FIRST DIVISION

[G.R. No. 172172. February 24, 2009.]

SPS. ERNESTO V. YU AND ELSIE ONG YU, petitioners, vs. BALTAZAR N. PACLEB, (Substituted
by ANTONIETA S. PACLEB, LORNA PACLEB-GUERRERO, FLORENCIO C. PACLEB, and MYRLA
C. PACLEB), respondents.
DECISION
PUNO, C.J :p

Before the Court is a Petition filed under Rule 45 of the Rules of Court assailing: (i) the Decision 1 dated August
31, 2005 of the Court of Appeals in CA-G.R. CV No. 78629 setting aside the Decision 2 dated December 27, 2002 of
the Regional Trial Court in Civil Case No. 1325-96; and (ii) the Resolution 3 dated April 3, 2006 of the Court of Appeals
denying reconsideration of the said decision. HICSTa

The facts are well established.

Respondent Baltazar N. Pacleb and his late first wife, Angelita Chan, are the registered owners of an 18,000-
square meter parcel of land in Barrio Langcaan, Dasmarias, Cavite, covered by Transfer Certificate of Title (TCT) No.
T-118375 4 (Langcaan Property).
In 1992, the Langcaan Property became the subject of three (3) documents purporting to transfer its ownership.
On February 27, 1992, a Deed of Absolute Sale 5 was entered into between Spouses Baltazar N. Pacleb and Angelita
Chan and Rebecca Del Rosario. On May 7, 1992, a Deed of Absolute Sale 6 was entered into between Rebecca Del
Rosario and Ruperto L. Javier (Javier). On November 10, 1992, a Contract to Sell 7 was entered into between Javier
and petitioner spouses Ernesto V. Yu and Elsie Ong Yu. In their contract, petitioner spouses Yu agreed to pay Javier a
total consideration of P900,000. Six hundred thousand pesos (P600,000) (consisting of P200,000 as previous payment
and P400,000 to be paid upon execution of the contract) was acknowledged as received by Javier and P300,000
remained as balance. Javier undertook to deliver possession of the Langcaan Property and to sign a deed of absolute
sale within thirty (30) days from execution of the contract.
All the aforementioned sales were not registered.
On April 23, 1993, petitioner spouses Yu filed with the Regional Trial Court of Imus, Cavite, a Complaint 8 for
specific performance and damages against Javier, docketed as Civil Case No. 741-93, to compel the latter to deliver to
them ownership and possession, as well as title to the Langcaan Property. In their Complaint, they alleged that Javier
represented to them that the Langcaan Property was not tenanted. However, after they already paid P200,000 as initial
payment and entered into an Agreement dated September 11, 1992 for the sale of the Langcaan Property, they
discovered it was tenanted by Ramon C. Pacleb (Ramon). 9 Petitioner spouses demanded the cancellation of their
agreement and the return of their initial payment. Thereafter, petitioner spouses and Javier verified from Ramon if he
was willing to vacate the property and the latter was agreeable. Javier then promised to make arrangements with Ramon
to vacate the property and to pay the latter his disturbance compensation. Hence, they proceeded to enter into a
Contract to Sell canceling the Agreement mentioned. However, Javier failed to comply with his obligations.
Javier did not appear in the proceedings and was declared in default. On September 8, 1994, the trial court
rendered a Decision, 10 the dispositive portion of which reads: aSEDHC

WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendant based on the sale of subject
parcel of land to the former who is entitled thereby to the ownership and possession thereof from the said defendant
who is further directed to pay damages of Thirty Thousand Pesos (P30,000.00) including attorney's fees and
expenses incurred by the plaintiff in this case as a consequence.

The defendant is further directed to deliver the certificate of title of the land to the plaintiff who is entitled to it as
transferee and new owner thereof upon payment by the plaintiff of his balance of the purchase price in the sum of
Three Hundred Thousand Pesos (P300,000.00) with legal interest from date.
SO ORDERED.

The said Decision and its Certificate of Finality 11 were annotated on TCT No. T-118375 as Entry No. 2676-
75 12 and Entry No. 2677-75, 13 respectively.
On March 10, 1995, petitioner spouses and Ramon and the latter's wife, Corazon Bodino, executed
a "Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag ng Pagtalikod sa Karapatan." 14 Under the said
agreement, petitioner spouses paid Ramon the amount of P500,000 in exchange for the waiver of his tenancy rights
over the Langcaan Property.
On October 12, 1995, respondent filed a Complaint 15 for annulment of deed of sale and other documents arising
from it, docketed as Civil Case No. 1199-95. He alleged that the deed of sale purportedly executed between him and
his late first wife and Rebecca Del Rosario was spurious as their signatures thereon were forgeries. Respondent moved
to have summons served upon Rebecca Del Rosario by publication since the latter's address could not be found. The
trial court, however, denied his motion. 16 Respondent then moved to dismiss the case, and the trial court granted the
motion in its Order 17 dated April 11, 1996, dismissing the case without prejudice.
Meanwhile, on November 23, 1995, petitioner spouses filed an action for forcible entry against respondent with
the Municipal Trial Court (MTC). They alleged that they had prior physical possession of the Langcaan Property through
their trustee, Ramon, until the latter was ousted by respondent in September 1995. The MTC ruled in favor of petitioner
spouses, which decision was affirmed by the Regional Trial Court. 18 However, the Court of Appeals set aside the
decisions of the lower courts and found that it was respondent who had prior physical possession of the property as
shown by his payment of real estate taxes thereon. 19
On May 29, 1996, respondent filed the instant case for removal of cloud from title with damages to cancel Entry
No. 2676-75 and Entry No. 2677-75, the annotated Decision in Civil Case No. 741-93 and its Certificate of Finality, from
the title of the Langcaan Property. 20 Respondent alleged that the deed of sale between him and his late first wife and
Rebecca Del Rosario, who is not known to them, could not have been possibly executed on February 27, 1992, the
date appearing thereon. He alleged that on said date, he was residing in the United States 21 and his late first wife,
Angelita Chan, died twenty (20) years ago. 22 EcTaSC

On May 28, 1997, during the pendency of the instant case before the trial court, respondent died without having
testified on the merits of his case. Hence, he was substituted by his surviving spouse, Antonieta S. Pacleb, and Lorna
Pacleb-Guerrero, Florencio C. Pacleb and Myrla C. Pacleb representing the children with the first wife. 23
On December 27, 2002, the trial court dismissed respondent's case and held that petitioner spouses are
purchasers in good faith. 24 The trial court ratiocinated that the dismissal of respondent's complaint for annulment of the
successive sales at his instance "sealed the regularity of the purchase" 25 by petitioner spouses and that he "in effect
admits that the said sale . . . was valid and in order". 26 Further, the trial court held that the Decision in Civil Case No.
741-93 on petitioner spouses' action for specific performance against Javier is already final and can no longer be altered.
Accordingly, the trial court ordered the cancellation of TCT No. T-118375 in the name of respondent and the issuance
of a new title in the name of petitioner spouses. The trial court also ordered the heirs of respondent and all persons
claiming under them to surrender possession of the Langcaan Property to petitioner spouses.
On appeal by respondent, the Court of Appeals reversed and set aside the decision of the trial court. 27 The
Court of Appeals ruled that petitioner spouses are not purchasers in good faith and that the Decision in Civil Case No.
741-93 did not transfer ownership of the Langcaan Property to them. Accordingly, the appellate court ordered the
cancellation of the annotation of the Decision in Civil Case No. 741-93 on the title of the Langcaan Property. The Court
of Appeals denied reconsideration of said decision. 28
Hence, this Petition.
Two issues are involved in the instant petition. The first is whether petitioner spouses are innocent purchasers
for value and in good faith. The second is whether ownership over the Langcaan Property was properly vested in
petitioner spouses by virtue of the Decision in Civil Case No. 741-93.
Petitioner spouses argue that they are purchasers in good faith. Further, they contend that the Court of Appeals
erred in finding that: "Ramon told him [Ernesto V. Yu] that the property is owned by his father, Baltazar, and that he is
the mere caretaker thereof" 29 since Ramon clarified that his father was the formerowner of the Langcaan Property. In
support of their stance, they cite the following testimony of petitioner Ernesto V. Yu:
Atty. Abalos:

Mr. Witness, you testified during the direct that you acquired the subject property from one Ruperto Javier, when
for the first time have you come to know Mr. Ruperto Javier?

A: I first came to know him in the year 1992 when he was accompanied by Mr. Kalagayan. He showed me some
papers to the office. ICHDca
Q: Do you know the exact date Mr. Witness?
A: I forgot the exact date, ma'am.
Q: More or less can you estimate what month?
A: Sometime in February or March 1992.

Q: When you said that the subject property was offered to you for sale, what did you do Mr. Witness, in preparation
for a transaction?
A: I asked my lawyer Atty. Florencio Paredes to check and verify the Deed of Sale.
Q: And after Atty. Florencio Paredes verified the document you decided to buy the property?
A: No, ma'am. We visited the place.
Q: When was that?
A: I could not remember the exact date but I visited the place and I met the son, Ramon Pacleb. I went there in
order to verify if the property is existing. When I verified that the property is existing Mr. Javier visited me
again to follow-up what decision I have but I told him that I will wait for my lawyer's advi[c]e.
Q: Mr. Witness, what particular instruction did you give to your lawyer?
A: To verify the title and the documents.
Court:
Documents for the title?
A: Yes, Your Honor.
Atty. Abalos:
When you were able to get the title in whose name the title was registered?
A: It was registered in the name of the older Pacleb.
Court:
By the way Mr. Witness, when you said you met Ramon Pacleb the son of the owner of the property, was he
residing there or he was (sic) just went there? When you visited the property did you find him to be
residing in that property?
A: No, Your Honor.
Atty. Abalos:
You mean to say Mr. Witness, you just met Mr. Ramon Pacleb in the place at the time you went there? AIDcTE

A: No, ma'am. He went to my office with Mr. Kalagayan. He was introduced to me at the Kelly Hardware. I do not
know Mr. Ruperto Javier. He told me that there is a property that [is] tenanted and occupied by the son
Ramon Pacleb after that I went with them to visit the place. On (sic) there he introduced me [to] Mr.
Ramon Pacleb the caretaker of the property and I told them that I will still look at the property and he gave
me some documents and that (sic) documents I gave it to my lawyer for verification.

Q: You said that Mr. Ruperto Javier went to your office with Mr. Kalagayan, so the first time you visited the property
you did not see Mr. Ramon Pacleb there?

A: No, ma'am. When I went there I met Ramon Pacleb the caretaker and he was the one who showed the place to
us.

Q: Mr. Witness, since you visited the place you were able to see the allege[d] caretaker Mr. Ramon Pacleb, did you
ask him regarding the property or the whereabouts of the registered owner, did you ask him?
A: When Ruperto introduced me to Mr. Ramon Pacleb he told me that he is the son of the owner and he is the
caretaker and his father is in the States. He showed me the place, I verified and I saw the monuments and
I told him I will come back to check the papers and if it is okay I will bring with me the surveyor.
Q: Could you estimate Mr. Witness, more or less what was the month when you were able to talk to Mr.
Ramon Pacleb?

A: I am not sure but it was morning of February.

Q: So it was in February, Mr. Witness?
A: I am not sure if February or March.
Q: But definitely. . .
A: Before I purchased the property I checked the property.

Q: But that was definitely after Mr. Ruperto offered to you for sale the subject property?
xxx xxx xxx
Atty. Abalos:

Okay, Mr. Witness, you said that you talked to Mr. Ramon Pacleb and he told you that his father is the owner of the
property? ACTEHI
 A: He told me that property is their former property and it was owned by them. Now, he is the tenant of the
property. 30 (Emphasis ours)

Petitioner spouses conclude that based on their personal inspection of the property and the representations of
the registered tenant thereon, they had no reason to doubt the validity of the deeds of absolute sale since these were
duly notarized. Consequently, the alleged forgery of Angelita Chan's signature is of no moment since they had no notice
of any claim or interest of some other person in the property despite their diligent inquiry.
We find petitioner spouses' contentions without merit.
At the outset, we note that in petitioner Ernesto V. Yu's testimony, he stated that he inspected the Langcaan
Property and talked with the tenant, Ramon, before he purchased the same. However, in his Complaint for specific
performance and damages which he filed against Javier, he alleged that it was only after he had entered into an
Agreement for the sale of the property and his initial payment of P200,000 that he discovered that the property was
indeed being tenanted by Ramon who lives in the said farm, viz.:
8. Sometime on September 11, 1992, defendant came again to the Office of plaintiff reiterating his offer to sell said
Lot No. 6853-D, containing an area of 18,000 square meters, at P75.00 per square meters (sic). Defendant
manifested to the plaintiff that if his offer is acceptable to the plaintiff, he binds and obligates himself to pay the capital
gains of previous transactions with the BIR and register subject Lot No. 6853-D in his name (defendant). On these
conditions, plaintiff accepted the offer and made [the] initial payment of TWO HUNDRED THOUSAND PESOS
(P200,000.00) to defendant by issuance and delivery of plaintiff's personal check.

9. Sometime on September 11, 1992, plaintiff and defendant signed an AGREEMENT on the sale of Lot No.
6853-D of the subdivision plan (LRC) Psd-282604, containing an area of 18,000 square meters, more or less, located
at Bo. Langcaan, Municipality of Dasmarinas, Province of Cavite, at a selling price of P75.00 per square meter. A
xerox copy of this AGREEMENT signed by the parties thereto is hereto attached and marked as ANNEX "D" of this
complaint.
10. Thereafter, however, plaintiff and defendant, with their surveyor discovered that subject Lot No. 6853-D
offered for sale to the plaintiff is indeed being tenanted by one RAMON PACLEB who lives in the said
farm. cACDaH

11. In view of the foregoing developments, plaintiff informed defendant that he wanted the Agreement be cancelled
and for the defendant to return the sum of TWO HUNDRED THOUSAND PESOS (P200,000.00). 31 (Emphasis
supplied)

This inconsistency casts grave doubt as to whether petitioner spouses personally inspected the property before
purchasing it.
More importantly, however, several facts should have put petitioner spouses on inquiry as to the alleged rights
of their vendor, Javier, over the Langcaan Property.
First, it should be noted that the property remains to be registered in the name of respondent despite the two
(2) Deeds of Absolute Sale 32 purporting to transfer the Langcaan Property from respondent and his late first wife,
Angelita Chan, to Rebecca Del Rosario then from the latter to Javier. Both deeds were not even annotated in the title
of the Langcaan Property.
Second, a perusal of the two deeds of absolute sale reveals that they were executed only about two (2) months
apart and that they contain identical provisions.
Third, it is undisputed that the Langcaan Property is in the possession of Ramon, the son of the registered
owner. Regardless of the representations given by the latter, this bare fact alone should have made petitioner spouses
suspicious as to the veracity of the alleged title of their vendor. Moreover, as noted by the Court of Appeals, petitioner
spouses could have easily verified the true status of the Langcaan Property from Ramon's wife, since the latter is their
relative, as averred in paragraph 13 of their Answer in Civil Case No. 1199-95. 33 The case law is well settled, viz.:
The law protects to a greater degree a purchaser who buys from the registered owner himself. Corollarily, it
requires a higher degree of prudence from one who buys from a person who is not the registered owner,
although the land object of the transaction is registered. While one who buys from the registered owner does
not need to look behind the certificate of title, one who buys from one who is not the registered owner is
expected to examine not only the certificate of title but all factual circumstances necessary for him to
determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land.

This Court has consistently applied the stricter rule when it comes to deciding the issue of good faith of one who
buys from one who is not the registered owner, but who exhibits a certificate of title. 34 (Emphasis supplied) IEcDCa

Finally, as correctly pointed out by the Court of Appeals, the dismissal of Civil Case No. 1199-95 (the action to
annul the successive sales of the property) cannot serve to validate the sale to petitioner spouses since the dismissal
was ordered because Rebecca Del Rosario and Javier could no longer be found. Indeed, the dismissal was without
prejudice.
 Based on the foregoing, therefore, petitioner spouses cannot be considered as innocent purchasers in good
faith.
We now go to the second issue.
Petitioner spouses argue that the decision of the Regional Trial Court in Civil Case No. 741-93 as to the rightful
owner of the Langcaan Property is conclusive and binding upon respondent even if the latter was not a party thereto
since it involved the question of possession and ownership of real property, and is thus not merely an action in
personam but an action quasi in rem.
In Domagas v. Jensen, 35 we distinguished between actions in personam and actions quasi in rem.
The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem, or in
personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A
proceeding in personam is a proceeding to enforce personal rights and obligations brought against the
person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of
ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the
mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court,
some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a
defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An action in personam is
said to be one which has for its object a judgment against the person, as distinguished from a judgment
against the propriety (sic) to determine its state. It has been held that an action in personam is a proceeding to
enforce personal rights or obligations; such action is brought against the person.

xxx xxx xxx

On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject the property of such
persons to the discharge of the claims assailed. In an action quasi in rem, an individual is named as defendant
and the purpose of the proceeding is to subject his interests therein to the obligation or loan burdening the
property. Actions quasi in rem deal with the status, ownership or liability of a particular property but which are
intended to operate on these questions only as between the particular parties to the proceedings and not to ascertain
or cut off the rights or interests of all possible claimants. The judgments therein are binding only upon the parties
who joined in the action.

Civil Case No. 741-93 is an action for specific performance and damages filed by petitioner spouses against
Javier to compel performance of the latter's undertakings under their Contract to Sell. As correctly held by the Court of
Appeals, its object is to compel Javier to accept the full payment of the purchase price, and to execute a deed of absolute
sale over the Langcaan Property in their favor. The obligations of Javier under the contract to sell attach to him alone,
and do not burden the Langcaan Property. 36 cDIHES

We have held in an unbroken string of cases that an action for specific performance is an action in
personam. 37 In Cabutihan v. Landcenter Construction and Development Corporation, 38 we ruled that an action
for specific performance praying for the execution of a deed of sale in connection with an undertaking in a contract,
such as the contract to sell, in this instance, is an action in personam.
Being a judgment in personam, Civil Case No. 741-93 is binding only upon the parties properly impleaded
therein and duly heard or given an opportunity to be heard. 39 Therefore, it cannot bind respondent since he was not a
party therein. Neither can respondent be considered as privy thereto since his signature and that of his late first wife,
Angelita Chan, were forged in the deed of sale.
All told, we affirm the ruling of the Court of Appeals finding that, as between respondent and petitioner spouses,
respondent has a better right over the Langcaan Property as the true owner thereof.
IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals is affirmed. Costs against
petitioners.
SO ORDERED.
 FIRST DIVISION
[G.R. No. 146874 * . July 20, 2006.]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. SOCORRO P. JACOB, respondent.
DECISION
CALLEJO, SR., J : p

Before this Court is a Petition for Review on Certiorari filed by the Republic of the Philippines assailing the Decision 1 of
the Court of Appeals (CA) in CA-G.R. CV No. 53606, which affirmed the ruling of the Regional Trial Court (RTC), Branch
17, Tabaco, Albay, in Land Registration Case No. T-210. In the said case, the RTC granted the application of private
respondent Socorro P. Jacob for confirmation of her title to Lot No. 4094, Cad-249, Malinao Cadastre of Plan AP-05-
002078 in Barangay Balading, Malinao, Albay.
The antecedents follow:
On August 14, 1970, then President Ferdinand E. Marcos issued Proclamation No. 739, "Establishing as Reservation for
the Purpose of the Exploration, Development, Exploitation and Utilization of Geothermal Energy, Natural Gas and
Methane Gas a Parcel of Land in the Province of Albay, Island of Luzon, Philippines." Lot No. 4094 of the Malinao
Cadastre, consisting of 15,520 square meters, is covered by the said proclamation.
Nevertheless, on May 6, 1994, private respondent, a retired public school teacher, filed an application with the RTC of
Albay for the confirmation and registration of her alleged title over Lot No. 4094.
The Republic of the Philippines, through the Office of the Solicitor General (OSG), opposed the application for the
following reasons:
3.That the claim of ownership in fee simple on the basis of Spanish title or grant can no longer be availed of by the
applicant/s who have failed to file an appropriate application for registration within the period of six (6) months from
February 16, 1976 as required by P.D. No. 892. From the records, it appears that the instant application was filed
on May 6, 1994.
4.That the parcel/s applied for is/are portions of the public domain belonging to the Republic of the Philippines not
subject to private appropriation. 2

Private respondent appended to her application the tracing cloth plan of the property under the name of Sotero Bondal.
The blue print, 3 dated February 27, 1991, was prepared and signed by Geodetic Engineer Bonifacio C. del Valle and
approved by Ernesto L. Llave, Chief, Regional Surveys Division of the Lands Management Service. Per Report 4 of the
Land Registration Authority dated September 27, 1994, the property was the subject of an application for registration
(Cadastral Case No. 42, GLRO Cadastral Record No. 1324), but "no decision has been rendered thereon, or if there had
been any, no copy of the same was furnished to the [Land Registration Authority]." The report also states that the property
is covered by Free Patent No. V-13062 dated May 21, 1955. 5 Private respondent had also applied for a free patent over
the property, but withdrew her application in a Letter 6 dated October 27, 1994 addressed to the Department of
Environment and Natural Resources, Region V, Legaspi City.
Private respondent adduced the following evidence and factual allegations to support her application before the RTC:
The previous owner of Lot No. 4094, Sotero Bondal, sold the property to Macario Monjardin, 7 a brother of private
respondent's mother, Josefa Monjardin Patricio. Macario declared the property in his name under Tax Declaration (T.D.)
No. 18854 8 in 1930, superseding T.D. No. 15956, and again in 1949 under T.D. No. 7117. 9 Since Macario was residing
in Manila and was unable to cultivate the property, he asked his sister, Josefa to be his encargado. By then, private
respondent was already a 17-year old substitute teacher who then accompanied her mother in supervising the planting
and harvesting of palay and the improvement of the lot. SIcCEA

Sometime in 1946, Macario decided to marry. On January 31, 1946, he sold the property and executed a deed of
sale 10 in favor of the spouses Igmedio A. Patricio and Josefa Monjardin-Patricio, as vendees, for P400.00. The spouses
thereafter received their share of the produce as owners, but failed to declare the property for taxation purposes under
their names.
In 1947, Josefa Patricio died intestate and was survived by her husband Igmedio and private respondent. T. D. No. 7117
was cancelled effective 1960 by T.D. No. 1160211 under the name of "Egmidio A. Patricio." The realty taxes due on the
property from 1949 to 1959 were paid on April 16, 1959. 12 Igmedio died intestate in 1968, and on May 8, 1971, private
respondent executed an Affidavit of Extrajudicial Adjudication 13 where she declared that as sole heir of the spouses
Igmedio Patricio, she was the sole owner of the property.
Lot No. No. 4094 was declared for taxation purposes under the name of Socorro under T.D. No. 00530 14 effective 1985.
On July 7, 1983, she paid the realty taxes over the property from 1960 to 1983, and from 1983 to 1995. 15
When cross-examined, private respondent admitted that she had no copy of the deed of sale executed by Sotero Bondal
in favor of Macario Monjardin. 16
The Republic of the Philippines did not offer any evidence to support its opposition to the application.
On January 30, 1996, the trial court rendered judgment in favor of the applicant. The fallo of the decision reads:
WHEREFORE, Lot No. 4094 of Plan Ap-05-002078, Cad-249, Malinao Cadastre, more particularly in the
corresponding plan and technical description (Exhibits "O" and "N"), is hereby ordered REGISTERED and
CONFIRMED in the name of Socorro Jacob, of legal age, married to Elias Jacob, and a resident of Barangay 7,
Balintawak Street, Albay District, Legazpi City pursuant to paragraph (1), Section 14 of the Presidential Decree No.
1529, otherwise known as the Property Registration Decree.

