsideration of the respondents concerned
met a similar fate in the May 9, 1994 Order of the trial court. They thus filed special
civil actions for certiorari before the respondent Court which were docketed as CAG.R. SP Nos. 34605, 34718 and 35065 and thereafter consolidated with CA-G.R. CV
No. 50694 for disposition.

II. The lower court erred and exceeded its jurisdiction when, contrary to the rules of
court and jurisprudence, it treated and considered the affirmative defenses of Ayalas defenses not categorized by the rules as grounds for a motion to dismiss - as grounds
of a motion to dismiss which justify the dismissal of the complaint.

Respondent court, on August 19, 1996, rendered the assailed decision, the dispositive
portion of which reads:

"WHEREFORE, judgment is rendered:

III. The lower court abused its discretion and exceeded its jurisdiction when it
favorably acted on Ayala's motion for preliminary hearing of affirmative defenses

1.) DENYING the petitions for writ of certiorari for lack of merit; and

II

2.) AFFIRMING the order of the lower court dismissing the complaint against the
appellees Ayalas.

In failing to consider that the complaint recited six alternative causes of action, such
that the insufficiency of one cause - assuming there is such insufficiency - does not
render insufficient the other causes and the complaint itself. The contrary ruling in
this regard by respondent CA is founded entirely on speculation and conjecture and
is constitutive of grave abuse of discretion.

"SO ORDERED."

Petitioner MWSS appealed to this Court that portion of the respondent Court's
decision affirming the trial court's dismissal of its complaint against respondent
AYALA, docketed as G.R. No. 126000. The portion dismissing the petition for
certiorari (CA-GR Nos. 34605, 347718 and 35065) of respondents Roman, CHGCCI
and SILHOUETTE, however, became final and executory for their failure to appeal
therefrom. Nonetheless, these respondents were able to thereafter file before the trial
court another motion to dismiss grounded, again, on prescription which the trial
court in an Order of October 1996 granted.

In G.R. No. 128520, petitioner MWSS avers that:

This prompted petitioner MWSS to file another petition for review of said trial court
Order before this Court and docketed as G.R. No. 128520. On motion of petitioner
MWSS, this Court in a Resolution dated December 3, 1997 directed the
consolidation of G.R. Nos. 126000 and 128520.

The court of origin erred in belatedly granting respondent's motions to dismiss which
are but a rehash, a disqualification, of their earlier motion for preliminary hearing of
affirmative defense / motion to dismiss. These previous motions were denied by the
lower court, which denial the respondents raised to the Court of Appeals by way of
perfection for certiorari, which petitions in turn were dismissed for lack of merit by
the latter court. The correctness and validity of the lower court's previous orders
denying movant's motion for preliminary hearing of affirmative defense/motion to
dismiss has accordingly been settled already with finality and cannot be disturbed or
challenged anew at this instance of defendant's new but similarly anchored motions
to dismiss, without committing procedural heresy causative of miscarriage of justice.

The errors assigned by petitioner MWSS in CA-GR No. 126000 are:

II

I
In holding, per the questioned Decision dated 19 August 1996, that plaintiffs cause of
action is for annulment of contract which has already prescribed in the face of the
clear and unequivocal recitation of six causes of action in the complaint, none of
which is for annulment and in effect affirming the dismissal by the respondent judge
of the complaint against respondent Ayalas. This conclusion of respondent CH is,
with due respect, manifestly mistaken and legally absurd.

The lower court erred in not implementing correctly the decision of the Court of
Appeal. After all, respondents' own petitions for certiorari questioning the earlier
denial of their motion for preliminary hearing of affirmative defense / motion to
dismiss were dismissed by the Court of Appeal, in the process of affirming the
validity and legality of such denial by the court a quo. The dismissal of the
respondents' petitions are embodied in the dispositive portion of the said decision of
the Court of Appeals dated 19 August 1996. The lower court cannot choose to
disregard such decretal aspect of the decision and instead implement an obiter
dictum.

