SECOND DIVISION

July 1, 2015
G.R. No. 200558
CONSUELO V. PANGASINAN and ANNABELLA V. BORROMEO, Petitioners,
vs.
CRISTINA DISONGLOALMAZORA, RENILDA ALMAZORA-CASUBUAN, RODOLFO
CASUBUAN, SUSANA ALMAZORAMENDIOLA, CARLOS MENDIOLA, CECILIO
ALMAZORA and NENITA ALMAZORA, Respondents.
DECISION
MENDOZA, J.:
The present case demonstrates the legal principle that the law aids the vigilant, not
those who slumber on their rights. Vigilantibus, sed non dormientibus Jura
subverniunt.
This is a petition for review on certiorari seeking to reverse and set aside the July 28,
2011 Decision1 and the February 3, 2012 Resolution2 of the Court of Appeals (CA), in
CA-G.R. CV 84529, which affirmed the June 29, 2004 Decision3 of the Regional Trial
Court, Branch 259, Paraaque City (RTC) in Civil Case No. 96-0206, a case for
damages.
The Facts
The subject property is a parcel of land with an area of 572 square meters located in
Brgy. Sto. Domingo, Bian, Laguna. It was registered in the name of Aquilina Martinez
(Aquilina) under Transfer Certificate of Title (TCT) No. T-18729 by the Register of
Deeds of Laguna on July 29, 1939.4

After the liberation of Manila from the Japanese military occupation in 1945, Aquilina
and her maternal grandmother, Leoncia Almendral (Leoncia), learned that their house

on Zabala Street, Tondo, Manila, was ruined by the war. To rebuild their house, they
borrowed money from their relative, Conrado Almazora (Conrado). Thus, their house
was reconstructed. In return, Leoncia entrusted to Contrado the owners duplicate
copy of TCT No. T-18729 covering the subject property in Bian, Laguna.
Consequently, Conrado and his family remained in the said property.
Following the death of Aquilina on July 19, 1949, the title of the subject property was
transferred to Aurora Morales-Vivar (Aurora), as her sole heir. Accordingly, TCT No. T35280 was issued in the name of Aurora5 after TCT No. T-18729 was cancelled. On
February 7, 1972, Conrado passed away.
Sometime in 1994, Aurora learned from Cristina Almazora (Cristina), the widowed
spouse of Conrado, that the title of the subject property had long been transferred in
the name of Conrado and that the subject property had been sold to Fullway
Development Corporation (Fullway) by the heirs of Conrado in consideration of
P4,000,000.00.6
Aurora was shocked to learn that the subject property was already transferred to
Conrado and sold for a meager amount. On October 30, 1995, she sent a letter to the
heirs of Conrado demanding the delivery of the payment they received for the sale of
the subject property; but it was unheeded.
On May 9, 1996, Aurora together with her husband, Arturo, filed a complaint for
damages7 against Cristina and the other heirs of Conrado (respondents) before the
RTC. They contended that the owners duplicate copy of TCT No. T-18729 was only
given to Conrado for safekeeping. The complaint, however, admitted that the family of
Conrado had been staying on, and using, the subject property since 1912 with the
permission and generosity of Aquilina and Leoncia.8

Aurora asserted that, through the years, she repeatedly asked Conrado to return the
owners copy of the title but the latter procrastinated, giving all kinds of excuses, until
he died in 1972; that thereafter, Aurora asked Cristina for the copy of the title but the
latter also ignored her request; that the subsequent sale of the subject property to
Fullway was without Auroras authorization, and, thus, the payment received by

respondents for the sale of the subject property should be turned over to her; and that
she prayed for moral and exemplary damages.9
On June 24, 1996, respondents filed their answer with compulsory counterclaim. They
countered that the subject property was properly transferred to Conrado under TCT
No. 35282, and, thereafter, in the names of the heirs of Conrado under TCT No. T114352. Respondents averred that the imputation of fraud on the part of Conrado in
the registration of the subject property was baseless and this assertion of fraud was
not transmissible from Conrado to his heirs, who merely acquired the property through
succession.10
Respondents raised some special and affirmatives defenses, among others, that the
complaint stated no cause of action and was barred by prescription. A preliminary
hearing for the said defenses was set by the RTC.11 In the Order,12 dated May 27,
1999, the RTC ruled that the complaint stated a cause of action.
Respondents filed a petition for certiorari 13 to assail the said interlocutory order of the
RTC before the CA. In its Decision,14 dated February 24, 1999, the CA denied the
same and held that the complaint stated a cause of action, which was an action for
damages arising from fraud committed by Conrado, as trustee, against Aurora, as
cestui que trust. The CA further held that the complaint, on its face, did not show that
the action had prescribed.

The RTC determined that Conrado was able to transfer the title of the subject property
in his name on June 17, 1965 by virtue of a document denominated as "Adjudication
and Absolute Sale of a Parcel of Registered Land,"16 dated January 9, 1949, signed
by Aurora and her husband. The signatures of Aurora and her husband, affixed on the
deed of sale, were not properly controverted by her. The trial court found that her
allegations of repeated pleas to Conrado to return the copy of the title deserved scant
consideration. It concluded that Aurora was not entitled to damages because there
were no clear and cogent grounds to award the same. The decretal portion of the
decision reads:
WHEREFORE, premises considered, plaintiffs having failed to prove its case for
damages, the same is hereby ordered DISMISSED for lack of merit.
SO ORDERED.17
Aggrieved, Aurora appealed to the CA. On June 4, 2009, the children of Aurora,
namely, Consuelo V. Pangasinan, Lucio M. Vivar and Annabella V. Borromeo
(petitioners), filed a motion for substitution of party18 after her death on March 26,
2008. In its Resolution,19 dated July 15, 2010, the CA granted the motion.
The CA Ruling

The RTC Ruling

In the assailed Decision, dated July 28, 2011, the CA denied the appeal of petitioners.
It held that it took Aurora more than 50 years to act on Conrados withholding of the
title covering the subject property. As early as 1945, the title was already in the
possession of Conrado. The CA ruled that petitioners were barred by laches as Aurora
should have been impervious in asserting her ownership and made judicial demands
to return the title and the property.

In its Decision, dated June 29, 2004, the RTC dismissed the complaint. The trial court
held that, after a thorough evaluation of the records, Aurora miserably failed to prove
her right to the subject property. It explained that even if Aurora had a claim on the
subject property, she was guilty of laches. For many years, Aurora slept on her right
over the questioned property and failed to exhaust all means, legal or administrative,
to retrieve what was rightfully hers at the earliest possible time.

The appellate court added that even on the aspect of prescription of actions, the case
would not prosper either. It explained that the prescriptive period to recover property
obtained through fraud or mistake giving rise to an implied trust under Article 1456 of
the Civil Code was 10 years, pursuant to Article 1144. This 10-year prescriptive period
began from the time the land was registered on June 17, 1965. Accordingly, Aurora
had only until June 17, 1975 within which to file her action. Evidently, the suit was

Meanwhile, the RTC continued the proceedings and set the case for trial on the merits.
After the parties adduced their respective pieces of evidence, the RTC required them
to submit their memoranda. Only respondents filed a memorandum.15

commenced only on May 12, 1996, beyond its prescription period. The dispositive
portion of the decision states:
WHEREFORE, premises considered, the instant petition is DENIED and the Decision
dated June 29, 2004 of the Regional Trial Court of Paraaque City, Branch 259 in Civil
Case No. 96-0206 is hereby AFFIRMED.
SO ORDERED.20
Petitioners moved for reconsideration, but their motion was denied by the CA in the
assailed Resolution, dated February 3, 2012.

On September 24, 2012, respondents filed their Comment,22 arguing that petitioners
assertions were tenuous. Aurora slept on her rights for more than 50 years, impervious
in asserting her ownership of the subject property, thereby losing the same by laches.
On December 11, 2012, petitioners filed their Reply,23 claiming that the CA observed
that respondents might have manipulated the said title to their benefit and advantage.
Respondents hands were unclean because of their bad faith and misrepresentation.
The Courts Ruling

Hence, this petition, raising the following

The petition is bereft of merit.

ISSUES

The petition raises questions of fact

As a general rule, the Courts jurisdiction in a Rule 45 petition is limited to the review of
pure questions of law. A question of law arises when the doubt or difference exists as
to what the law is on a certain state of facts. Negatively put, Rule 45 does not allow the
review of questions of fact. A question of fact exists when the doubt or difference
arises as to the truth or falsity of the alleged facts.24

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF

THE LOWER COURT DISMISSING THE COMPLAINT FOR DAMAGES FILED BY
AURORA MORALESVIVAR, WHICH DECISIONS ARE ALL CONTRARY TO LAW;
II
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING THAT THE
ACQUISITION OF CONRADO ALMAZORA, RESPONDENTS PREDECESSOR-ININTEREST, OF THE SUBJECT PROPERTY, IS INVALID AND PRODUCED NO
EFFECT WHATSOEVER BECAUSE NOT ALL THE ELEMENTS OF LACHES, AS TO
DEPRIVE AURORA MORALES-VIVAR OF HER OWNERSHIP, ARE PRESENT IN
THE CASE AT BAR.21
Petitioners assert that they are not guilty of laches. When Aurora was told that the
subject property was already in the name of Conrado in April 1994, she immediately
filed a complaint for damages on May 2, 1996. Petitioners also claim that prescription
is not a valid defense to defeat the title of Aurora. Section 47 of Presidential Decree
(P.D.) No. 1529 states that no title to registered land in derogation of the title of the
registered owner shall be acquired by prescription or adverse possession.

Petitioners challenge the findings of laches, prescription and lack of bad faith by the
CA. To answer these questions, the Court must review the records to determine
whether the lower courts properly appreciated the evidence in concluding its findings.
Clearly, the questions raised are factual. On this ground alone, the present petition
under Rule 45 is dismissible. In the interest of substantial justice, however, the Court
deems it proper to reevaluate the records.
Petitioners are barred by laches
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 a presumption that the party entitled to assert it either has abandoned it or
declined to assert it.25

The principle of laches is a creation of equity which, as such, is applied not really to
penalize neglect or sleeping upon one's right, but rather to avoid recognizing a right
when to do so would result in a clearly inequitable situation.26 The time-honored rule
anchored on public policy is that relief will be denied to a litigant whose claim or
demand has become "stale," or who has acquiesced for an unreasonable length of
time, or who has not been vigilant or who has slept on his rights either by negligence,
folly or inattention. In other words, public policy requires, for peace of society, the
discouragement of claims grown stale for non-assertion; thus laches is an impediment
to the assertion or enforcement of a right which has become, under the circumstances,
inequitable or unfair to permit.27
The four (4) elements of laches, as first prescribed by this Court in Go Chi Gun v. Co
Cho28 are as follows:
(1) conduct on the part of the defendant, or of one under whom he claims, giving rise
to the situation of which complaint is made for which the complaint seeks a remedy;
(2) delay in asserting the complainants rights, the complainant having had knowledge
or notice, of the defendants 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 to be barred.29
In the case at bench, the CA correctly held that all the elements of laches were
present. First, Aurora and her family entrusted to Conrado the owners duplicate of the
certificate of title of the subject property in 1945. In their complaint, petitioners even
admitted that Conrados family had been staying in the subject property since 1912.30
Second, it took five decades, from 1945 to 1996, before Aurora and petitioners
decided to enforce their right thereon. Third, respondents who lived all their lives in the
disputed property apparently were not aware that Aurora would one day come out and
claim ownership thereon. Fourth, there was no question that respondents would be
prejudiced in the event that the suit would be allowed to prosper.1avvphi1

The contention of petitioners that they were not in delay in claiming their rights over the
subject property is specious. For 50 years, Aurora and her heirs did not take any legal
step to uphold their claim over the subject property, despite being fully aware that
Conrado and his family were occupying the same for a very long time. Even petitioner
Consuelo Vivar- Pangasinan testified that Conrado had been using the property for 30
years31 and that Aurora had never shown her any evidence of ownership of the
property.32
In their complaint, Aurora claimed that she repeatedly reminded Conrado to return the
copy of the title. This, however, is a self-serving allegation without any evidentiary
substantiation. The two belated demand letters, dated October 30, 1995 and March 5,
1996, sent by Auroras lawyer before the institution of the present action, are the only
tangible assertions of their claim to the property.33 Indeed, not a scintilla of proof was
presented by Aurora and her heirs to establish that, for 50 years, they actively
manifested to reclaim the title and possession of the subject property.
A person, endowed with properties and entitlements, but chose to lie quietly as
decades passed by, watching his property wither away, allowing innocent bystanders
to pick the fruits of his unguarded trees, instead of safeguarding his rights through the
accessibly and necessary legal means, does not deserve the protection of equity. The
law aids the vigilant, not those who slumber on their rights.
The action has prescribed
On the basis of prescription of actions, the pending petition must also be denied.
Petitioners argue that prescription shall not lie against their action because a
registered land under Section 47 of P.D. No. 1529 cannot be acquired through
prescription.34 The argument is patently erroneous.
There are two kinds of prescription provided in the Civil Code. One is acquisitive, that
is, the acquisition of a right by the lapse of time as expounded in paragraph 1, Article
1106.35 Acquisitive prescription is also known as adverse possession and usucapcion.
The other kind is extinctive prescription whereby rights and actions are lost by the
lapse of time as defined in paragraph 2, Article 1106 and Article 1139.36 Another name

for extinctive prescription is litigation of action. These two kinds of prescription should
not be interchanged.37
In a plethora of cases,38 the Court has held that Section 47 of P.D. No. 1529 covers
acquisitive prescription. A registered land therein can never be acquired by adverse
possession. In the case at bench, however, it was extinctive prescription, and not
acquisitive prescription, which barred the action of petitioners. As the CA correctly
held, the action must fail, not because respondents adversely occupied the property,
but because petitioners failed to institute their suit within the prescriptive period under
Article 1144 of the Civil Code.
To determine the applicable period of extinctive prescription, the nature and
circumstances of the case should be considered. According to petitioners, the owners
duplicate certificate of title was given to Conrado for safekeeping in 1945. Allegedly,
Conrado employed fraud and bad faith when he drafted the Adjudication and Absolute
Sale of a Parcel of Registered Land39 on January 9, 1949, and transferred the title of
the land to his name with the issuance of TCT No. 3528240 on June 17, 1965; and
because of the purported fraud committed by Conrado against petitioners, an implied
constructive trust was created by operation of law, with Conrado as trustee and Aurora
as cestui que trust.
Constructive trusts are created by the construction of equity in order to satisfy the
demands of justice and prevent unjust enrichment.41 Article 1456 of the Civil Code
provides that a person acquiring property through fraud becomes, by operation of law,
a trustee of an implied trust for the benefit of the real owner of the property.42 It is now
well-settled that the prescriptive period to recover property obtained by fraud or
mistake, giving rise to an implied trust under Article 1456 of the Civil Code, is 10 years
pursuant to Article 1144.43 The prescriptive period to enforce the constructive trust
shall be counted from the alleged fraudulent registration or date of issuance of the
certificate of title over the property.44 The ten-year prescriptive period applies only if
there is an actual need to reconvey the property as when the plaintiff is not in
possession of the property.45

In this case, the ten-year prescriptive period is squarely applicable because Conrado
and his family, not petitioners, were in possession of the property. The subject property
was registered in the name of Conrado on June 17, 1965, and this should be the
starting point of the ten-year period. Petitioners, thus, had until June 17, 1975 to
enforce the implied trust and assert their claim over the land. As properly held by the
CA, petitioners belatedly instituted their judicial claim over the land on May 9, 1996.
Indeed, with the lapse of the prescriptive period to file an action, petitioners could no
longer seek relief from the courts.
Fraud was not proven
Granting, for the sake of argument, that the present case was not barred by laches
and had not prescribed, it must still fail on its merits. The basis of the action for
damages of petitioners would be the fraud, bad faith and misrepresentation allegedly
committed by Conrado in transferring the title of the subject property to his name.
Petitioners, however, drastically failed to prove the fact of fraud with clear and
convincing evidence.
Fraud must be proven by clear and convincing evidence and not merely by a
preponderance thereof.46 Clear and convincing proof is more than mere
preponderance, but not to extent of such certainty as is required beyond reasonable
doubt as in criminal cases.47 The imputation of fraud in a civil case requires the
presentation of clear and convincing evidence. Mere allegations will not suffice to
sustain the existence of fraud. The burden of evidence rests on the part of the plaintiff
or the party alleging fraud.48

Here, the Adjudication and Absolute Sale of a Parcel of Registered Land, which was
signed by Aurora and her husband, transferred the ownership of the subject property
from Aurora to Conrado. Petitioners, however, failed to assail the validity of such deed.
As written by the RTC, petitioners could have questioned the authenticity of the
document and submitted the same to the National Bureau of Investigation for
comparison of the signatures. This, they failed to do.49

In fine, the Adjudication and Absolute Sale of a Parcel of Registered Land, being a
notarized document, enjoys the presumption of regularity. Even assuming that
Conrado truly employed fraud, no proof was presented that respondents, as heirs of
Conrado, were in privy and had knowledge of the misrepresentations. In the absence
of evidence of fraud, the transfer to Conrado of the title of the subject property, and the
subsequent transfer to respondents by virtue of succession,50 must be upheld.