Once this decision becomes final, let the corresponding decree and Original Certificate of Title be issued in favor of
said applicant.
SO ORDERED. 17

The Republic of the Philippines, through the Office of the Solicitor General, appealed the decision to the CA on the
following ground:
THE HONORABLE COURT ERRED IN FINDING THAT APPELLEE HAS A REGISTRABLE RIGHT OVER LOT
NO. 4049 OF THE MALINAO CADASTRE AND THAT HER POSSESSION AND THAT OF HER
PREDECESSORS-IN-INTEREST OVER THE SAID LOT FOR MORE THAN TWENTY SEVEN (27) YEARS WAS
IN THE CONCEPT OF OWNER. 18

The OSG averred that private respondent failed to prove her claim that the original owner of the property, Sotero Bondal,
sold the property to her uncle Macario Monjardin. It was likewise pointed out that private respondent admitted that she
had no copy of any such deed of sale. The fact that the property was declared under the name of Sotero Bondal in 1991
(as shown by the tracing cloth plan approved by the Land Registration Authority on February 27, 1991) negates private
respondent's claim that the property was sold to Monjardin. Even assuming the existence of such sale, the OSG claimed
that private respondent still failed to prove that her predecessors-in-interest had exclusive, open and adverse occupation
under a bona fide claim of ownership over the property since June 12, 1945 or earlier, up to August 14, 1970 when the
property was declared as a reservation under Proclamation No. 739. 19
Private respondent opted not to file any brief.
On January 20, 2001, the CA rendered judgment affirming the appealed decision. It declared that although private
respondent failed to adduce in evidence the deed of sale executed by Sotero Bondal in favor of Macario Monjardin, her
testimony that the sale took place was enough. Her claims were likewise buttressed by her documentary evidence, and
thus she was able to muster the requisite quantum of evidence to prove exclusive, open, and continuous possession
under a bona fideclaim of ownership for the requisite period of time before August 14, 1970. According to the appellate
court, the bare fact that private respondent failed to present any evidence to corroborate such testimony did not render it
self-serving.
The Republic of the Philippines, now petitioner, filed the instant petition, assailing the decision of the CA on the following
grounds:
A
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT HAS ESTABLISHED BY
CLEAR AND CONVINCING EVIDENCE HER POSSESSION AND THAT OF HER PREDECESSOR-IN-INTEREST
WITHIN THE PERIOD AND IN THE CONCEPT REQUIRED BY LAW.
B
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT ACQUIRED A VESTED RIGHT
OVER THE SUBJECT PARCEL OF LAND EVEN BEFORE THE EFFECTIVITY OF PROCLAMATION NO. 739 OF
AUGUST 14, 1970. 20

The parties reiterated their arguments in the CA to support their respective claims in this Court.
The petition is meritorious.
Section 48(b) of Commonwealth Act No. 141, as amended by Republic Act No. 1942, reads:
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 therefor, under the Land Registration Act, to wit:
 (b)Those who by themselves or through their predecessors in-interest therein have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain,
under a bona fide claim of acquisition of ownership, for at least thirty years immediately preceding the
filing of the application 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.

This provision was further amended by Presidential Decree (P.D.) No. 1903 by substituting the phrase "for at least thirty
years" with "since June 12, 1945," thus:

Sec. 4.The provisions of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act are hereby amended
in the sense that these provisions shall apply only to alienable and disposable lands of the public domain which
have been in open, continuous, exclusive and notorious possession, and occupation by the applicant himself or
through his predecessor-in-interest, under a bona fide claim of acquisition of ownership, since June 12,
1945 (emphasis supplied).

Section 14(1) of P.D. No. 1529, otherwise known as the Property Registration Decree, likewise provides:
SEC. 14.Who may apply. The following persons may file in the proper Court of First Instance [now Regional
Trial Court] an application for registration of title to land, whether personally or through their duly authorized
representatives:

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

Applicants for confirmation of imperfect title must, therefore, prove the following: (a) that the land forms part of the
disposable and alienable agricultural lands of the public domain; and (b) that they have been in open, continuous,
exclusive, and notorious possession and occupation of the same under a bona fide claim of ownership either since time
immemorial or since June 12, 1945. 21
Under the Regalian doctrine, all lands not otherwise appearing to be clearly within private ownership are presumed to
belong to the State. The presumption is that lands of whatever classification belong to the State. 22 Unless public land is
shown to have been reclassified as alienable or disposable to a private person by the State, it remains part of the
inalienable public domain. Property of the public domain is beyond the commerce of man and not susceptible of private
appropriation and acquisitive prescription. Occupation thereof in the concept of owner no matter how long cannot ripen
into ownership and be registered as a title. 23 The statute of limitations with regard to public agricultural lands does not
operate against the State unless the occupant proves possession and occupation of the same after a claim of ownership
for the required number of years to constitute a grant from the State. 24
No public land can be acquired by private persons without any grant from the government, whether express or implied. It
is indispensable that there be a showing of a title from the State. The rationale for the period "since time immemorial or
since June 12, 1945" lies in the presumption that the land applied for pertains to the State, and that the occupants or
possessor claim an interest thereon only by virtue of their imperfect title as continuous, open and notorious possession.
In the case at bar, when private respondent filed her application with the RTC on May 6, 1994, Lot No. 4094 was no
longer alienable and disposable property of the public domain, since as of August 14, 1970, by virtue of Proclamation No.
739, it was segregated from the public domain and declared part of the reservation for the development of geothermal
energy. 25 Private respondent filed her application for confirmation 24 years after the said proclamation was issued; thus,
the period of her possession and occupancy after such proclamation can no longer be tacked in favor of the claimant. 26
The Court notes that on October 25, 1975, the Secretary of Justice issued an opinion 27 stating that Proclamation No. 739
was without prejudice to the vested rights of individuals/applicants who had fully complied with all the requirements under
the Public Land Law for the acquisition of ownership as alienable and disposable. It bears stressing, however, that one
claiming private rights under the Public Land Act, as amended, must prove by clear and convincing evidence that all the
substantive requisites for acquisition of public lands (along with the procedural) had been complied with.
As pointed out by petitioner, private respondent failed to adduce clear and convincing evidence that by August 14, 1970,
she had already acquired ownership over the property by herself or through her predecessors-in-interest through open,
continuous, exclusive and notorious possession and occupation of the property since 1945 or earlier.
Indeed, the law speaks of "possession and occupation." Possession is broader than occupation because it includes
constructive possession. Unless, therefore, the law adds the word "occupation," it seeks to delimit the all-encompassing
effect of constructive possession. Taken together with the words "continuous," "exclusive" and "notorious," the word
"occupation" seems to highlight the facts that for an applicant to qualify, her possession of the property must not be a
mere fiction.
Actual possession of a land consists in the manifestation of acts of dominion of such a nature as a party would naturally
exercise over her own property. 28 A mere casual cultivation of portions of land by the claimant does not constitute
sufficient basis for a claim of ownership. Such possession is not exclusive and notorious as it gives rise to a presumptive
grant from the State. 29 The applicant is burdened to offer proof of specific acts of ownership to substantiate the claim over
the land. 30 The good faith of the person consists in the reasonable belief that the person from whom she received the
property was the owner thereof and could transfer ownership. 31
While tax receipts and tax payment receipts themselves do not convincingly prove title to the land, 32 these are good
indicia of possession in the concept of an owner, for no one in his right mind would pay taxes for a property that is not in
his actual or, at least, constructive possession. 33 They constitute, at the least, proof that the holder has a claim of title
over the property, particularly when accompanied by proof of actual possession. 34 The voluntary declaration of a piece of
property for taxation purposes not only manifests one's sincere and honest desire to obtain title to the property, but also
announces an adverse claim against the State and all other interested parties with an intention to contribute needed
revenues to the government. Such an act strengthens one's bona fide claim of acquisition of ownership. 35
In this case, however, private respondent failed to offer in evidence the deed of sale purportedly executed by Sotero
Bondal in favor of Macario Monjardin as vendee. On cross-examination, she admitted that the only deed of sale she had
was the deed of absolute sale Macario Monjardin executed in favor of her parents, the spouses Igmedio Patricio. The
documentary evidence adduced by private respondent even belies her claim that Sotero Bondal sold the property to her
uncle. She even failed to identify "B.C. Monjardin," much less explain whether such person was really her uncle. 36 She
even failed to adduce in evidence any tax declaration over the property under his name and that he paid the realty taxes
for the property from 1930 to 1946.
Of great significance is private respondent's "promise" to submit proof based on the records in the Register of Deeds and
other government agencies showing that Sotero Bondal sold the property to Macario Monjardin; and that if such records
had been destroyed during the Second World War, she would submit proof of said destruction:
QWho is this Sotero Bondal?
AThe original owner of the lot from whom my uncle bought the property.
QDo you have any document that your uncle Macario Monjardin acquired this property from Sotero Bondal?
ANone. That was the only document executed both by my parents and my uncle.

QSo, there is a gap now to prove that your uncle, Macario Monjardin was able to acquire this from Sotero because
it appears from the survey that the owner is still Sotero Bondal.
AYes, sir.
QSo, as of now you do not have any document?
AYou know during the war years everything was disturbed. So that is the only document that I have found.

QSo, there is a need for you to submit that to the Court because official documents show that the property is still in
the name of Sotero Bondal. Are you going to prove that before this Court?
AI have to get from the cadastral office?
PROS. BOCALBOS:

It is up to your counsel to secure that. Just to show continuity of ownership of the land from the original owner,
Sotero Bondal. As far as this witness is concerned, Your Honor, no more cross-examination except to
submit the document which we require to show contin[u]ous possession and ownership of the land.
ATTY. RAESES:

Your Honor please, we want to manifest before this Court that as far as that sale is concerned we cannot assure
the Court that we can produce that document. So I'm already manifesting this so that the distinguished
Prosecutor, Your Honor, will not oblige us to produce that. If we cannot produce that we will leave our
evidence to the Honorable Court.
COURT:
It is the observation that most of the records especially those that have been archived were lost during the war.
PROS. OCALBOS:
Yes, Your Honor. But it is a suggestion that in cases like this, you have to secure a certification from different
agencies that all the records were already destroyed because of the war or whatever. So, they are going
to execute again an affidavit of ownership of the property tracing all the dates from the predecessor, how
this property was acquired by Macario Monjardin. That is an affirmation of the ownership of the land. As of
 this date there are still documents showing that the property is owned by Sotero Bondal otherwise from
the date of sale, January 31, 1946 from Macario Monjardin to the petitioner's parents only shows that he
was the owner of the property but without proving how he was able to secure this from Sotero Bondal.

ATTY. RAESES:

Your Honor please, we agree with counsel. If I can only have a copy of that it will be the best evidence to prove
possession. But I must be frank, because pf the years that have passed and because of the Pacific War
that occurred in the Philippines. The floods and the natural calamities and time, Your Honor, I cannot
guarantee. But at any rate I filed this original land registration case in accordance with P.D. 1529 that
since this is still a public land, all I have to prove here is the continuous possession at least for 30 years
from 1936 continuously up to the present.
PROS. BOCALBOS:
There is even a gap from that statement, "from 1936", wherein the property was sold in 1946.
COURT:
That was sold to the uncle.
PROS. BOCALBOS:
But prior to that date there was no mention of Macario Monjardin how he was able to acquire this property. So, he
could have executed some document that he was the owner at that time when he sold the property. So,
there is a gap from the possession and ownership of the property from Sotero Bondal to Macario
Monjardin.
ATTY. RAESES:
The requirement in the application is to show that there is a continuous, exclusive possession of the land.
PROS. BOCALBOS:

We are tracing this, Your Honor, to protect the interest of the previous owner, not only the government. That is only
a suggestion. If they could secure from the Bureau of Lands or from any other agency that the records
were already lost from the time Sotero Bondal owned the property so that they can execute another
document an affidavit of ownership tracing the date and how Sotero Bondal acquired the property. 37

However, private respondent failed to comply with her undertaking and rested her case without presenting said
evidence. ICTaEH

Significantly, the spouses Igmedio Patricio applied for a free patent over the property after the Second World War, which,
according to private respondent, was rejected by the Bureau of Lands. 38 Private respondent's testimony is further belied
by the request to withdraw her application for a free patent over Lot No. 4094 which she made on October 27,
1994. 39 The records also show that the property is the subject of Cadastral Case No. 42, G.L.R.O. No. 1324 and there is
no evidence on record that this case has been terminated. There are thus two applications for registration of the same lot:
(1) the application of private respondent in the court below; and (2) Cadastral Case No. 42.
Furthermore, the fact that the blue print copy of the tracing cloth plan covering the subject lot as of 1991 was still in the
name of Sotero Bondal is proof that not all the records of the Land Management Authority relative to the property had
been lost. Unless and until respondent offered credible evidence that Monjardin had purchased the property from Bondal,
it cannot be said that the spouses Igmedio Patricio acquired the rights and interests of Bondal over the property through
Monjardin; private respondent cannot even tack her own possession of the property to that of her parents. In fact, she
failed to adduce evidence that her uncle had been in open, continuous and adverse possession of the property. While she
claimed that her mother was designated as encargado, private respondent failed to even mention the portion of the
property that was cultivated, or at least where and who planted the palay. Such declaration (that Macario designated her
mother as encargado) without more does not constitute preponderant evidence to prove adverse, continuous, open,
public, and peaceful possession in the concept of owner. Private respondent's testimony that after her parents purchased
the lot, they began receiving the share of the produce of the property does not in itself constitute proof of such adverse
possession.
There is thus no evidence that the parents of private respondent ever had open, continuous, adverse and actual
possession of Lot No. 4094.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The appealed decision of the Court of Appeals in CA-
G.R. CV No. 53606 is SET ASIDE. The Regional Trial Court is ordered to DISMISS private respondent's application for
confirmation of title over Lot No. 4094. SO ORDERED.
 EN BANC
[G.R. No. L-15385. June 30, 1960.]
ALEJANDRA BUGARIN VDA. DE SARMIENTO, plaintiff-appellee, vs. JOSEFA R.
LESACA, defendant-appellant.

SYLLABUS
1. SALE; DELIVERY OF SUBJECT-MATTER TO VENDEE; EXECUTION OF PUBLIC INSTRUMENT
EQUIVALENT TO DELIVERY. When a contract of sale is executed the vendor is bound to deliver to the vendee
the thing sold by placing the vendee in the control and possession of the subject-matter of the contract. However, if
the sale is executed by means of a public instrument, the mere execution of the instrument is equivalent to delivery
unless the contrary appears or is clearly to be inferred from such instrument.
2. ID.; ID.; ID.; WHEN PUBLIC INSTRUMENT NOT EQUIVALENT TO DELIVERY. Although it is
postulated in Article 1462 that the execution of a public document is equivalent to delivery, this legal fiction only holds
true when there is no impediment that may prevent the passing of the property from the hands of the vendor into
those of the vendee.
3. ID.; RESCISSION; RIGHT OF THE PARTY PREJUDICED TO EXACT FULFILLMENT OR RESCIND THE
SALE. In a contract of sale the obligation of the parties is reciprocal, and, as provided by law, in case one of the
parties fails to comply with what is incumbent upon him to do, the person prejudiced may either exact the fulfillment of
the obligation or rescind the sale.

DECISION
BAUTISTA ANGELO, J : p

On December 31, 1949, plaintiff filed a complaint in the Court of First Instance of Zambales praying for the
rescission of the contract of sale executed between her and defendant for failure of the latter to place the former in the
actual physical possession of the lands she bought.
After issues were joined, the parties submitted the case for decision upon the following stipulation of facts:
that on January 18, 1949, plaintiff bought from defendant two parcels of land for P5,000; that after the sale, plaintiff
tried to take actual physical possession of the lands but was prevented from doing so by one Martin Deloso who
claims to be the owner thereof; that on February 1, 1949, plaintiff instituted an action before the Tenancy Enforcement
Division of the Department of Justice to oust said Martin Deloso from the possession of the lands, which action she
later abandoned for reasons known only to her; that on December 12, 1949, plaintiff wrote defendant asking the latter
either to change the lands sold with another of the same kind and class or to return the purchase price together with
the expenses she had incurred in the execution of the sale, plus 6 per cent interest; and that since defendant did not
agree to this proposition as evidenced by her letter dated December 21, 1949, plaintiff filed the present action.
On April 11, 1957, the trial court rendered judgment declaring the deed of sale entered into between plaintiff
and defendant rescinded, and ordering the latter to pay the former the sum of P5,000, representing the purchase price
of the lands, plus the amount of P50.25 which plaintiff spent for the execution and registration of the deed of sale, with
legal interest on both sums from January 18, 1949. Defendant, in due time, appealed to the Court of Appeals, but the
case was certified to us on the ground that the questions involved are purely legal.
The first issue posed by appellant is whether the execution of the deed of sale in a public document (Exhibit
A) is equivalent to delivery of possession of the lands sold to appellee thus relieving her of the obligation to place
appellee in actual possession thereof. Articles 1461 and 1462 of the old Civil Code provide:
"ART. 1461. The vendor is bound to deliver and warrant the thing which is the subject-matter of the sale."
"ART. 1462. The thing sold shall be deemed delivered when the vendee is placed in the control and
possession thereof.
"If the sale should be made by means of a public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the subject-matter of the contract unless the contrary appears or is clearly to be
inferred from such instrument."
From the above it is clear that when a contract of sale is executed the vendor is bound to deliver to the
vendee the thing sold by placing the vendee in thecontrol and possession of the subject-matter of the contract.
However, if the sale is executed by means of a public instrument, the mere execution of the instrument is equivalent
to delivery unless the contrary appears or is clearly to be inferred from such instrument.
The question that now arises is: Is there any stipulation in the sale in question from which we can infer that
the vendor did not intend to deliver outright the possession of the lands to the vendee? We find none. On the contrary,
it can be clearly seen therein that the vendor intended to place the vendee in actual possession of the lands
immediately as can be inferred from the stipulation that the vendee "takes actual possession thereof . . . with full rights
to dispose, enjoy and make use thereof in such manner and form as would be most advantageous to herself." The
possession referred to in the contract evidently refers to actual possession and not merely symbolical inferable from
the mere execution of the document.
Has the vendor complied with this express commitment? she did not. As provided in Article 1462, the thing
sold shall be deemed delivered when the vendee is placed in the control and possession thereof, which situation does
not here obtain because from the execution of the sale up to the present the vendee was never able to take
possession of the lands due to the insistent refusal of Martin Deloso to surrender them claiming ownership thereof.
And although it is postulated in the same article that the execution of a public document is equivalent to delivery, this
legal fiction only holds true when there is no impediment that may prevent the passing of the property from the hands
of the vendor into those of the vendee. This is what we said in a similar case:
"The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is considered to be
delivered when it is placed 'in the hands and possession of the vendee.' (Civ. Code, art. 1462.) It is true that the
same article declares that the execution of a public instrument is equivalent to the delivery of the thing which is the
object of the contract, but, in order that this symbolic delivery may produce the effect of tradition, it is necessary
that the vendor shall have had suchcontrol over the thing sold that, at the moment of the sale, its material delivery
could have been made. It is not enough to confer upon the purchaser the ownershipand right of possession. The
thing sold must be placed in his control. When there is no impediment whatever to prevent the thing sold passing
into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the execution by the sole
will of the vendor, symbolic delivery through the execution of a public instrument is sufficient. But if, notwithstanding
the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and
make use of it himself or through another in his name, because such tenancy and enjoyment are opposed by the
interposition of another will, then fiction yields to reality the delivery has not been effected." (Addison vs. Felix
and Tioco, 38 Phil., 404; See also Garchitorena vs. Almeda, 48 Off. Gaz., No. 8, 3432; 3437)
The next question to resolve is: Can plaintiff rescind the contract of sale in view of defendant's failure to
deliver the possession of the lands?
We are inclined to uphold the affirmative. While defendant contends that rescission can be availed of only in
the cases enumerated in Articles 1291 and 1292 of the old civil Code and being a subsidiary remedy (Article 1294) it
can only be resorted to when no other remedy is available, yet we agree with plaintiff's contention that this action is
based on Article 1124 of the same Code, which provides:
"ART. 1124. The right to resolve reciprocal obligations, in case one of the obligors should fail to comply
with that which is incumbent upon him, is deemed to be implied.
"The person prejudiced may choose between exacting the fulfillment of the obligation or its resolution with
indemnity for losses and payment of interest in either case. He may also demand the resolution of the obligation
even after having elected its fulfillment, should the latter be found impossible."
Undoubtedly, in a contract of purchase and sale the obligation of the parties is reciprocal, and, as provided by
the law, in case one of the parties fails to comply with what is incumbent upon him to do, the person prejudiced may
either exact the fulfillment of the obligation or rescind the sale. Since plaintiff chose the latter alternative, it cannot be
disputed that her action is in accordance with law.
"We agree with the trial court that there was no fraud in the transaction in question but rather a non-
fulfillment by the plaintiff-appellee C. N. Hodges of his obligation, as vendor, to deliver the things, which were the
subject-matter of the contract, to the defendant-appellant Alberto Granada, as purchaser thereof (article 1461, Civil
Code), and place them in the latter's control and possession (article 1462, Civil Code) which was not done.
Inasmuch as the obligations arising from the contract of purchase and sale, Exhibit A, which was entered into by
the plaintiff-appellee and the defendant-appellant, are reciprocal, and the former had failed to comply with that
which was incumbent upon him, the latter has the implied right to resolve them, and he may choose between
exacting from the vendor the fulfillment of the obligation or its resolution with indemnity for damages and payment
of interest in either case (article 1124, Civil Code). Inasmuch as the defendant-appellant had chosen to rescind the
aforesaid contract of purchase and sale in his cross- complaint, there arose the necessity, on the part of the
plaintiff- appellee, to return the purchase price with interest thereon, and on the part of the defendant-appellant, to
restore the things which were the subject-matter thereof, in case he had received them (article 1295, Civil Code)."
(Hodges vs. Granada, 59 Phil., 429, 432; See also Pabalan vs. Velez, 22 Phil., 29; Addison vs. Felix and
Tioco, supra; Rodriguez vs. Flores, 43 Off. Gaz., No. 6, 2247.)