III.
That part of the decision of the decision of the Court of Appeals resolving the issue
of prescription attendant to the appeal of plaintiff against the Ayalas, has been
appealed by plaintiff to the Supreme Court by way of a petition for review on
certiorari. Not yet being final and executory, the lower court erred in making capital
out of the same to dismiss the case against the other defendants, who are the
respondents herein.

SILHOUETTE sale, and all subsequent conveyances of the subject property, void
which is imprescriptible.

We disagree.
The very allegations in petitioner MWSS' complaint show that the subject property
was sold through contracts which, at most, can be considered only as voidable, and
not void. Paragraph 12 of the complaint reads in part:

IV.
The lower court erred in holding, per the questioned orders, that plaintiff's cause of
action is for annulment of contract which has already prescribed in the face of the
clear and unequivocal recitation of six causes of action in the complaint, none of
which is for annulment. This conclusion of public respondent is manifestly mistaken
and legally absurd.

V.
The court a quo erred in failing to consider the complaint recites six alternative
causes of action, such that the insufficiency of one cause - assuming there is such
insufficiency - does not render insufficient the other cause and the complaint itself.
The contrary ruling in this regard by public respondent is founded entirely on
speculation and conjecture and is constitutive of grave abuse of discretion.

In disposing of the instant petition, this Court shall dwell on the more crucial upon
which the trial court and respondent based their respective rulings unfavorable to
petitioner MWSS; i.e., prescription, laches, estoppel/ratification and non-joinder of
indispensable parties.

"12. xxx.

The plaintiff has been in continuous, peaceful and public possession and ownership
of the afore-described properties, the title (TCT No. [36069] 199170) thereto,
including its derivative titles TCT Nos. 213872 and 307655, having been duly issued
in its name. However, as a result of fraudulent and illegal acts of herein defendants,
as described in the paragraphs hereinafter following, the original of said title/s were
cancelled and in lieu thereof new titles were issued to corporate defendant/s covering
subject 127.9271 hectares. xxx."

Paragraph 34 alleges:
"34. Sometime thereafter, clearly influenced by the premature if not questionable
approval by Mr. Marcos of a non-existent agreement, and despite full knowledge that
both the assessed and market value of subject property were much much higher, the
MWSS Board of Trusties illegally passed an undated resolution ( 'Resolution No. 3683' ), approving the 'sale' of the property to CHGCCI at P40/sq.m. and illegally
authorizing General Manager Ilustre to sign the covering contract.

RE: Prescription

This 'resolution' was signed by Messrs. Jesus Hipolito as Chairman; Oscar Ilustre, as
Vice Chairman; Aflredo Junio, as Member; and Silvestre Payoyo, as Member; xxx"

Petitioner MWSS claims as erroneous both the lower courts' uniform finding that the
action has prescribed, arguing that its complaint is one to declare the MWSS-

Paragraph 53 states:

" 53. Defendants Pablo Roman, Jr., Josefino Cenizal, and Jose Roxas as well as
defendant corporations (CHGCCI, STC and Ayala) who acted through the former
and their other principal officers, knowingly inducedand caused then President
Marcos and the former officers of plaintiff MWSS to enter into the aforesaid undated
'Agreement' which are manifestly and grossly disadvantageous to the government
and which gave the same defendants unwarranted benefits, i.e., the ownership and
dominion of the afore-described property of plaintiff."

Paragraph 54 avers:
"54. Defendants Jesus Hipolito and Alfredo Junio, then public officers, together with
the other public officers who are now deceased (Ferdinand Marcos, Oscar liustre,
and Sivestre Payoyo) knowingly allowed themselves to be persuaded, induced and
influenced to approve and/or enter into the aforementioned 'Agreements' which are
grossly and manifestly disadvantageous to the MWSS/government and which
bestowed upon the other defendants the unwarranted benefit/ownership of subject
property."