HYDRO
RESOURCES
CONTRACTORS
CORPORATION, petitioner,
vs.
NATIONAL IRRIGATION ADMINISTRATION, respondent.

Even on the subject of ownership, petitioners failed to substantiate their claim.

Petitioners had nothing, other than their bare allegations, that they continuously owned
the subject property. For decades, petitioners lacked the possession and interest to
'recover the subject property. The trial court even noted that petitioners could not
present a single tax declaration receipt as an indicia of their ownership. Based on the
foregoing, petitioners are certainly not entitled to damages on the basis of their
misplaced claim of ownership over the subject property.

DECISION

WHEREFORE, the petition is DENIED. The July 28, 2011 Decision and the February
3, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 122153 are AFFIRMED
in toto.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice

Republic
SUPREME
Manila

of

FIRST DIVISION
G.R. No. 160215

November 10, 2004

the

Philippines
COURT

YNARES-SANTIAGO, J.:
Challenged in this petition for review on certiorari under Rule 45 is the Decision of the
Court of Appeals1 dated October 29, 2002 and its Resolution dated September 24,
20032 in CA-G.R. SP No. 44527,3 reversing the judgment of the Construction Industry
Arbitration Commission (CIAC) dated June 10, 19974 in CIAC Case No. 14-98 in favor
of petitioner Hydro Resources Contractors Corporation.
The facts are undisputed and are matters of record.
In a competitive bidding conducted by the National Irrigation Administration (NIA)
sometime in August 1978, Hydro Resources Contractors Corporation (Hydro) was
awarded Contract MPI-C-25 involving the main civil work of the Magat River MultiPurpose Project. The contract price for the work was pegged at P1,489,146,473.72
with the peso component thereof amounting to P1,041,884,766.99 and the US$
component valued at $60,657,992.37 at the exchange rate of P7.3735 to the dollar or
P447,361,706.73.
On November 6, 1978, the parties signed Amendment No. 1 6 of the contract whereby
NIA agreed to increase the foreign currency allocation for equipment financing from
US$28,000,000.00 for the first and second years of the contract to US$38,000,000.00,
to be made available in full during the first year of the contract to enable the contractor
to purchase the needed equipment and spare parts, as approved by NIA, for the
construction of the project. On April 9, 1980, the parties entered into a Memorandum of
Agreement7 (MOA) whereby they agreed that Hydro may directly avail of the foreign

currency component of the contract for the sole purpose of purchasing necessary
spare parts and equipment for the project. This was made in order for the contractor to
avoid further delays in the procurement of the said spare parts and equipment.
A few months after the MOA was signed, NIA and Hydro entered into a Supplemental
Memorandum of Agreement (Supplemental MOA) to include among the items to be
financed out of the foreign currency portion of the Contract "construction materials,
supplies and services as well as equipment and materials for incorporation in the
permanent works of the Project."8
Work on the project progressed steadily until Hydro substantially completed the project
in 1982 and the final acceptance was made by NIA on February 14, 1984.9
During the period of the execution of the contract, the foreign exchange value of the
peso against the US dollar declined and steadily deteriorated. Whenever Hydro's
availment of the foreign currency component exceeded the amount of the foreign
currency payable to Hydro for a particular period, NIA charged interest in dollars based
on the prevailing exchange rate instead of the fixed exchange rate of P7.3735 to the
dollar. Yet when Hydro received payments from NIA in Philippine Pesos, NIA made
deductions from Hydro's foreign currency component at the fixed exchange rate of
P7.3735 to US$1.00 instead of the prevailing exchange rate.
Upon completion of the project, a final reconciliation of the total entitlement of Hydro to
the foreign currency component of the contract was made. The result of this final
reconciliation showed that the total entitlement of Hydro to the foreign currency
component of the contract exceeded the amount of US dollars required by Hydro to
repay the advances made by NIA for its account in the importation of new equipment,
spare parts and tools. Hydro then requested a full and final payment due to the
underpayment of the foreign exchange portion caused by price escalations and extra
work orders. In 1983, NIA and Hydro prepared a joint computation denominated as the
"MPI-C-2 Dollar Rate Differential on Foreign Component of Escalation." 10 Based on
said joint computation, Hydro was still entitled to a foreign exchange differential of
US$1,353,771.79 equivalent to P10,898,391.17.
Hydro then presented its claim for said foreign exchange differential to NIA on August
12, 198311 but the latter refused to honor the same. Hydro made several 12 demands to

recover its claim until the same was turned down with finality by then NIA Administrator
Federico N. Alday, Jr. on January 6, 1987.13
On December 7, 1994, Hydro filed a request for arbitration with the Construction
Industry Arbitration Commission (CIAC).14 In the said request, Hydro nominated six (6)
arbitrators. The case was docketed as CIAC Case No. 18-94.
NIA filed its Answer with Compulsory Counterclaim15 raising laches, estoppel and lack
of jurisdiction by CIAC as its special defenses. NIA also submitted its six (6) nominees
to the panel of arbitrators. After appointment of the arbitrators, both parties agreed on
the Terms of Reference16 as well as the issues submitted for arbitration.
On March 13, 1995, NIA filed a Motion to Dismiss17 questioning CIAC's jurisdiction to
take cognizance of the case. The latter, however, deferred resolution of the motion and
set the case for hearing for the reception of evidence.18NIA moved19 for reconsideration
but the same was denied by CIAC in an Order dated April 25, 1995.20
Dissatisfied, NIA filed a petition for certiorari and prohibition with the Court of Appeals
where the same was docketed as CA-G.R. SP No. 37180, 21 which dismissed the
petition in a Resolution dated June 28, 1996.22
NIA challenged the resolution of the Court of Appeals before this Court in a special civil
action for certiorari, docketed as G.R. No. 129169.23
Meanwhile, on June 10, 1997, the CIAC promulgated a decision in favor of
Hydro.24 NIA filed a Petition for Review on Appeal before the Court of Appeals, which
was docketed as CA-G.R. SP No. 44527.25
During the pendency of CA-G.R. SP No. 44527 before the Court of Appeals, this Court
dismissed special civil action for certiorari docketed as G.R. No. 129169 on the ground
that CIAC had jurisdiction over the dispute and directed the Court of Appeals to
proceed with reasonable dispatch in the disposition of CA-G.R. SP No. 44527. NIA did
not move for reconsideration of the said decision, hence, the same became final and
executory on December 15, 1999.26
Thereafter, the Court of Appeals rendered the challenged decision in CA-G.R. SP No.
44527, reversing the judgment of the CIAC on the grounds that: (1) Hydro's claim has

prescribed; (2) assuming that Hydro was entitled to its claim, the rate of exchange
should be based on a fixed rate; (3) Hydro's claim is contrary to R.A. No. 529; 27 (4)
NIA's Certification of Non-Forum-Shopping was proper even if the same was signed
only by counsel and not by NIA's authorized representative; and (5) NIA did not
engage in forum-shopping.
Hydro's Motion for Reconsideration was denied in Resolution of September 24, 2003.
Hence, this petition.
Addressing first the issue of prescription, the Court of Appeals, in ruling that Hydro's
claim had prescribed, reasoned thus:
Nevertheless, We find good reason to apply the principle of prescription against
HRCC. It is well to note that Section 25 of the General Conditions of the subject
contract provides (CIAC Decision, p. 15, Rollo, p. 57):
Any controversy or dispute arising out of or relating to this Contract which cannot be
resolved by mutual agreement shall be decided by the Administrator within thirty (30)
calendar days from receipt of a written notice from Contractor and who shall furnish
Contractor a written copy of this decision. Such decision shall be final and conclusive
unless within thirty (30) calendar days from the date of receipt thereof, Contractor shall
deliver to NIA a written notice addressed to the Administrator that he desires that the
dispute be submitted to arbitration. Pending decision from arbitration, Contractor shall
proceed diligently with the performance of the Contract and in accordance with the
decision of the Administrator. (Emphasis and Underscoring Ours)
Both parties admit the existence of this provision in the Contract (Petition, p. 4;
Comment, p. 16; Rollo, pp. 12 and 131). Apropos, the following matters are clear: (1)
any controversy or dispute between the parties arising from the subject contract shall
be governed by the provisions of the contract; (2) upon the failure to arrive at a mutual
agreement, the contractor shall submit the dispute to the Administrator of NIA for
determination; and (3) the decision of the Administrator shall become final and
conclusive, unless within thirty (30) calendar days from the date of receipt thereof, the
Contractor shall deliver to NIA a written notice addressed to the Administrator that he
desires that the dispute be submitted for arbitration.

Prescinding from the foregoing matters, We find that the CIAC erred in granting
HRCC's claim considering that the latter's right to make such demand had clearly
prescribed. To begin with, on January 7, 1986, Cesar L. Tech (NIA's Administrator at
the time) informed HRCC in writing that after a review of the additional points raised by
the latter, NIA confirms its original recommendation not to allow the said claim (Annex
"F"; Rollo, p. 81; CIAC Decision, p. 11; Rollo, p. 53). This should have propelled private
respondent to notify and signify to NIA of intention to submit the dispute to arbitration
pursuant to the provision of the contract. Yet, it did not. Instead it persisted to send
several letters to NIA reiterating the reason for its rejected claim (CIAC Decision, p. 11;
Rollo, p. 53).28
We disagree for the following reasons:
First, the appellate court clearly overlooked the fact that NIA, through then
Administrator Fedrico N. Alday, Jr., denied "with finality" Hydro's claim only on January
6, 1987 in a letter bearing the same date29 which reads:
This refers to your letter dated November 7, 1986 requesting reconsideration on your
claim for payment of the Dollar Rate Differential of Price Escalation in Contract No.
MPI-C-2.
We have reviewed the relevant facts and issues as presented and the additional points
raised in the abovementioned letter in the context of the Contract Documents and we
find no strong and valid reason to reverse the earlier decision of NIA's previous
management denying your claim. Therefore, we regret that we have to reiterate the
earlier official stand of NIA under its letter dated January 7, 1986, that confirms the
original recommendation which had earlier been presented in our 4th Indorsement
dated February 5, 1985 to your office.
In view hereof, we regret to say with finality that the claim cannot be given favorable
consideration. (Emphasis and italics supplied)
Hydro received the above-mentioned letter on January 27, 1987. 30 Pursuant to Section
25 of the Contract's General Conditions (GC-25), Hydro had thirty (30) days from
receipt of said denial, or until February 26, 1987, within which to notify NIA of its desire
to submit the dispute to arbitration.

On February 18, 1987, Hydro sent a letter 31 to NIA, addressed to then NIA
Administrator Federico N. Alday, Jr., manifesting its desire to submit the dispute to
arbitration. The letter was received by NIA on February 19, 1987, which was within the
thirty-day prescriptive period.
Moreover, a circumspect scrutiny of the wording of GC-25 with regard to the thirty-day
prescriptive period shows that said proviso is intended to apply to disputes which
arose during the actual construction of the project and not for controversies which
occured after the project is completed. The rationale for such a stipulation was aptly
explained thus by the CIAC in its Decision in CIAC Case No. 18-94:
In construction contracts, there is invariably a provision for interim settlement of
disputes. The right to settle disputes is given to the owner or his representative, either
an architect or engineer, designated as "owner's representative," only for the purpose
of avoiding delay in the completion of the project. In this particular contract, that right
was reserved to the NIA Administrator. The types of disputes contemplated were those
which may have otherwise affected the progress of the work. It is very clear that this is
the purpose of the limiting periods in this clause that the dispute shall be resolved by
the Administrator within 30 days from receipt of a written notice from the Contractor
and that the Contractor may submit to arbitration this dispute if it does not agree with
the decision of the Administrator, and "Pending decision from arbitration, Contractor
shall proceed diligently with the performance of the Contract and in accordance with
the decision of the Administrator."
In this case, the dispute had arisen after completion of the Project. The reason for the
30-day limitation no longer applies, and we find no legal basis for applying it.
Moreover, in Exhibit "B," NIA Administrator Cesar L. Tech had, instead of rendering an
adverse decision, by signing the document with HRCC's Onofre B. Banson, implicitly
approved the payment of the foreign exchange differential, but this payment could not
be made because of the opinion of Auditor Saldua and later of the Commission on
Audit.32
Second, as early as April 1983, Hydro and NIA, through its Administrator Cesar L.
Tech, prepared the Joint Computation which shows that Hydro is entitled to the foreign
currency differential.33 As correctly found by the CIAC, this computation constitutes a

written acknowledgment of the debt by the debtor under Article 1155 of the Civil Code,
which states:
ART. 1155. The prescription of actions is interrupted when they are filed before the
court, when there is a written extrajudicial demand by the creditors, and when there is
any written acknowledgment of the debt by the debtor. (Emphasis and italics supplied)
Instead of upholding the CIAC's findings on this point, the Court of Appeals ruled that
Cesar L. Tech's act of signing the Joint Computation was an ultra vires act. This again
is patent error. It must be noted that the Administrator is the highest officer of the NIA.
Furthermore, Hydro has been dealing with NIA through its Administrator in all of its
transactions with respect to the contract and subsequently the foreign currency
differential claim. The NIA Administrator is empowered by the Contract to grant or deny
foreign currency differential claims. It would be preposterous for the NIA Administrator
to have the power of granting claims without the authority to verify the computation of
such claims. Finally, the records of the case will show that NIA itself never disputed its
Administrator's capacity to sign the Joint Computation because it knew that the
Administrator, in fact, had such capacity.
Even assuming for the sake of argument that the Administrator had no authority to bind
NIA, the latter is already estopped after repeatedly representing to Hydro that the
Administrator had such authority. A corporation may be held in estoppel from denying
as against third persons the authority of its officers or agents who have been clothed
by it with ostensible or apparent authority.34 Indeed
. . . The rule is of course settled that "[a]lthough an officer or agent acts without, or in
excess of, his actual authority if he acts within the scope of an apparent authority with
which the corporation has clothed him by holding him out or permitting him to appear
as having such authority, the corporation is bound thereby in favor of a person who
deals with him in good faith in reliance on such apparent authority, as where an officer
is allowed to exercise a particular authority with respect to the business, or a particular
branch of it, continuously and publicly, for a considerable time.". . .35
Third, NIA has clearly waived the prescriptive period when it continued to entertain
Hydro's claim regarding new matters raised by the latter in its letters to NIA and then
issuing rulings thereon. In this regard, Article 1112 of the Civil Code provides that:

ART. 1112. Persons with capacity to alienate property may renounce prescription
already obtained, but not the right to prescribe in the future.
Prescription is deemed to have been tacitly renounced when the renunciation results
from acts which imply the abandonment of the right acquired. (Emphasis and italics
supplied)
Certainly, when a party has renounced a right acquired by prescription through its
actions, it can no longer claim prescription as a defense.36
Fourth, even assuming that NIA did not waive the thirty-day prescriptive period, it
clearly waived the effects of such period when it actively participated in arbitration
proceedings through the following acts:
a) On January 6, 1995, NIA voluntarily filed its written appearance, readily submitted
its Answer and asserted its own Counterclaims;
b) In the Compliance which accompanied the Answer, NIA also submitted its six
nominees to the Arbitral Tribunal to be constituted, among of which one was eventually
appointed to the tribunal;
c) NIA also actively participated in the deliberations for and the formulation of the
Terms of Reference during the preliminary conference set by CIAC; and
d) For the purpose of obviating the introduction of testimonial evidence on the
authenticity and due execution of its documentary evidence, NIA even had examined,
upon prior request to Hydro, all of the documents which the latter intended to present
as evidentiary exhibits for the said arbitration case.
We now come to the issue of whether or not the provisions of R.A. No. 529, otherwise
known as an Act To Assure Uniform Value to Philippine Coin And Currency, is
applicable to Hydro's claim.
The Contract between NIA and Hydro is an internationally tendered contract
considering that it was funded by the International Bank for Reconstruction and
Development (IBRD). As a contract funded by an international organization,
particularly one recognized by the Philippines, 37 the contract is exempt from the
provisions of R.A. No. 529. R.A. No. 4100 amended the provisions of R.A. 529 thus:

SECTION 1. Section one of Republic Act Numbered Five hundred and twenty-nine,
entitled "An Act to Assure Uniform Value of Philippine Coin and Currency," is hereby
amended to read as follows:
Sec. 1. Every provision contained in, or made with respect to, any domestic obligation
to wit, any obligation contracted in the Philippines which provisions purports to give the
obligee the right to require payment in gold or in a particular kind of coin or currency
other than Philippine currency or in an amount of money of the Philippines measured
thereby, be as it is hereby declared against public policy, and null, void, and of no
effect, and no such provision shall be contained in, or made with respect to, any
obligation hereafter incurred. The above prohibition shall not apply to (a) transactions
where the funds involved are the proceeds of loans or investments made directly or
indirectly, through bona fide intermediaries or agents, by foreign governments, their
agencies and instrumentalities, and international financial and banking institutions so
long as the funds are identifiable, as having emanated from the sources enumerated
above; (b) transactions affecting high-priority economic projects for agricultural,
industrial and power development as may be determined by the National Economic
Council which are financed by or through foreign funds; (c) forward exchange
transaction entered into between banks or between banks and individuals or juridical
persons; (d) import-export and other international banking, financial investment and
industrial transactions. With the exception of the cases enumerated in items (a), (b),
(c) and (d) in the foregoing provisions, in which bases the terms of the parties'
agreement shall apply, every other domestic obligation heretofore or hereafter
incurred, whether or not any such provision as to payment is contained therein or
made with respect thereto, shall be discharged upon payment in any coin or currency
which at the time of payment is legal tender for public and private debts: Provided,
That if the obligation was incurred prior to the enactment of this Act and required
payment in a particular kind of coin or currency other than Philippine currency, it shall
be discharged in Philippine currency measured at the prevailing rates of exchange at
the time the obligation was incurred, except in case of a loan made in a foreign
currency stipulated to be payable in the same currency in which case the rate of
exchange prevailing at the time of the stipulated date of payment shall prevail. All coin
and currency, including Central Bank notes, heretofore and hereafter issued and

declared by the Government of the Philippines shall be legal tender for all debts, public
and private.