Wherefore, the decision appealed from is affirmed, with costs against defendant-appellant.
Paras, C. J., Bengzon, Padilla, Montemayor, Concepcion, Reyes, J. B. L., Barrera and Gutierrez David,
JJ., concur.
 EN BANC
[G.R. No. 179987. April 29, 2009.]
HEIRS OF MARIO MALABANAN, petitioner, vs. REPUBLIC OF THE PHILIPPINES, respondent.
DECISION
TINGA, J :
p

One main reason why the informal sector has not become formal is that from Indonesia to Brazil, 90 percent of the
informal lands are not titled and registered. This is a generalized phenomenon in the so-called Third World. And it
has many consequences. STHDAc
xxx xxx xxx

The question is: How is it that so many governments, from Suharto's in Indonesia to Fujimori's in Peru, have wanted
to title these people and have not been able to do so effectively? One reason is that none of the state systems in
Asia or Latin America can gather proof of informal titles. In Peru, the informals have means of proving property
ownership to each other which are not the same means developed by the Spanish legal system. The informals have
their own papers, their own forms of agreements, and their own systems of registration, all of which are very clearly
stated in the maps which they use for their own informal business transactions.

If you take a walk through the countryside, from Indonesia to Peru, and you walk by field after field in each field a
different dog is going to bark at you. Even dogs know what private property is all about. The only one who does not
know it is the government. The issue is that there exists a "common law" and an "informal law" which the Latin
American formal legal system does not know how to recognize.
Hernando De Soto 1

This decision inevitably affects all untitled lands currently in possession of persons and entities other than the
Philippine government. The petition, while unremarkable as to the facts, was accepted by the Court en banc in order to
provide definitive clarity to the applicability and scope of original registration proceedings under Sections 14 (1) and 14
(2) of the Property Registration Decree. In doing so, the Court confronts not only the relevant provisions of the Public
Land Act and the Civil Code, but also the reality on the ground. The countrywide phenomenon of untitled lands, as well
as the problem of informal settlement it has spawned, has unfortunately been treated with benign neglect. Yet our
current laws are hemmed in by their own circumscriptions in addressing the phenomenon. Still, the duty on our part is
primarily to decide cases before us in accord with the Constitution and the legal principles that have developed
our public land law, though our social obligations dissuade us from casting a blind eye on the endemic problems.
I.
On 20 February 1998, Mario Malabanan filed an application for land registration covering a parcel of land
identified as Lot 9864-A, Cad-452-D, Silang Cadastre, 2situated in Barangay Tibig, Silang Cavite, and consisting of
71,324 square meters. Malabanan claimed that he had purchased the property from Eduardo Velazco, 3and that he and
his predecessors-in-interest had been in open, notorious, and continuous adverse and peaceful possession of the land
for more than thirty (30) years. HaSEcA

The application was raffled to the Regional Trial Court of (RTC) Cavite-Tagaytay City, Branch 18. The Office of
the Solicitor General (OSG) duly designated the Assistant Provincial Prosecutor of Cavite, Jose Velazco, Jr., to appear
on behalf of the State. 4 Apart from presenting documentary evidence, Malabanan himself and his witness, Aristedes
Velazco, testified at the hearing. Velazco testified that the property was originally belonged * to a twenty-two hectare
property owned by his great-grandfather, Lino Velazco. Lino had four sons Benedicto, Gregorio, Eduardo and
Esteban the fourth being Aristedes's grandfather. Upon Lino's death, his four sons inherited the property and divided
it among themselves. But by 1966, Esteban's wife, Magdalena, had become the administrator of all the properties
inherited by the Velazco sons from their father, Lino. After the death of Esteban and Magdalena, their son Virgilio
succeeded them in administering the properties, including Lot 9864-A, which originally belonged to his uncle, Eduardo
Velazco. It was this property that was sold by Eduardo Velazco to Malabanan. 5
Assistant Provincial Prosecutor Jose Velazco, Jr. did not cross-examine Aristedes Velazco. He further
manifested that he "also [knew] the property and I affirm the truth of the testimony given by Mr. Velazco." 6 The Republic
of the Philippines likewise did not present any evidence to controvert the application.
Among the evidence presented by Malabanan during trial was a Certification dated 11 June 2001, issued by
the Community Environment & Natural Resources Office, Department of Environment and Natural Resources (CENRO-
DENR), which stated that the subject property was "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 4-1656 on March
15, 1982." 7
On 3 December 2002, the RTC rendered judgment in favor of Malabanan, the dispositive portion of which reads:
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. HcDaAI
Once this Decision becomes final and executory, the corresponding decree of registration shall forthwith issue.
SO ORDERED.

The Republic interposed an appeal to the Court of Appeals, 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 had 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 23 February 2007, the Court of Appeals rendered a Decision 8 reversing the RTC and dismissing the
application of Malabanan. The appellate court held that under Section 14 (1) of the Property Registration Decree any
period of possession prior to the classification of the lots as alienable and disposable was inconsequential and should
be excluded from the computation of the period of possession. Thus, the appellate court noted that since the CENRO-
DENR certification had verified that the property was declared alienable and disposable only on 15 March 1982, the
Velazcos' possession prior to that date could not be factored in the computation of the period of possession. This
interpretation of the Court of Appeals of Section 14 (1) of the Property Registration Decree was based on the Court's
ruling in Republic v. Herbieto. 9
Malabanan died while the case was pending with the Court of Appeals; 10 hence, it was his heirs who appealed
the decision of the appellate court. Petitioners, before this Court, rely on our ruling in Republic v. Naguit, 11 which was
handed down just four months prior to Herbieto. Petitioners suggest that the discussion inHerbieto cited by the Court of
Appeals is actually obiter dictum since the Metropolitan Trial Court therein which had directed the registration of the
property had no jurisdiction in the first place since the requisite notice of hearing was published only after the hearing
had already begun. Naguit, petitioners argue, remains the controlling doctrine, especially when the property in question
is agricultural land. Therefore, with respect to agricultural lands, any possession prior to the declaration of the alienable
property as disposable may be counted in reckoning the period of possession to perfect title under the Public Land
Act and the Property Registration Decree.
The petition was referred to the Court en banc, 12 and on 11 November 2008, the case was heard on oral
arguments. The Court formulated the principal issues for the oral arguments, to wit: HICEca

1. In order that an alienable and disposable land of the public domain may be registered under Section 14(1)
of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, should the land be classified
as alienable and disposable as of June 12, 1945 or is it sufficient that such classification occur at any time prior to
the filing of the applicant for registration provided that it is established that the applicant has been in open, continuous,
exclusive and notorious possession of the land under a bona fide claim of ownership since June 12, 1945 or earlier?

2. For purposes of Section 14(2) of the Property Registration Decree may a parcel of land classified as alienable and
disposable be deemed private land and therefore susceptible to acquisition by prescription in accordance with the
Civil Code?
3. May a parcel of land established as agricultural in character either because of its use or because its slope is below
that of forest lands be registrable under Section 14(2) of the Property Registration Decree in relation to the provisions
of the Civil Code on acquisitive prescription?

4. Are petitioners entitled to the registration of the subject land in their names under Section 14(1) or Section 14(2)
of the Property Registration Decree or both? 13

Based on these issues, the parties formulated their respective positions.

With respect to Section 14 (1), petitioners reiterate that the analysis of the Court in Naguit is the correct
interpretation of the provision. The seemingly contradictory pronouncement in Herbieto, it is submitted, should be
considered obiter dictum, since the land registration proceedings therein was void ab initio due to lack of publication of
the notice of initial hearing. Petitioners further point out that in Republic v. Bibonia, 14 promulgated in June of 2007, the
Court applied Naguitand adopted the same observation that the preferred interpretation by the OSG of Section 14 (1)
was patently absurd. For its part, the OSG remains insistent that for Section 14 (1) to apply, the land should have been
classified as alienable and disposable as of 12 June 1945. Apart from Herbieto, the OSG also cites the subsequent
rulings in Buenaventura v. Republic, 15 Fieldman Agricultural Trading v. Republic 16 and Republic v. Imperial Credit
Corporation, 17 as well as the earlier case ofDirector of Lands v. Court of Appeals. 18 ACTEHI

With respect to Section 14 (2), petitioners submit that open, continuous, exclusive and notorious possession of
an alienable land of the public domain for more than 30 years ipso jure converts the land into private property, thus
placing it under the coverage of Section 14 (2). According to them, it would not matter whether the land sought to be
 registered was previously classified as agricultural land of the public domain so long as, at the time of the application,
the property had already been "converted" into private property through prescription. To bolster their argument,
petitioners cite extensively from our 2008 ruling in Republic v. T.A.N. Properties. 19
The arguments submitted by the OSG with respect to Section 14 (2) are more extensive. The OSG notes that
under Article 1113 of the Civil Code, the acquisitive prescription of properties of the State refers to "patrimonial property",
while Section 14 (2) speaks of "private lands". It observes that the Court has yet to decide a case that presented Section
14 (2) as a ground for application for registration, and that the 30-year possession period refers to the period of
possession under Section 48 (b) of the Public Land Act, and not the concept of prescription under the Civil Code. The
OSG further submits that, assuming that the 30-year prescriptive period can run against public lands, said period should
be reckoned from the time the public land was declared alienable and disposable.
Both sides likewise offer special arguments with respect to the particular factual circumstances surrounding the
subject property and the ownership thereof.
II.
First, we discuss Section 14 (1) of the Property Registration Decree. For a full understanding of the provision, reference
has to be made to the Public Land Act. HSEIAT

A.
Commonwealth Act No. 141, also known as the Public Land Act, has, since its enactment, governed the
classification and disposition of lands of the public domain. The President is authorized, from time to time, to classify
the lands of the public domain into alienable and disposable, timber, or mineral lands. 20 Alienable and disposable lands
of the public domain are further classified according to their uses into (a) agricultural; (b) residential, commercial,
industrial, or for similar productive purposes; (c) educational, charitable, or other similar purposes; or (d) reservations
for town sites and for public and quasi-public uses. 21
May a private person validly seek the registration in his/her name of alienable and disposable lands of the public
domain? Section 11 of the Public Land Actacknowledges that public lands suitable for agricultural purposes may be
disposed of "by confirmation of imperfect or incomplete titles" through "judicial legalization". 22 Section 48 (b) of the
Public Land Act, as amended by P.D. No. 1073, supplies the details and unmistakably grants that right, subject to the
requisites stated therein:
Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own
any such land 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 therefor, under the Land Registration Act, to wit:
xxx xxx xxx

(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 application
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. DEHcTI

Section 48 (b) of Com. Act No. 141 received its present wording in 1977 when the law was amended by P.D.
No. 1073. Two significant amendments were introduced by P.D. No. 1073. First, the term "agricultural lands" was
changed to "alienable and disposable lands of the public domain". The OSG submits that this amendment restricted the
scope of the lands that may be registered. 23 This is not actually the case. Under Section 9 of the Public Land Act,
"agricultural lands" are a mere subset of "lands of the public domain alienable or open to disposition." Evidently,
alienable and disposable lands of the public domain are a larger class than only "agricultural lands".
Second, the length of the requisite possession was changed from possession for "thirty (30) years immediately
preceding the filing of the application" to possession "since June 12, 1945 or earlier". The Court in Naguit explained:
When the Public Land Act was first promulgated in 1936, the period of possession deemed necessary to vest the
right to register their title to agricultural lands of the public domain commenced from July 26, 1894. However, this
period was amended by R.A. No. 1942, which provided that the bona fide claim of ownership must have been for at
least thirty (30) years. Then in 1977, Section 48(b) of the Public Land Act was again amended, this time by P.D. No.
1073, which pegged the reckoning date at June 12, 1945. . . .

It bears further observation that Section 48 (b) of Com. Act No, 141 is virtually the same as Section 14 (1) of
the Property Registration Decree. Said Decree codified the various laws relative to the registration of property, including
lands of the public domain. It is Section 14 (1) that operationalizes the registration of such lands of the public domain.
The provision reads:
 SEC. 14. Who may apply. The following persons may file in the proper Court of First Instance an application for
registration of title to land, whether personally or through their duly authorized representatives:

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

Notwithstanding the passage of the Property Registration Decree and the inclusion of Section 14 (1) therein, the
Public Land Act has remained in effect. Both laws commonly refer to persons or their predecessors-in-interest who
"have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands
of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier." That circumstance may have
led to the impression that one or the other is a redundancy, or that Section 48 (b) of the Public Land Act has somehow
been repealed or mooted. That is not the case.
The opening clauses of Section 48 of the Public Land Act and Section 14 of the Property Registration
Decree warrant comparison:
Sec. 48 [of the Public Land Act]. The following described citizens of the Philippines, occupying lands of the public
domain or claiming to own any such land 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 therefor, under the Land Registration Act, to wit:
xxx xxx xxx

Sec. 14 [of the Property Registration Decree]. Who may apply. The following persons may file in the proper Court
of First Instance an application for registration of title to land, whether personally or through their duly authorized
representatives:
xxx xxx xxx

It is clear that Section 48 of the Public Land Act is more descriptive of the nature of the right enjoyed by the
possessor than Section 14 of the Property Registration Decree, which seems to presume the pre-existence of the right,
rather than establishing the right itself for the first time. It is proper to assert that it isthe Public Land Act, as amended
by P.D. No. 1073 effective 25 January 1977, that has primarily established the right of a Filipino citizen who has 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" to perfect or complete his title
by applying with the proper court for the confirmation of his ownership claim and the issuance of the corresponding
certificate of title.
DCSETa

Section 48 can be viewed in conjunction with the afore-quoted Section 11 of the Public Land Act, which provides
that public lands suitable for agricultural purposes may be disposed of by confirmation of imperfect or incomplete titles,
and given the notion that both provisions declare that it is indeed the Public Land Actthat primarily establishes the
substantive ownership of the possessor who has been in possession of the property since 12 June 1945. In turn, Section
14 (a) of theProperty Registration Decree recognizes the substantive right granted under Section 48 (b) of the Public
Land Act, as well provides the corresponding original registration procedure for the judicial confirmation of an imperfect
or incomplete title.
There is another limitation to the right granted under Section 48 (b). Section 47 of the Public Land Act limits the
period within which one may exercise the right to seek registration under Section 48. The provision has been amended
several times, most recently by Rep. Act No. 9176 in 2002. It currently reads thus:
Section 47. The persons specified in the next following section are hereby granted time, not to extend beyond
December 31, 2020 within which to avail of the benefits of this Chapter: Provided, That this period shall apply only
where the area applied for does not exceed twelve (12) hectares: Provided, further, That the several periods of time
designated by the President in accordance with Section Forty-Five of this Act shall apply also to the lands comprised
in the provisions of this Chapter, but this Section shall not be construed as prohibiting any said persons from acting
under this Chapter at any time prior to the period fixed by the President. 24

Accordingly under the current state of the law, the substantive right granted under Section 48 (b) may be availed
of only until 31 December 2020.
B.
Despite the clear text of Section 48 (b) of the Public Land Act, as amended and Section 14 (a) of the Property
Registration Decree, the OSG has adopted the position that for one to acquire the right to seek registration of an
alienable and disposable land of the public domain, it is not enough that the applicant and his/her predecessors-in-
interest be in possession under a bona fide claim of ownership since 12 June 1945; the alienable and disposable
character of the property must have been declared also as of 12 June 1945. Following the OSG's approach, all lands
certified as alienable and disposable after 12 June 1945 cannot be registered either under Section 14 (1) of the Property
Registration Decree or Section 48 (b) of the Public Land Act as amended. The absurdity of such an implication was
discussed inNaguit. EcTDCI

Petitioner suggests an interpretation that the alienable and disposable character of the land should have already
been established since June 12, 1945 or earlier. This is not borne out by the plain meaning of Section 14(1). "Since
June 12, 1945", as used in the provision, qualifies its antecedent phrase "under a bonafide claim of ownership".
Generally speaking, qualifying words restrict or modify only the words or phrases to which they are immediately
associated, and not those distantly or remotely located. 25 Ad proximum antecedents fiat relation nisi impediatur
sentencia.

Besides, we are mindful of the absurdity that would result if we adopt petitioner's position. Absent a legislative
amendment, the rule would be, adopting the OSG's view, that all lands of the public domain which were not declared
alienable or disposable before June 12, 1945 would not be susceptible to original registration, no matter the length
of unchallenged possession by the occupant. Such interpretation renders paragraph (1) of Section 14 virtually
inoperative and even precludes the government from giving it effect even as it decides to reclassify public agricultural
lands as alienable and disposable. The unreasonableness of the situation would even be aggravated considering
that before June 12, 1945, the Philippines was not yet even considered an independent state.

Accordingly, the Court in Naguit explained:

[T]he more reasonable interpretation of Section 14(1) is that it merely requires the property sought to be registered
as already alienable and disposable at the time the application for registration of title is filed. If the State, at the time
the application is made, has not yet deemed it proper to release the property for alienation or disposition, the
presumption is that the government is still reserving the right to utilize the property; hence, the need to preserve its
ownership in the State irrespective of the length of adverse possession even if in good faith. However, if the property
has already been classified as alienable and disposable, as it is in this case, then there is already an intention on the
part of the State to abdicate its exclusive prerogative over the property. EIcSTD

The Court declares that the correct interpretation of Section 14 (1) is that which was adopted in Naguit. The
contrary pronouncement in Herbieto, as pointed out in Naguit, absurdly limits the application of the provision to the point
of virtual inutility since it would only cover lands actually declared alienable and disposable prior to 12 June 1945, even
if the current possessor is able to establish open, continuous, exclusive and notorious possession under a bona
fide claim of ownership long before that date.
Moreover, the Naguit interpretation allows more possessors under a bona fide claim of ownership to avail of
judicial confirmation of their imperfect titles than what would be feasible under Herbieto. This balancing fact is significant,
especially considering our forthcoming discussion on the scope and reach of Section 14 (2) of the Property Registration
Decree.
Petitioners make the salient observation that the contradictory passages from Herbieto are obiter dicta since
the land registration proceedings therein is voidab initio in the first place due to lack of the requisite publication of the
notice of initial hearing. There is no need to explicitly overturn Herbieto, as it suffices that the Court's acknowledgment
that the particular line of argument used therein concerning Section 14 (1) is indeed obiter.
It may be noted that in the subsequent case of Buenaventura, 26 the Court, citing Herbieto, again stated that
"[a]ny period of possession prior to the date when the [s]ubject [property was] classified as alienable and disposable is
inconsequential and should be excluded from the computation of the period of possession. . ." That statement, in the
context of Section 14 (1), is certainly erroneous. Nonetheless, the passage as cited in Buenaventura should again be
considered as obiter. The application therein was ultimately granted, citing Section 14 (2). The evidence submitted by
petitioners therein did not establish any mode of possession on their part prior to 1948, thereby precluding the
application of Section 14 (1). It is not even apparent from the decision whether petitioners therein had claimed
entitlement to original registration following Section 14 (1), their position being that they had been in exclusive
possession under a bona fide claim of ownership for over fifty (50) years, but not before 12 June 1945. aCHDST

Thus, neither Herbieto nor its principal discipular ruling Buenaventura has any precedental value with respect
to Section 14 (1). On the other hand, the ratio ofNaguit is embedded in Section 14 (1), since it precisely involved situation
wherein the applicant had been in exclusive possession under a bona fide claim of ownership prior to 12 June 1945.
The Court's interpretation of Section 14 (1) therein was decisive to the resolution of the case. Any doubt as to which
between Naguitor Herbieto provides the final word of the Court on Section 14 (1) is now settled in favor of Naguit.
We noted in Naguit that it should be distinguished from Bracewell v. Court of Appeals 27 since in the latter, the
application for registration had been filedbefore the land was declared alienable or disposable. The dissent though
pronounces Bracewell as the better rule between the two. Yet two years after Bracewell, itsponente, the esteemed
Justice Consuelo Ynares-Santiago, penned the ruling in Republic v. Ceniza, 28 which involved a claim of possession
that extended back to 1927 over a public domain land that was declared alienable and disposable only in
1980. Ceniza cited Bracewell, quoted extensively from it, and following the mindset of the dissent, the attempt at
registration in Ceniza should have failed. Not so.
 To prove that the land subject of an application for registration is alienable, an applicant must establish the existence
of a positive act of the government such as a presidential proclamation or an executive order; an administrative
action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute.