The three elements of a contract - consent, the object, and the cause of obligation11
are all present. It cannot be otherwise argued that the contract had for its object the
sale of the property and the cause or consideration thereof was the price to be paid
(on the part of respondents CHGCCI/SILHOUETTE) and the land to be sold (on the
part of petitioner MWSS). Likewise, petitioner MWSS' consent to the May 11, 1983
and August 11, 1983 Agreements is patent on the face of these documents and on its
own resolution No. 36-83.
As noted by both lower courts, petitioner MWSS admits that it consented to the sale
of the property, with the qualification that such consent was allegedly unduly
influenced by the President Marcos. Taking such allegation to be hypothetically true,
such would have resulted in only voidable contracts because all three elements of a
contract, still obtained nonetheless. The alleged vitiation of MWSS' consent did not
make the sale null and void ab initio. Thus, "a contract where consent is given
through mistake, violence, intimidation, undue influence or fraud, is voidable."2
Contracts "where consent is vitiated by mistake, violence, intimidation, undue
influence or fraud" are voidable or annullable.3 These are not void as -

"Concepts of Voidable Contracts. - Voidable or anullable contracts are existent, valid,

and binding, although they can be annulled because of want of capacity or vitiated
consent of the one of the parties, but before annulment, they are effective and
obligatory between parties. Hence, it is valid until it is set aside and its validity may
be assailed only in an action for that purpose. They can be confirmed or ratified."
As the contracts were voidable at the most, the four year prescriptive period under
Art. 1391 of the New Civil Code will apply. This article provides that the
prescriptive period shall begin in the cases of intimidation, violence or undue
influence, from the time the defect of the consent ceases", and "in case of mistake or
fraud, from the time of the discovery of the same time".
Hypothetically admitting that President Marcos unduly influenced the sale, the
prescriptive period to annul the same would have begun on February 26, 1986 which
this Court takes judicial notice of as the date President Marcos was deposed.
Prescription would have set in by February 26, 1990 or more than three years before
petitioner MWSS' complaint was filed.
However, if petitioner MWSS' consent was vitiated by fraud, then the prescriptive
period commenced upon discovery. Discovery commenced from the date of the
execution of the sale documents as petitioner was party thereto. At the least,
discovery is deemed to have taken place on the date of registration of the deeds with
the register of Deeds as registration is constructive notice to the world.5 Given these
two principles on discovery, the prescriptive period commenced in 1983 as petitioner
MWSS actually knew of the sale, or, in 1984 when the agreements were registered
and titles thereafter were issued to respondent SILHOUETTE. At the latest, the
action would have prescribed by 1988, or about five years before the complaint was
instituted. Thus, in Aznar vs. Bernard6, this Court held that:

"Lastly, even assuming that the petitioners had indeed failed to raise the affirmative
defense of prescription in a motion to dismiss or in an appropriate pleading (answer,
or amended or supplemental answer) and an amendment would no longer be feasible,
still prescription, if apparent on the face of the complaint, may be favorably
considered. In the case at bar, the private respondents admit in their complaint that
the contract or real estate mortgage which they alleged to be fraudulent and which
had been foreclosed, giving rise to this controversy with the petitioners, was
executed on July 17, 1978, or more than eight long years before the commencement
of the suit in the court a quo, on September 15, 1986. And an action declare a
contract null and void on the ground of fraud must be instituted within four years.