The next issue to be resolved is whether or not Hydro's claim should be computed at
the fixed rate of exchange.

SECTION 2. This Act shall take effect upon its approval. (Emphasis and italics
supplied)

When the MOA41 and the Supplemental MOA42 were in effect, there were instances
when the foreign currency availed of by Hydro exceeded the foreign currency payable
to it for that particular Progress Payment. In instances like these, NIA actually charged
Hydro interest in foreign currency computed at the prevailing exchange rate and not at
the fixed rate. NIA now insists that the exchange rate should be computed according to
the fixed rate and not the escalating rate it actually charged Hydro.

Even assuming ex gratia argumenti that R.A. No. 529 is applicable, it is still erroneous
for the Court of Appeals to deny Hydro's claim because Section 1 of R.A. No. 529
states that only the stipulation requiring payment in foreign currency is void, but not the
obligation to make payment. This can be gleaned from the provision that "every other
domestic obligation heretofore or hereafter incurred" shall be "discharged upon
payment in any coin and currency which at the time is legal tender for public and
private debts." In Republic Resources and Development Corporation v. Court of
Appeals,38 it was held:
. . . it is clear from Section 1 of R.A. No. 529 that what is declared null and void is the
"provision contained in, or made with respect to, any domestic obligation to wit, any
obligation contracted in the Philippines which provision purports to give the obligee the
right to require payment in gold or in a particular kind of coin or currency other than
Philippine currency or in an amount of money of the Philippines measured thereby"
and not the contract or agreement which contains such proscribed provision.
(Emphasis supplied)
More succinctly, we held in San Buenaventura v. Court of Appeals39 that
It is to be noted under the foregoing provision that while an agreement to pay an
obligation in a currency other than Philippine currency is null and void as contrary to
public policy, what the law specifically prohibits is payment in currency other than legal
tender but does not defeat a creditor's claim for payment. A contrary rule would allow a
person to profit or enrich himself inequitably at another's expense. (Emphasis
supplied)
It is thus erroneous for the Court of Appeals to disallow petitioner's claim for foreign
currency differential because NIA's obligation should be converted to Philippine Pesos
which was legal tender at the time.40

Suffice it to state that this flip-flopping stance of NIA of adopting and discarding
positions to suit its convenience cannot be countenanced. A person who, by his deed
or conduct has induced another to act in a particular manner, is barred from adopting
an inconsistent position, attitude or course of conduct that thereby causes loss or
injury to another.43 Indeed, the application of the principle of estoppel is proper and
timely in heading off NIA's efforts at renouncing its previous acts to the prejudice of
Hydro which had dealt with it honestly and in good faith.
. . . A principle of equity and natural justice, this is expressly adopted under Article
1431 of the Civil Code, and pronounced as one of the conclusive presumptions under
Rule 131, Section 3(a) of the Rules of Court, as follows:
Whenever a party has, by his own declaration, act or omission, intentionally and
deliberately led another to believe a particular thing to be true, and to act upon such a
belief he cannot, in any litigation arising out of such declaration, act or omission, be
permitted to falsify it.
Petitioner, having performed affirmative acts upon which the respondents based their
subsequent actions, cannot thereafter refute his acts or renege on the effects of the
same, to the prejudice of the latter. To allow him to do so would be tantamount to
conferring upon him the liberty to limit his liability at his whim and caprice, which is
against the very principles of equity and natural justice44
NIA is, therefore, estopped from invoking the contractual stipulation providing for the
fixed rate to justify a lower computation than that claimed by Hydro. It cannot be
allowed to hide behind the very provision which it itself continuously violated. 45 An

admission or representation is rendered conclusive upon the person making it and

cannot be denied or disproved as against the person relying thereon.46 A party may not
go back on his own acts and representations to the prejudice of the other party who
relied upon them.47
NIA was guilty of forum-shopping. Forum-shopping refers to the act of availing oneself
of several judicial remedies in different courts, either simultaneously or successively,
substantially founded on the same transaction and identical material facts and
circumstances, raising basically the like issues either pending in, or already resolved
by, some other court.48
It has been characterized as an act of malpractice that is prohibited and condemned
as trifling with the courts and abusing their processes. It constitutes improper conduct
which tends to degrade the administration of justice. It has also been described as
deplorable because it adds to the congestion of the heavily burdened dockets of the
courts.49 The test in determining the presence of this pernicious practice is whether in
the two or more cases pending, there is identity of: (a) parties; (b) rights or causes of
action; and (c) reliefs sought.50
Applying the foregoing yardstick to the instant case, it is clear that NIA violated the
prohibition against forum-shopping. Besides filing CA-G.R. SP No. 44527 wherein the
Court of Appeals' decision is the subject of appeal in this proceeding, NIA previously
filed CA-G.R. SP No. 37180 and G.R. No. 129169 which is a special civil action for
certiorari. In all three cases, the parties are invariably Hydro and NIA. In all three
petitions, NIA raised practically the same issues51 and in all of them, NIA's prayer was
the same: to nullify the proceedings commenced at the CIAC.
It must be pointed out in this regard that the first two petitions namely, CA-G.R. SP No.
37180 and G.R. No. 129169 are both original actions. Since NIA failed to file a petition
for review on certiorari under Rule 45 of the Rules of Court challenging the decision of
the appellate court in CA-G.R. SP No. 37180 dismissing its petition, it opted to file an
original action for certiorari under Rule 65 with this Court where the same was
docketed as G.R. No. 129169. For its failure to appeal the judgments in CA-G.R. SP
No. 37180 and G.R. No. 129169, NIA is necessarily bound by the effects of those
decisions. The filing of CA-G.R. SP No. 44527, which raises the issues already passed
upon in both cases is a clear case of forum-shopping which merits outright dismissal.

The issue of whether or not the Certification of Non-Forum Shopping is valid despite
that it was signed by NIA's counsel must be answered in the negative. Applicable is
the ruling in Mariveles Shipyard Corp. v. Court of Appeals, et al.:52
It is settled that the requirement in the Rules that the certification of non-forum
shopping should be executed and signed by the plaintiff or the principal means that
counsel cannot sign said certification unless clothed with special authority to do so.
The reason for this is that the plaintiff or principal knows better than anyone else
whether a petition has previously been filed involving the same case or substantially
the same issues. Hence, a certification signed by counsel alone is defective and
constitutes a valid cause for dismissal of the petition. In the case of natural persons,
the Rule requires the parties themselves to sign the certificate of non-forum shopping.
However, in the case of the corporations, the physical act of signing may be
performed, on behalf of the corporate entity, only by specifically authorized individuals
for the simple reason that corporations, as artificial persons, cannot personally do the
task themselves. . . It cannot be gainsaid that obedience to the requirements of
procedural rule[s] is needed if we are to expect fair results therefrom. Utter disregard
of the rules cannot justly be rationalized by harking on the policy of liberal construction.
(Emphasis and italics supplied)
In this connection, the lawyer must be "specifically authorized" in order to validly sign
the certification.53
In closing, we restate the rule that the courts will not interfere in matters which are
addressed to the sound discretion of government agencies entrusted with the
regulation of activities coming under the special technical knowledge and training of
such agencies.54
An action by an administrative agency may be set aside by the judicial department
only if there is an error of law, abuse of power, lack of jurisdiction or grave abuse of
discretion clearly conflicting with the letter and spirit of the law. 55 In the case at bar,
there is no cogent reason to depart from the general rule because the action of the
CIAC conforms rather than conflicts with the governing statutes and controlling case
law on the matter.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CAG.R. SP No. 44527 dated October 29, 2002 and the Resolution dated September 24,
2003 are REVERSED and SET ASIDE. The Decision of the Construction Industry
Arbitration Commission dated June 10, 1997 in CIAC Case No. 18-94 is
REINSTATED.
SO ORDERED.
Republic
SUPREME
Manila

of

the

Philippines
COURT

petitioner a right-of-way over a portion of the subject property. Wooden electrical posts
and transmission lines were to be installed for the electrification of Puerto Azul. The
respondents acceded to this request upon the condition that the said installation would
only be temporary in nature. The petitioner assured the respondents that the
arrangement would be temporary and that the wooden electric posts would be
relocated as soon as permanent posts and transmission lines shall have been
installed. Contrary to the verbal agreement of the parties, however, the petitioner
continued to use the subject property for its wooden electrical posts and transmission
lines without compensating the respondents therefor.3

The petition at bar stemmed from the following antecedents:

The complaint likewise alleged that some time in 1994, the petitioners agents
trespassed on the subject property and conducted engineering surveys thereon. The
respondents caretaker asked these agents to leave the property. Thereafter, in 1995,
a certain "Mr. Raz," who claimed to be the petitioners agent, went to the office of
respondent Jose C. Campos, Jr., then Associate Justice of the Supreme Court, and
requested permission from the latter to enter the subject property and conduct a
survey in connection with the petitioners plan to erect an all-steel transmission line
tower on a 24-square meter area inside the subject property. Respondent Jose
Campos, Jr., refused to grant the permission and expressed his preference to talk to
the Chief of the Calaca Sub-station or the head of the petitioners Quezon City office.
The respondents did not hear from "Mr. Raz" or any one from the petitioners office
since then. Sometime in July or August of 1995, the petitioners agents again
trespassed on the subject property, presenting to the respondents caretaker a letter of
authority purportedly written by respondent Jose C. Campos, Jr. When the caretaker
demanded that the letter be given to him for verification with respondent Jose C.
Campos, Jr. himself, the petitioners agents refused to do so. Consequently, the
caretaker ordered the agents to leave the subject property.4

On February 2, 1996, the respondents filed with the court a quo an action for sum of
money and damages against the petitioner. In their complaint, the respondents alleged
that they are the owners of a parcel of land situated in Bo. San Agustin, Dasmarias,
Cavite, consisting of 66,819 square meters ("subject property") covered by Transfer
Certificate of Title (TCT) No. T-957323. Sometime in the middle of 1970, Dr. Paulo C.
Campos, who was then the President of the Cavite Electric Cooperative and brother of
respondent Jose C. Campos, Jr., verbally requested the respondents to grant the

The complaint further alleged that on December 12, 1995, the petitioner instituted an
expropriation case involving the subject property before the RTC of Imus, Cavite,
Branch 22. The case was docketed as Civil Case No. 1174-95. The petitioner alleged
in its complaint therein that the subject property was selected "in a manner compatible
with the greatest public good and the least private injury" and that it (petitioner) had
tried to negotiate with the respondents for the acquisition of the right-of-way easement
on the subject property but that the parties failed to reach an amicable settlement.5

SECOND DIVISION
G.R. No. 143643

June 27, 2003

NATIONAL
POWER
CORPORATION, petitioner,
vs.
SPS. JOSE C. CAMPOS, JR. and MA. CLARA LOPEZ-CAMPOS, respondents.
CALLEJO, SR., J.:
This is a petition for review of the Decision1 dated June 16, 2000 of the Court of
Appeals in CA-G.R. CV No. 54265. The assailed decision affirmed in toto the
Decision2 of the Regional Trial Court (RTC) of Quezon City, Branch 98, which ordered
petitioner National Power Corporation to pay, among others, actual, moral and nominal
damages in the total amount of P1,980,000 to respondents Spouses Jose C. Campos,
Jr. and Ma. Clara A. Lopez-Campos.

The respondents maintained that, contrary to the petitioners allegations, there were
other more suitable or appropriate sites for the petitioners all-steel transmission lines
and that the petitioner chose the subject property in a whimsical and capricious
manner. The respondents averred that the proposed right-of-way was not the least
injurious to them as the system design prepared by the petitioner could be further
revised to avoid having to traverse the subject property. The respondents vigorously
denied negotiating with the petitioner in connection with the latters acquisition of a
right-of-way on the subject property.6
Finally, the complaint alleged that unaware of the petitioners intention to expropriate a
portion of the subject property, the respondents sold the same to Solar Resources, Inc.
As a consequence, the respondents stand to lose a substantial amount of money
derived from the proceeds of the sale of the subject property should the buyer (Solar
Resources, Inc.) decide to annul the sale because of the contemplated expropriation of
the subject property.7
The complaint a quo thus prayed that the petitioner be adjudged liable to pay the
respondents, among others, actual, nominal and moral damages:
WHEREFORE, premises considered, it is respectfully prayed that the Honorable Court
award the plaintiffs:
a. Actual damages for the use of defendants property since middle 1970s, including
legal interest thereon, as may be established during the trial;
b. P1,000,000.00 as nominal damages;
c. P1,000,000.00 as moral damages;
d. Lost business opportunity as may be established during the trial;
e. P250,000.00 as attorneys fees;
f. Costs of suit.
Plaintiffs pray for other, further and different reliefs as may be just and equitable under
the premises.8

Upon receipt of the summons and complaint, the petitioner moved for additional time
to file its responsive pleading. However, instead of filing an answer to the complaint,
the petitioner filed a motion to dismiss on the ground that the action had prescribed
and that there was another action pending between the same parties for the same
cause (litis pendencia). The respondents opposed said motion. On May 2, 1996, the
RTC issued an order denying the petitioners motion to dismiss.
The petitioner then moved for reconsideration of the aforesaid order. The respondents
opposed the same and moved to declare the petitioner in default on the ground that its
motion for reconsideration did not have the required notice of hearing; hence, it did not
toll the running of the reglementary period to file an answer.
On July 15, 1996, the RTC issued an order denying the petitioners motion for
reconsideration. Subsequently, on July 24, 1996, it issued another order granting the
respondents motion and declared the petitioner in default for its failure to file an
answer. The petitioner filed a motion to set aside the order of default but the same was
denied by the RTC.
The petitioner filed a petition for certiorari, prohibition and preliminary injunction with
the Court of Appeals, docketed as CA-G.R. SP No. 41782, assailing the May 2, 1996,
July 15, 1996 and July 24, 1996 Orders issued by the RTC as having been issued with
grave abuse of discretion and to enjoin it from proceeding with the case. On February
13, 1996, the CA dismissed the petition for certiorari, prohibition and preliminary
injunction filed by the petitioner in CA-G.R. SP No. 41782.
In the meantime, the respondents adduced their evidence ex parte in the RTC. As
synthesized by the trial court, the respondents adduced evidence, thus:
From the evidence thus far submitted, it appears that the plaintiffs spouses, both of
whom professional of high standing in society, are the absolute owners of a certain
parcel of land situated in Bo. San Agustin, Dasmarias, Cavite, consisting of 66,819
square meters, more or less, covered and embraced in TCT No. T-95732. Sometime in
the mid-1970, Dr. Paulo C. Campos, brother of Justice Jose Campos, Jr., then
President of the Cavite Electric Cooperative, approached the latter and confided to him
the desire of the National Power Corporation to be allowed to install temporary wooden
electric posts on the portion of his wifes property in order that the high-tension

transmission line coming from Kaliraya passing thru that part of Cavite can be
continued to the direction of Puerto Azul.
Having heard the plea of his brother and the fact that National Power Corporation was
under pressure because at the time that Puerto Azul was being developed there was
no electricity nor was there electrical lines towards that place and acting on the belief
that the installation of wooden electric posts would be temporary in nature, plaintiffs
gave oral permission for the NPC personnel to enter the said parcel of land. Dr. Paulo
C. Campos, assured him that it was just a temporary measure to meet the emergency
need of the Puerto Azul and that the wooden electric posts will be relocated when a
permanent posts and transmission lines shall have been installed. Pursuant to their
understanding, the National Power Corporation installed wooden posts across a
portion of plaintiffs property occupying a total area of about 2,000 square meters more
or less. To date, defendant NPC has been using the plaintiffs property for its wooden
electrical posts and transmission lines; that the latter has estimated that the aggregate
rental (which they peg at the conservative rate of P1.00 per square meter) of the 2,000
square meters for twenty-four (24) years period, would amount to the aggregate sum
of P480,000.00.
From the time National Power Corporation installed those temporary wooden posts, no
notice was ever served upon the plaintiffs of their intention to relocate the same or to
install permanent transmission line on the property. Also, there was no personal
contact between them. However, in late 1994, plaintiffs overseer found a group of
persons of the defendant NPC conducting survey inside the said property, and were
asked to leave the premises upon being discovered that they have no authority to do
so from the owners thereof. Subsequently thereafter, or sometime in 1995, a person by
the name of Mr. Paz, bearing a letter from Calaca Regional Office, went to see Justice
Jose C. Campos, Jr. in his office, informing the latter that he was authorized by the
National Power Corporation to acquire private lands. In the same breath, Mr. Paz
requested his permission to let NPC men enter the subject property and to conduct a
survey in connection with its plan to erect an all steel transmission line tower on a 24
square meter area inside plaintiffs property, but same was denied. Justice Campos,
however, expressed his preference to talk instead to the Chief of the Calaca Substation or the Head of the NPC, Quezon City office. Since then, nothing however
transpired.