In this case, private respondents presented a certification dated November 25, 1994, issued by Eduardo M. Inting,
the Community Environment and Natural Resources Officer in the Department of Environment and Natural
Resources Office in Cebu City, stating that the lots involved were "found to be within the alienable and
disposable (sic) Block-I, Land Classification Project No. 32-A, per map 2962 4-I555 dated December 9, 1980". This
is sufficient evidence to show the real character of the land subject of private respondents' application. Further, the
certification enjoys a presumption of regularity in the absence of contradictory evidence, which is true in this case.
Worth noting also was the observation of the Court of Appeals stating that:
[n]o opposition was filed by the Bureaus of Lands and Forestry to contest the application of appellees on
the ground that the property still forms part of the public domain. Nor is there any showing that the lots in
question are forestal land. . . . IDASHa

Thus, while the Court of Appeals erred in ruling that mere possession of public land for the period required by law
would entitle its occupant to a confirmation of imperfect title, it did not err in ruling in favor of private respondents as
far as the first requirement in Section 48(b) of the Public Land Act is concerned, for they were able to overcome the
burden of proving the alienability of the land subject of their application.

As correctly found by the Court of Appeals, private respondents were able to prove their open, continuous, exclusive
and notorious possession of the subject land even before the year 1927. As a rule, we are bound by the factual
findings of the Court of Appeals. Although there are exceptions, petitioner did not show that this is one of them. 29

Why did the Court in Ceniza, through the same eminent member who authored Bracewell, sanction the
registration under Section 48 (b) of public domain lands declared alienable or disposable thirty-five (35) years and 180
days after 12 June 1945? The telling difference is that in Ceniza, the application for registration was filed nearly six (6)
years after the land had been declared alienable or disposable, while in Bracewell, the application was filed nine (9)
years before the land was declared alienable or disposable. That crucial difference was also stressed in Naguit to
contradistinguish it from Bracewell, a difference which the dissent seeks to belittle.
III.
We next ascertain the correct framework of analysis with respect to Section 14 (2). The provision reads:
SEC. 14. Who may apply. The following persons may file in the proper Court of First Instance an application for
registration of title to land, whether personally or through their duly authorized representatives:

xxx xxx xxx

(2) Those who have acquired ownership over private lands by prescription under the provisions of existing
laws.

The Court in Naguit offered the following discussion concerning Section 14 (2), which we did even then
recognize, and still do, to be an obiter dictum, but we nonetheless refer to it as material for further discussion, thus:
Did the enactment of the Property Registration Decree and the amendatory P.D. No. 1073 preclude the application
for registration of alienable lands of the public domain, possession over which commenced only after June 12, 1945?
It did not, considering Section 14(2) of the Property Registration Decree, which governs and authorizes the
application of "those who have acquired ownership of private lands by prescription under the provisions of existing
laws." DEcSaI

Prescription is one of the modes of acquiring ownership under the Civil Code. [ 30 ] There is a consistent
jurisprudential rule that properties classified as alienable public land may be converted into private property by reason
of open, continuous and exclusive possession of at least thirty (30) years. [ 31 ] With such conversion, such property
may now fall within the contemplation of "private lands" under Section 14(2), and thus susceptible to registration by
those who have acquired ownership through prescription. Thus, even if possession of the alienable public land
commenced on a date later than June 12, 1945, and such possession being been open, continuous and exclusive,
then the possessor may have the right to register the land by virtue of Section 14(2) of the Property Registration
Decree.

Naguit did not involve the application of Section 14 (2), unlike in this case where petitioners have based their
registration bid primarily on that provision, and where the evidence definitively establishes their claim of possession
only as far back as 1948. It is in this case that we can properly appreciate the nuances of the provision.
A.
The obiter in Naguit cited the Civil Code provisions on prescription as the possible basis for application for
original registration under Section 14 (2). Specifically, it is Article 1113 which provides legal foundation for the
application. It reads:
 All things which are within the commerce of men are susceptible of prescription, unless otherwise provided. Property
of the State or any of its subdivisions not patrimonial in character shall not be the object of prescription.

It is clear under the Civil Code that where lands of the public domain are patrimonial in character, they are
susceptible to acquisitive prescription. On the other hand, among the public domain lands that are not susceptible to
acquisitive prescription are timber lands and mineral lands. The Constitution itself proscribes private ownership of timber
or mineral lands. caTESD

There are in fact several provisions in the Civil Code concerning the acquisition of real property through
prescription. Ownership of real property may be acquired by ordinary prescription of ten (10) years, 32 or through
extraordinary prescription of thirty (30) years. 33 Ordinary acquisitive prescription requires possession in good faith, 34 as
well as just title. 35
When Section 14 (2) of the Property Registration Decree explicitly provides that persons "who have acquired
ownership over private lands by prescription under the provisions of existing laws", it unmistakably refers to the Civil
Code as a valid basis for the registration of lands. The Civil Code is the only existing law that specifically allows the
acquisition by prescription of private lands, including patrimonial property belonging to the State. Thus, the critical
question that needs affirmation is whether Section 14 (2) does encompass original registration proceedings over
patrimonial property of the State, which a private person has acquired through prescription.
The Naguit obiter had adverted to a frequently reiterated jurisprudence holding that properties classified as
alienable public land may be converted into private property by reason of open, continuous and exclusive possession
of at least thirty (30) years. 36 Yet if we ascertain the source of the "thirty-year" period, additional complexities relating
to Section 14 (2) and to how exactly it operates would emerge. For there are in fact two distinct origins of the thirty
(30)-year rule.
The first source is Rep. Act No. 1942, enacted in 1957, which amended Section 48 (b) of the Public Land Act by
granting the right to seek original registration of alienable public lands through possession in the concept of an owner
for at least thirty years.
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 therefor, under the Land Registration Act, to wit: TDCaSE
xxx xxx xxx
(b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive and
notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition
of ownership, for at least thirty years immediately preceding the filing of the application 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. (emphasis supplied) 37

This provision was repealed in 1977 with the enactment of P.D. 1073, which made the date 12 June 1945 the
reckoning point for the first time. Nonetheless, applications for registration filed prior to 1977 could have invoked the
30-year rule introduced by Rep. Act No. 1942.
The second source is Section 14 (2) of P.D. 1529 itself, at least by implication, as it applies the rules on
prescription under the Civil Code, particularly Article 1113 in relation to Article 1137. Note that there are two kinds of
prescription under the Civil Code ordinary acquisitive prescription and extraordinary acquisitive prescription, which,
under Article 1137, is completed "through uninterrupted adverse possession. . . for thirty years, without need of title or
of good faith".
Obviously, the first source of the thirty (30)-year period rule, Rep. Act No. 1942, became unavailable after 1977.
At present, the only legal basis for the thirty (30)-year period is the law on prescription under the Civil Code, as mandated
under Section 14 (2). However, there is a material difference between how the thirty (30)-year rule operated under Rep.
Act No. 1942 and how it did under the Civil Code.
Section 48 (b) of the Public Land Act, as amended by Rep. Act No. 1942, did not refer to or call into application
the Civil Code provisions on prescription. It merely set forth a requisite thirty-year possession period immediately
preceding the application for confirmation of title, without any qualification as to whether the property should be declared
alienable at the beginning of, and continue as such, throughout the entire thirty (30) years. There is neither statutory
nor jurisprudential basis to assert Rep. Act No. 1942 had mandated such a requirement, 38 similar to our earlier finding
with respect to the present language of Section 48 (b), which now sets 12 June 1945 as the point of reference.
Then, with the repeal of Rep. Act No. 1942, the thirty-year possession period as basis for original registration
became Section 14 (2) of the Property Registration Decree, which entitled those "who have acquired ownership over
private lands by prescription under the provisions of existing laws" to apply for original registration. Again, the thirty-
year period is derived from the rule on extraordinary prescription under Article 1137 of the Civil Code. At the same time,
Section 14 (2) puts into operation the entire regime of prescription under the Civil Code, a fact which does not hold true
with respect to Section 14 (1).
B.
Unlike Section 14 (1), Section 14 (2) explicitly refers to the principles on prescription under existing laws.
Accordingly, we are impelled to apply the civil law concept of prescription, as set forth in the Civil Code, in our
interpretation of Section 14 (2). There is no similar demand on our part in the case of Section 14 (1). DSHTaC

The critical qualification under Article 1113 of the Civil Code is thus: "[p]roperty of the State or any of its
subdivisions not patrimonial in character shall not be the object of prescription". The identification what consists of
patrimonial property is provided by Articles 420 and 421, which we quote in full:
Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State,
banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the
development of the national wealth.

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

It is clear that property of public dominion, which generally includes property belonging to the State, cannot be
the object of prescription or, indeed, be subject of the commerce of man. 39 Lands of the public domain, whether
declared alienable and disposable or not, are property of public dominion and thus insusceptible to acquisition by
prescription.
Let us now explore the effects under the Civil Code of a declaration by the President or any duly authorized
government officer of alienability and disposability of lands of the public domain. Would such lands so declared alienable
and disposable be converted, under the Civil Code, from property of the public dominion into patrimonial property? After
all, by connotative definition, alienable and disposable lands may be the object of the commerce of man; Article 1113
provides that all things within the commerce of man are susceptible to prescription; and the same provision further
provides that patrimonial property of the State may be acquired by prescription. IEcDCa

Nonetheless, Article 422 of the Civil Code states that "[p]roperty of public dominion, when no longer intended
for public use or for public service, shall form part of the patrimonial property of the State". It is this provision that controls
how public dominion property may be converted into patrimonial property susceptible to acquisition by prescription.
After all, Article 420 (2) makes clear that those property "which belong to the State, without being for public use, and
are intended for some public service or for the development of the national wealth" are public dominion property. For
as long as the property belongs to the State, although already classified as alienable or disposable, it remains property
of the public dominion if when * it is "intended for some public service or for the development of the national wealth".
Accordingly, there must be an express declaration by the State that the public dominion property is no
longer intended for public service or the development of the national wealth or that the property has been
converted into patrimonial. Without such express declaration, the property, even if classified as alienable or
disposable, remains property of the public dominion, pursuant to Article 420 (2), and thus incapable of
acquisition by prescription. It is only when such alienable and disposable lands are expressly declared by the
State to be no longer intended for public service or for the development of the national wealth that the period
of acquisitive prescription can begin to run. Such declaration shall be in the form of a law duly enacted by
Congress or a Presidential Proclamation in cases where the President is duly authorized by law.
It is comprehensible with ease that this reading of Section 14 (2) of the Property Registration Decree limits its
scope and reach and thus affects the registrability even of lands already declared alienable and disposable to the
detriment of the bona fide possessors or occupants claiming title to the lands. Yet this interpretation is in accord with
the Regalian doctrine and its concomitant assumption that all lands owned by the State, although declared alienable or
disposable, remain as such and ought to be used only by the Government.
Recourse does not lie with this Court in the matter. The duty of the Court is to apply the Constitution and the
laws in accordance with their language and intent. The remedy is to change the law, which is the province of the
legislative branch. Congress can very well be entreated to amend Section 14 (2) of the Property Registration
Decree and pertinent provisions of the Civil Code to liberalize the requirements for judicial confirmation of imperfect or
incomplete titles. aATEDS

The operation of the foregoing interpretation can be illustrated by an actual example. Republic Act No. 7227,
entitled "An Act Accelerating The Conversion Of Military Reservations Into Other Productive Uses, etc.", is more
commonly known as the BCDA law. Section 2 of the law authorizes the sale of certain military reservations and portions
of military camps in Metro Manila, including Fort Bonifacio and Villamor Air Base. For purposes of effecting the sale of
the military camps, the law mandates the President to transfer such military lands to the Bases Conversion Development
Authority (BCDA) 40 which in turn is authorized to own, hold and/or administer them. 41 The President is authorized to
sell portions of the military camps, in whole or in part. 42 Accordingly, the BCDA law itself declares that the military lands
subject thereof are "alienable and disposable pursuant to the provisions of existing laws and regulations governing
sales of government properties." 43
From the moment the BCDA law was enacted the subject military lands have become alienable and disposable.
However, said lands did not become patrimonial, as the BCDA law itself expressly makes the reservation that these
lands are to be sold in order to raise funds for the conversion of the former American bases at Clark and Subic. 44 Such
purpose can be tied to either "public service" or "the development of national wealth" under Article 420 (2). Thus, at that
time, the lands remained property of the public dominion under Article 420 (2), notwithstanding their status as alienable
and disposable. It is upon their sale as authorized under the BCDA law to a private person or entity that such lands
become private property and cease to be property of the public dominion.
C.
Should public domain lands become patrimonial because they are declared as such in a duly enacted law or
duly promulgated proclamation that they are no longer intended for public service or for the development of the national
wealth, would the period of possession prior to the conversion of such public dominion into patrimonial be reckoned in
counting the prescriptive period in favor of the possessors? We rule in the negative.
The limitation imposed by Article 1113 dissuades us from ruling that the period of possession before the public
domain land becomes patrimonial may be counted for the purpose of completing the prescriptive period. Possession of
public dominion property before it becomes patrimonial cannot be the object of prescription according to the Civil Code.
As the application for registration under Section 14 (2) falls wholly within the framework of prescription under the Civil
Code, there is no way that possession during the time that the land was still classified as public dominion property can
be counted to meet the requisites of acquisitive prescription and justify registration. EHTSCD

Are we being inconsistent in applying divergent rules for Section 14 (1) and Section 14 (2)? There is no
inconsistency. Section 14 (1) mandates registration on the basis of possession, while Section 14 (2) entitles
registration on the basis of prescription. Registration under Section 14 (1) is extended under the aegis of
the Property Registration Decree and the Public Land Act while registration under Section 14 (2) is made
available both by the Property Registration Decree and the Civil Code.
In the same manner, we can distinguish between the thirty-year period under Section 48 (b) of the Public Land
Act, as amended by Rep. Act No. 1472, and the thirty-year period available through Section 14 (2) of the Property
Registration Decree in relation to Article 1137 of the Civil Code. The period under the former speaks of a thirty-year
period of possession, while the period under the latter concerns a thirty-year period of extraordinary
prescription. Registration under Section 48 (b) of the Public Land Act as amended by Rep. Act No. 1472 is
based on thirty years of possession alone without regard to the Civil Code, while the registration under Section
14 (2) of the Property Registration Decree is founded on extraordinary prescription under the Civil Code.
It may be asked why the principles of prescription under the Civil Code should not apply as well to Section 14
(1). Notwithstanding the vaunted status of the Civil Code, it ultimately is just one of numerous statutes, neither superior
nor inferior to other statutes such as the Property Registration Decree. The legislative branch is not bound to adhere to
the framework set forth by the Civil Code when it enacts subsequent legislation. Section 14 (2) manifests a clear intent
to interrelate the registration allowed under that provision with the Civil Code, but no such intent exists with respect to
Section 14 (1).
IV.
One of the keys to understanding the framework we set forth today is seeing how our land registration
procedures correlate with our law on prescription, which, under the Civil Code, is one of the modes for acquiring
ownership over property.
The Civil Code makes it clear that patrimonial property of the State may be acquired by private persons through
prescription. This is brought about by Article 1113, which states that "[a]ll things which are within the commerce of man
are susceptible to prescription", and that [p]roperty of the State or any of its subdivisions not patrimonial in character
shall not be the object of prescription".
There are two modes of prescription through which immovables may be acquired under the Civil Code. The
first is ordinary acquisitive prescription, which, under Article 1117, requires possession in good faith and with just title;
and, under Article 1134, is completed through possession of ten (10) years. There is nothing in the Civil Code that bars
a person from acquiring patrimonial property of the State through ordinary acquisitive prescription, nor is there any
apparent reason to impose such a rule. At the same time, there are indispensable requisites good faith and just title.
 The ascertainment of good faith involves the application of Articles 526, 527, and 528, as well as Article 1127 of the
Civil Code, 45 provisions that more or less speak for themselves.
On the other hand, the concept of just title requires some clarification. Under Article 1129, there is just title for
the purposes of prescription "when the adverse claimant came into possession of the property through one of the modes
recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not
transmit any right". Dr. Tolentino explains: ITCcAD

Just title is an act which has for its purpose the transmission of ownership, and which would have actually transferred
ownership if the grantor had been the owner. This vice or defect is the one cured by prescription. Examples: sale
with delivery, exchange, donation, succession, and dacion in payment. 46

The OSG submits that the requirement of just title necessarily precludes the applicability of ordinary acquisitive
prescription to patrimonial property. The major premise for the argument is that "the State, as the owner and grantor,
could not transmit ownership to the possessor before the completion of the required period of possession". 47 It is evident
that the OSG erred when it assumed that the grantor referred to in Article 1129 is the State. The grantor is the one from
whom the person invoking ordinary acquisitive prescription derived the title, whether by sale, exchange, donation,
succession or any other mode of the acquisition of ownership or other real rights. SIEHcA

Earlier, we made it clear that, whether under ordinary prescription or extraordinary prescription, the period of
possession preceding the classification of public dominion lands as patrimonial cannot be counted for the purpose of
computing prescription. But after the property has been become patrimonial, the period of prescription begins to run in
favor of the possessor. Once the requisite period has been completed, two legal events ensue: (1) the patrimonial
property is ipso jureconverted into private land; and (2) the person in possession for the periods prescribed under the
Civil Code acquires ownership of the property by operation of the Civil Code.
It is evident that once the possessor automatically becomes the owner of the converted patrimonial property,
the ideal next step is the registration of the property under the Torrens system. It should be remembered that registration
of property is not a mode of acquisition of ownership, but merely a mode of confirmation of ownership. 48
Looking back at the registration regime prior to the adoption of the Property Registration Decree in 1977, it is
apparent that the registration system then did not fully accommodate the acquisition of ownership of patrimonial property
under the Civil Code. What the system accommodated was the confirmation of imperfect title brought about by the
completion of a period of possession ordained under the Public Land Act (either 30 years following Rep. Act No. 1942,
or since 12 June 1945 following P.D. No. 1073).
The Land Registration Act 49 was noticeably silent on the requisites for alienable public lands acquired through
ordinary prescription under the Civil Code, though it arguably did not preclude such registration. 50 Still, the gap was
lamentable, considering that the Civil Code, by itself, establishes ownership over the patrimonial property of persons
who have completed the prescriptive periods ordained therein. The gap was finally closed with the adoption of
the Property Registration Decree in 1977, with Section 14 (2) thereof expressly authorizing original registration in favor
of persons who have acquired ownership over private lands by prescription under the provisions of existing laws, that
is, the Civil Code as of now. AcDaEH

V.
We synthesize the doctrines laid down in this case, as follows:
(1) In connection with Section 14 (1) of the Property Registration Decree, Section 48 (b) of the Public Land
Act recognizes and confirms that "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" have acquired ownership of, and registrable
title to, such lands based on the length and quality of their possession.
(a) Since Section 48 (b) merely requires possession since 12 June 1945 and does not require that the
lands should have been alienable and disposable during the entire period of possession, the
possessor is entitled to secure judicial confirmation of his title thereto as soon as it is declared
alienable and disposable, subject to the timeframe imposed by Section 47 of the Public Land
Act. 51
(b) The right to register granted under Section 48 (b) of the Public Land Act is further confirmed by Section
14 (1) of the Property Registration Decree.
(2) In complying with Section 14 (2) of the Property Registration Decree, consider that under the Civil Code,
prescription is recognized as a mode of acquiring ownership of patrimonial property. However, public domain lands
become only patrimonial property not only with a declaration that these are alienable or disposable. There must also be
an express government manifestation that the property is already patrimonial or no longer retained for public service or
 the development of national wealth, under Article 422 of the Civil Code. And only when the property has become
patrimonial can the prescriptive period for the acquisition of property of the public dominion begin to run.
(a) Patrimonial property is private property of the government. The person acquires ownership of
patrimonial property by prescription under the Civil Code is entitled to secure registration thereof
under Section 14 (2) of the Property Registration Decree.
(b) There are two kinds of prescription by which patrimonial property may be acquired, one ordinary and
other extraordinary. Under ordinary acquisitive prescription, a person acquires ownership of a
patrimonial property through possession for at least ten (10) years, in good faith and with just
title. Under extraordinary acquisitive prescription, a person's uninterrupted adverse possession
of patrimonial property for at least thirty (30) years, regardless of good faith or just title, ripens
into ownership.
B.
We now apply the above-stated doctrines to the case at bar.
It is clear that the evidence of petitioners is insufficient to establish that Malabanan has acquired ownership
over the subject property under Section 48 (b) ofthe Public Land Act. There is no substantive evidence to establish that
Malabanan or petitioners as his predecessors-in-interest have been in possession of the property since 12 June 1945
or earlier. The earliest that petitioners can date back their possession, according to their own evidence the Tax
Declarations they presented in particular is to the year 1948. Thus, they cannot avail themselves of registration under
Section 14 (1) of the Property Registration Decree. EaCDAT

Neither can petitioners properly invoke Section 14 (2) as basis for registration. While the subject property was
declared as alienable or disposable in 1982, there is no competent evidence that is no longer intended for public use
service or for the development of the national evidence, conformably with Article 422 of the Civil Code. The classification
of the subject property as alienable and disposable land of the public domain does not change its status as property of
the public dominion under Article 420 (2) of the Civil Code. Thus, it is insusceptible to acquisition by prescription.
VI.
A final word. The Court is comfortable with the correctness of the legal doctrines established in this decision.
Nonetheless, discomfiture over the implications of today's ruling cannot be discounted. For, every untitled property that
is occupied in the country will be affected by this ruling. The social implications cannot be dismissed lightly, and the
Court would be abdicating its social responsibility to the Filipino people if we simply levied the law without comment.
The informal settlement of public lands, whether declared alienable or not, is a phenomenon tied to long-
standing habit and cultural acquiescence, and is common among the so-called "Third World" countries. This paradigm
powerfully evokes the disconnect between a legal system and the reality on the ground. The law so far has been unable
to bridge that gap. Alternative means of acquisition of these public domain lands, such as through homestead or free
patent, have proven unattractive due to limitations imposed on the grantee in the encumbrance or alienation of said
properties. 52 Judicial confirmation of imperfect title has emerged as the most viable, if not the most attractive means to
regularize the informal settlement of alienable or disposable lands of the public domain, yet even that system, as
revealed in this decision, has considerable limits.
There are millions upon millions of Filipinos who have individually or exclusively held residential lands on which
they have lived and raised their families. Many more have tilled and made productive idle lands of the State with their
hands. They have been regarded for generation by their families and their communities as common law owners. There
is much to be said about the virtues of according them legitimate states. Yet such virtues are not for the Court to translate
into positive law, as the law itself considered such lands as property of the public dominion. It could only be up to
Congress to set forth a new phase of land reform to sensibly regularize and formalize the settlement of such lands
which in legal theory are lands of the public domain before the problem becomes insoluble. This could be accomplished,
to cite two examples, by liberalizing the standards for judicial confirmation of imperfect title, or amending the Civil Code
itself to ease the requisites for the conversion of public dominion property into patrimonial.
One's sense of security over land rights infuses into every aspect of well-being not only of that individual, but
also to the person's family. Once that sense of security is deprived, life and livelihood are put on stasis. It is for the
political branches to bring welcome closure to the long pestering problem. caHIAS