Extinctive prescription is thus apparent on the face of the complaint itself as resolved
by the Court."
Petitioner MWSS further contends that prescription does not apply as its complaint
prayed not for the nullification of voidable contracts but for the declaration of nullity
of void ab initio contracts which are imprescriptible. This is incorrect, as the prayers
in a complaint are not determinative of what legal principles will operate based on
the factual allegations of the complaint. And these factual allegations, assuming their
truth, show that MWSS consented to the sale, only that such consent was purportedly
vitiated by undue influence or fraud. Therefore, the rules on prescription will
operate. Even if petitioner MWSS asked for the declaration of nullity of these
contracts, the prayers will not be controlling as only the factual allegations in the
complaint determine relief. "(I)t is the material allegations of fact in the complaint,
not the legal conclusion made therein or the prayer that determines the relief to
which the plaintiff is entitled"7. Respondent court is thus correct in holding that:
"xxx xxx xxx
The totality then of those allegations in the complaint makes up a case of a voidable
contract of sale - not a void one. The determinative allegations are those that point
out that the consent of MWSS in the Agreement of Sale was vitiated either by fraud
or undue for the declaration of nullity of the said contract because the Complaint
says no. Basic is the rule however that it is the body and not the caption nor the
prayer of the Complaint that determines the nature of the action. True, the caption
and prayer of the Complaint state that the action is for a judicial declaration of nullity
of a contract, but alas, as already pointed out, its body unmistakably alleges only a
voidable contract. One cannot change the real nature of an action adopting a different
nomenclature any more than one can change gin into whisky by just replacing the
label on the bottle with that of the latter's and calling it whisky. No matter what, the
liquid inside remains gin.
xxx xxx xxx."
Petitioner MWSS also theorizes that the May 11, 1983 MWSS-SILHOUETTE
Agreement and the August 11, 1983 Supplemental Agreement were void ab initio
because the "initial agreement" from which these agreements emanated was executed
"without the knowledge, much less the approval" of petitioner MWSS through its
Board of Trustees. The "initial agreement" referred to in petitioner MWSS' argument
is the December 20, 1982 letter of respondents Roxas and Roman, Jr. to President
Marcos where the authors mentioned that they had reached an agreement with
petitioner's then general manager, Mr. Oscar Ilustre. Petitioner MWSS maintains that
Mr. Ilustre was not authorized to enter into such "initial agreement", contrary to Art.

1874 of the New Civil Code which provides that "when a sale of a parcel of land or
any interest therein is through an agent, the authority of the latter shall be in writing
otherwise the sale shall be void." It then concludes that since its Res. No. 36-83 and
the May 11, 1983 and August 11, 1983 Agreements are "fruits" of the "initial
agreement" (for which Mr. Ilustre was allegedly not authorized in writing), all of
these would have been also void under Art. 1422 of NCC, which provides that a
contract which is the direct result of a pronounced illegal contract, is also void and
inexistent."
The argument does not impress. The "initial agreement" reflected in the December
20, 1982 letter of respondent Roman to Pres. Marcos, is not a sale under Art. 1874.
Since the nature of the "initial agreement" is crucial, we quote8 the letter in full:

"We respectfully approach Your Excellency in all humility and in the spirit of the
Yuletide Season. We have explained to Your Excellency when you allowed us the
honor to see you, that the negotiations with MWSS which the late Pablo R. Roman
initiated way back in 1975, with your kind approval, will finally be concluded.

We have agreed in principle with Mr. Oscar llustre on the terms of the sale as
evidenced by the following:

1 . Our written agreement to hire Asian Appraisal Company to appraise the entire
leased area which would then be the basis for the negotiations of the purchase price
of the property; and
2. Our exchange of communications wherein MWSS made a counter-offer and our
acceptance of the counter-offer.

However, we were informed by Mr. Ilustre that only written instruction from Your
Excellency will allow us to finally sign the Agreement.

In sum, our Agreement is for the purchase price of FIFTY-SEVEN MILLION TWOHUNDRED-FORTY THOUSAND PESOS (P 57,240,000) for the entire leased area

of 135 hectares; TWENTY-SEVEN MILLION PESOS (P27,000,000) payable upon

approval of the contract by Your Excellency and the balance of THIRTY MILLION
TWO HUNDRED FORTY THOUSAND PESOS (P 30,240,000) after one (1) year
inclusive of a 12% interest.
We believe that this arrangement is fair and equitable to both parties considering that
the value of the land was appraised by a reputable company and independent
appraisal company jointly commissioned by both parties and considering further that
Capitol Hills has still a 23-year lien on the property by virtue of its existing lease
contract with MWSS.

We humbly seek your instruction, Your Excellency and please accept our families'
sincere wish for a Merry Christmas and a Happy New Year to you and the First
Family."
The foregoing does not document a sale, but at most, only the conditions proposed
by respondent Roman to enter into one. By the terms thereof, it refers only to an
"agreement in principle". Reflecting a future consummation, the letter mentions
"negotiations with MWSS (which) with your (Marcos') kind approval, will finally be
concluded". It must likewise be noted that presidential approval had yet to be
obtained. Thus, the "initial agreement" was not a sale as it did not in any way transfer
ownership over the property. The proposed terms had yet to be approval by the
President and the agreement in principle still had to be formalized in a deed of sale.
Written authority as is required under Art. 1834 of the New Civil Code, was not
needed at the point of the "initial agreement".