Sometime in July or August 1995, plaintiffs learned that defendants agents again
entered the subject property. This time, they have presented to the caretaker a letter of
authority supposedly from Justice Jose C. Campos, Jr. And, when prodded to see the
letter for verification, defendants agents refused to do so. So, they were ordered out of
the vicinity. Plaintiffs stressed that defendants repeated intrusions into their property
without their expressed knowledge and consent had impugned on their constitutional
right to protection over their property.
Later, on December 12, 1995, plaintiffs received copy of summons and complaint in
Civil Case No. 1174-95 filed by the defendant before the Regional Trial Court, Fourth
Judicial Region, Branch 22, Imus, Cavite for the expropriation of 5,320 square meters
of plaintiffs above-described property to be used as right-of-way for the all-steel
transmission line tower of the Calaca-Dasmarias 230 KV T/L Project. But what had
caused plaintiffs discomfiture is the allegation in said complaint stating that the "parcel
of land sought to be expropriated has not been applied to nor expropriated for any
public use and is selected by plaintiff in a manner compatible with the greatest good
and the least private injury" and that defendant "had negotiated with (plaintiffs) for the
acquisition of the right-of-way easement over the portion of the same for the public
purpose as above-stated at a price prescribed by law, but failed to reach an agreement
with them notwithstanding the repeated negotiations between the parties".
Plaintiffs assert that at no instance was there a negotiation between them and the
NPC or its representative. The alleged "talk" initiated by Mr. Paz with Justice Campos,
Jr. just ended in the latters remonstrance and in prevailing upon the former of his
preference to discuss the matter with a more responsible officer of the National Power
Corporation, such as the Chief of the Calaca Sub-Station or the Head of NPCs Office
in Quezon City. But plaintiffs plea just fell on the deaf ear. The next thing they know
was Civil Case No. Q-1174-95 already filed in court. A party to a case shall not do
falsehood nor shall mislead or misrepresent the contents of its pleading. That gross
misrepresentation had been made by the National Power Corporation in their said
pleading is irrefutable.
Plaintiffs-spouses Campos declared that there are other areas more suitable or
appropriate that can be utilized as alternative sites for the all-steel transmission line
tower. Just a few meters from the planned right-of-way is an abandoned road occupied

by squatters; it is a government property and the possession of which the NPC need
not compensate. The latter had not exercised judiciously in the proper selection of the
property to be appropriated. Evidently, NPCs choice was whimsical and capricious.
Such arbitrary selection of plaintiffs property despite the availability of another property
in a manner compatible with the greatest public good and the least private injury,
constitutes an impermissible encroachment of plaintiffs proprietary rights and their
right to due process and equal protection.

WHEREFORE, in view of the foregoing consideration, justment [sic] is hereby

rendered in favor of the plaintiffs, condemning the defendant to pay

Concededly, NPCs intention is to expropriate a portion of plaintiffs property. This

limitation on the right of ownership is the paramount right of the National Power
Corporation granted by law. But before a person can be deprived of his property
through the exercise of the power of eminent domain, the requisites of law must strictly
be complied with. (Endencia vs. Lualhati, 9 Phil. 177) No person shall be deprived of
his property except by competent authority and for public use and always upon
payment of just compensation. Should this requirement be not first complied with, the
courts shall protect and, in a proper case, restore the owner in his possession. (Art.
433 Civil Code of the Philippines)

(d) One Hundred Fifty Thousand Pesos (P150,000.00) as attorneys fees; and

Records disclose that in breach of such verbal promise, defendant NPC had not
withdrawn the wooden electrical posts and transmission lines; said wooden electrical
posts and transmission lines still occupy a portion of plaintiffs property; that the NPC
had benefited from them for a long period of time already, sans compensation to the
owners thereof.
Without first complying with the primordial requisites appurtenant to the exercise of the
power of eminent domain, defendant NPC again boldly intruded into plaintiffs property
by conducting engineering surveys with the end in view of expropriating 5,320 square
meters thereof to be used as right-of-way for the all-steel transmission line tower of the
Calaca-Dasmarias 230 KV T/L Project. Such acts constitute a deprivation of ones
property for public use without due compensation. It would therefore seem that the
expropriation had indeed departed from its own purpose and turns out to be an
instrument to repudiate compliance with obligation legally and validly contracted.9
On September 26, 1996, the RTC rendered a decision finding the petitioner liable for
damages to the respondents. The dispositive portion of the RTC decision reads:

(a) Actual damages of P480,000.00 for the use of plaintiffs property;

(b) One Million Pesos (P1,000,000.00) as moral damages;
(c ) Five Hundred Thousand Pesos (P500,000.00) as nominal damages;

(e) Costs of suit in the amount of P11,239.00.

SO ORDERED.10
The petitioner appealed the decision to the Court of Appeals which on June 16, 1990
rendered a decision affirming the ruling of the RTC.
Essentially, the CA held that the respondents claim for compensation and damages
had not prescribed because Section 3(i) of the petitioners Charter, Republic Act No.
6395, as amended, is not applicable to the case. The CA likewise gave scant
consideration to the petitioners claim that the respondents complaint should be
dismissed on the ground of litis pendencia. According to the CA, the complaint a
quo was the more appropriate action considering that the venue for the expropriation
case (Civil Case No. 1174-95) was initially improperly laid. The petitioner filed the
expropriation proceedings with the RTC in Imus, Cavite, when the subject property is
located in Dasmarias, Cavite. Moreover, the parties in the two actions are not the
same since the respondents were no longer included as defendants in the petitioners
amended complaint in the expropriation case (Civil Case No. 1174-95) but were
already replaced by Solar Resources, Inc., the buyer of the subject property, as
defendant therein.
The CA likewise found the damages awarded by the RTC in favor of the respondents
just and reasonable under the circumstances obtaining in the case.
The petitioner now comes to this Court seeking to reverse and set aside the assailed
decision. The petitioner alleges as follows:

I
The Court of Appeals grievously erred and labored under a gross misapprehension of
fact in finding that the Complaint below should not be dismissed on the ground of
prescription.
II
The Court of Appeals erred in affirming the award of nominal and moral damages,
attorneys fees and costs of litigation.11
Citing Article 620 of the Civil Code, the petitioner contends that it had already acquired
the easement of right-of-way over the portion of the subject property by prescription,
the said easement having been allegedly continuous and apparent for a period of
about twenty-three (23) years, i.e., from about the middle of 1970 to the early part of
1994. The petitioner further invokes Section 3(i) of its Charter in asserting that the
respondents already waived their right to institute any action for compensation and/or
damages concerning the acquisition of the easement of right-of-way in the subject
property. Accordingly, the petitioner concludes that the award of damages in favor of
the respondents is not warranted.
The petition is bereft of merit.
The petitioners claim that, under Article 620 of the Civil Code, it had already acquired
by prescription the easement of right-of-way over that portion of the subject property
where its wooden electric posts and transmission lines were erected is untenable.
Article 620 of the Civil Code provides that:
Art. 620. Continuous and apparent easements are acquired either by virtue of a title or
by prescription of ten years.
Prescription as a mode of acquisition requires the existence of the following: (1)
capacity to acquire by prescription; (2) a thing capable of acquisition by prescription;
(3) possession of the thing under certain conditions; and (4) lapse of time provided by
law.12 Acquisitive prescription may either be ordinary, in which case the possession
must be in good faith and with just title, 13 or extraordinary, in which case there is
neither good faith nor just title. In either case, there has to be possession which must

be in the concept of an owner, public, peaceful and uninterrupted. 14 As a corollary,

Article 1119 of the Civil Code provides that:
Art. 1119. Acts of possessory character executed in virtue of license or by mere
tolerance of the owner shall not be available for the purposes of possession.
In this case, the records clearly reveal that the petitioners possession of that portion of
the subject property where it erected the wooden posts and transmission lines was
merely upon the tolerance of the respondents. Accordingly, this permissive use by the
petitioner of that portion of the subject property, no matter how long continued, will not
create an easement of right-of-way by prescription. The case of Cuaycong vs.
Benedicto15 is particularly instructive. In that case, the plaintiffs for more than twenty
years made use of the road that passed through the hacienda owned by the
defendants, being the only road that connected the plaintiffs hacienda to the public
road. The defendants closed the road in question and refused the use of the same
unless a toll was paid. The plaintiffs therein brought an action to enjoin the defendants
from interfering with the use of the road. In support of their action, the plaintiffs
presented evidence tending to show that they have acquired the right-of-way through
the road by prescription. This Court rejected the contention, holding as follows:
Had it been shown that the road had been maintained at the public expense, with the
acquiescence of the owners of the estates crossed by it, this would indicate such
adverse possession by the government as in course of time would ripen into title or
warrant the presumption of a grant or of a dedication. But in this case there is no such
evidence, and the claims of plaintiffs, whether regarded as members of the public
asserting a right to use the road as such, or as persons claiming a private easement of
way over the land of another must be regarded as resting upon the mere fact of user.
If the owner of a tract of land, to accommodate his neighbors or the public in general,
permits them to cross his property, it is reasonable to suppose that it is not his
intention, in so doing, to divest himself of the ownership of the land so used, or to
establish an easement upon it, and that the persons to whom such permission, tacit or
express, is granted, do not regard their privilege of use as being based upon anything
more than the mere tolerance of the owner. Clearly, such permissive use is in its
inception based upon an essentially revocable license. If the use continues for a long
period of time, no change being made in the relations of the parties by any express or

implied agreement, does the owner of the property affected lose his right of
revocation? Or, putting the same question in another form, does the mere permissive
use ripen into title by prescription?

lines was due merely to the tacit license and tolerance of the respondents. As such, it
cannot be made the basis of the acquisition of an easement of right-of-way by
prescription.

It is a fundamental principle of the law in this jurisdiction concerning the possession of

real property that such possession is not affected by acts of a possessory character
which are "merely tolerated" by the possessor, which are or due to his license (Civil
Code, arts. 444 and 1942). This principle is applicable not only with respect to the
prescription of the dominium as a whole, but to the prescription of right in rem. In the
case of Cortes vs. Palanca Yu-Tibo (2 Phil. Rep., 24, 38), the Court said:

Neither can the petitioner invoke Section 3(i) of its Charter (Rep. Act No. 6395, as
amended) to put up the defense of prescription against the respondents. The said
provision reads in part:

The provision of article 1942 of the Civil Code to the effect that acts which are merely
tolerated produce no effect with respect to possession is applicable as much to the
prescription of real rights as to the prescription of the fee, it being a glaring and selfevident error to affirm the contrary, as does the appellant in his motion papers.
Possession is the fundamental basis of prescription. Without it no kind of prescription
is possible, not even the extraordinary. Consequently, if acts of mere tolerance
produce no effect with respect to possession, as that article provides, in conformity
with article 444 of the same Code, it is evident that they can produce no effect with
respect to prescription, whether ordinary or extraordinary. This is true whether the
prescriptive acquisition be of a fee or of real rights, for the same reason holds in one
and the other case; that is, that there has been no true possession in the legal sense
of the word. (Citations omitted)
Possession, under the Civil Code, to constitute the foundation of a prescriptive right,
must be possession under claim of title (en concepto de dueo), or to use the common
law equivalent of the term, it must be adverse. Acts of possessory character performed
by one who holds by mere tolerance of the owner are clearly not en concepto de
dueo, and such possessory acts, no matter how long so continued, do not start the
running of the period of prescription.16
Following the foregoing disquisition, the petitioners claim that it had acquired the
easement of right-of-way by prescription must perforce fail. As intimated above,
possession is the fundamental basis of prescription, whether ordinary or extraordinary.
The petitioner never acquired the requisite possession in this case. Its use of that
portion of the subject property where it erected the wooden poles and transmission

Sec. 3(i). The Corporation or its representatives may also enter upon private
property in the lawful performance or prosecution of its business or purposes, including
the construction of transmission lines thereon; Provided, that the owner of such private
property shall be paid the just compensation therefor in accordance with the provisions
hereinafter provided; Provided, further, that any action by any person claiming
compensation and/or damages shall be filed within five years after the right-of-way,
transmission lines, substations, plants or other facilities shall have been established:
Provided, finally, that after the said period no suit shall be brought to question the said
right-of-way, transmission lines, substations, plants or other facilities nor the amounts
of compensation and/or damages involved;
Two requisites must be complied before the above provision of law may be invoked:
1. The petitioner entered upon the private property in the lawful performance or
prosecution of its businesses or purposes; and
2.The owner of the private property shall be paid the just compensation therefor.
As correctly asserted by the respondents, Section 3(i) of Rep. Act No. 6395, as
amended, presupposes that the petitioner had already taken the property through a
negotiated sale or the exercise of the power of eminent domain, and not where, as in
this case, the petitioner was merely temporarily allowed to erect wooden electrical
posts and transmission lines on the subject property. Significantly, the provision uses
the term "just compensation," implying that the power of eminent domain must first be
exercised by the petitioner in accordance with Section 9, Article III of the Constitution,
which provides that "no private property shall be taken for public use without just
compensation."
This Courts ruling in Lopez vs. Auditor General17 is likewise in point:

The petitioner brought this case to this Court on the sole issue of prescription. He
cites Alfonso vs. Pasay Cityin which a lot owner was allowed to bring an action to
recover compensation for the value of his land, which the Government had taken for
road purposes, despite the lapse of thirty years (1924-1954). On the other hand, the
respondents base their defense of prescription on Jaen vs. Agregado which held an
action for compensation for land taken in building a road barred by prescription
because it was brought after more than ten years (i.e., thirty three years, from 1920 to
1953). They argue that the ruling in Alfonso cannot be applied to this case because,
unlike Alfonso who made repeated demands for compensation within ten years,
thereby interrupting the running of the period of prescription, the petitioner here filed
his claim only in 1959.
It is true that in Alfonso vs. Pasay City this Court made the statement that "registered
lands are not subject to prescription and that on grounds of equity, the government
should pay for private property which it appropriates though for the benefit of the
public, regardless of the passing of time." But the rationale in that case is that where
private property is taken by the Government for public use without first acquiring title
thereto either through expropriation or negotiated sale, the owners action to recover
the land or the value thereof does not prescribe. This is the point that has been
overlooked by both parties.
On the other hand, where private property is acquired by the Government and all that
remains is the payment of the price, the owners action to collect the price must be
brought within ten years otherwise it would be barred by the statue of limitations.18
Thus, the five-year period provided under Section 3(i) of Rep. Act No. 6395, as
amended, within which all claims for compensation and/or damages may be allowed
against the petitioner should be reckoned from the time that it acquired title over the
private property on which the right-of-way is sought to be established. Prior thereto,
the claims for compensation and/or damages do not prescribe. In this case, the
findings of the CA is apropos:
Undeniably, NPC never acquired title over the property over which its wooden
electrical posts and transmission lines were erected. It never filed expropriation
proceedings against such property. Neither did it negotiate for the sale of the same. It
was merely allowed to temporarily enter into the premises. As NPCs entry was gained

through permission, it had no intention to acquire ownership either by voluntary

purchase or by the exercise of eminent domain.19
The petitioner instituted the expropriation proceedings only on December 12, 1995.
Indisputably, the petitioner never acquired title to that portion of the subject property
where it erected the wooden electrical posts and transmission lines. Until such time,
the five-year prescriptive period within which the respondents right to file an action to
claim for compensation and/or damages for the petitioners use of their property does
not even commence to run. The CA thus correctly ruled that Section 3(i) of Rep. Act
No. 6395, as amended, finds no application in this case and that the respondents
action against the petitioner has not prescribed.
With respect to the damages awarded in favor of the respondents, the petitioner avers,
thus:
The Court of Appeals erred in affirming the award of nominal and moral damages,
attorneys fees and costs of litigation.
It follows from Section 31(c) of R.A. 6395 that the award moral and nominal damages,
as well as attorneys fees and costs are baseless. The right to claim them has likewise
prescribed.20
With our ruling that the claims of the respondents had not prescribed, the petitioners
contention that the respondents are not entitled to moral and nominal damages and
attorneys fees must fail. In affixing the award for moral and nominal damages and
attorneys fees, the CA ratiocinated:
With respect to the fourth assignment of error, this Court is not persuaded to reverse
much less modify the court a quos findings.
An award of moral damages would require certain conditions to be met, to wit: (1) first,
there must be an injury, whether physical, mental or psychological, clearly sustained
by the claimant; (2) second, there must be a culpable act or omission factually
established; (3) third, the wrongful act or omission of the defendant is the proximate
cause of the injury sustained by the claimant; and (4) fourth, the award of damages is
predicated on any of the cases stated in Article 2219 of the Civil Code.