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated 23 February 2007 and
Resolution dated 2 October 2007 are AFFIRMED. No pronouncement as to costs.
SO ORDERED.
 SECOND DIVISION
[G.R. No. 109595. April 27, 2000.]
CRISTETA CHUA-BURCE, petitioner, vs. COURT OF APPEALS AND PEOPLE OF THE
PHILIPPINES, respondents.
.
SYNOPSIS
In August 1985, the Metropolitan Bank in Calapan, Oriental Mindoro, conducted a physical bundle count of cash inside its
vault. It was discovered that there was a shortage of P150,000.00, and the person primarily responsible for it was the
bank's cash custodian, herein petitioner. The bank filed a civil case, then a criminal case against petitioner. During the
pre-trial conference of the estafa case, the parties agreed to adopt their respective evidence in the civil case as their
respective evidence in the criminal case. Later, the trial court rendered a consolidated decision finding petitioner guilty of
estafa and liable for P150,000.00 in the civil case. Hence, this appeal.
The adoption by the parties of their respective evidence in the civil case to the criminal case during the pre-trial
conference is allowed under Sec. 2(e) of Rule 118 of the Rules of Court. When the same was reduced to writing and
signed by the parties, they bound themselves to the agreement. The Court, however, ruled that petitioner cannot be
convicted of estafa through misappropriation because petitioner is a mere cash custodian who had no juridical possession
over the missing funds. In the absence of the element of juridical possession, petitioner cannot be convicted of estafa
under Art. 315 (1) (b) of the Revised Penal Code. Petitioner was acquitted.
DECISION
QUISUMBING, J : p

Subject of the present appeal by certiorari is the decision dated November 27, 1992 of the Court of Appeals in CA-G.R.
CR No. 12037, (a) affirming in toto the trial court's decision finding petitioner guilty of estafa, and (b) denying her Motion
for Reconsideration in a Resolution dated March 25, 1993. The Regional Trial Court, Calapan, Oriental Mindoro, Branch
40, rendered a joint decision finding petitioner guilty of estafa under Article 315, par. 1 (b) of the Revised Penal Code, in
Criminal Case No. C-2313, and likewise found petitioner liable for the amount of P150,000.00 in Civil Case No. R-3733.
Only the criminal case is before us for review. cdasia

The uncontroverted facts, as found by the Court of Appeals, are as follows:

On August 16, 1985, Ramon Rocamora, the Manager (of Metropolitan Bank and Trust Company, Calapan Branch,
Oriental Mindoro) requested Fructuoso Peaflor, Assistant Cashier, to conduct a physical bundle count of the cash inside
the vault, which should total P4,000,000.00, more or less. During this initial cash count, they discovered a shortage of
fifteen bundles of One Hundred Pesos denominated bills totalling P150,000.00. The One Hundred Peso bills actually
counted was P3,850,000.00 as against the balance of P4,000,000.00 in the Cash in Vault (CIV) Summary Sheet, or a
total shortage of P150,000.00. The next day, to determine if there was actually a shortage, a re-verification of the records
and documents of the transactions in the bank was conducted. There was still a shortage of P150,000.00.
The bank initiated investigations totalling four (4) in all. The first was by Ramon Rocamora, the Manager. The second was
by the bank's internal auditors headed by Antonio Batungbakal. Then, the bank's Department of Internal Affairs conducted
an independent investigation. Thereafter, the National Bureau of Investigation (NBI) came in to investigate. All of these
investigations concluded that there was a shortage of P150,000.00, and the person primarily responsible was the bank's
Cash Custodian, Cristeta Chua-Burce, the herein accused.
On November 4, 1985, unable to satisfactorily explain the shortage of P150,000.00, the accused's service with the bank
was terminated.
To recover the missing amount, Metropolitan Bank and Trust Company (Metrobank) filed a Civil Case for Sum of Money
and Damages with Preliminary Attachment and Garnishment docketed as Civil Case No. R-3733 against petitioner and
her husband, Antonio Burce.
Prior to the filing of the Answer, the following Information for Estafa was filed against petitioner:
"That on or about the 16th day of August 1985, and for a period prior and subsequent thereto, the above-named
accused, with unfaithfulness or abuse of confidence, and with intent to defraud, did then and there wilfully,
unlawfully, and feloniously, in her capacity as Cash Custodian of the Metrobank, Calapan Branch, take from the
Bank's Vault the amount of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS, which is under her direct
custody and/or accountability, misappropriate and convert to her own personal use and benefit, without the
knowledge and consent of the offended party, despite repeated demands for her to account and/or return the said
amount, she refused and failed, and still fails and refuses to the damage and prejudice of the Metrobank, Calapan
Branch, in the aforementioned amount of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS.
Contrary to Article 315 of the Revised Penal Code.
Calapan, Oriental Mindoro, November 27, 1985." 1
Both civil and criminal cases were raffled to the same branch of the Regional Trial Court of Calapan, Oriental Mindoro,
Branch 40.
Thereafter, petitioner moved for the suspension of the criminal case on the ground of the existence of a prejudicial
question, viz., that the resolution of the civil case was determinative of her guilt or innocence in the criminal case. 2 The
trial court, over the vehement opposition of the private and public prosecutors, granted the motion and suspended the trial
of the criminal case. 3 On petition for certiorari to the Court of Appeals, the appellate court ruled that there was no
prejudicial question.4
Petitioner was arraigned and assisted by counsel de parte, entered a plea of not guilty. 5 While the trial of the criminal
case was suspended, the trial of the civil case continued. At the time of arraignment, the civil case was already submitted
for decision. Hence, during the pre-trial conference of the criminal case, the parties agreed to adopt their respective
evidence in the civil case as their respective evidence in the criminal case. 6 The trial court ordered the parties to submit
their written agreement pursuant to Section 4 of Rule 118 of the Rules of Court. 7 Thereafter, petitioner, duly assisted by
her counsel, with the conforme of the public prosecutor, entered into the following pre-trial agreement: 8
"COMES NOW, the accused, assisted by counsel, and unto this Honorable Court most respectfully submits this
Pre-Trial agreement:

1. That the evidence already adduced by the plaintiff in Civil Case No. R-3733 will be adopted by the prosecution
as its evidence in Criminal Case No. C-2313;

2. That the evidence to be adduced by the defendant in Civil Case No. R-3733 will also be adopted as evidence for
the defense in Criminal Case No. C-2313.

WHEREFORE, premises considered, it is prayed that the foregoing pre-trial agreement be admitted in compliance
with the Order of this Court dated April 19, 1988.

RESPECTFULLY SUBMITTED.
Calapan, Oriental Mindoro, August 20, 1990.
CRISTETA CHUA-BURCE (sgd.)
Accused
Assisted By:
RODRIGO C. DIMAYACYAC (sgd.)
Defense Counsel
San Vicente, Calapan
Oriental Mindoro
IBP O.R. No. 292575
May 11, 1990
Quezon City
With Conformity:
EMMANUEL S. PANALIGAN (sgd.)
Prosecuting Fiscal

Pursuant to the pre-trial agreement, the public prosecutor filed a Motion to Adopt Evidence. 9 Both the pre-trial agreement
and said Motion were granted by the trial court. 10
On March 18, 1991, the trial court rendered a consolidated decision 11 finding petitioner (a) guilty of estafa under Article
315 (1) (b) of the Revised Penal Code in the criminal case, and (b) liable for the amount of P150,000.00 in the civil case.
The dispositive portion of decision provides
In Criminal Case No. C-2313

WHEREFORE, the Court hereby finds the accused Cristeta Chua-Burce guilty beyond reasonable doubt of the
crime of Estafa, punishable under Art. 315, paragraph 1 (b) of the Revised Penal Code, which imposes a penalty
of prision correccional in its maximum period to prision mayor in its minimum period but considering that the
amount involved exceeds P22,000.00, the penalty provided for shall be imposed in its maximum period, adding one
year for each additional P10,000.00, but the total amount not to exceed twenty years.
Applying the Indeterminate Sentence Law, the imposable penalty shall be one degree lower as minimum of arresto
mayor with a penalty range of One Month and One Day to Six Months, as minimum to prision mayor in its
maximum period, as maximum, or a penalty of Six years to Twelve Years. Considering the mitigating circumstance
of voluntary surrender, the court hereby imposes upon the accused to suffer imprisonment from SIX (6) MONTHS
of arresto mayor in its maximum period, as minimum, to EIGHT (8) YEARS of prision mayor, in its minimum period,
as maximum. The civil liability shall not be imposed in this case due to a separate civil action.
In Civil Case No. R-3733
 WHEREFORE, judgment is hereby rendered in favor of the plaintiff Metrobank, ordering defendants Cristeta Chua-
Burce and Antonio Burce, spouses, to pay Metrobank the amount of P150,000.00 representing the amount
misappropriated with the legal rate of six percent (6%) per annum from August 15, 1985 until fully paid and to pay
the costs of suit.
SO ORDERED."

Petitioner seasonably appealed her conviction in the criminal case to the Court of Appeals. Petitioner filed a separate
appeal in the civil case.
In a decision dated November 27, 1992, 12 the Court of Appeals affirmed the trial court's decision in toto. Petitioner's
Motion for Reconsideration was likewise denied. 13Hence, the recourse to this Court.
Petitioner raises the following issues: 14
1. IS THE RESULT OF POLYGRAPH EXAMINATION ADMISSIBLE IN EVIDENCE?

2. CAN THE PRESIDING JUDGE OF THE REGIONAL TRIAL COURT ADMIT IN EVIDENCE THE EVIDENCE
WHICH WAS ALREADY DENIED ADMISSION IN THE ORDER OF THE FORMER JUDGE OF THE
SAME COURT?
3. DOES PRIMA FACIE PRESUMPTION OF MISAPPROPRIATION OR CONVERSION EXISTS (sic) AGAINST
THE PETITIONER WHEN THERE WERE OTHER PERSONS WHO HAD DIRECT AND GREATER
ACCESS IN THE CASH-IN-VAULT?

4. IS RULE 111 SECTION 2 (a) OF THE REVISED RULES ON CRIMINAL PROCEDURE APPLICABLE IN
(sic)THE CASE AT BAR?

5. WAS THERE A VALID PROCEEDING WHEN THE FISCAL WAS NOT ACTUALLY PRESENT AND DID NOT
CONTROL AND SUPERVISE THE PROSECUTION OF THE CASE?

In gist, (1) petitioner contends that the trial court erred in taking into account the results of the polygraph examination as
circumstantial evidence of guilt considering the inherent unreliability of such tests, and the fact that the previous trial judge
who handled the case already ruled such evidence as inadmissible; (2) petitioner insists that there can be no presumption
of misappropriation when there were other persons who had access to the cash in vault; and (3) petitioner questions the
validity of the trial of criminal case considering that the pre-trial agreement dispensed with the intervention of the public
prosecutor in a full-blown trial of the criminal case.
The Office of the Solicitor General, for the State, contends that the guilt of petitioner has been proven beyond reasonable
doubt by the following facts which were duly established during trial first, petitioner was the cash custodian who was
directly responsible and accountable for the cash-in-vault. Second, the other persons who had access to the vault facilities
never used the duplicate keys to open the safety deposit boxes and the cash safe from where the P100.00 bill
denominations were located. In fact, the duplicate keys were offered in evidence still in their sealed
envelopes. Third, alterations and superimposition on the cash-in-vault summary sheet were made by petitioner to cover
the cash shortage. Lastly, there was a valid joint trial of the civil and criminal cases. cdasia

The crucial issues, in our mind, are (1) whether there was a valid trial of the criminal case, and (2) whether the elements
of the crime of estafa under Article 315 (1) (b) of the Revised Penal Code were duly proven beyond reasonable doubt.
First, petitioner assails the validity of the proceedings in the trial court on the ground that the public prosecutor did not
intervene and present any evidence during the trial of the criminal case. The records clearly show that the pre-trial
agreement was prepared by petitioner with the conforme of the public prosecutor. Thereafter, petitioner filed
a consolidated memorandum for both civil and criminal cases. Section 5 of Rule 110 15 requires that all criminal actions
shall be prosecuted under the direction and control of the public prosecutor. The rationale behind the rule is "to prevent
malicious or unfounded prosecutions by private persons." 16 The records show that the public prosecutor actively
participated in the prosecution of the criminal case from its inception. It was during pre-trial conference when the parties
agreed to adopt their respective evidence in the civil case to the criminal case. This is allowed under Section 2 (e) of Rule
118 of the Rules of Court 17 which provides that during pre-trial conference, the parties shall consider "such other matters
as will promote a fair and expeditious trial." The parties, in compliance with Section 4 of Rule 118, 18 reduced to writing
such agreement. Petitioner, her counsel, and the public prosecutor signed the agreement. Petitioner is bound by the pre-
trial agreement, and she cannot now belatedly disavow its contents. 19
On the second issue. Petitioner was charged with the crime of estafa under Article 315 (1) (b) of the Revised Penal
Code. 20 In general, the elements of estafa are: (1) that the accused defrauded another (a) by abuse of confidence or (b)
by means of deceit; and (2) that damage or prejudice capable of pecuniary estimation is caused to the offended party or
third person. 21 Deceit is not an essential requisite of estafa with abuse of confidence, since the breach of confidence
takes the place of the fraud or deceit, which is a usual element in the other estafas. 22
The elements of estafa through conversion or misappropriation under Art. 315 (1) (b) of the Revised Penal Code are: 23
 (1) that personal property is received in trust, on commission, for administration or under any other circumstance
involving the duty to make delivery of or to return the same, even though the obligation is guaranteed by a bond;

(2) that there is conversion or diversion of such property by the person who has so received it or a denial on his
part that he received it;
(3) that such conversion, diversion or denial is to the injury of another; and
(4) that there be demand for the return of the property.

Have the foregoing elements been met in the case at bar? We find the first element absent. When the money, goods, or
any other personal property is received by the offender from the offended party (1) in trust or (2) on commission or (3)
for administration, the offender acquires both material or physical possession and juridical possession of the thing
received. 24 Juridical possession means a possession which gives the transferee a right over the thing which the
transferee may set up even against the owner. 25 In this case, petitioner was a cash custodian who was primarily
responsible for the cash-in-vault. Her possession of the cash belonging to the bank is akin to that of a bank teller, both
being mere bank employees.
In People v. Locson, 26 the receiving teller of a bank misappropriated the money received by him for the bank. He was
found liable for qualified theft on the theory that the possession of the teller is the possession of the bank. We explained
in Locson that
"The money was in the possession of the defendant as receiving teller of the bank, and the possession of the
defendant was the possession of the bank. When the defendant, with grave abuse of confidence, removed the
money and appropriated it to his own use without the consent of the bank, there was the taking
orapoderamiento contemplated in the definition of the crime of theft." 27

In the subsequent case of Guzman v. Court of Appeals, 28 a travelling sales agent misappropriated or failed to return to his
principal the proceeds of things or goods he was commissioned or authorized to sell. He was, however, found liable for
estafa under Article 315 (1) (b) of the Revised Penal Code, and not qualified theft. In theGuzman case, we explained the
distinction between possession of a bank teller and an agent for purposes of determining criminal liability

"The case cited by the Court of Appeals (People vs. Locson, 57 Phil. 325), in support of its theory that appellant
only had the material possession of the merchandise he was selling for his principal, or their proceeds, is not in
point. In said case, the receiving teller of a bank who misappropriated money received by him for the bank, was
held guilty of qualified theft on the theory that the possession of the teller is the possession of the bank. There is an
essential distinction between the possession by a receiving teller of funds received from third persons paid to the
bank, and an agent who receives the proceeds of sales of merchandise delivered to him in agency by his principal.
In the former case, payment by third persons to the teller is payment to the bank itself; the teller is a mere
custodian or keeper of the funds received, and has no independent right or title to retain or possess the same as
against the bank. An agent, on the other hand, can even assert, as against his own principal, an independent,
autonomous, right to retain money or goods received in consequence of the agency; as when the principal fails to
reimburse him for advances he has made, and indemnify him for damages suffered without his fault (Article 1915,
[N]ew Civil Code; Article 1730, old)."

Petitioner herein being a mere cash custodian had no juridical possession over the missing funds. Hence, the element of
juridical possession being absent, petitioner cannot be convicted of the crime of estafa under Article 315, No. 1 (b) of the
Revised Penal Code. 29
WHEREFORE, the petition is hereby granted and petitioner is ACQUITTED of the crime of estafa under Article 315 (1) (b)
of the Revised Penal Code. Petitioner is ordered RELEASED from custody unless she is being held for some other lawful
cause. No costs. Cdpr

SO ORDERED.
||| (Chua-Burce v. Court of Appeals, G.R. No. 109595, [April 27, 2000], 387 PHIL 15-28)
 SECOND DIVISION
[G.R. No. 164823. August 31, 2005.]
MARIA CARLOS, represented by TERESITA CARLOS VICTORIA, petitioner, vs. REPUBLIC OF
THE PHILIPPINES, respondent.
DECISION
PUNO, J : p

This is a petition for review on certiorari to annul the decision of the Court of Appeals in CA-G.R. CV No. 76824 entitled
"Re: Application for Land Registration of a Parcel of Land in Taguig, Metro Manila, Maria Carlos represented by Teresita
Carlos Victoria, Applicant-Appellee vs. Republic of the Philippines through the Office of the Solicitor General, Oppositor-
Appellant."
On December 19, 2001, petitioner Maria Carlos, represented by her daughter, Teresita Carlos Victoria, filed an application
for registration and confirmation of title over a parcel of land with an area of 3,975 square meters located at Pusawan,
Ususan, Taguig, Metro Manila, covered by Plan Psu-244418. Petitioner alleged, among others, that she is the owner of
said parcel of land which she openly, exclusively and notoriously possessed and occupied since July 12, 1945 or earlier
under a bona fide claim of ownership; that there is no mortgage or encumbrance affecting said property, nor is it part of
any military or naval reservation; that the property is being used for industrial purposes; and that there are no tenants or
lessees on the property. Petitioner further claimed that she has been in possession of the subject land in the concept of
an owner; that her possession has been peaceful, public, uninterrupted and continuous since 1948 or earlier; and tacking
her possession with that of her predecessors-in-interest, petitioner has been in possession of the land for more than 50
years. 1
The Republic of the Philippines, represented by the Director of Lands, filed an opposition to petitioner's application. 2
During the initial hearing, however, only petitioner and her counsel appeared. They presented documentary evidence to
prove the jurisdictional requirements. 3
Petitioner later presented testimonial evidence consisting of the testimonies of her neighbors, Sergio Cruz and Daniel
Castillo, and Teresita Carlos Victoria herself. 4
Sergio Cruz, 83 years old, a native of Ususan, Taguig, and neighbor of Maria Carlos, testified that the property subject of
the application was previously owned and possessed by Jose Carlos. He planted it with palay and sold the harvest.
Everyone in the community knew him as the owner of said parcel of land. He also paid the taxes thereon. After the death
of Jose Carlos in 1948, his daughter, Maria Carlos, inherited the property and immediately took possession thereof. Her
possession was peaceful, open, public, continuous, uninterrupted, notorious, adverse and in the concept of an owner.
When Maria Carlos died, her heirs took over the property. 5
Cruz's testimony was corroborated by Daniel Castillo, 76 years old, Barangay Captain of Ususan, Taguig. 6

Teresita Carlos Victoria stated on the witness stand that her mother, Maria Carlos, was in possession of the subject
property until she passed away on January 6, 2001. Upon the demise of Maria Carlos, Victoria took possession of the
property with the consent of her brothers and sisters. She characterized Maria Carlos's possession as peaceful, open,
public, continuous, adverse, notorious and in the concept of an owner. She has never been disturbed in her possession;
the whole community recognized her as the owner of the land; she declared the land for tax purposes; and she paid the
taxes thereon. In addition, Victoria informed the court that the heirs of Maria Carlos have not yet instituted a settlement of
her estate. However, they have agreed to undertake the titling of the property and promised to deliver the certificate of title
to Ususan Development Corporation which bought the property from Maria Carlos. Victoria admitted that her mother had
sold the land to Ususan Development Corporation in 1996 but failed to deliver the title. Hence, the heirs of Maria Carlos
made a commitment to the corporation to deliver the certificate of title so that they could collect the unpaid balance of the
purchase price. 7
Petitioner also presented in court the concerned officers of the Department of Environment and Natural Resources
(DENR) to establish that the land in question is alienable and disposable. cCAIDS

Elvira R. Reynaldo, Records Officer, DENR Lands Management Bureau, appeared to certify that their office "has no
record of any kind of public land application/land patent covering the parcel of land situated at Ususan, Taguig, Rizal,
identified/described in Plan Psu-244418." 8
Ulysses Sigaton, Land Management Inspector, DENR National Capital Region, stated that he conducted an ocular
inspection of the subject property and found that it is within the alienable and disposable area under Project No. 27-B, LC
Map No. 2623, certified by the Bureau of Forest Development on January 4, 1968. He also noted that the land is being
used for industrial purposes. It had several warehouses, four big water tanks and is enclosed by a fence. 9
The trial court granted the application in its decision dated October 24, 2002. It held:
 After considering the applicant's evidence ex-parte which is based on factual and meritorious grounds, and
considering that the applicant acquired the property under registration through inheritance from her father, Jose
Carlos, and considering further that her possession thereof, tacked with that of her predecessor-in-interest, is open,
continuous, exclusive, notorious and undisturbed, under claim of ownership since time immemorial up to the
present time; and considering further that the subject parcel of land is part of the disposable and alienable land
(Tsn, July 3, 2002, p.6) and considering further that the realty taxes due thereon have been religiously paid (Exhs.
"HH," "II," "JJ," and "JJ-1"), and considering finally that the subject parcel of land belong[s] to the applicant and that
she possess[es] a perfect title thereto which may be confirmed and registered in her name under the (P)roperty
Registration Decree (P.D. 1529), the herein application is hereby GRANTED. 10

On appeal, the Court of Appeals reversed and set aside the decision of the trial court. It noted that:
In the instant case, the applicant at the time she filed her application for registration of title was no longer in
possession and occupation of the land in question since on October 16, 1996, the applicant's mother and
predecessor-in-interest sold the subject land to Ususan Development Corporation. This was admitted by witness
Teresita Carlos Victoria . . .
Clearly, as early as 1996, possession and occupation of the land in question pertains not to the applicant but to
Ususan Development Corporation, thus it can be said that the applicant has no registrable title over the land in
question. 11

Hence, this petition.