Verily, the principle on prescription of actions is designed to cover situations such as

the case at bar, where there have been a series of transfers to innocent purchasers for
value. To set aside these transactions only to accommodate a party who has slept on
his rights is anathema to good order.9

can still be dismissed on the ground of laches which is different from prescription.
This Court, as early as 1966, has distinguished these two concepts in this wise:
"x x x (T)he defense of laches applies independently of prescription. Laches is
different from the statute of limitations. Prescription is concerned with the fact of
delay, whereas laches is concerned with the effect of delay. Prescription is a matter of
time; laches is principally a question of inequity of permitting a claim to be enforced,
this inequity being founded on some change in the condition of the property or the
relation of the parties. Prescription is statutory; laches is not. Laches applies in
inequity, whereas prescription applies at law. Prescription is based on fixed-time;
laches is not."10

Thus, the prevailing doctrine is that the right to have a contract declared void ab
initio may be barred by laches although not barred by prescription.

It has, for all its elements are present, viz:

(1) conduct on the part of the defendant, or one under whom he claims, giving rise to
the situation that led to the complaint and for which the complaint seeks a remedy;
(2) delay in asserting the complainant's rights, having had knowledge or notice of the
defendant's conduct and having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit; and
(4) injury or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held barred.12

RE: Laches

There is no question on the presence of the first element. The main thrust of
petitioner MWSS's complaint is to bring to the fore what it claims as fraudulent
and/or illegal acts of the respondents in the acquisition of the subject property.

Even assuming, for argument's sake, that the allegations in the complaint establish
the absolute nullity of the assailed contracts an hence imprescriptible, the complaint

The second element of delay is evident from the fact that petitions tarried for almost
ten (10) years from the conclusion of the sale sometime in 1983 before formally
laying claim to the subject property in 1993.

The third element is present as can be deduced from the allegations in the complaint
that petitioner MWSS (a) demanded for downpayment for no less than three times;
(b) accepted downpayment for P25 Million; and (c) accepted a letter of credit for the
balance. The pertinent paragraphs in the complaint thus read:

"38. In a letter dated September 19, 1983, for failure of CHGCCI to pay on time, Mr.
Ilustre demanded payment of the downpayment of P25 Million which was due as of
18 April 1983. A copy of this letter is hereto attached as Annex 'X';
"39. Again, in a letter dated February 7, 1984, then MWSS Acting General Manager
Aber Canlas demanded payment from CHGCCI of the purchase price long overdue.
A copy of this letter is hereto attached as Annex 'Y';
"40. Likewise, in a letter dated March 14, 1984, Mr. Canlas again demanded from
CHGCCI payment of the price. A copy of this demand letter is hereto attached as
Annex 'Z';
"41. Thereafter, in a letter dated July 27, 1984, another entity, defendant Ayala
Corporation, through SVP Renato de la Fuente, paid with a check the long overdue
downpayment of P25,000,000.00 of STC/CHGCCI. Likewise a domestic stand-by
letter of credit for the balance was issued in favor of MWSS; Copies of the said
letter, check and letter of credit are hereto attached as Annexes 'AA', 'BB', and 'CC',
respectively."
Under these facts supplied by petitioner MWSS itself, respondents have every good
reason to believe that petitioner was honoring the validity of the conveyances of the
subject property, and that the sudden institution of the complaint in 1993 alleging the
nullity of such conveyances was surely an unexpected turn of events for respondents.
Hence, petitioner MWSS cannot escape the effect of laches.

RE: Ratification
Pertinent to this issue is the claim of petitioner MWSS that Mr. Ilustre was never
given the authority by its Board of Trustees to enter into the "initial agreement" of
December 20, 1982 and therefore, the sale of the subject property is invalid.
Petitioner MWSS misses the point. The perceived infirmity in the "initial agreement"
can be cured by ratification. So settled is the precept that ratification can be made by
the corporate board either expressly or impliedly. Implied ratification may take

various forms - like silence or acquiescence; by acts showing approval or adoption of

the contract; or by acceptance and retention of benefits flowing therefrom.13 Both
modes of ratification have been made in this case.