NPC made it appear that it negotiated with the appellees when no actual negotiations
took place. This allegation seriously affected the on-going sale of the property to Solar
Resources, Inc. as appellees seemed to have sold the property knowing fully well that
a portion thereof was being expropriated. Such an act falls well within Article 21 of the
Civil Code. NPCs subterfuge certainly besmirched the reputation and professional
standing of Justice Jose C. Campos, Jr. and Professor Maria Clara A. Lopez-Campos,
and caused them physical suffering, mental anguish, moral shock and wounded
feelings.
The records show that Justice Campos career included, among other[s], being a
Professor of Law at the University of the Philippines; Acting Chairman of the Board of
Transportation; Presiding Judge of the Court of First Instance of Pasay City, and
Associate Justice of the Court of Appeals. Such career reached its apex when he was
appointed Associate Justice of the Supreme Court in 1992. Justice Campos was a
member of the Judicial and Bar Council when NPC filed its Civil Case No. 1174-95.
Professor Maria Clara A. Lopez-Campos is a noted authority in Corporate and Banking
Laws and is a Professor Emerita of the University of the Philippines from 1981 to the
present. She had taught more than three decades at the College of Law. Against such
backdrop, it does not take too much imagination to conclude that the oppressive and
wanton manner in which NPC sought to exercise its statutory right of eminent domain
warranted the grant of moral damages.
On the award of nominal damages, such are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
by him. As previously discussed, it does not brood well for a government entity such as
NPC to disregard the tenets of private property enshrined in the Constitution. NPC not
only intentionally trespassed on appellees property and conducted engineering
surveys thereon but also sought to fool the appellees caretaker by claiming that such
entry was authorized. Moreover, NPC even justifies such trespass as falling under its
right to expropriate the property. Under the circumstances, the award of nominal
damages is sustained.
That NPCs highhanded exercise of its right of eminent domain constrained the
appellees to engage the services of counsel is obvious. As testified upon, the

appellees engaged their counsel for an agreed fee of P250,000.00. The trial court
substantially reduced this to P150,000.00. Inasmuch as such services included not
only the present action but also those for Civil Case No. 1174-95 erroneously filed by
NPC with the Regional Trial Court of Imus, Cavite, and the Petition for Certiorari in CAGR No. 41782, this Court finds such attorneys fees to be reasonable and equitable.21
We agree with the CA.
The award of moral damages in favor of the respondents is proper given the
circumstances obtaining in this case. As found by the CA:
NPC made it appear that it negotiated with the appellees when no actual negotiation
took place. This allegation seriously affected the on-going sale of the property to Solar
Resources, Inc. as appellees seemed to have sold the property knowing fully well that
a portion thereof was being expropriated. Such an act falls well within Article 21 of the
Civil Code. NPCs subterfuge certainly besmirched the reputation and professionally
standing of Justice Jose C. Campos, Jr. and Professor Maria Clara A. Lopez-Campos,
and caused them physical suffering, mental anguish, moral shock and wounded
feelings.
The records show that Justice Campos career included, among other[s], being a
Professor of Law at the University of the Philippines; Acting Chairman of the Board of
Transportation; Presiding Judge of the Court of First Instance of Pasay City, and
Associate Justice of the Court of Appeals. Such career reached its apex when he was
appointed Associate Justice of the Supreme Court in 1992. Justice Campos was a
member of the Judicial and Bar Council when NPC filed its Civil Case No. 1174-95.
Professor Maria Clara A. Lopez-Campos is a noted authority in Corporate and Banking
Laws and is a Professor Emerita of the University of the Philippines from 1981 to the
present. She had taught more than three decades at the College of Law. Against such
backdrop, it does not take too much imagination to conclude that the oppressive and
wanton manner in which NPC sought to exercise its statutory right of eminent domain
warranted the grant of moral damages.22
Further, nominal damages are adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for any loss suffered by him. 23 Similarly,

the court may award nominal damages in every case where any property right has
been invaded.24 The petitioner, in blatant disregard of the respondents proprietary
right, trespassed the subject property and conducted engineering surveys thereon. It
even attempted to deceive the respondents caretaker by claiming that its agents were
authorized by the respondents to enter the property when in fact, the respondents
never gave such authority. Under the circumstances, the award of nominal damages is
likewise warranted.
Finally, the award of attorneys fees as part of damages is deemed just and equitable
considering that by the petitioners unjustified acts, the respondents were obviously
compelled to litigate and incur expenses to protect their interests over the subject
property.25
WHEREFORE, the petition is hereby DENIED for lack of merit. The assailed Decision
dated June 16, 2000 of the Court of Appeals in CA-G.R. CV No. 54265
is AFFIRMED in toto.
SO ORDERED.
Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R. No. 179987

September 3, 2013

HEIRS
OF
MARIO
MALABANAN,
(Represented
Malabanan), Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

by

Sally

A.

RESOLUTION

ruling of the Court of Appeals (CA) denying the application of the petitioners for the
registration of a parcel of land situated in Barangay Tibig, Silang, Cavite on the ground
that they had not established by sufficient evidence their right to the registration in
accordance with either Section 14(1) or Section 14(2) of Presidential Decree No. 1529
(Property Registration Decree).
Antecedents
The property subject of the application for registration is a parcel of land situated in
Barangay Tibig, Silang Cavite, more particularly identified as Lot 9864-A, Cad-452-D,
with an area of 71,324-square meters. On February 20, 1998, applicant Mario
Malabanan, who had purchased the property from Eduardo Velazco, filed an
application for land registration covering the property in the Regional Trial Court (RTC)
in Tagaytay City, Cavite, claiming that the property formed part of the alienable and
disposable land of the public domain, and that he and his predecessors-in-interest had
been in open, continuous, uninterrupted, public and adverse possession and
occupation of the land for more than 30 years, thereby entitling him to the judicial
confirmation of his title.1
To prove that the property was an alienable and disposable land of the public domain,
Malabanan presented during trial a certification dated June 11, 2001 issued by the
Community Environment and Natural Resources Office (CENRO) of the Department of
Environment and Natural Resources (DENR), which reads:
This is to certify that the parcel of land designated as Lot No. 9864 Cad 452-D, Silang
Cadastre as surveyed for Mr. Virgilio Velasco located at Barangay Tibig, Silang, Cavite
containing an area of 249,734 sq. meters as shown and described on the Plan Ap-0400952 is verified to be within the Alienable or Disposable land per Land Classification
Map No. 3013 established under Project No. 20-A and approved as such under FAO 41656 on March 15, 1982.2

BERSAMIN, J.:

After trial, on December 3, 2002, the RTC rendered judgment granting Malabanans
application for land registration, disposing thusly:

For our consideration and resolution are the motions for reconsideration of the parties
who both assail the decision promulgated on April 29, 2009, whereby we upheld the

WHEREFORE, this Court hereby approves this application for registration and thus
places under the operation of Act 141, Act 496 and/or P.D. 1529, otherwise known as

Property Registration Law, the lands described in Plan Csd-04-0173123-D, Lot 9864-A
and containing an area of Seventy One Thousand Three Hundred Twenty Four
(71,324) Square Meters, as supported by its technical description now forming part of
the record of this case, in addition to other proofs adduced in the name of MARIO
MALABANAN, who is of legal age, Filipino, widower, and with residence at Munting
Ilog, Silang, Cavite.
Once this Decision becomes final and executory, the corresponding decree of
registration shall forthwith issue.
SO ORDERED.3
The Office of the Solicitor General (OSG) appealed the judgment to the CA, arguing
that Malabanan had failed to prove that the property belonged to the alienable and
disposable land of the public domain, and that the RTC erred in finding that he had
been in possession of the property in the manner and for the length of time required by
law for confirmation of imperfect title.
On February 23, 2007, the CA promulgated its decision reversing the RTC and
dismissing the application for registration of Malabanan. Citing the ruling in Republic v.
Herbieto (Herbieto),4 the CA declared that under Section 14(1) of the Property
Registration Decree, any period of possession prior to the classification of the land as
alienable and disposable was inconsequential and should be excluded from the
computation of the period of possession. Noting that the CENRO-DENR certification
stated that the property had been declared alienable and disposable only on March 15,
1982, Velazcos possession prior to March 15, 1982 could not be tacked for purposes
of computing Malabanans period of possession.
Due to Malabanans intervening demise during the appeal in the CA, his heirs elevated
the CAs decision of February 23, 2007 to this Court through a petition for review on
certiorari.
The petitioners assert that the ruling in Republic v. Court of Appeals and Corazon
Naguit5 (Naguit) remains the controlling doctrine especially if the property involved is
agricultural land. In this regard, Naguit ruled that any possession of agricultural land
prior to its declaration as alienable and disposable could be counted in the reckoning

of the period of possession to perfect title under the Public Land Act (Commonwealth
Act No. 141) and the Property Registration Decree. They point out that the ruling in
Herbieto, to the effect that the declaration of the land subject of the application for
registration as alienable and disposable should also date back to June 12, 1945 or
earlier, was a mere obiter dictum considering that the land registration proceedings
therein were in fact found and declared void ab initio for lack of publication of the
notice of initial hearing.
The petitioners also rely on the ruling in Republic v. T.A.N. Properties, Inc. 6 to support
their argument that the property had been ipso jure converted into private property by
reason of the open, continuous, exclusive and notorious possession by their
predecessors-in-interest of an alienable land of the public domain for more than 30
years. According to them, what was essential was that the property had been
"converted" into private property through prescription at the time of the application
without regard to whether the property sought to be registered was previously
classified as agricultural land of the public domain.
As earlier stated, we denied the petition for review on certiorari because Malabanan
failed to establish by sufficient evidence possession and occupation of the property on
his part and on the part of his predecessors-in interest since June 12, 1945, or earlier.
Petitioners Motion for Reconsideration
In their motion for reconsideration, the petitioners submit that the mere classification of
the land as alienable or disposable should be deemed sufficient to convert it into
patrimonial property of the State. Relying on the rulings in Spouses De Ocampo v.
Arlos,7 Menguito v. Republic8 and Republic v. T.A.N. Properties, Inc.,9 they argue that
the reclassification of the land as alienable or disposable opened it to acquisitive
prescription under the Civil Code; that Malabanan had purchased the property from
Eduardo Velazco believing in good faith that Velazco and his predecessors-in-interest
had been the real owners of the land with the right to validly transmit title and
ownership thereof; that consequently, the ten-year period prescribed by Article 1134 of
the Civil Code, in relation to Section 14(2) of the Property Registration Decree, applied
in their favor; and that when Malabanan filed the application for registration on
February 20, 1998, he had already been in possession of the land for almost 16 years

reckoned from 1982, the time when the land was declared alienable and disposable by
the State.

State is the source of any asserted right to ownership of land, and is charged with the
conservation of such patrimony.16

The Republics Motion for Partial Reconsideration

All lands not appearing to be clearly under private ownership are presumed to belong
to the State. Also, public lands remain part of the inalienable land of the public domain
unless the State is shown to have reclassified or alienated them to private persons.17

The Republic seeks the partial reconsideration in order to obtain a clarification with
reference to the application of the rulings in Naguit and Herbieto.
Chiefly citing the dissents, the Republic contends that the decision has enlarged, by
implication, the interpretation of Section 14(1) of the Property Registration Decree
through judicial legislation. It reiterates its view that an applicant is entitled to
registration only when the land subject of the application had been declared alienable
and disposable since June 12, 1945 or earlier.
Ruling
We deny the motions for reconsideration.
In reviewing the assailed decision, we consider to be imperative to discuss the
different classifications of land in relation to the existing applicable land registration
laws of the Philippines.
Classifications of land according to ownership
Land, which is an immovable property,10 may be classified as either of public dominion
or of private ownership.11Land is considered of public dominion if it either: (a) is
intended for public use; or (b) belongs to the State, without being for public use, and is
intended for some public service or for the development of the national wealth. 12 Land
belonging to the State that is not of such character, or although of such character but
no longer intended for public use or for public service forms part of the patrimonial
property of the State.13 Land that is other than part of the patrimonial property of the
State, provinces, cities and municipalities is of private ownership if it belongs to a
private individual.
Pursuant to the Regalian Doctrine (Jura Regalia), a legal concept first introduced into
the country from the West by Spain through the Laws of the Indies and the Royal
Cedulas,14 all lands of the public domain belong to the State.15This means that the

Classifications
according to alienability

of

public

lands

Whether or not land of the public domain is alienable and disposable primarily rests on
the classification of public lands made under the Constitution. Under the 1935
Constitution,18 lands of the public domain were classified into three, namely,
agricultural, timber and mineral.19 Section 10, Article XIV of the 1973 Constitution
classified lands of the public domain into seven, specifically, agricultural, industrial or
commercial, residential, resettlement, mineral, timber or forest, and grazing land, with
the reservation that the law might provide other classifications. The 1987 Constitution
adopted the classification under the 1935 Constitution into agricultural, forest or timber,
and mineral, but added national parks.20 Agricultural lands may be further classified by
law according to the uses to which they may be devoted.21 The identification of lands
according to their legal classification is done exclusively by and through a positive act
of the Executive Department.22
Based on the foregoing, the Constitution places a limit on the type of public land that
may be alienated. Under Section 2, Article XII of the 1987 Constitution, only
agricultural lands of the public domain may be alienated; all other natural resources
may not be.
Alienable and disposable lands of the State fall into two categories, to wit: (a)
patrimonial lands of the State, or those classified as lands of private ownership under
Article 425 of the Civil Code,23 without limitation; and (b) lands of the public domain, or
the public lands as provided by the Constitution, but with the limitation that the lands
must only be agricultural. Consequently, lands classified as forest or timber, mineral, or
national parks are not susceptible of alienation or disposition unless they are
reclassified as agricultural.24 A positive act of the Government is necessary to enable
such reclassification,25 and the exclusive prerogative to classify public lands under

existing laws is vested in the Executive Department, not in the courts. 26 If, however,
public land will be classified as neither agricultural, forest or timber, mineral or national
park, or when public land is no longer intended for public service or for the
development of the national wealth, thereby effectively removing the land from the
ambit of public dominion, a declaration of such conversion must be made in the form of
a law duly enacted by Congress or by a Presidential proclamation in cases where the
President is duly authorized by law to that effect. 27 Thus, until the Executive
Department exercises its prerogative to classify or reclassify lands, or until Congress
or the President declares that the State no longer intends the land to be used for
public service or for the development of national wealth, the Regalian Doctrine is
applicable.
Disposition of alienable public lands
Section 11 of the Public Land Act (CA No. 141) provides the manner by which
alienable and disposable lands of the public domain, i.e., agricultural lands, can be
disposed of, to wit:
Section 11. Public lands suitable for agricultural purposes can be disposed of only as
follows, and not otherwise:
(1) For homestead settlement;
(2) By sale;
(3) By lease; and
(4) By confirmation of imperfect or incomplete titles;
(a) By judicial legalization; or
(b) By administrative legalization (free patent).
The core of the controversy herein lies in the proper interpretation of Section 11(4), in
relation to Section 48(b) of the Public Land Act, which expressly requires possession
by a Filipino citizen of the land since June 12, 1945, or earlier, viz:

Section 48. The following-described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such lands or an interest therein, but whose titles
have not been perfected or completed, may apply to the Court of First Instance of the
province where the land is located for confirmation of their claims and the issuance of
a certificate of title thereafter, under the Land Registration Act, to wit:
xxxx
(b) Those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive, and notorious possession and occupation of alienable
and disposable lands of the public domain, under a bona fide claim of acquisition of
ownership, since June 12, 1945, or earlier, immediately preceding the filing of the
applications for confirmation of title, except when prevented by war or force majeure.
These shall be conclusively presumed to have performed all the conditions essential to
a Government grant and shall be entitled to a certificate of title under the provisions of
this chapter. (Bold emphasis supplied)
Note that Section 48(b) of the Public Land Act used the words "lands of the public
domain" or "alienable and disposable lands of the public domain" to clearly signify that
lands otherwise classified, i.e., mineral, forest or timber, or national parks, and lands of
patrimonial or private ownership, are outside the coverage of the Public Land Act.
What the law does not include, it excludes. The use of the descriptive phrase
"alienable and disposable" further limits the coverage of Section 48(b) to only the
agricultural lands of the public domain as set forth in Article XII, Section 2 of the 1987
Constitution. Bearing in mind such limitations under the Public Land Act, the applicant
must satisfy the following requirements in order for his application to come under
Section 14(1) of the Property Registration Decree,28 to wit:
1. The applicant, by himself or through his predecessor-in-interest, has been in
possession and occupation of the property subject of the application;
2. The possession and occupation must be open, continuous, exclusive, and
notorious;
3. The possession and occupation must be under a bona fide claim of acquisition of
ownership;

4. The possession and occupation must have taken place since June 12, 1945, or
earlier; and
5. The property subject of the application must be an agricultural land of the public
domain.
Taking into consideration that the Executive Department is vested with the authority to
classify lands of the public domain, Section 48(b) of the Public Land Act, in relation to
Section 14(1) of the Property Registration Decree, presupposes that the land subject
of the application for registration must have been already classified as agricultural land
of the public domain in order for the provision to apply. Thus, absent proof that the land
is already classified as agricultural land of the public domain, the Regalian Doctrine
applies, and overcomes the presumption that the land is alienable and disposable as
laid down in Section 48(b) of the Public Land Act. However, emphasis is placed on the
requirement that the classification required by Section 48(b) of the Public Land Act is
classification or reclassification of a public land as agricultural.
The dissent stresses that the classification or reclassification of the land as alienable
and disposable agricultural land should likewise have been made on June 12, 1945 or
earlier, because any possession of the land prior to such classification or
reclassification produced no legal effects. It observes that the fixed date of June 12,
1945 could not be minimized or glossed over by mere judicial interpretation or by
judicial social policy concerns, and insisted that the full legislative intent be respected.
We find, however, that the choice of June 12, 1945 as the reckoning point of the
requisite possession and occupation was the sole prerogative of Congress, the
determination of which should best be left to the wisdom of the lawmakers. Except that
said date qualified the period of possession and occupation, no other legislative intent
appears to be associated with the fixing of the date of June 12, 1945. Accordingly, the
Court should interpret only the plain and literal meaning of the law as written by the
legislators.
Moreover, an examination of Section 48(b) of the Public Land Act indicates that
Congress prescribed no requirement that the land subject of the registration should
have been classified as agricultural since June 12, 1945, or earlier. As such, the
applicants imperfect or incomplete title is derived only from possession and

occupation since June 12, 1945, or earlier. This means that the character of the
property subject of the application as alienable and disposable agricultural land of the
public domain determines its eligibility for land registration, not the ownership or title
over it.
Alienable public land held by a possessor, either personally or through his
predecessors-in-interest, openly, continuously and exclusively during the prescribed
statutory period is converted to private property by the mere lapse or completion of the
period.29 In fact, by virtue of this doctrine, corporations may now acquire lands of the
public domain for as long as the lands were already converted to private ownership, by
operation of law, as a result of satisfying the requisite period of possession prescribed
by the Public Land Act.30 It is for this reason that the property subject of the application
of Malabanan need not be classified as alienable and disposable agricultural land of
the public domain for the entire duration of the requisite period of possession.
To be clear, then, the requirement that the land should have been classified as
alienable and disposable agricultural land at the time of the application for registration
is necessary only to dispute the presumption that the land is inalienable.
The declaration that land is alienable and disposable also serves to determine the
point at which prescription may run against the State. The imperfect or incomplete title
being confirmed under Section 48(b) of the Public Land Act is title that is acquired by
reason of the applicants possession and occupation of the alienable and disposable
agricultural land of the public domain. Where all the necessary requirements for a
grant by the Government are complied with through actual physical, open, continuous,
exclusive and public possession of an alienable and disposable land of the public
domain, the possessor is deemed to have acquired by operation of law not only a right
to a grant, but a grant by the Government, because it is not necessary that a certificate
of title be issued in order that such a grant be sanctioned by the courts.31
If one follows the dissent, the clear objective of the Public Land Act to adjudicate and
quiet titles to unregistered lands in favor of qualified Filipino citizens by reason of their
occupation and cultivation thereof for the number of years prescribed by law32 will be
defeated. Indeed, we should always bear in mind that such objective still prevails, as a
fairly recent legislative development bears out, when Congress enacted legislation
(Republic Act No. 10023)33in order to liberalize stringent requirements and procedures

in the adjudication of alienable public land to qualified applicants, particularly

residential lands, subject to area limitations.34
On the other hand, if a public land is classified as no longer intended for public use or
for the development of national wealth by declaration of Congress or the President,
thereby converting such land into patrimonial or private land of the State, the
applicable provision concerning disposition and registration is no longer Section 48(b)
of the Public Land Act but the Civil Code, in conjunction with Section 14(2) of the
Property Registration Decree.35 As such, prescription can now run against the State.
To sum up, we now observe the following rules relative to the disposition of public land
or lands of the public domain, namely:
(1) As a general rule and pursuant to the Regalian Doctrine, all lands of the public
domain belong to the State and are inalienable. Lands that are not clearly under
private ownership are also presumed to belong to the State and, therefore, may not be
alienated or disposed;
(2) The following are excepted from the general rule, to wit:
(a) Agricultural lands of the public domain are rendered alienable and disposable
through any of the exclusive modes enumerated under Section 11 of the Public Land
Act. If the mode is judicial confirmation of imperfect title under Section 48(b) of the
Public Land Act, the agricultural land subject of the application needs only to be
classified as alienable and disposable as of the time of the application, provided the
applicants possession and occupation of the land dated back to June 12, 1945, or
earlier. Thereby, a conclusive presumption that the applicant has performed all the
conditions essential to a government grant arises, 36 and the applicant becomes the
owner of the land by virtue of an imperfect or incomplete title. By legal fiction, the land
has already ceased to be part of the public domain and has become private property.37
(b) Lands of the public domain subsequently classified or declared as no longer
intended for public use or for the development of national wealth are removed from the
sphere of public dominion and are considered converted into patrimonial lands or
lands of private ownership that may be alienated or disposed through any of the
modes of acquiring ownership under the Civil Code. If the mode of acquisition is

prescription, whether ordinary or extraordinary, proof that the land has been already
converted to private ownership prior to the requisite acquisitive prescriptive period is a
condition sine qua non in observance of the law (Article 1113, Civil Code) that property
of the State not patrimonial in character shall not be the object of prescription.
To reiterate, then, the petitioners failed to present sufficient evidence to establish that
they and their predecessors-in-interest had been in possession of the land since June
12, 1945. Without satisfying the requisite character and period of possession possession and occupation that is open, continuous, exclusive, and notorious since
June 12, 1945, or earlier - the land cannot be considered ipso jure converted to private
property even upon the subsequent declaration of it as alienable and disposable.
Prescription never began to run against the State, such that the land has remained
ineligible for registration under Section 14(1) of the Property Registration Decree.
Likewise, the land continues to be ineligible for land registration under Section 14(2) of
the Property Registration Decree unless Congress enacts a law or the President
issues a proclamation declaring the land as no longer intended for public service or for
the development of the national wealth.1wphi1
WHEREFORE, the Court DENIES the petitioners' Motion for Reconsideration and the
respondent's Partial Motion for Reconsideration for their lack of merit.
SO ORDERED.
LUCAS
Associate Justice
Republic
SUPREME
Manila

P.
of

BERSAMIN
the

Philippines
COURT

THIRD DIVISION
G.R. No. 161943

June 28, 2005

RUBEN ROMERO, represented by DIOSDADO ROMERO, petitioner,

vs.
EDISON N. NATIVIDAD and HERMINIA NATIVIDAD-MEJORADA, respondents.

DECISION
GARCIA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court is
the decision1 dated August 29, 2003 of the Court of Appeals in CA-G.R. CV. No.
71617, affirming with modification the June 15, 2001 decision of the Regional Trial
Court (RTC) at Morong, Rizal in an action for recovery of possession and quieting of
title thereat commenced by the herein petitioner Ruben Romero against respondents
Edison Natividad and Herminia Natividad-Mejorada.
Subject of the controversy is a portion of a parcel of land at T. Claudio St., Morong,
Rizal and covered by T.C.T. No. 20890 in the name of one Francisca Galarosa
(Francisca, hereafter).
Petitioner Ruben Romero is Franciscas grandson while respondents Edison Natividad
and Herminia Natividad-Majorada are Franciscas great grandnephew and great
grandniece, respectively.
In the latter part of 1996, petitioner filed with the RTC at Morong, Rizal a complaint for
recovery of possession and quieting of title against respondents, alleging that he is the
owner of the subject property by virtue of inheritance from his mother, Estelita
Bautista-Atendido (Estelita), who, in turn, inherited the same from her mother,
Francisca. Petitioner claims that on July 27, 1994, respondents, despite knowledge
that the property belonged to him, entered the contested portion of the land and
constructed a building of strong materials thereon.
In their answer, respondents raised the defense of prescription and laches. They
averred that they and their predecessors-in-interest had been in open, continuous and
uninterrupted possession of the subject property since the 1920s when it was donated
to their grandparents, Demetrio Natividad and Ulpiana Raymundo, by the latters aunt
Francisca, when Ulpiana got married; that their father, Herminigildo Natividad,
inherited the same portion from their grandparents; and that, they, in turn, inherited the
property upon their fathers death. Respondents pointed out that during the lifetime of
their father Herminigildo, the latter operated a bakery store thereon until it was burned.
On March 3, 1994, they constructed a commercial building on said property.

In a decision dated June 15, 2001,2 the trial court rendered judgment for the
respondents by dismissing petitioners complaint and ordering him to pay attorneys
fees, thus:
WHEREFORE, in view of the foregoing judgment is hereby rendered in favor of the
defendants and as against the plaintiff, dismissing the complaint for utter lack of merit,
and ordering the latter to pay defendants P50,000.00 in concept of attorneys fee
plus P1,000.00 per actual appearance of defendants counsel in court. Without
pronouncement as to costs and damages.
SO ORDERED.
In ruling for the respondents, the trial court declared that the latters long possession
had ripened to acquisitive prescription in their favor:
This court is of the opinion and so holds that the defendants are now the owners of the
disputed lot involved in this case. Defendants predecessors-in-interest spouses
Demetrio Natividad and Ulpiana Raymundo after the execution of the Deed of
Donation dated May 21, 1921 took possession of the portion of the lot in question
where they engaged their usual business without anybody from the plaintiffs relatives
disturbing and questioning the possession. Demetrio Natividad had caused to declare
for taxation purposes the improvement he introduced into the disputed lot, and for the
period from the deed of donation executed by Francisca Galarosa, grandmother of the
plaintiff, up to the present, efforts to recover possession were unsuccessful, thus
strengthening the rightful claim of possession and ownership over the land in question
by the defendants. Indeed, it has been an acknowledged principle in law, that
uninterrupted possession in concept of owner, ripens into ownership. In the case at
bar, plaintiff as well as his predecessor-in-interest had failed to question within the
period allowable under the law, the claim of possession and ownership by defendants
and their predecessor-in-interest. As correctly pointed out by the defendants counsel,
plaintiff and his predecessor slept on their right to recover ownership and possession
of the disputed property, and this neglect should be counted against them. Defendants
possession in concept of owner, metamorphosed into an acquisitive prescription, that
granted them the right to consolidate their right of ownership over the lot in question.3

On appeal to the Court of Appeals in CA-G.R. CV No. 71617, petitioner argued that
the trial court erred in declaring respondents as owners of the subject property on the
basis of prescription as there can be no prescription against a titled property. He also
insists that there was no valid donation by Francisca because it was not contained in a
public document, as required by law, adding that respondents grandfather Demetrio
was never in possession of the entire property because he only occupied the second
floor of the building then existing thereon.
In the herein assailed decision4 dated August 29, 2003, the appellate court affirmed
with modification the appealed decision of the trial court by deleting the award of
attorneys fees:
WHEREFORE, in view of the foregoing, the decision of the Regional Trial Court of
Morong, Rizal, Branch 79, dated 15 June 2001, is hereby AFFIRMED with
the MODIFICATION that the award of attorneys fees is hereby DELETED.
SO ORDERED.
In arriving at such a disposition, the appellate court refused to apply the general rule
regarding the operation of prescription against a titled property, ratiocinating that said
rule does not apply if the person invoking it is not the registered owner, as in this case.
Petitioner moved for reconsideration but his motion was denied by the appellate court
in its subsequent resolution5of January 29, 2004.
Hence, petitioners present recourse seeking reversal of the challenged decision and
resolution of the Court of Appeals.
The petition is unavailing.
Apparently, the instant case was not the only one instituted by petitioner against
respondents. Sometime in 1994, an ejectment suit (Civil Case No. 566) was filed by
him but it was dismissed for his failure to prove prior possession of the disputed
property. Later, a case for recovery of possession (Civil Case No. 680-M) was also
instituted by the petitioner but similarly dismissed.
There is no absolute rule as to what constitutes laches or staleness of demand; each
case is to be determined according to its particular circumstances. The question of

laches is addressed to the sound discretion of the court, and since laches is an
equitable doctrine, its application is controlled by equitable considerations. It cannot
work to defeat justice or to perpetrate fraud and injustice. It would be rank injustice and
patently iniquitous to deprive the lawful heirs of their rightful inheritance.
Here, we are inclined to apply the above rule in favor of respondents. We find support
in Tambot, et al. v. Court of Appeals, et al. 6 where this Court, through then Associate
Justice Carolina Grio-Aquino, held:
The Court of Appeals ruling that the private respondents, by continuous, open, and
adverse possession of the landfor more than thirty-six (36) years as owner, had
acquired title through prescription and that the petitioners title is not protected by
Section 46 of the Land Registration Act (which provides that a registered owners title
may not be lost through prescription) because the petitioners are not the registered
owners of the land in question, finds support in various decisions of this Court.
In Wright, Jr., et al. vs. Lepanto Consolidated Mining Co., 7 where the mining
companys possession of the mining claims under the color of title began since 1936
while the appellants whose father had been the patentee of those claims did not lift a
finger to assert their title or right for over 25 years, this Court held:
xxx Assuming that Albert P. Wright ever held a Torrens title to the claims (which is not
adequately shown), and that his ownership and that of his heirs may not be defeated
by prescription, still those rights have become barred by their inactivity and laches for
nearly thirty years. This long inaction, coupled with renewed activity after total
destruction of official records, strongly indicate an unmeritorious claim.
The above jurisprudence finds application in this case. For one, as
in Tambot, herein petitioner is not the registered owner of the land in question.
Moreover, it was never disputed that respondents and their predecessors-in-interest
had been in open, continuous and uninterrupted possession of the subject parcel of
land since the 1920s. It was only in 1994, or after a period of about seventy-four (74)
years when petitioner started asserting ownership by filing an ejectment case against
them.