We affirm the findings of the appellate court.
Applicants for confirmation of imperfect title must prove the following: (a) that the land forms part of the disposable and
alienable agricultural lands of the public domain; and (b) that they have been in open, continuous, exclusive, and
notorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial or
since June 12, 1945. 12
As found by the Court of Appeals, petitioner has met the first requirement but not the second.
The Court held in Republic vs. Alconaba 13 that the applicant must show that he is in actual possession of the property
at the time of the application, thus:
The law speaks of possession and occupation. Since these words are separated by the conjunction ["]and["], the
clear intention of the law is not to make one synonymous with the other. Possession is broader than occupation
because it includes constructive possession. When, therefore, the law adds the word occupation, it seeks to delimit
the all-encompassing effect of constructive possession. Taken together with the words open, continuous, exclusive
and notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his possession must
not be a mere fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of such a
nature as a party would naturally exercise over his own property. aEACcS

It is clear in the case at bar that the applicant, Maria Carlos, no longer had possession of the property at the time of the
application for the issuance of a certificate of title. The application was filed in court on December 19, 2001. Teresita
Carlos Victoria, the daughter of Maria Carlos, admitted during the hearing that her mother had sold the property to Ususan
Development Corporation in 1996. They also presented as evidence the deed of absolute sale executed by and between
Maria Carlos and Ususan Development Corporation on October 16, 1996. 14 The document states, among others:
xxx xxx xxx
4. That the VENDOR, by this Deed hereby transfer(s) possession of the property to the VENDEE. 15

This contradicts petitioner's claim that she was in possession of the property at the time that she applied for confirmation
of title.
Nonetheless, even if it were true that it was petitioner who had actual possession of the land at that time, such possession
was no longer in the concept of an owner. Possession may be had in one of two ways: possession in the concept of an
owner and possession of a holder. A possessor in the concept of an owner may be the owner himself or one who claims
to be so. On the other hand, one who possesses as a mere holder acknowledges in another a superior right which he
believes to be ownership, whether his belief be right or wrong. 16 Petitioner herein acknowledges the sale of the property
to Ususan Development Corporation in 1996 and in fact promised to deliver the certificate of title to the corporation upon
its obtention. Hence, it cannot be said that her possession since 1996 was under a bona fide claim of ownership. Under
the law, only he who possesses the property under a bona fide claim of ownership is entitled to confirmation of title.

We therefore find that the Court of Appeals did not err in denying the issuance of a certificate of title to petitioner.
IN VIEW WHEREOF, the petition is DENIED. SO ORDERED.
 THIRD DIVISION
[G.R. No. 116220. December 6, 2000.]
SPOUSES ROY PO LAM and JOSEFA ONG PO LAM, petitioners, vs. COURT OF APPEALS and
FELIX LIM now JOSE LEE, respondents.
SYNOPSIS
At the time petitioners spouses purchased the lots in dispute, from LAHCO, there was a notice of lis pendens on TCT no.
2581 which covered Lot No. 1558. And since Lot No. 1558 was sold simultaneously with Lot No. 1557, even if the notice
of lis pendens on Lot No. 1557 had already been cancelled, petitioners were held to be purchasers in had faith even in
regard to Lot No. 1557. The trial court held that they should have been alerted of a possible defect in the title of LAHCO.
CA affirmed the decision of the trial court. The Supreme Court likewise affirmed the assailed decision of the CA.
Petitioners moved for reconsideration, alleging it was error to hold them buyers in bad faith.
The Supreme Court granted the motion, set aside its previous decision and rendered a new one, ruling: that the doctrine
of lis pendens rests on public policy, not notice. Thus, upon cancellation of the notice of lis pendens, the petitioners-spouses
cannot then be considered as having constructive notice of any defect in the title of Lahco as to made them purchasers in
bad faith of the lots in dispute. To hold otherwise would render nugatory the cancellation of the notices of lis
pendens inscribed on TCT Nos. 2580 and 2581.
RESOLUTION
MELO, J : p

On October 13, 1999, this Division, under the ponencia of Mr. Justice Purisima handed down a decision declaring
petitioners, the spouses Roy Po Lam and Josefa Ong Po Lam, as transferees pendente lite and not purchasers in good
faith of Lots No. 1557 and 1558 and ordering them to reconvey said lots to private respondent Jose Lee.
Forthwith, petitioners filed a motion for reconsideration which was received hereat on November 15, 1999. Respondents
thereupon filed their opposition, as well as a separate comment, to which petitioners submitted a reply.
Regrettably, however, for one reason or another, the motion for reconsideration remained unacted upon until the retirement
of Justice Purisima in October, 2000, notwithstanding the fact that it was calendared or placed in the Court's agenda a
number of times, as well as the urgings of both parties to have the matter resolved.
Thus, with Justice Purisima leaving the Court and, in accordance with A.M. No. 99-8-99 promulgated by the Court En
Banc on February 15, 2000, the matter of the motion for reconsideration was assigned by raffle to herein ponente for study
and the preparation of the appropriate action.
A review of the facts, uncontroverted though they are, is in order.
Lots No. 1557 and 1558 are prime commercial lots located in the heart of Legaspi City's commercial district. These were
sold by Lim Kok Chiong to the Legaspi Avenue Hardware Company (hereafter referred to as LAHCO) sometime in the early
60's. On December 4, 1964, however, Felix Lim, Lim Kok Chiong's brother, filed a complaint with the then Court of First
Instance of Albay against his brother and LAHCO to annul the deeds of sale covering said lots on the ground that the sale
included the 3/14pro-indiviso portion of the lots which Felix Lim had inherited from his foster parents. The complaint was
docketed as Civil Case No. 2953 of the Court of First Instance of Albay.
On January 27, 1365, Felix Lim filed with the Register of Deeds of Albay a notice of lis pendens over the two lots. The same
was inscribed on Transfer Certificates of Title No. 2580 and 2581, covering Lots No. 1557 and 1558, respectively. Later,
the trial court, on motion of Felix Lim, dropped the case against Lim Kok Chiong. On March 15, 1969, the trial court rendered
a decision declaring LAHCO to be the absolute owner of the two above-mentioned lots. As a consequence of its decision,
the trial court ordered the cancellation of the notice of lis pendens inscribed on the titles of the two lots. Pursuant to this
order, the notice of lis pendens inscribed on TCT No. 2580 was cancelled. However, the notice of lis pendens annotated on
TCT No. 2581 remained uncancelled, allegedly because the duplicate owner's copy of said TCT was with the Continental
Bank, Lot No. 1558 having been mortgaged by LAHCO to said bank.
Aggrieved, Felix Lim appealed to the Court of Appeals. On May 28, 1970, and during the pendency of the appeal, CA-G.R.
No. 44770-R, LAHCO sold the two lots to herein petitioners, the spouses Roy Po Lam and Josefa Ong Po Lam. On May
20, 1974, petitioners, by virtue of the court order adverted to earlier, had the notice of lis pendensstill inscribed on TCT No.
2581 cancelled. Felix Lim did not move for the reinstatement of the cancelled notices of lis pendens on TCT No. 2580 and
2581. Thereafter, said certificates of title were themselves cancelled and replaced by TCT No. 8102 and 13711, respectively,
in the name of petitioners.
On April 29, 1980, the Court of Appeals affirmed the decision of the trial court in Civil Case No. 2953, appellant Felix Lim's
counsel receiving a copy of thereof on May 16, 1980. On May 23, 1980, counsel for Felix Lim filed a motion for extension
of time to file a motion for reconsideration. The appellate court gave Felix Lim up to June 20, 1980 to file one. On June 17,
1980, he filed a motion for reconsideration, which was, however, denied. Without leave of court, Felix Lim filed, on July 14,
1980, a second motion for reconsideration. This was acted upon favorably by the Court of Appeals on March 11, 1981, with
the appellate court declaring that Felix Lim, by returning P20,000.00 to LAHCO, could exercise the right of redemption over
the two lots sold by Lim Kok Chiong to LAHCO. Although LAHCO asked this Court for an extension of time to file a petition
for review, none was ever filed, for which reason the Court remanded the case to the trial court for execution.
On November 12, 1981, Felix Lim moved, in Civil Case No. 2953, to have the March 11, 1981 resolution of the Court of
Appeals annotated on TCT No. 8102 and 13711. He also moved for the issuance of a writ of execution to enforce said
resolution. Likewise, he filed a motion praying that the Clerk of Court execute a deed of conveyance over the disputed lots
in his favor. All these motions were denied by the trial court on the ground that the Po Lam spouses could not be bound
thereby since they were not impleaded as party-litigants in Civil Case No. 2953 or CA-G.R. No. 44770-R. However, the trial
court reserved to Felix Lim "the right to institute an action on whether or not the acquisition of the properties in question by
spouses Roy Po Lam and Josefa Ong Po Lam were made in good faith or bad faith."
In consonance with this ruling, Felix Lim filed a complaint for reconveyance and annulment of the sale and titles of said lots
with the Regional Trial Court of Legaspi City, which was docketed therein as Civil Case No. 6767.
On September 19, 1985, Felix Lim filed with the trial court, in the old case, Civil Case No. 2953, a motion to include as
defendants the Po Lam spouses, as well as to execute the March 11, 1981 resolution of the Court of Appeals. Both motions
were denied. On appeal (CA-G.R. No. 08533-CV), the Court of Appeals upheld the denial. Felix Lim appealed the decision
to this Court.
In the meantime, in June, 1970, or one month after the Po Lam spouses had purchased the two lots from LAHCO, they
leased the commercial building erected on Lot No. 1557 to private respondent Jose Lee for one year. After the contract
expired, Jose Lee continued to occupy the same, paying monthly rentals therefor. However, after September 15, 1981, Jose
Lee refused to pay rentals to the Po Lam spouses, informing them that he would deposit the same in court since Felix Lim
had promised to sell the property to him. Lee's failure to pay rentals prompted the Po Lam spouses to file an unlawful
detainer case against him with the Metropolitan Trial Court of Legaspi City.
On October 29, 1990, Felix Lim assigned all his rights to and interests in the disputed lots to Jose Lee, who then substituted
Felix Lim as party plaintiff, now private respondent.
On December 19, 1993, the Metropolitan Trial Court of Legaspi City declared the Po Lam spouses to be the lawful owners
of Lot No. 1557. On appeal, said judgment was affirmed by the regional trial court and thereafter, by the Court of Appeals
in CA-G.R. No. 12316-SP. Aggrieved, Jose Lee filed an appeal with this Court, which consolidated the case with the appeal
filed in CA-G.R. No. 08533-CV where the trial court in the original 1965 case refused to have petitioners impleaded as
defendants, and to execute the March 11, 1981 resolution of the Court of Appeals, were upheld by the appellate court.
It must be mentioned that in both CA-G.R. No. 12316-SP and CA-G.R. No. 08533-CV, the appellate court ruled that the
March 11, 1981 resolution of the Court of Appeals in CA-G.R. No. 44770-R was null and void on the ground that the decision
it had issued earlier on April 29, 1980 had already become final and executory when the above-said resolution was
promulgated. The appellate court ruled that Felix Lim's counsel should not have filed a motion for extension of time to file a
motion for reconsideration, the same being a prohibited pleading under the rule laid down in Habaluyas v. Japson (138
SCRA 46 [1985]). Being a prohibited pleading, it was held that the extension granted to Lim did not arrest the running of the
15-day period. Thus, when Lim filed his motion for reconsideration on June 17, 1980, the same was already filed out of
time, he having received a copy of the judgment of affirmance on May 16, 1980.
The above finding of the appellate court was, however, debunked by this Court in G.R. No. 84145-55 (Lim v. Court of
Appeals, 188 SCRA 23 [1988]) where we held thatHabaluyas v. Japson (supra) must be applied prospectively so that "when
petitioner Lim filed thru registered mail on May 23, 1980 his motion for extension of time to file a motion for reconsideration,
the motion was deemed properly filed contrary to the respondent court's ruling that it was a prohibited pleading."
Ruling on the appeals filed from CA-G.R. No. 12316-SP and CA-G.R. No. 08533-CV, this Court thus declared, on February
18, 1988, in Lim vs. CA cited in the immediately preceding paragraph that:
ACCORDINGLY, the decisions appealed from are modified. The portions of the appealed decisions dealing with the
March 11, 1981 resolution in CA-G.R. No. 44770-R are reversed and set aside and the said resolution is ordered
reinstated. The decisions are affirmed in all other respects. Costs against private respondents.
SO ORDERED.

In the interim, Civil Case No. 6767 for reconveyance and annulment of sale and titles filed by Felix Lim (now Jose Lee) went
on until, on January 14, 1992, the Regional Trial Court of Legaspi City rendered a decision declaring the spouses Roy Po
Lam and Josefa Ong Po Lam as transferees pendente lite and not purchasers in good faith. It held that the Po Lam spouses
were bound by the March 11, 1981 resolution rendered in CA-G.R. No. 44770-R. The Po Lam spouses forthwith appealed
to the Court of Appeals (CA-G.R. CV No. 37452) but said Court, on June 30, 1993, affirmed the trial court's decision.
The Po Lam spouses thus filed a petition for certiorari with this Court. On October 13, 1999, we denied the petition and
affirmed in toto the decision of the Court of Appeals in CA-G.R. CV No. 37452. We held that the Po Lam spouses could not
be deemed buyers in good faith, ratiocinating in the process:
As to Lot 1558, there is no question that they (petitioners) cannot be deemed buyers in good faith. The annotation
of lis pendens on TCT No. 2581 which covers Lot 1558, served as notice to them that the said lot is involved in a
pending litigation. Settled is the rule that one who deals with property subject of a notice of lis pendenscannot invoke
the right of a purchaser in good faith. Neither can he acquire better rights than those of his predecessor in interest.
A transferee pendente lite stands in the shoes of the transferor and is bound by any judgment or decree which may
be rendered for or against the transferor. It is thus beyond cavil that the herein petitioners, who purchased Lot 1558
subject of a notice of lis pendens, are not purchasers in good faith and are consequently bound by the Resolution
dated March 11, 1981 of the Court of Appeals.
Can petitioners then be treated purchasers in good faith of Lot 1557 covered by TCT No. 2580 considering that the
notice of lis pendens thereon had been already cancelled at the time of the sale? We rule in the negative. It is a firmly
settled jurisprudence that a purchaser cannot close his eyes to facts which should put a reasonable man on guard
and claim that he acted in good faith in the belief that there was no defect in the title of the vendor. His mere refusal
to believe that such a defect exist, or his willful closing of his eyes to the possibility of the existence of a defect on his
vendor's title, will not make him innocent purchaser for value, if it develops afterwards that the title was in fact
defective, and it appears that he had notice of such defect as would have led to its discovery had he acted with that
measure of precaution which may reasonably be required of a prudent man in like situation.

In the case under consideration, there exist circumstances which should have placed are herein petitioners on guard.
As aptly stressed upon by the respondent court, while it is true that when the petitioners purchased Lot 1557, the
notice of lis pendens affecting said lot had been cancelled, it could not be denied that such inscription appears on
the Transfer Certificate of Title of the said lot together with the cancellation of the notice of lis pendens. This fact
coupled with the non-cancellation of the notice of lis pendens on Transfer Certificate of Title No. 2581 covering Lot
1558, should have sufficiently alerted the petitioners vis-a-vis a possible defect in the title of LAHCO, especially so
that Lots 1557 and 1558 were simultaneously sold to the petitioners in a single deed of sale executed on May 28,
1969. SaCIDT

Undeterred, the Po Lam spouses filed a motion for reconsideration, alleging, inter alia, that it was error to hold them as
purchasers in bad faith.
The motion for reconsideration is impressed with merit.
It must be stressed that the sole basis for finding petitioners to be purchasers in bad faith was the subsistence of the notice
of lis pendens inscribed on TCT No. 2581, which covered Lot No. 1558, at the time petitioners-spouses purchased the lots
in dispute. And since Lot No. 1558 was sold simultaneously with Lot No. 1557, even if the notice of lis pendens on Lot No.
1557 had already been cancelled, petitioners were held to be purchasers in bad faith even in regard to Lot No. 1557.
However, it must be pointed out that even if a notice of lis pendens on TCT No. 2581 (Lot No. 1558) was still subsisting at
the time petitioners bought the property from LAHCO, there also was a court order ordering that the annotation be cancelled,
as in fact, it was cancelled on May 20, 1974.
A possessor in good faith has been defined as "one who is unaware that there exists a flaw which invalidates his acquisition
of the thing (See Article 526, Civil Code). Good faith consists in the possessor's belief that the person from whom he received
the thing was the owner of the same and could convey his title (Pio v. CA, 198 SCRA 434 [1991]). In this case, while
petitioners bought Lot No. 2581 from LAHCO while a notice of lis pendens was still annotated thereon, there was also
existing a court order canceling the same. Hence, petitioners cannot be considered as being "aware of a flaw which
invalidates their acquisition of the thing" since the alleged flaw, the notice of lis pendens, was already being ordered
cancelled at the time of the purchase. On this ground alone, petitioners can already be considered buyers in good faith.
More importantly, however, the notice of lis pendens inscribed on TCT No. 2581 was cancelled on May 20, 1974, pursuant
to the order of the trial court in Civil Case No. 2953. Felix Lim did not move for the reinstatement of the cancelled notices
of lis pendens. What is the effect of this cancellation? To follow the prior ruling of the Court in the instant case, the
cancellation of the notice of lis pendens would have no effect. Regardless of the cancellation of the notice of lis pendens,
the Po Lam spouses are still considered as having notice of a possible defect in the title of LAHCO, making them purchasers
in bad faith.
As we shall elucidate, hewing to such an interpretation misunderstands the nature and effect of a notice of lis pendens. The
meaning, nature, recording, and effects of a notice of lis pendens are clearly stated in Section 14, Rule 13 of the 1997 Rules
of Civil Procedure, thus:
SECTION 14. Notice of lis pendens. In an action affecting the title or the right of possession of real property, the
plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of
deeds of the province in which the property is situated a notice of the pendency of the action. Said notice shall contain
the names of the parties and the object of the action or defense, and a description of the property in that province
affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrances of the property
 affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency
against the parties designated by their real names.
The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, are proper showing
that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the right of the
party who caused it to be recorded.