There was express ratification made by the Board of petitioner MWSS when it
passed Resolution No. 36-83 approving the sale of the subject property to respondent
SILHOUETTE and authorizing Mr. Ilustre, as General Manager, "to sign for and in
behalf of the MWSS the contract papers and other pertinent documents relative
thereto." Implied ratification by "silence or acquiescence" is revealed from the acts
of petitioner MWSS in (a) sending three (3) demand letters for the payment of the
purchase price, (b) accepting P25 Million as downpayment, and (c) accepting a letter
of credit for the balance, as hereinbefore mentioned. It may well be pointed out also
that nowhere in petitioner MWSS' complaint is it alleged that it returned the
amounts, or any part thereof, covering the purchase price to any of the respondentsvendees at any point in time. This is only indicative of petitioner MWSS' acceptance
and retention of benefits flowing from the sales transactions which is another form of
implied ratification.

RE: Non-joinder of indispensable parties

There is no denying that petitioner MWSS' action against herein respondents for the
recovery of the subject property now converted into a prime residential subdivision
would ultimately affect the proprietary rights of the many lot owners to whom the
land has already been parceled out. They should have been included in the suit as
parties-defendants, for. "it is well established that owners of property over which
reconveyance is asserted are indispensable parties without whom no relief is
available and without whom the court can render no valid judgment."14 Being
indispensable parties, the absence of these lot-owners in the suit renders all
subsequent actions of the trial court null and void for want of authority to act, not
only as to the absent parties but even as to those present.15 Thus, when indispensable
parties are not before the court, the action should be dismissed.16

WHEREFORE, in view of the foregoing, the consolidated petitions are hereby

DENIED.
SO ORDERED

The present action was instituted by the plaintiff in the Court of the First Instance of
Cebu to recover from the defendant the possession of said vessel or its value in the
sum of P20,000, plus damages in the sum of P5,000.

G.R. No. L-2939

August 29, 1950

PLACIDO NOCEDA, vs. MARCOS ESCOBAR

Plaintiff-appellant was the owner of the motor cutter named "N.S. del Rosario I."
which was registered in his name in the office of the Insular Collector of Customs,
Manila, on January 19, 1939, and which, according to said plaintiff, had cost him
about P 16,000. He used it to transport passengers and cargo between Albay and
Catanduanes. On February 11, 1942, that is to say, during the enemy occupation of
the Bicol provinces, the Japanese armed forces seized the said vessel and utilized it
during the progress of the war in transporting troops, ammunition, and supplies.

After the liberation of the Philippines from the Japanese, the United States armed
forces found said vessel in Cebu and, on May 17, 1945, thru the PCAU, sold it as
enemy property to one Vicente Asuncion for P100. The bill of sale executed by Lt.
Col. Pete W. Scott, "C.O. PCAU 15, Agent, United States Government," described
said vessel as a "Japanese fishing type boat approximately 60 feet in length . . . now
partially submerged and beached between Cebu City, Cebu, and the town of
Mandawe, Cebu." The bill of sale further recited: "It is expressly understood that
party of the first part warrants nothing in this transaction except transfer of title to
said property." On August 14, 1945, Vicente Asuncion sold said vessel for P8,000 to
the defendant Marcos Escobar, who registered the deed of sale in the office of the
collector of Customs of Cebu on October 25, 1945. Thereafter Escobar caused
extensive repairs to be made on the vessel and named it "Long Distance."