For another, even if we take into consideration that there was a case filed by
petitioners mother Estelita against Demetrio Natividad in 1965, said case was filed
only after forty-four (44) years from the time respondents grandfather Demetrio
Natividad first started occupying the property in the early 1920s. The Court also notes
that this case was dismissed by agreement of the parties, although it can no longer be
determined from the records what exactly was the agreement reached. It should
further be noted that from 1965 until 1996, when petitioner filed his complaint in this
case, a period of twenty-six (26) years have lapsed and no other case was filed
against respondents.
Petitioner would rely on the case of Mateo vs. Diaz where this Court ruled that no title
to registered land in derogation to that of a registered owner shall be acquired by
prescription or adverse possession and that the heirs of the registered owner are not
estopped from claiming their fathers property, since they merely stepped into the
shoes of the previous owners.
Unfortunately, the Mateo case is not on all fours with the case at bar. In Mateo, it was
found that immediately after petitioners therein discovered the existence of the original
certificate of title of the disputed property in the name of their father, they took steps to
assert their rights thereto. Petitioners divided the property among themselves in an
extra-judicial partition. Then they filed an action to recover ownership and possession
as the only surviving children of the original owner.
In contrast, petitioner in the present case and his deceased mother have slumbered on
their perceived rights for seventy (70) years.
Verily, in a number of cases, it had been held that laches, the essence of which is the
neglect to assert a right over a long period of time, may prevent recovery of a titled
property.8 For sure, in the same case of Tambot, this Court further held that laches will
bar recovery of the property even if the mode of transfer was invalid:
In Heirs of Batiog Lacamen vs. Heirs of Laruan, 65 SCRA 606, Laruan conveyed a
parcel of land in La Trinidad, Benguet, to Batiog Lacamen in 1928 for P300. The deed
was acknowledged before a notary in Baguio City, and immediately after the sale,
Laruan delivered the certificate of title No. 420 to Lacamen who entered in possession
of the land without securing a transfer certificate of title in his name. He introduced

improvements and paid the taxes. After his death in 1942, his heirs remained in
possession of the land and also paid the taxes. However, they discovered in 1957 that
Laruans heirs (Laruan had died in 1938) had obtained a new owners copy of
Certificate of Title No. 420 by alleging in a petition filed in court that their copy had
been lost or destroyed. Lacamens heirs sued for reconveyance. Laruans heirs
alleged that the sale to Lacamen was null and void under Act. No. 2874 and Sections
145 and 146 of the Code of Mindanao and Sulu. This Court upheld the title of
Lacamen and his heirs despite the invalidity of the sale.
It has been held that while a person may not acquire title to the registered property
through continuous adverse possession, in derogation of the title of the original
registered owner, the heir of the latter, however, may lose his right to recover back the
possession of such property and the title thereto, by reason of laches. Much more
should it be in the instant case where the possession of nearly 30 years or almost half
a century now is in pursuance of sale which regrettably did not bear the approval of the
executive authority but which the vendor never questioned during his life time.
Laruans laches extends to his heirs, the respondents-appellants herein, since they
stand in privity with him.
Where a period of 37 years elapsed between the sale of land by the patentee (Mejia)
to Zacarias Ciscar and the action of Mejias heirs to recover it from the vendee
(Gamponia) of an heir of Ciscar, the Court ruled that:
While the defendant may not be considered as having acquired title by virtue of his
and his predecessors long continued possession (37 years), the original owners right
to recover back the possession of the property and the title thereto from the defendant
has, by the latters long period of possession and by patentees inaction and neglect,
been converted into a stale demand. (Mejia de Lucas vs. Gamponia, 100 Phil. 277,
280)
In Vda. De Lima vs. Tio, 32 SCRA 516, where the plaintiffs paraphernal property was
sold in 1936 by her husband without her consent and her action to recover it was filed
only in 1964, or after 28 years, we likewise ruled:
It is now an established doctrine that inaction and neglect convert what otherwise
could be a valid claim into a stale demand x x x Such passivity in the face of what

might have given rise to an action in court is visited with the loss of such a right. That
in essence is what laches signifies. Nor does ignorance resulting from inexcusable
negligence suffice to explain such failure to file seasonably the necessary suit." (181
SCRA at 207-208) (Emphasis supplied)
To recapitulate, respondents and their predecessors-in-interest had been in open
continuous possession of the property in question since the early 1920s when the
former owner Francisca Galarosa executed what was intended as a deed of
donation propter nuptias. Petitioners and his predecessor-in-interests neglect to
assert ownership for a long period of time acts as a bar to the present
action. Vigilantibus sed non dormientibus jura subverniunt. The law aids the vigilant,
not those who sleep on their rights. This legal precept finds perfect application in the
case at bar.
WHEREFORE, the petition is hereby DENIED and the assailed decision and resolution
of the Court of Appeals AFFIRMED.
Costs against petitioner.
SO ORDERED.

JAYME Representing the Heirs of Gerardo Derecho, MARDONIO D.

HERMOSILLA Representing the Heirs of Oliva D. Hermosilla, Respondents.
DECISION
PANGANIBAN, J.:
Owners who, for a long period of time, fail to assert their rights to unregistered real
property may be deprived of it through prescription. Although the present respondents
initially owned part of the subject property by virtue of succession, their inaction for
several decades bars them from recovering it from petitioners who have possessed it
as owners since 1928. The purpose of prescription is to protect the diligent and
vigilant, not those who sleep on their rights.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, challenging the
July 28, 2003 Decision2 of the Court of Appeals (CA) in CA-GR CV No. 62535. The
assailed Decision disposed as follows:

THIRD DIVISION

"WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for

lack of merit. The assailed decision of the court a quo dated October 26, 1998 is
AFFIRMED WITH THE MODIFICATION that its declaration of the [petitioners] as
lawful heirs of Dolores Derecho-Rigonan, and indicating their lawful share equivalent
to the share of one child of the deceased Hilarion Derecho is DELETED.

G.R. No. 159571. July 15, 2005

"Costs against the [petitioners]."3

DELFINA Vda. de RIGONAN and Spouses VALERIO LAUDE and VISMINDA

LAUDE, Petitioners,
vs.
ZOROASTER DERECHO Representing the Heirs of RUBEN DERECHO, ABEL
DERECHO, HILARION DERECHO, NUNELA D. PASAOL, EFRAIM DERECHO,
NOEL DERECHO, CORAZON D. OCARIZA Representing the Heirs of Marcial
Derecho, LANDILINO D. PRIETO Representing the Heirs of Pilar D. Prieto, JUSTA
D. BUENO, ADA D. MAPA, EMMANUEL DERECHO, POMPOSO DERECHO
Representing the Heirs of Apolinar Derecho, VICENTE D. RIGONAN, RUFA D.

The trial courts Decision, modified by the CA, had disposed as follows:

Republic
SUPREME COURT

of

the

Philippines

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

[respondents], declaring the Affidavit of Adjudication executed by Leandro Rigonan on
April 24, 1980 and the Deed of Sale executed by Teodoro Rigonan in favor of Valerio
Laude null and void; ordering the cancellation of Tax Dec. No. 00667 in the name of
Valerio Laude; ordering the [petitioners] to pay [respondents], jointly and severally,
moral damages in the sum of P10,000.00 and litigation expenses in the sum
of P5,000.00.

"[Petitioners] are hereby ordered to give-up and deliver the possession and ownership
of the parcel of land in question to [respondents]. [Petitioners] being the heirs of the
late Dolores Derecho are entitled to the rightful share equivalent to the share of one
child of deceased Hilarion Derecho."4
The Facts
The instant controversy revolves around a parcel of land located at Tuburan Sur,
Danao City, originally owned by Hilarion Derecho. When Hilarion died long before
World War II, his eight children -- Leonardo, Apolinar, Andres, Honorata, Dolores,
Gerardo, Agaton, and Oliva -- became pro indiviso co-owners of the subject property
by intestate succession. Subsequently, Tax Declaration No. 002675 was issued under
the name "Heirs of Hilarion."
On July 16, 1921, five of the co-owners -- Leonardo, Apolinar, Andres, Honorata, and
Dolores -- sold the inherited property to Francisco Lacambra, subject to a five-year
redemption clause.6 Notably, the three other Derecho heirs -- Gerardo, Agaton, and
Oliva -- were not parties to the pacto de retro sale.
Sometime in 1928, two years after the period for redemption expired, Dolores -together with her husband, Leandro Rigonan -- purchased7 the land from Lacambra
and immediately occupied it.8
More than five decades passed without any controversy. On April 24, 1980, Leandro
Rigonan executed the assailed Affidavit of Adjudication in favor of his son, Teodoro
Rigonan (the deceased husband of Petitioner Delfina vda. de Rigonan). 9 Under this
instrument, Leandro declared himself to be the sole heir of Hilarion,10 while Teodoro
obtained the cancellation of Tax Declaration No. 00267,11 and acquired Tax Declaration
No. 00667 in his own name.12
During the same year, Teodoro mortgaged the subject property to the Rural Bank of
Compostela of Cebu. Dreading foreclosure, he settled his obligations with the
bank13 by securing the aid of Spouses Valerio and Visminda Laude. On April 5, 1984,
Teodoro executed the assailed Deed of Absolute Sale of Unregistered Land in favor of
Valerio Laude,14 who then obtained Tax Declaration No. 00726 under the latters name
on May 10, 1984.15

On November 10, 1993, respondents -- as the alleged heirs of Hilarion and pro
indiviso owners of the subject realty -- brought an action before the Regional Trial
Court (RTC) of Danao City (Branch 25), first, to recover the property; and, second, to
annul the Deed of Sale in favor of Laude16 and the Affidavit of Adjudication, whose
validity and authenticity they assailed on the ground of fraud. They likewise maintained
that the subject property had not been partitioned among the heirs; thus, it was still coowned at the time it was conveyed to Petitioner Laude.17
Petitioners did not deny the imputed fraud in the execution of the Affidavit of
Adjudication. They, however, averred that the document had no bearing on their claim
of ownership, which had long pertained to the Rigonan spouses following the 1928
conveyance from the absolute owner, Lacambra. 18 They theorized that the coownership over the property ended when the period for redemption lapsed without any
action on the part of the co-owners.19Therefore, the Rigonan spouses bought the
property as legitimate vendees for value and in good faith, not in the capacity of
redeeming co-owners.20
Petitioners likewise argued that they and their predecessors-in-interest had
continuously owned and possessed the subject property for 72 years. Accordingly,
acquisitive prescription had allegedly set in, in their favor, when the case was filed in
1993.21
Lastly, petitioners maintained that they were entitled to the equitable defense of
laches. Respondents and their forebears were rebuked for not asserting their rights
over the property for the past 72 years. They supposedly did so only after finding that
the land had been developed, and that it had appreciated in value.22
Ruling of the Court of Appeals
On appeal, the CA held that the Affidavit of Adjudication and the Deed of Absolute Sale
were both void. The Affidavit was deemed fraudulent because of the undisputed
factual finding that some of the heirs of Hilarion were still alive at the time of its
execution; hence, the statement that Leandro was the sole heir was indubitably
false.23 The Deed of Sale in favor of Laude was held void because the vendor,
Teodoro, had no legal right to dispose of the entire co-owned property. Moreover, the
appellate court found that the evident purpose of the Contract was to deprive the other

lawful heirs of their claims over the realty. Under Article 1409 (pars. 1 & 2), of the Civil
Code, the Contract was considered void ab initio.24
As the Contracts were void, the defense of prescription was inapplicable. Article 1410
of the Civil Code states that actions for the declaration of the inexistence of a contract
do not prescribe.25
As for the defense that the co-ownership ended when the period to redeem expired,
the CA ruled that the redemption or repurchase by the Rigonan spouses did not end
the state of co-ownership. At most, the repurchase gave rise to an implied trust in favor
of the other co-owners.26
The CA added that prescription was inapplicable, because it did not run in favor of a
co-owner as long as the latter recognized the co-ownership. In the present case,
petitioners failed to show that the co-heirs, except Dolores, had repudiated their rights
over the inherited property.27
The appellate court further ruled that Valerio Laude was not a buyer in good faith for
two reasons; one, he had been forewarned by Respondent Ruben Derecho that the
property was still co-owned; and, two, Valerio had admitted seeing the cancelled Tax
Declaration under the name of the heirs of Hilarion. These matters should have alerted
Valerio, who should have then exercised prudence as a buyer.28
Finally, the appellate court held that the action for recovery prescribed within ten years
from the issuance of the Certificate of Title, which operated as a constructive notice.
Considering, however, that the subject property was unregistered, the CA ruled that
the prescriptive period should be reckoned from the issuance of the Tax Declaration on
May 10, 1984. It concluded that the action was filed well within the period allowed by
law for its recovery.29

"1. Respondent Court of Appeals erred in holding that the land subject matter hereof is
property held in common by the Heirs of Hilarion Derecho and an [i]mplied [t]rust was
created by the act of repurchase.
"2. Respondent Court of Appeals erred in holding that the action for the recovery of
possession and ownership is not time-barred by prescription and/or laches.
"3. Respondent Court of Appeals erred in holding that respondents action for
annulment of the Deed of Sale and Affidavit of Adjudication is not time-barred by
prescription and/or laches.
"4. Respondent Court of Appeals erred in holding that Petitioner Valerio Laude is not a
buyer in good faith and cannot be considered as legitimate and lawful owner of the
subject property.
"5. Respondent Court of Appeals erred in resolving the case with an award of litigation
expenses and attorneys fees.
"6. Respondent Court of Appeals acted with grave abuse of discretion when it ruled on
the issue of [h]eirship."31
Simply stated, the issues are as follows:
1. Whether at the time of the purchase in 1928, co-ownership still subsisted among the
heirs of Hilarion Derecho
2. Whether an implied trust was created
3. Whether the action in the RTC was barred by prescription and laches
The Courts Ruling

Hence, this Petition.30

The Petition has merit.

Issues

First Issue:

Petitioners raise the following issues for our consideration:

Co-Ownership
Petitioners argue that the co-ownership ended when the heirs entered into a sale with
the right to repurchase and subsequently failed to redeem the property within the

stipulated period. Consequently, when the Rigonan spouses bought the subject land
from Lacambra, it was a conveyance to the spouses in their personal capacities, not
as co-owners.32
On the other hand, respondents merely adopted33 the CAs disquisitions discussed
earlier.
Since the Spanish Civil Code was still in effect when Hilarion died long before the
outbreak of the Second World War 34 and when the sale was executed on July 16,
1921, it is evident that the said law governed both the co-ownership and the pacto de
retro sale.
Pacto de Retro and
Failure to Redeem
Under a pacto de retro sale, title to and ownership of property are immediately vested
in the vendee a retro, subject only to the resolutory condition that the vendor
repurchases it within the stipulated period. Pending the redemption, the vendor loses
all ownership rights over the property, save for the right to repurchase it upon
compliance with the requirements provided in Article 1518 of the Spanish Civil Code.35
In a number of cases, this Court has held that once the vendor fails to redeem the
property within the stipulated period, irrevocable title shall be vested in the vendee by
operation of law.36
In the instant case, the parties to the contract stipulated a five-year redemption period,
which expired on July 16, 1926. The failure of the sellers to redeem the property within
the stipulated period indubitably vested absolute title and ownership in the vendee,
Lacambra. Consequently, barring any irregularities in the sale, the vendors definitively
lost all title, rights and claims over the thing sold. To all intents and purposes,
therefore, the vendors a retro ceased to be co-owners on July 16, 1926.
Clearly then, the parties to the sale -- Leonardo, Apolinar, Andres, and Honorata (but
not Dolores, as will be explained later), as well as all their successors-in-interest -- no
longer had any legal interest in the disputed property, none that they could have
asserted in this action.