Lis pendens literally means a pending suit or a pending litigation; and the doctrine of lis pendens has been defined as the
jurisdiction, power, or control which a court acquires over property involved in a suit, pending the continuance of the action,
and until final judgment therein (54 C.J.S. Lis Pendens 1). A notice of lis pendens is an announcement to the whole world
that a particular real property is in litigation, serving as a warning that one who acquires an interest over said property does
so at his own risk, or that he gambles on the result of the litigation over the said property (AFPMBAI v. CA, G.R. No. 104769,
March 3, 2000). The filing of a notice of lis pendenscharges all strangers with a notice of the particular litigation referred to
therein and, therefore, any right they may thereafter acquire on the property is subject to the eventuality of the suit (Laroza
v. Guia, 134 SCRA 341 [1985]). Notice of lis pendens has been conceived and, more often than not, availed of, to protect
the real rights of the registrant while the case involving such rights is pending resolution or decision. With the notice of lis
pendens duly recorded, and while it remains uncancelled, the registrant could rest secure that he would not lose the property
or any part of it during the litigation (People v. Regional Trial Court of Manila, 178 SCRA 299 [1989]).
The filing of a notice of lis pendens in effect (1) keeps the subject matter of the litigation within the power of the court until
the entry of the final judgment so as to prevent the defeat of the latter by successive alienations; and (2) binds a purchaser
of the land subject of the litigation to the judgment or decree that will be promulgated thereon whether such a purchaser is
a bona fide purchaser or not; but (3) does not create a non-existent right or lien (Somes v. Government, 62 Phil. 432 [1935]).
The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the
subject matter of the litigation within the power of the court until the judgment or decree shall have been entered; otherwise
by successive alienations pending the litigation, its judgment or decree shall be rendered abortive and impossible of
execution (Laroza v. Guia, supra; People v. Regional Trial Court of Manila, supra). The doctrine of lis pendens is based on
considerations of public policy and convenience, which forbid a litigant to give rights to others, pending the litigation, so as
to affect the proceedings of the court then progressing to enforce those rights, the rule being necessary to the administration
of justice in order that decisions in pending suits may be binding and may be given full effect, by keeping the subject matter
in controversy within the power of the court until final adjudication, that there may be an end to litigation, and to preserve
the property that the purpose of the pending suit may not be defeated by successive alienations and transfers of title (54
C.J.S. Lis Pendens, supra).
From the above, it can be seen that the basis of the doctrine of lis pendens is public policy and convenience, under the view
that once a court has taken cognizance of a controversy, it should be impossible to interfere with consummation of the
judgment by any ad interim transfer, encumbrance, or change of possession (51 Am Jur 2d,Lis Pendens, 3).
However, to hold that the Po Lam spouses are still bound by the results of the litigation over the property, despite and
notwithstanding the cancellation of the notices oflis pendens prior to the termination of litigation, would consider the doctrine
of lis pendens as one of implied or constructive notice. This view is erroneous.
While the doctrine of lis pendens is frequently spoken of as one of implied or constructive notice, according to many
authorities, the doctrine is not founded on any idea of constructive notice, since its true foundation rests, as has already
been stated, on principles of public policy and necessity. The lis pendens annotation, although considered a "general notice
to all the world, . . . it is not correct to speak of it as part of the doctrine of notice; the purchaser pendente lite is affected,
not by notice, but because the law does not allow litigating parties to give to others, pending the litigation, rights to the
property in dispute as to prejudice the opposite party. The doctrine rests upon public policy, not notice" (Tirado v. Sevilla,
188 SCRA 321 [1990]). "The doctrine of lis pendens, as generally understood and applied by the courts of this country, is
not based upon presumption of notice, but upon a public policy, imperatively demanded by a necessity which can be met
and overcome in no other way. It is careless 'use of language which has led judges to speak of it as notice, because it
happens to have in some instance similar effect with notice' (Smith v. Kimball, 13 P. 801, 36 Kan. 474)."
And since the doctrine rests on public policy, not notice, upon the cancellation of the notice of lis pendens, the Po Lam
spouses cannot then be considered as having constructive notice of any defect in the title of LAHCO as to make them
transferees pendente lite and purchasers in bad faith of Lots No. 1557 and 1558. To hold otherwise would render nugatory
the cancellation of the notices of lis pendens inscribed on TCT Nos. 2580 and 2581. Differently stated, to hold the Po Lam
spouses still bound by the notice of lis pendens inscribed on TCT No. 2581 despite its subsequent cancellation on May 20,
1974, would render said cancellation an empty, unavailing, and purposeless act, which could not have been the intent of
the law. Lex neminem cogit ad van seu inutilia peragenda. The law will not compel one to do useless things.
As adverted to earlier, while the notice of lis pendens is duly recorded and as long as it remains uncancelled, the litigant
can rest secure that he would not lose the property or any part of it during litigation. Conversely, cancellation of the notice
of pendency terminates the effects of such notice. Therefore, with the cancellation of the notices of lis pendens on TCT No.
2580 and 2581, the effects of such notice were terminated, resulting in the Po Lam spouses not being bound thereby. In
fine, they cannot be considered transferees pendente lite and purchasers in bad faith of the property.
Moreover, since its operation is arbitrary and it may be harsh in particular instances, the doctrine of lis pendens is to be
strictly construed and applied. It should not be extended without strict necessity (54 C.J.S. Lis Pendens 1). To consider
the Po Lam spouses still bound by the notice of lis pendens even after the same had been cancelled would be extending
the doctrine when there is no reason therefor.
Lastly, Felix Lim's claim is barred by the equitable principle of laches. At the time the notices of lis pendens were cancelled
in 1969 and 1974, Felix Lim did not move to reinstate the same. Nor did he act when TCT No. 2580 and 2581 were replaced
by TCT No. 8102 and 13711. Instead, he waited seven years, or until 1981, to have his claim on the disputed pieces of
property recognized. Felix Lim's long inaction and passivity in asserting his rights over the disputed property precludes him
from recovering them from petitioners-spouses.
WHEREFORE, premises considered, the Motion for Reconsideration of petitioners-spouses Roy Po Lam and Josefa Ong
Po Lam is hereby GRANTED. Consequently, the decision dated October 13, 1999, is VACATED and SET ASIDE. A new
judgment is hereby entered declaring petitioners-spouses to be PURCHASERS IN GOOD FAITH and Transfer Certificates
of Title No. 8102 and 13711 in their name valid, without prejudice on the part of private respondent Jose Lee to file a
separate action for reimbursement for the value of said property from the Legaspi Avenue Hardware Company.
SO ORDERED.
Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.

||| (Spouses Po Lam v. Court of Appeals, G.R. No. 116220 (Resolution), [December 6, 2000], 400 PHIL 858-872)
 FIRST DIVISION [G.R. No. 153625. July 31, 2006.]
HEIRS OF MARCELINO CABAL vs. SPOUSES LORENZO CABAL and ROSITA CABAL.
DECISION
AUSTRIA-MARTINEZ, J : p

Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the
Decision 2 of the Court of Appeals (CA) dated September 27, 2001 in CA-G.R. SP No. 64729 which affirmed in toto the
Decision of the Regional Trial Court, Branch 70, Iba, Zambales (RTC) dated August 10, 2000 in Civil Case No. RTC-
1489-I; and the CA Resolution 3 dated May 22, 2002 which denied the Motion for Reconsideration of Marcelino Cabal
(Marcelino).
The factual background of the case is as follows:
During his lifetime, Marcelo Cabal (Marcelo) was the owner of a 4,234-square meter parcel of land situated at Barrio
Palanginan, Iba, Zambales, described as Lot G and covered by Original Certificate of Title (OCT) No. 29 of the Registry of
Deeds of Zambales. cEITCA

Sometime in August 1954, 4 Marcelo died, survived by his wife Higinia Villanueva (Higinia) and his children: Marcelino,
Daniel, Cecilio, Natividad, Juan, Margarita,Lorenzo, Lauro and Anacleto. 5 It appears that sometime in 1949, five years
before he died, Marcelo allowed his son, Marcelino, to build his house on a portion of Lot G, now the southernmost portion
of Lot 1-E of Transfer Certificate of Title (TCT) No. 43419. 6 Since then, Marcelino resided thereon. 7 Later, Marcelino's
son also built his house on the disputed property. 8
On August 17, 1964, Marcelo's heirs extra-judicially settled among themselves Lot G into undivided equal shares of
423.40-square meters each and Transfer Certificate of Title (TCT) No. T-8635 was issued in their names. 9
On September 17, 1973, Daniel sold 380 square meters of his 423.40-square meter undivided share to spouses Oscar
Merete and Clarita Ebue. 10
On September 12, 1976, the heirs subdivided Lot G into Lot G-1 in favor of Marcelino, resulting in the issuance of TCT
No. T-22656; 11 and Lot G-2 in favor of Higinia, Daniel, Natividad, Juan, Cecilio, Margarita, Lorenzo, Lauro and Anacleto,
resulting in the issuance of TCT No. 22657. 12
On March 1, 1977, Marcelino mortgaged his share, as described under TCT No. 22656, to the Rural Bank of San Antonio
(Zambales), Inc. 13 The mortgage on the property was subsequently released on December 19, 1983. 14
In the interim, based on consolidated subdivision plan (LRC) Pcd-24078, Lot G-2 was further subdivided and the
remaining portion, known as Lot 1 of the subdivision plan, comprising 3387.20 square meters, became subject of TCT No.
T-24533 with Higinia, Margarita, Natividad, Lorenzo, Daniel, Oscar Merete, Cecilio, Carmelita C. Pagar, and Anacleto as
co-owners.
On August 3, 1978, the co-owners of Lot 1 executed a Deed of Agreement of Partition with Sale. Lot 1 was subdivided
among the co-owners with Higinia, Margarita, Natividad, Lorenzo, Cecilio, Carmelita C. Pagar and Anacleto, receiving
423.40 square meters each; Daniel, with 43.4 square meters; and Oscar Merete, with 380 square meters. 15 In the same
deed, Lorenzo bought the shares of Higinia, Margarita, Daniel and Natividad. 16 Thus, Lorenzo's share in the co-
ownership amounted to 1,737 square meters. Likewise, in the same deed, Cecilio sold his share to a certain Marcela B.
Francia. 17
On January 13, 1982, a land survey was conducted on Lot 1 by Geodetic Engineer Dominador L. Santos and Junior
Geodetic Engineer Eufemio A. Abay and based on the survey, they submitted subdivision survey plan (LRC) Psd-307100,
designating the shares of Carmelita C. Pagar, Marcela B. Francia, spouses Oscar Merete and Clarita Ebue, Anacleto, and
Lorenzo as Lots 1-A, 1-B, 1-C, 1-D and 1-E, respectively. 18 The subdivision survey plan of Lot 1 was approved by the
Director of the Bureau of Lands on May 7, 1982. 19 On June 7, 1990, the co-owners of Lot 1 executed a Subdivision
Agreement designating their shares based on the approved subdivision plan. 20 On July 13, 1993, TCT No. 43419
covering Lot 1-E was issued in the name of Lorenzo. 21
In the meantime, since the subdivision plan revealed that Marcelino and his son occupied and built their houses on a 423-
square meter area located on the southernmost portion of Lot 1-E and not the adjacent lot designated as Lot G-1 under
TCT No. T-22656, 22 the spouses Lorenzo and Rosita Cabal (respondents) confronted Marcelino on this matter which
resulted to an agreement on March 1, 1989 to a re-survey and swapping of lots for the purpose of reconstruction of land
titles. 23 However, the agreed resurvey and swapping of lots did not materialize 24 and efforts to settle the dispute in
the barangay level proved futile. 25
Hence, on August 10, 1994, respondents filed a complaint for Recovery of Possession with Damages against Marcelino
before the Municipal Trial Court of Iba, Zambales (MTC), docketed as Civil Case No. 735. They alleged that Marcelino
introduced improvements in bad faith on their land with knowledge that the adjacent lot is titled in his name. 26
On August 26, 1994, Marcelino filed his Answer with Counterclaim, contending that respondents have no cause of action
against him because he has been in possession in good faith since 1949 with the respondents' knowledge and
acquiescence. He further avers that acquisitive prescription has set in. 27
On January 24, 1997, during the pendency of the trial of the case, Lorenzo died. Following trial on the merits, the MTC
rendered on November 19, 1997 its Decision 28 in favor of Marcelino, the dispositive portion of which reads: HcISTE

WHEREFORE, on the basis of the foregoing premises as adduced by this Court the plaintiff or their representatives
are hereby directed to relinquish the possession of said property subject matter of this case and deliver the
peaceful possession of the same to the herein defendant or his authorized representatives, to remove the
improvements made thereon within fifteen (15) days from the receipt of this decision, otherwise, this Court would
remove and/or destroy the same with cost against the plaintiff, further the plaintiff is hereby ordered to pay the
amount of Ten Thousand Pesos (P10,000.00), Philippine Currency representing moral damages and exemplary
damages in the amount of Five Thousand Pesos (P5,000.00), Philippine Currency, and the amount of Twenty
Thousand Pesos (P20,000.00), Philippine Currency, representing attorney's fees. SO ORDERED. 29

The MTC reasoned that prescription or the length of time by which Marcelino has held or possessed the property has
barred the respondents from filing a claim.
On December 12, 1997, respondents filed a Motion for Reconsideration 30 but the MTC denied it in its Order dated
February 5, 1998. 31
Dissatisfied, respondents filed an appeal with the RTC Branch 70, Iba, Zambales, docketed as RTC-1489-I. On August
10, 2000, the RTC rendered its Decision setting aside the Decision of the MTC. 32 The dispositive portion of the Decision
states:
WHEREFORE, the appealed Decision of the Municipal Trial Court is hereby REVERSED and SET ASIDE ordering
the defendant Marcelino Cabal and all other persons claiming interest under him to vacate and deliver peaceful
possession of the disputed area of 423 sq. m. within Lot 1-E embraced in TCT No. T-43419 to the plaintiffs-
appellants; to remove all improvements therein introduced by said defendant or by persons under his direction and
authority; to pay the plaintiffs-appellants P10,000.00 and P5,000.00 by way of moral and exemplary damages,
respectively; to pay plaintiff-appellants attorney's fee in the sum of P20,000.00 and cost of this suit. SO ORDERED.

In reversing the MTC, the RTC held that Marcelino's possession was in the concept of a co-owner and therefore
prescription does not run in his favor; that his possession, which was tolerated by his co-owners, does not ripen into
ownership.
On August 30, 2000, Marcelino filed a Motion for Reconsideration 34 but the RTC denied it in its Order dated May 3,
2001. 35
On May 18, 2001, Marcelino filed a petition for review with the CA, docketed as CA-G.R. SP No. 64729. 36 Marcelino,
however, died during the pendency of the case. On September 27, 2001, the CA rendered its Decision affirming in
toto the Decision of the RTC. 37
In sustaining the RTC, the CA held that Marcelino may have been in good faith when he started to occupy the disputed
portion in 1949 but his occupation in good faith diminished after Lot G was surveyed when he was apprised of the fact that
the portion he was occupying was not the same as the portion titled in his name; that from the tenor of the petition for
review Marcelino would like to hold on to both the lot he occupies and Lot G-1, which cannot be allowed since it will
double his inheritance to the detriment of his brother Lorenzo. SCEDaT

On November 13, 2001, Marcelino's counsel filed a Motion for Reconsideration 38 but the CA denied it in its Resolution
dated May 22, 2002. 39
On June 6, 2002, the heirs of Marcelino (petitioners), represented by his widow, Victoria Cabal, filed the present petition
anchored on the following grounds:
I. CONTRARY TO THE COURT OF APPEALS' FINDINGS AND CONCLUSION, PETITIONER NEVER INTENDED AND
NEITHER DOES HE INTEND TO HOLD ON TO BOTH THE 423 SQUARE METER WITHIN LOT 1-E WHICH HE IS
OCCUPYING AND LOT 1-G (sic). PETITIONER IS ONLY INTERESTED IN THE DISPUTED PROPERTY, THAT IS, A
PORTION OF LOT 1-E BECAUSE THIS IS WHERE HE INTRODUCED CONSIDERABLE IMPROVEMENTS IN GOOD
FAITH.

II. THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT RULED THAT THE GOOD
FAITH OF PETITIONER ON THE DISPUTED PROPERTY BEGAN TO DIMINISH AFTER LOT-G WAS SURVEYED. 40

Anent the first ground, petitioners contend that since 1949 Marcelino has claimed no other portion as his inheritance from
Marcelo, except the disputed lot; that Marcelino believed in good faith that the disputed lot is Lot G-1; that Marcelino never
intended to hold on to both lots since he did not introduce any improvement on Lot G-1 and he even agreed to a resurvey,
swapping of lots and reconstruction of title after discovery of the mistake in 1989; that Marcelino wanted the disputed lot
because he has introduced considerable improvements thereon. aHSAIT

On the second ground, petitioners maintain that Marcelino became aware of the flaw in his title only before the execution
of the swapping agreement in March 1, 1989, long after he had introduced considerable improvements in the disputed lot;
that Marcelino should not be faulted for believing that the disputed lot is his titled property because he is a layman, not
versed with the technical description of properties; that Marcelino should be adjudged a builder in good faith of all the
improvements built on the disputed property immediately prior to the execution of the swapping agreement and accorded
all his rights under the law or, alternatively, the swapping of lots be ordered since no improvements have been introduced
on Lot G-1.
Respondents, on the other hand, submit that Marcelino cannot be adjudged a builder in good faith since he exhibited
blatant and deliberate bad faith in dealing with respondents.
The Court rules in favor of the petitioners. As a general rule, in petitions for review, the jurisdiction of this Court in cases
brought before it from the CA is limited to reviewing questions of law which involves no examination of the probative value
of the evidence presented by the litigants or any of them. 41 The Supreme Court is not a trier of facts; it is not its function
to analyze or weigh evidence all over again. 42 Accordingly, findings of fact of the appellate court are generally conclusive
on the Supreme Court. 43
Nevertheless, jurisprudence has recognized several exceptions in which factual issues may be resolved by this Court,
such as: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when
the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in
making its findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the
appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record; (11) when the CA manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered, would justify a different
conclusion. 44 The Court finds that exceptions (1), (2), (4) and (11) apply to the present petition. SCaTAc

It is undisputed that Marcelino built his house on the disputed property in 1949 with the consent of his father. Marcelino
has been in possession of the disputed lot since then with the knowledge of his co-heirs, such that even before his father
died in 1954, when the co-ownership was created, his inheritance or share in the co-ownership was already particularly
designated or physically segregated. Thus, even before Lot G was subdivided in 1976, Marcelino already occupied the
disputed portion and even then co-ownership did not apply over the disputed lot. Elementary is the rule that there is no co-
ownership where the portion owned is concretely determined and identifiable, though not technically described, 45 or that
said portion is still embraced in one and the same certificate of title does make said portion less determinable or
identifiable, or distinguishable, one from the other, nor that dominion over each portion less exclusive, in their respective
owners. 46
Thus, since Marcelino built a house and has been occupying the disputed portion since 1949, with the consent of his
father and knowledge of the co-heirs, 47 it would have been just and equitable to have segregated said portion in his favor
and not one adjacent to it. Undoubtedly, the subdivision survey effected in 1976 spawned the dilemma in the present
case. It designated Lot G-1 as Marcelino's share in the inheritance notwithstanding his possession since 1949 of a definite
portion of Lot G, now the southernmost portion of Lot 1-E.
Marcelino raised the defense of acquisitive prescription, in addition to possession in good faith, in his Answer to the
Complaint in the MTC. Prescription, in general, is a mode of acquiring or losing ownership and other real rights through
the lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the
concept of an owner, public, peaceful, uninterrupted and adverse. 48 Acquisitive prescription is either ordinary or
extraordinary. 49 Ordinary acquisitive prescription requires possession in good faith and with just title 50 for ten years. 51 In
extraordinary prescription ownership and other real rights over immovable property are acquired through uninterrupted
adverse possession thereof for thirty years, without need of title or of good faith. 52
In the present case, the evidence presented during the trial proceedings in the MTC were sorely insufficient to prove that
acquisitive prescription has set in with regards to the disputed lot. The tax declaration and receipts presented in evidence
factually established only that Marcelino had been religiously paying realty taxes on Lot G-1. Tax declarations and
receipts can only be the basis of a claim of ownership through prescription when coupled with proof of actual possession.
Evidently, Marcelino declared and paid realty taxes on property which he did not actually possess as he took possession
of a lot eventually identified as the southernmost portion of Lot 1-E of subdivision plan (LRC) Psd-307100.
Furthermore, the Court notes that Marcelino no longer invoked prescription in his pleadings before the RTC 56 and
CA; 57 neither did herein petitioners raise prescription in their petition 58 and memorandum 59 before this Court. They only
extensively discussed the defense of possession in good faith. They are thus deemed to have abandoned the defense of
prescription.
The Court shall now delve on the applicability of the principle of possession in good faith.
It has been said that good faith is always presumed, and upon him who alleges bad faith on the part of the possessor
rests the burden of proof. 60 Good faith is an intangible and abstract quality with no technical meaning or statutory
definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to
defraud or to seek an unconscionable advantage. An individual's personal good faith is a concept of his own mind and,
therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from
knowledge of circumstances which ought to put the holder upon inquiry. 61 The essence of good faith lies in an honest
belief in the validity of one's right, ignorance of a superior claim, and absence of intention to overreach another. 62 Applied
to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw
which invalidates it. 63
In the present case, Marcelino's possession of the disputed lot was based on a mistaken belief that Lot G-1 is the same
lot on which he has built his house with the consent of his father. There is no evidence, other than bare allegation, that
Marcelino was aware that he intruded on respondents' property when he continued to occupy and possess the disputed
lot after partition was effected in 1976.
Moreover, the fact that in 1977 Marcelino mortgaged Lot G-1 subject of TCT No. 22656 is not an indication of bad faith
since there is no concrete evidence that he was aware at that time that the property covered by the title and the one he
was occupying were not the same. There is also no evidence that he introduced improvements on Lot G-1. In fact, the
agreement on March 1, 1989 to a resurvey and swapping of lots for the purpose of reconstructing the land titles is
substantial proof of Marcelino's good faith, sincerity of purpose and lack of intention to hold on to two lots.
Thus, the CA's conclusion that Marcelino intended to hold on to both the disputed lot and Lot G-1 is pure speculation,
palpably unsupported by the evidence on record. Marcelino is deemed a builder in good faith 64 at least until the time he
was informed by respondents of his encroachment on their property. 65
When a person builds in good faith on the land of another, the applicable provision is Article 448, which reads: CEDHTa

Article 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles
546 66 and 548, 67 or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the
proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than
that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.

Thus, the owner of the land on which anything has been built, sown or planted in good faith shall have the right to
appropriate as his own the building, planting or sowing, after payment to the builder, planter or sower of the necessary
and useful expenses, and in the proper case, expenses for pure luxury or mere pleasure. The owner of the land may
also oblige the builder, planter or sower to purchase and pay the price of the land. If the owner chooses to sell his
land, the builder, planter or sower must purchase the land, otherwise the owner may remove the improvements
thereon. The builder, planter or sower, however, is not obliged to purchase the land if its value is considerably more
than the building, planting or sowing. In such case, the builder, planter or sower must pay rent to the owner of the
land. If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof. The
right to choose between appropriating the improvement or selling the land on which the improvement stands to the
builder, planter or sower, is given to the owner of the land. 68
In accordance with Depra v. Dumlao, 69 this case must be remanded to the trial court to determine matters necessary for
the proper application of Article 448 in relation to Articles 546 and 548. Such matters include the option that respondents
would take and the amount of indemnity that they would pay, should they decide to appropriate the improvements on the
lots.
The Court notes that petitioners' alternative prayer that swapping of lots be ordered because no improvements have been
introduced on Lot G-1. This cannot be granted. Respondents and Marcelino, petitioners' predecessor-in-interest, did not
pray for swapping of lots in all their pleadings below. Both parties also did not allege the existence of a swapping
agreement in their initial pleadings, much less pursue the enforcement of the swapping agreement. They are deemed to
have renounced or abandoned any enforceable right they had under the swapping agreement and the parties cannot be
compelled to a swapping of lots.
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-
G.R. SP No. 64729 are REVERSED and SET ASIDE. The case is REMANDED to the court of origin for further
proceedings to determine the facts essential to the proper application of Article 448 in relation to Articles 546 and 548 of
the Civil Code. No pronouncement as to costs. SO ORDERED.
 FIRST DIVISION
[G.R. No. L-31267. November 24, 1972.]
IGNACIO NEGRETE, plaintiff-appellant, vs. COURT OF FIRST INSTANCE OF MARINDUQUE and IGMEDIO
MADERAZO, represented by his legal representative CATALINO MADERAZO, defendants-appellees.
DECISION
MAKASIAR, J : p

Plaintiff-appellant Ignacia Negrete, an indigent widow over 70 years of age, appealed as a pauper from the decision of the
Court of First Instance of Marinduque dated May 22, 1969 raising only questions of law (Annex "A", p. 6, rec.).
Claiming that since 1945 she and her late husband had been in continuous and peaceful possession of a parcel of land
with an area of nine (9) hectares more or less in sitio Puting Buhangin, Mogpog, Marinduque (near the Marcopper Mines
p. 8, rec.) and covered by Tax Declaration No. 8431 in her name, plaintiff-appellant Ignacia Negrete filed on July 28,
1956 a forcible entry suit against the defendant-appellee Igmedio Maderazo in the municipal court of Mogpog (docketed
as Civil Case No. 51), alleging among others that on January 7, 1956, said defendant-appellee, through strategy, force,
intimidation, and stealth unlawfully entered the northern portion of said parcel of land, said northern portion comprising an
area of about four hectares. Defendant-appellee orally moved to dismiss the ejectment complaint on the grounds of lack
of cause of action and improper venue, which motion to dismiss was denied by the court for lack of merit. Thereafter,
defendant-appellee filed an answer asserting among others that the land he is presently cultivating in sitio Puting
Buhangin is a different land. To expedite the proceedings, the municipal court directed the chief of police of Mogpog to
conduct an ocular inspection of the disputed land to determine whether the land area cultivated by the defendant-appellee
is the same land claimed by the plaintiff-appellant as the northern portion of her land under Tax Declaration No. 8431.
After the trial, the municipal court rendered a decision dated September 15, 1956 in favor of defendant-appellee after
finding that:
"There is no dispute as to the identity of the land alleged to have been unlawfully entered by the defendant. Despite
the allegations of the defendant that the land he is presently cultivating is a different land from that claimed by the
plaintiffs as the northern portion of the property, the ocular inspection made by the Chief of Police showed that it is
the same land as shown by Exhibit 'A' (also Exhibit '1') and verified by the parties during their oral testimony (at) the
witness stand. The only question to be resolved now is: Did the defendant through force, strategy and stealth,
unlawfully enter(ed) this land on January 7, 1956, thereby depriving the plaintiffs of its lawful possession?