Upon the trial of the case, in which the principal issue was the identity of the vessel,
the trial court, after an ocular inspection of the vessel in question and after hearing
the testimony of witnesses, found in effect that the vessel now named "Long
Distance" in the possession of the defendant is the same vessel formerly named "N.S.
del Rosario I," which the Japanese armed forces had seized in Albay from the
plaintiff in February, 1942. The trial court, however, held that the boat in question
had been lawfully seized and confiscated by the Japanese armed forces and that "as a
necessary consequence of the validity of the seizure by the Japanese of the vessel in
dispute, the United States armed forces acquired a valid title over the same when in
the course of liberation of the Philippines said authority took possession of the vessel
in Philippine waters." Further holding that the defendant had acquired a valid title to
said vessel, the trial court dismissed plaintiff's complaint, without costs. From that
judgment the plaintiff appealed.

Appellant's contention is predicated on the article 3, Chapter II of the Hague

Conventions of 1907 relating to the exercise of the rights of the capture in the naval
war, which reads as follows:

Vessel used exclusively for fishing along the coast or small boats employed in the
local trade are exempt from capture, as well as their appliances, rigging, tackle, and
cargo.

We think this article is not applicable, for the reason that when the Japanese armed
forces seized the vessel in question in the Bicol provinces on February 11, 1942, they
were already in military occupation of that territory. The vessel was not captured in
the course of a naval war, but was seized by the military occupant, who used it in the
prosecution of the war. We think the provision of the Hague Conventions of 1907
that is applicable here is the second paragraph of article 53 of the "Regulations
Respecting the Laws and Customs of War on Land." which reads as follows:

ART. 53. An army of occupation can only take possession of the cash, funds, and
realizable securities belonging strictly to the State, depots of arms, of arms, of
transport, stores and supplies, and, generally, all movable property of the State which
may be used for military operations.

All appliances, whether on land, at sea, or in the air, adapted for the transmission of
news, or for the transport of persons or things, apart from cases governed by
maritime law, depots of arms and, generally, all kinds of war material may be seized,
even though belonging to private persons, but they must be restored at the conclusion
of peace, and indemnities paid for them. (Emphasis supplied.)

The second paragraph of article 53 above quoted was quoted by the trial court in
support of its view that the Japanese Army was authorized under international law to
seize the vessel in question. And we think that was correct. But we are clearly of the
opinion that the trial court erred in holding that the Japanese Army could and did
lawfully confiscate said vessel. Although the regulations quoted authorized the
seizure of the vessel in question, they did not authorize its confiscation. On the
contrary, it is expressly provided therein that the things seized "must be restored at
the conclusion of peace and indemnities paid for them." It is clear, therefore, that the
title to the vessel in question did not pass to the Japanese but remained in the owner,
the plaintiff herein. In other words, said vessel did not become enemy property and
was not such when the PCAU sold it to Vicente Asuncion. Hence said sale was not
valid as against the plaintiff, and the defendant acquired no valid title to said vessel
by virtue of his purchase from Vicente Asuncion.

A question which was not passed upon by the trial court remains to be resolved,
namely, the right of the defendant to be reimbursed by the plaintiff for necessary and

useful expenditures on said vessel and the corresponding obligation of said defendant
to account to the plaintiff for the earnings of the vessel during the pendency of this
action. Upon the facts proven, we may a concede that the defendant-appellee was a
purchaser in good faith. But we hold that he ceased to be a possessor in good faith
from the moment the plaintiff, as owner of the vessel, claimed it from the defendant
judicially or extrajudicially Form that moment the defendant was not unaware that
his possession was wrongful. (See art. 435, Civil Code; Ortis vs. Fuentebella, 27
Phil., 537.)

Article 451 of the old Civil Code provides that "fruits received by one in possession
in the good faith, before possession is legally interrupted, become his own" And
article 453 says that "necessary expenditures shall be refunded to every possessor;
but only the possessor in good faith may retain the thing until they are repaid to him.
Useful expenditures shall be paid the possessor in good faith.."

It follows that the defendant must account to the plaintiff for the net earnings of the
vessel from the time the plaintiff claimed said vessel from him judicially or
extrajudicially, and whatever necessary expenditures he may have made on said
vessel as well as all useful expenditures made before the possession was legally
interrupted, may be deducted from or set off against said earnings.

Finding that the plaintiff is entitled to the vessel in question, we reverse the
Judgment appealed from and order the case remanded to the court of origin for
further proceedings in accordance with this decision, with costs against the appellee.