Purchase Beyond the

Redemption Period
As for Dolores, she reacquired legal interest in the property by virtue of the purchase in
1928, two years after the period to redeem had already expired.37
This purchase cannot be considered as a redemption in the concept of a pacto de
retro sale, which would imply that the period to redeem was extended long after it had
already expired. Such automatic extension is not possible because, as succinctly
stated by Manresa, "if the extension is made after the expiration of the period, then it is
void and of no effect because there is nothing to extend."38
Adiarte v. Tumaneng39 illustrates the legal effect of the expiration of the stipulated
period for redemption. In that case, Amanda Madamba sold two parcels of land to
Spouses Cirilo Agudong and Emiliana Tumaneng. However, she reserved for herself
the right to repurchase the lots within ten years. Five years after the period expired,
Agudong executed a Contract promising to resell the land to Madamba. When the
former died without fulfilling his promise, the latter filed a suit to compel the widow to
execute a deed of sale in the plaintiffs favor. The widow argued that Madamba could
no longer redeem the property, because the period for redemption had already
expired.
In debunking the widows defense, this Court ruled that the Contract did not constitute
a promise to resell, because the right to repurchase had been lost after the expiration
of the stipulated period. The original Contract of Sale with a right of repurchase no
longer existed at the time Agudong made the promise to sell. Therefore, the parties
entered into an entirely new and independent agreement to sell, which was binding on
the widow.
In Umale v. Fernandez,40 the Court ruled that the vendors were entitled to redeem the
property despite the lapse of the period for redemption, inasmuch as the vendees had
renounced their right. On April 13, 1905, a parcel of land was sold a retro by Emigdio
Umale and his wife to Spouses Fernandez, without fixing any period for redemption.
On June 12, 1909, Fernandez executed a Contract allowing the Umale spouses to
redeem the land despite the lapse of the four-year period of redemption. This period

was mandated by Article 150841 of the Spanish Civil Code for cases in which no period
had been stipulated. In 1911, Emigdio Umale redeemed the land and took possession
of it.
He then sued to compel the Fernandez couple to execute the instrument of
redemption. The defendants countered that the land belonged to them, because the
vendors had failed to redeem it within the term allowed by law. The Court ruled:
"In the absence of an express stipulation with regard to the period of redemption, the
purchaser, in the exercise of the freedom to make contracts that is possessed by all,
has the power to extend the period allowed by law, provided that the new period
stipulated does not exceed the ten years fixed by article 1508 of the code. For nothing
in this article prohibits an extension, by agreement, of the four years, which is the
period prescribed by law in cases where, in sales with right of repurchase, no period
for redemption has been fixed by the parties."42 [Emphasis supplied]
43

In his Concurring Opinion, Justice Torres arrived at the same conclusion, but on a
different ground. He explained that the contracting parties had no right to extend the
legal period for redemption after it had already lapsed; and that, when the vendees
alienated and returned the property afterwards, they did so by virtue of a new Contract
of Sale, independent of and distinct from the previous one already terminated.
It is clear from Adiarte and Umale that after the expiration of the period for redemption,
the parties could either (1) enter into an entirely new contract involving the same
property; or (2) if they did not expressly stipulate the period, extend the time for
redemption, provided the extension did not exceed the maximum period of ten years
allowed by Article 1508.44
In the present case, Lacambra and the heirs stipulated a five-year redemption period.
When it lapsed, the vendee acquired absolute title, while the five co-owners-sellers
were stripped of their co-ownership of the property.
Therefore, when Dolores repurchased the property in 1928, she did so in her personal
capacity, no longer as a co-owner-seller. Following the ruling in Adiarte, she is deemed
to have entered into an entirely new contract, independent of the 1921 pacto de
retro sale.

Second Issue:
Implied Trust
Petitioners contend that the appellate court erred in holding that an implied trust had
arisen from the 1928 repurchase by the Rigonan spouses. They argue that the sale
was a conveyance of the absolute ownership of Lacambra over the land, which he had
acquired by virtue of a failure to redeem. Therefore, when he sold it, the spouses
likewise acquired absolute ownership.45
We clarify.
Satisfy Demands of
Justice and Equity
An implied trust arises, not from any presumed intention of the parties, but by
operation of law in order to satisfy the demands of justice and equity and to protect
against unfair dealing or downright fraud.46 Under Article 1456 of the new Civil Code, "if
property is acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person from whom
the property comes." Although this provision is not retroactive in character, and thus
inapplicable to the 1928 purchase, it merely expresses a rule already recognized by
our courts prior to the effectivity of the Code.47
In the present case, the implied trust arose in 1921, when five of the eight co-owners
assumed ownership of the whole inherited property and sold it in its entirety to
Lacambra. The sale clearly defrauded the three other co-heirs who were not parties to
the transaction -- Gerardo, Agaton, and Oliva -- and unlawfully deprived them of their
undivided shares in the inheritance. Thus, to the extent of their participation, the
property is deemed to have been acquired through fraud; and the person who acquired
it, a trustee for the benefit of the person from whom it was acquired.48
In the present case, Lacambra was the trustee who held the property partly for the
benefit of the three mentioned heirs (cestuis que trustent).

The CA, however, erred in finding that the implied trust had arisen in 1928, when the
Rigonan spouses repurchased the property from Lacambra.49 By then, Petitioners
Rigonan were merely stepping into the shoes of Lacambra as trustee.
Third Issue:
Prescription or Laches
Petitioners argue that even if an implied trust existed, acquisitive prescription is still
applicable. They rely on the pronouncement in Medina v. Court of Appeals50 that
acquisitive prescription applies to implied trusts, provided there is continuous adverse
possession of property in the concept of owner.51
Petitioners maintain that they obtained absolute ownership of the subject land through
acquisitive prescription. They point out that the heirs did not impugn the validity of the
documents of sale until after seventy-two years, in 1993 when the case was filed
before the trial court.52
Petitioners are correct.
It is settled in this jurisdiction that prescription, 53 as well as laches,54 supervenes in the
enforcement of implied trusts.
Prescription of Action
Possession of the property by petitioners commenced way back in 1928,55 when the
prescriptive periods applicable were those provided in Act 190 (Code of Civil
Procedure). Their argument finds basis in Article 1116 of the new Civil Code, which
states that "prescription already running before the effectivity of this Code shall be
governed by laws previously in force x x x."
Under Section 40 of the Code of Civil Procedure, an action for recovery of real
property, or of an interest therein, can be brought only within ten years after the cause
of action accrues.56
The cause of action of respondents accrued in 1928, when they lost possession of the
property to the forebears of petitioners. These predecessors-in-interest took
possession from 192857 until 1980 when Laude, their successor-in-interest, continued

possession up to the present. During this entire time, respondents inexcusably failed to
take action to recover the property. In 1993, they finally rose from their seeming
slumber when they filed the present suit. Unfortunately, 65 years had already lapsed
and, by that time, their right of action had clearly been barred by extinctive
prescription.
Acquisitive Prescription
Moreover, petitioners acquired title to the subject property by prescription. Section 41
of Act 190 (Code of Civil Procedure) provides:
"Title to land by prescription. -- Ten years actual adverse possession by any person
claiming to be the owner for that time of any land or interest in land, uninterruptedly
continued for ten years by occupancy, descent, grants, or otherwise, in whatever way
such occupancy may have commenced or continued, shall vest in every actual
occupant or possessor of such land a full and complete title, saving to the person
under disabilities the rights secured by the next section. In order to constitute such title
by prescription or adverse possession, the possession by the claimant or by the
person under or through whom he claims must be actual, open, public, continuous,
under a claim of title exclusive of any other right and adverse to all claimants x x x."
This provision, as authoritatively and consistently interpreted by this Court, allows
adverse possession in anycharacter to ripen into ownership after the lapse of ten
years.58 "Prescription lies under the said section even in the absence of good faith and
just title."59
In the instant case, the Rigonan spouses possessed the property in the concept of
owners after their purchase in 1928. They peacefully occupied it, were never ousted
from it, and never prevented from enjoying its fruits.
Furthermore, possession by the Rigonan spouses was adverse to the other heirs, as
shown by the following: one,the former obtained the cancellation of the Tax Declaration
in the latters name; two, the spouses executed the Affidavit of Adjudication, claiming
that Leandro Rigonan was the sole heir; three, petitioners did not share with
respondents the enjoyment of the property for a half-century; and four, Teodoro sold
the property to Laude. Respondents were aware of these facts and of their rightful

share in the land. Therefore, they knew that petitioners were holding the property
adverse to their interests.
As petitioners have been in continuous possession and enjoyment of the disputed land
since 1928, a length of time that has never been questioned, there can be no doubt
that they obtained title to it by acquisitive prescription.
To stress the folly of respondents protracted inaction, may we add that the present
action would still be barred, even if the Court were to apply the thirty-year period fixed
by the present Civil Code for the acquisition of ownership by extraordinary
prescription60 or for the extinction of the right of action over immovables.61
Action to Annul Contracts
Imprescriptible, but Recovery
of Realty Barred by Acquisitive
Prescription
The CA dismissed petitioners defense of prescription on the ground that the action for
annulment of contracts was imprescriptible, as mandated by Article 1410 of the Civil
Code.62
There is no question that the said action does not prescribe, but the principal question
in this case is the recovery of the subject property, which is the ultimate goal of
respondents. They seek the nullification of the Contracts, merely as a means or
prelude to the recovery of the property. Unfortunately for them, acquisitive prescription
has already set in to bar the recovery.
As stated in Bargayo v. Camumot,63 "the prescription of an action and the acquisitive
prescription of ownership cannot and should not be confounded. They are two different
and distinct things, although equally transcendent, being of identical result and effect."
In that case, the Complaint filed by the heirs was one for partition, which did not
prescribe, while the defendant raised the defense of acquisitive prescription. This
Court took a moment to explain that the law spoke only of the imprescriptibility of the
action, not of ownership. It explained thus: "x x x [I]t is evident that to deny the

prescription of the ownership of an inheritance, because Article 1965 of the Civil Code
declares the action for its partition imprescriptible, is to confound the prescription of
ownership and that of an action x x x." 64 But the Court overruled the defense, because
the defendant had failed to prove adverse possession, an essential element of
acquisitive prescription.
Similarly, the imprescriptibility of an action to annul a contract does not mean that the
present respondents are perpetually allowed to recover the property, the subject of the
void contract. They may file the action to annul, but their right to recover based on
ownership is contingent on the premise that they still own the property. Ownership may
have been lost in the interval during which they remained inactive. For this reason, the
Court constantly reminds parties to remain vigilant over their rights.
This matter is likewise illuminated by Heirs of Maningding v. CA.65 In that case, Ramon
owned two parcels of land in Pangasinan. When he died intestate, his four children -Roque, Segunda, Juan, and Maria -- inherited the contested properties. While Juan
and Maria renounced their rights to the inheritance, Roque claimed the land as his own
by virtue of a donation propter nuptias, previously executed in his favor by their father.
Having been excluded from the enjoyment of the property, the heirs of Segunda filed
an action for partition against Roque, as well as for the annulment of the conveyance
documents.
The Court ruled that the parcels of land had devolved to the children of Ramon by right
of succession. Roque did not acquire exclusive ownership of those properties by virtue
of the Deed of Donation, which was null and void. Nevertheless, the Court held that his
thirty-six years of exclusive possession and enjoyment of the property sufficed to
confer ownership through acquisitive prescription. The heirs of Segunda were thus
barred from recovering their shares in the inheritance.
It will be noted that Maningding sustained the defense of acquisitive prescription
despite the imprescriptibility of the actions for annulment of contracts and partition.
Simply put, the imprescriptibility of an action is distinct from the prescription of
ownership and rights.

In the present case, we hold that respondents can no longer recover the property
despite the nullity of the assailed contracts, because they have lost their ownership by
reason of prescription.

abandoned or declined to assert it. This equitable defense is based upon grounds of
public policy, which requires the discouragement of stale claims for the peace of
society. 70

Laches

As previously mentioned, an action to enforce an implied trust may be circumscribed

by laches. Under this circumstance, repudiation is not even required, 71 unless the facts
that give rise to the trust are concealed. This principle holds because of the nature of
an implied trust, which involves a certain antagonism between the cestui que trust and
the trustee.72 There is neither promise nor fiduciary relation; the trustee does not
recognize any trust and has no intention of holding the property for the beneficiary;
therefore, the latter is not justified in delaying action to recover the property. Having
incurred unreasonable delay, the beneficiary is estopped by laches.73

Assuming arguendo that the action does not prescribe, laches would still bar
respondents from belatedly asserting their claim. The defense of laches, which is a
question of inequity in permitting a claim to be enforced, applies independently of
prescription, which is a question of time.66 Prescription is statutory; laches is
equitable.67
In Miguel v. Catalino,68 Bacaquio sold a parcel of land to Catalino in 1928. The latter
possessed it and enjoyed its fruits from then until 1962, when the heirs of Bacaquio
filed a complaint for recovery of possession of the property. The heirs asserted that the
sale was void for lacking the requisite executive approval. The Court held that, despite
the nullity of the sale and the fact that no prescription had run against the title of the
heirs, the action was already barred by laches due to their passivity and inaction for
more than thirty-four years.
Again in Mejia de Lucas v. Gamponia,69 the Court held that while the legal defense of
prescription did not lie, the equitable defense of laches did.
In that case, Domingo sold a parcel of registered land to Zacarias, who immediately
took possession of it and enjoyed its fruits. When the heirs of Domingo filed an action
for the annulment of the sale, Gamponia -- Zacarias successor-in-interest -- proffered
the defense of prescription. The lower court overruled the defense on the ground that
registered lands could not be acquired by prescription.
The lower court was reversed by this Court. Although Gamponia could not be deemed
to have acquired title by virtue of the fact that he and his predecessors had long and
continued possession of the property for thirty-seven years, the owners right to
recover it as well as the title to it was held to have been converted into a stale demand
by their inaction and negligence.
Laches is defined as the failure to assert a right for an unreasonable and unexplained
length of time, warranting a presumption that the party entitled to assert it has either

Coming to the present case, the record does not reveal, and respondents do not even
assert, that there was a concealment of the 1921 sale of the property to Lacambra.
Although three of the co-heirs were not parties to that transaction, there is no showing
whatsoever that they interjected any objection to the conveyance. There is no
allegation, either, that respondents were unaware of the sale in favor of Dolores or of
her familys possession of the property since 1928. On the contrary, Respondent
Ruben Derecho warned Laude not to buy the land because it had not been
partitioned.74 This fact shows that respondents were aware that Teodoro intended to
sell the land, a move that was clearly an act of dominion over the entire property. Their
cognizance of these facts eliminates the need for a repudiation on the part of
petitioners.
It was held in Go Chi Gun v. Co Cho75 that four elements had to be shown in order to
use laches as a defense: (1) conduct on the part of the defendant, or of one under
whom a claim is made, giving rise to a situation for which a complaint is filed and a
remedy sought; (2) delay in asserting the rights of the complainant, who has
knowledge or notice of the defendants conduct and has been afforded an opportunity
to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the
complainant will assert the right on which the latter has based the suit; and (4) injury or
prejudice to the defendant in the event that the complainant is granted a relief or the
suit is not deemed barred.

The four requisites are present in the instant case. First, the five co-owners act of
selling the entire property deprived respondents predecessors of the enjoyment of
their rightful shares in the inheritance. This deprivation was the basis of the Complaint
filed by respondents.

lifetime of indifference and apathy. They cannot now be permitted to recover property
that others have possessed, developed, and invested in for sixty-five years. It would be
sheer injustice to allow the latter to reap benefits after generations of predecessors
passively slept on their rights. The Court aptly stated in Miguel v. Catalino:

Second, respondents waited more than six decades to file a suit without offering any
excuse for the long delay in the assertion of their rights. They do not at all claim that
they were unaware of their co-heirs actions. They could have instituted an action to
annul in 1921 or to recover the property in 1928, since they were legally presumed to
know of the invalidity of the sale as to their shares; they did not have to wait for sixtyfive years to institute this suit.

"x x x. Courts cannot look with favor at parties who, by their silence, delay, and
inaction, knowingly induce another to spend time, effort, and expense in cultivating the
land, paying taxes and making improvements thereon x x x only to spring from ambush
and claim title when the possessors efforts and the rise of land values offer an
opportunity to make easy profit at his expense."76

Third, after being allowed more than six decades of peaceful possession of the
property, petitioners were certainly not expecting respondents to reclaim it. Although
Ruben Derecho warned Laude not to buy the land because it was still co-owned, the
former still took no immediate action to prevent Teodoro from selling the entire property
or to recover it. Respondents even allowed nine more years to pass before rising from
their stupor to institute the Complaint.
Fourth, there is no doubt that petitioners will suffer if respondents are allowed to
recover the property. The former have already developed, invested in, and religiously
paid the taxes for it for at least a half-century. On the other hand, respondents
nonchalantly allowed petitioners to continue with their possession and enjoyment of
the property, and then pounced upon them when the latter least expected it.
Although we condemn the fraudulent acts of Leandro and the five co-owners in their
scheme to deprive their relatives of the latters rightful shares in the inheritance, the
fact remains that respondents and their forebears wasted their opportunity through a

To grant respondents relief when they have not even offered any justifiable excuse for
their inaction would be unjust. It is certainly beyond our comprehension how they could
have remained silent for more than 50 years. They have only themselves to blame if
the Court at this late hour can no longer afford them relief against the inequities they
allegedly suffered.
Considering the undisputed facts, not only had laches set in when respondents
instituted their action for reconveyance in 1993, but their right to enforce the
constructive trust had already prescribed as well.
WHEREFORE, the Petition is GRANTED. The assailed July 28, 2003 Decision of the
Court of Appeals is hereby REVERSED and SET ASIDE. The Complaint before the
Regional Trial Court of Danao City is hereby DISMISSED. No costs.
SO ORDERED.