"Plaintiffs' testimony both oral and documentary, is to the effect that they have been in continuous and peaceful
possession of the whole parcel of land under Tax Dec, No. 8431 (which included the four hectares in dispute) since
1945, exercising acts of possession (clearing the land and planting rice therein) until January 7, 1956, when
defendant unlawfully entered the land and began cultivating it.

"Defendant on the other hand does not deny cultivating the land in the month of January, 1956, but he testified that
he had been continuously cultivating the same land since 1951 when he bought certain portions of it and
possessed the other portions as tenant of his brothers and sister-in-law.

"After considering all the evidence presented and the manner the witnesses testified on the witness stand, the
Court is of the opinion and so holds that the preponderance of evidence is with the defendant that he had been in
continuous and peaceful possession of the disputed land since 1951 and that, therefore, he was in the material and
physical possession of the said land within the year prior to the filing of the instant complaint. The testimony of the
defendant and his witness (Cresencia Oriendo) is more coherent, straightforward and clear. It may be that, as the
plaintiffs claim, they have a strong and valid claim to the possession of the disputed portion as part of the whole
parcel under Tax Dec. No. 8431 over which they allege possession incident to ownership, but then, the only issue
in the instant case is possession de facto (possession for one year prior to the institution of the action) and not
possession de jure incident to ownership. Defendant, Igmedio Maderazo, having proved by preponderance of
evidence that he was in the material and physical possession of the land for more than one year immediately
preceding the filing of the action on July 28, 1956, he has now the security that entitles him to stay in the property
until he is lawfully ejected by a person having a better right by either accion publiciana or accion reivindicatoria.
(Moran, Vol. II, pages 238-239, citing Masallo vs. Cesar, 39 Phil. 134, and other cases).

"IN VIEW OF THE FOREGOING, this Court finds that the defendant has not unlawfully entered the land in dispute
on January 7, 1956 as alleged by the plaintiffs, he being in the material and physical possession of the said land
prior to the date of the incident.

"WHEREFORE, this Court renders judgment in favor of the defendant and against the plaintiffs with costs against
the plaintiffs." (Pp. 43-44, rec.).

Instead of appealing from the aforesaid decision of the municipal court of Mogpog, plaintiff-appellant filed on January 18,
1967 after the lapse of ten (10) years an action for recovery of ownership of property (reivindicacion) against
defendant-appellee Igmedio Maderazo alleging that she is the owner of a piece of land of about nine (9) hectares situated
in barrio Puting Buhangin, Mogpog, Marinduque covered by Tax Declaration No. 8645 (annexed to the complaint as
Exhibit "A"), having inherited the same from her late father Juan Negrete who was 150 years old when he died a year
before the outbreak of World War II; that she and her predecessor-in-interest have been in possession of the same for
about seventy (70) years; that shortly after liberation, defendant-appellee, claiming to be the owner thereof, entered the
said land by means of force, intimidation, stealth and strategy and introduced improvements thereon consisting of about
"100 coco trees and 28 boxes of rice paddies"; that until 1957 she repeatedly prohibited defendant-appellee from making
any improvement thereon, but defendant-appellee threatened her and her representatives with bodily harm; and that she
suffered damages in the amount of P6,000.00, by virtue of which she prayed for judgment declaring her to be the lawful
owner of the land and for damages in the amount of P6,000.00 as well as costs (Annex "A", pp. 26-28, rec.).
In his answer dated April 11, 1967, defendant-appellee averred that since liberation, he had been in possession of the
northern portion of the questioned parcel of land and cultivated and introduced improvements on the same consisting of
coconut trees and "boxes of rice paddies"; that, asserting ownership over the said northern portion and prohibiting anyone
from cultivating the same, he specifically denies threatening the plaintiff or anyone else with physical harm; that he bought
for P150,00 on August 30, 1954 the northern portion of about 3,5700 square meters (Exhibit "A" states "the southern half
(1/2) portion") which is now covered by tax declaration No. 25811 in his name from Tito Oriendo, who declared it for
taxation in 1949 under tax declaration No. 16117; and that his possession over the northern portion of the disputed land
had never been disturbed until July 28, 1956, when plaintiff-appellant instituted a civil suit against him for forcible entry in
the municipal court of Mogpog, which decided the same in his favor on September 15, 1956, from which decision plaintiff-
appellant did not appeal; and interposes as special defenses that plaintiff-appellant has no legal capacity to sue, that the
action had been barred by the statute of limitation for plaintiff-appellant filed this present action over ten (10) years after
he purchased the property, and the cause of action is barred by prior judgment, as well as a counterclaim (pp. 29-32,
rec.).
The disputed land of about nine (9) hectares is described in tax declaration Nos. 8431 (p. 43, rec.; p. 1, mun. court
decision) and 8645 in the name of plaintiff-appellant as situated in barrio Puting Buhangin, Mogpog, Marinduque, and
bounded thus: "North, Benito Luisaga and Pantaleon Oriendo; East, Toribio Linga, Eustaquio Logmao, Hilarion Buag
and B. Linga; South, Boac River, Modesto Lazo and Tomas Malimata, and West, Benito Luisa-Naza-rio Malimata, Pedro
Luisaga and Hilarion Buag" (p. 26, rec.).
The deed of sale, executed and signed by Tito Oriendo as vendor and defendant-appellee Igmedio Maderazo as vendee,
was notarized on August 30, 1954 by the municipal judge of Boac and stipulates:
"This DEED, made and executed by and between EGMIDIO MADERAZO, 48 years of age, a citizen of the
Philippines, married (to) Cresenciana Oriendo with residence and postal address at Bo. Puting Buhangin, Boac,
Marinduque, now and hereafter referred to all the VENDEE, and TITO ORIENDO, 55 years of age, married to
Bonifacia Lazo, with residence and postal address at Bo Dinapulan, Boac, Marinduque, now and hereafter referred
to all the VENDOR.
"W I T N E S S E T H
"That for and in consideration of the sum of ONE HUNDRED FIFTY PESOS (P150,00), Philippine Currency, the
receipt whereof hereby acknowledged to the entire satisfaction of the VENDOR, the said VENDOR does hereby,
by this presents, SELL, TRANSFER, CONVEY, in a manner absolute and irrevocable, unto the VENDEE, his heirs
and assigns, ONE-HALF (PRO-INDIVISO) SHARE of that certain real estate destined for agricultural purposes,
heretofore under the actual possession and management of the VENDOR, which one-half share is more
particularly bounded and described as follow:

"The southern HALF (1/2) PORTION containing approximately 3700 square meters without any improvements
thereon of that parcel of coconut-forest land situated in barrio Puyog, Boac, Marinduque, and which ONE-HALF
SHARE is to be bounded on the North; by rest of the land; East: Sofia Oriendo; South: Pedro Oriendo; and West:
Estero, delimited by madre cacao trees.'
"That the VENDOR does hereby declare that the entire parcel is assessed in the year 1949 at P30.00 as per tax
decl. 16117 in the name of the herein VENDOR; and that the parties hereto have agreed to record this instrument
under Act 3344, the property involved not having been previously registered either under Act 496 or under the
Spanish Mortgage Law;

"That the VENDOR does hereby covenant and agree with the VENDEE, his heirs and assigns, that he is lawfully
seized in fee simple of the said one-half premises; that he has perfect right to convey the subject property, having
adverse, physical and continuous possession and management over the same for more than 15 years; that it is
free from all liens and encumbrances; and that he will warrant forever defend the title herein conveyed against the
lawful claims of all persons whomsoever." (Exh. "A" or Annex "C", p. 33, rec.).

On October 17, 1968, defendant-appellee Igmedio Maderazo died and was substituted on January 4, 1969 by his legal
representative, Catalino Maderazo (p. 35, rec.; p. 2, CFI decision).
In a decision dated May 22, 1969, the Court of First Instance of Marinduque rendered the following decision dismissing
the case, thus:
 ". . . On January 21, 1969, the Court gave the parties time to file their respective memoranda after the parties
agreed to submit the case for judgment based on their pleadings. The only issue here to be resolved is whether or
not the cause of action is barred by the statute of limitation and whether or not the plaintiff is guilty of laches for not
having instituted her action within 10 years from the date the defendant acquired the property by deed of sale.
"From the pleadings, the following facts are clear, to wit: that the land in question described in the complaint was
bought by Igmidio Maderazo (deceased), the original defendant and later substituted by his son, the present
defendant, from one Tito Oriendo by virtue of a Deed of Sale, marked as Exhibit "A", (page 110 of the Expediente).
Said parcel of land was purchased by the defendant on August 30, 1954 (Exhibit ("A"). The plaintiff contends that
the deed of sale (Exhibit "1", for the plaintiff and Exhibit "A", for the defendant) is void ab initio because it lacked the
formalities required by law, and that the possession of the defendant by virtue of the sale made him (defendant) a
mere trustee and therefore neither prescription nor laches may be set up as a defense by him.

"The contention of the plaintiff that the deed of sale is void lacks basis in law and fact. Said deed of sale was
notarized by a Justice of the Peace (now Municipal Judge) and it is evident that all the essential elements of a
contract are present, namely: (1) consent of the contracting parties (2) object certain which is the subject matter of
the contract and (3) cause of the obligation which is established (Act 1318 New Civil Code). The deed of sale
between Tito Oriendo and the father of the present defendant being a perfect deed of sale, the Court cannot agree
to the allegation of the plaintiff that the defendant became a mere trustee by virtue of the deed of sale.

"There is no dispute as to the identity of the land subject-matter of the instant suit. There was an ocular inspection
made by the Chief of Police of Mogpog when the same land was litigated there. Moreover, the present defendant
(and his father who bought the land in 1954) has been in possession of the land since 1954 and therefore even if
there was a flaw in their title, the defendant would still have acquired the land by virtue of acquisitive prescription,
having possessed the land in good faith within a period of ten (10) years. There is good faith because the
defendant's possession of the land is by virtue of a deed of sale." (pp. 35-36, rec.).

Plaintiff-appellant in her brief maintains that the lower court erred:

(1) in not declaring that the deed of sale executed on August 30, 1954 by Tito Oriendo in favor of defendant-
appellee Igmedio Maderazo refers to a different parcel of land situated in barrio Puyog, municipality of Boac,
Marinduque, while the disputed parcel is situated in barrio Puting Buhangin, Mogpog, Marinduque;

(2) in admitting the said deed of sale as evidence of defendant-appellee's title and possession in good faith of the
land in question; and

(3) in holding that defendant-appellee acquired the land through ordinary acquisitive prescription by virtue of his
possession in good faith for the period of ten (10) years, and in not declaring that defendant-appellee's possession
was interrupted by the forcible entry suit she instituted on July 28, 1956 in the municipal court of Mogpog.

Plaintiff-appellant argues that the deed of sale in favor of defendant-appellee clearly describes the land as the "southern
Half (1/2) portion containing approximately 3,700 square meters . . . situated in Barrio Puyog, Boac, Marinduque," and that
this parcel is about 3 kilometers from the poblacion of Boac (p. 10, rec.), while the parcel of land in question is situated in
sitio Puting Buhangin, municipality of Mogpog, far from the parcel of land sold to Igmedio Maderazo. Defendant-appellee
could not therefore assert good faith in possessing the disputed lot; consequently, adverse possession of ten (10) years
would not suffice.
I
The applicable statute on prescription of action for the recovery of a real property, is Article 1141 of the Civil Code of the
Philippines, which provides that "real actions over immovables prescribe after thirty years . . . without prejudice to what is
established for the acquisition of ownership and other real rights by prescription.
The trial court found that defendant-appellee Catalino Maderazo (together with his late father, Igmedio Maderazo) has
been in possession of the land since 1954 (p. 36, rec.), which factual determination is not impugned by the parties. The
institution by plaintiff-appellant of the action for recovery of ownership of the land in question on January 18, 1967, after
only about 13 years from 1954, interrupted the running of the prescriptive period of thirty (30) years (Art. 1155, Civil Code
of the Philippines). The action was therefore filed well within the period prescribed in Article 1141.
II
However, defendant-appellee Catalino Maderazo insists that he has acquired ownership over the disputed parcel by
ordinary prescription through adverse possession of only ten (10) years under Article 1134 of the Civil Code of the
Philippines. But ordinary acquisitive prescription of immovables and other real rights thru adverse possession of ten (10)
years, requires possession "in good faith and with just title for the time fixed by law" (Art. 1117, Civil Code of the
Philippines).
In the absence of a just title or good faith, ownership of immovables can be acquired by extraordinary prescription thru an
uninterrupted adverse possession of thirty (30) years (Art. 1137, Civil Code of the Philippines).
After finding that defendant-appellee Catalino Maderazo "has been in possession of the land since 1954," the trial judge
concluded that "even if there was a flaw in their title, the defendant would still have acquired the land by virtue of
acquisitive prescription, having possessed the land in good faith within a period of ten (10) years. There is good faith
because the defendant's possession of the land is by virtue of a deed of sale" (p. 36, rec.).
The crucial issue therefore is whether the deed of sale executed by Tito Oriendo on August 30,1954 in favor of the late
Igmedio Maderazo could be considered as a valid basis for good faith and as a just title, in order to justify the acquisition
of the disputed parcel of about 9 hectares by ordinary prescription thru adverse possession of only 10 years.
The law defines a possessor in good faith as one who is not aware of any flaw in his title or mode of acquisition; and
conversely, one who is aware of such a flaw is a possessor in bad faith (Art. 526, Civil Code of the Philippines).
WE ruled that "the essence of the bona fides or good faith, therefore, lies in honest belief in the validity of one's right,
ignorance of a superior claim, and absence of intention to overreach another." 1
A deed of sale, to constitute a just title and to generate good faith for the ordinary acquisitive prescription of ten (10)
years, should refer to the same parcel of land, which is adversely possessed. In the case at bar, the deed of sale in favor
of the deceased Igmedio Maderazo covers a parcel of land patently different from the disputed land owned by plaintiff-
appellant as to area, location and boundary owners.
The disputed parcel contains an area of about nine (9) hectares, and is situated in sitio Puting Buhangin, Mogpog,
Marinduque, as shown in Tax Declaration No. 8431 submitted as evidence by plaintiff-appellant at the trial of the
ejectment case before the municipal court of Mogpog (see Decision of municipal court, p. 43, rec.) and in Tax Declaration
No. 8645 attached as Annex "A" to the complaint in Civil Case No 1395 for reivindicacion before the Court of First
Instance of Marinduque (p. 26, rec.). Said Tax Declaration Nos. 8431 and 8645 particularly describe the questioned parcel
of land as bounded on the north by Benito Luisaga and Pantaleon Oriendo; east, by Toribio Orlinga, Eustaquio Logmao,
Hilarion Buag and B. Linga; south, by Boac river, Modesto Lazo and Tomas Malimata; and west, Benito Luisa-Nazario
Malimata, Pedro Luisaga and Bilarion Buag (p. 26, rec.). This 9-hectare land is near the Marcopper Mines (p. 8, rec.)
and therefore of great potential value.
On the other hand, the parcel of land purchased on August 30, 1954 by the late Igmedio Maderazo from Tito Oriendo for
P150 was assessed in 1949 at P30 per Tax Declaration No. 16117 and is described in the deed of sale, Exhibit "A", as
"the southern HALF (1/2) PORTION containing approximately 3,700 square meters without any improvements thereon of
that parcel of coconut-forest land situated in barrio Puyog, Boac, Marinduque, and which ONE-HALF SHARE is to be
bounded on the north: by the rest of the lot; east: Sofia Oriendo; south: Pedro Oriendo; and west: estero, delimited by
madre cacao trees" (p. 33, rec.). If the southern half is only about 3,700 square meters, the northern half must also be
about 3,700 square meters, or the entire lot of Tito Oriendo is only about 7,400 square meters in area very much less
than nine (9) hectares, the area of the questioned parcel.
It is therefore patent that the land sold by Tito Oriendo to the late Igmedio Maderazo is distinct from the land of plaintiff-
appellant Ignacia Negrete as to location, boundaries and area. To repeat, the land of plaintiff-appellant is about nine (9)
hectares and located in sitio Puting Buhangin, Mogpog. The lot of defendant-appellee is only about 3,700 square meters
and situated in barrio Puyog, Boac. The two parcels have different boundary owners. As a matter of fact, defendant-
appellee did not controvert the claim of plaintiff-appellant that barrio Puyog is three kilometers from the town proper of
Boac, Marinduque (pp. 15-16, rec., or pp. 9-10, appellant's brief). Defendant-appellee does not even insinuate that barrio
Puting Buhangin of Mogpog is adjacent to barrio Puyog of Boac. Furthermore, defendant-appellee, in paragraph 2 of his
answer to the complaint for recovery of ownership, admits that plaintiff-appellant "owns a piece of land at Puting
Buhangin, Mogpog, Marinduque" (p. 29, rec.).
The municipal court of Mogpog found that the disputed parcel of about nine (9) hectares is within the town of Mogpog.
Defendant-appellee Igmedio Maderazo himself conceded before the municipal court of Mogpog that the land he is
cultivating, which is subject matter of the forcible entry suit, is in Puting Buhangin; although he alleges that it is different
from the land claimed by the plaintiff-appellant (p. 43, rec.).
Defendant-appellee included in his brief an alleged report dated February 12, 1968 and purportedly signed by
commissioners Constancio M. Marte allegedly representing the court, Teodoro Lagustin allegedly representing the plaintiff
and Igmedio Maderazo allegedly for himself, stating that on their ocular inspection of the questioned land on February 12,
1968, they
"found out that the attached Sketch is the land in questioned as the plaintiff declared in the person of Miguel
Malapit; and on the other hand the defendant and at the same time commissioner Igmedio Maderazo declared that
the names stated in the said sketch are the persons in possession of each parcel with the approximate area of
each.

"The commissioner also found out that the land in question is within the jurisdiction of Boac, Marinduque, February
12, 1968.
 "Mogpog, Marinduque, February 12, 1968.

"(SGD.) CONSTANCIO M. MARTE

Commissioner of the Court
"TEODORO LAGUSTIN
Commissioner for the Plaintiff
"(SGD.) IGMIDIO MADERAZO
Commissioner for Defendant"

As above reproduced, the said report appears to have been signed by only two commissioners, namely, Constancio
Marte and Igmedio Maderazo. It was not signed by Teodoro Lagustin, the alleged commissioner of the plaintiff. Moreover,
the alleged report states that Miguel Malapit represented the plaintiff. Yet in the spaces for the signatures of the
commissioners, the name Teodoro Lagustin, not Miguel Malapit, appears as commissioner for the plaintiff. It would seem
therefore that Teodoro Lagustin or Miguel Malapit did not agree to the entire report including its last paragraph stating that
the land in question is within the jurisdiction of Boac, Marinduque, for which reason they did not sign the same. And
precisely because neither Miguel Malapit nor Teodoro Lagustin, as commissioner for the plaintiff, signed the aforesaid
alleged report, it was not submitted to the lower court, so that the trial court in its decision did not even remotely intimate
about, much less approve, said alleged report. Said report was prepared obviously to sustain the position of defendant-
appellee.
Hence, defendant-appellee Catalino Maderazo, along with his late father Igmedio Maderazo, could not claim good faith in
occupying said land of plaintiff-appellant on the basis of the said instrument of sale. If said appellee's position were to be
sustained, it would be easy for anyone to acquire ownership of an untitled land belonging to another person by adverse
possession of only ten (10) years on the basis of a document of sale covering a distinct parcel executed by a person who
is a stranger to the land. This could not have been intended by the legislature; because forged deeds of conveyance could
be conveniently interposed to oust the true owner from a land by adverse possession of only ten (10) years. To spawn
such a monstrosity in the law was never contemplated by the statute, which is designed to engender social quietude.
Appellee Maderazo admits in his answer in Civil Case No. 1395 that he is a resident of barrio Puting Buhangin, Mogpog,
Marinduque (pp. 26, 29, rec.). As the buyer, he knew what lot was sold to him. And having signed as vendee the deed of
sale in his favor, he is conclusively presumed to have read the deed of sale, which clearly states that the southern half
(1/2) portion containing an area of approximately 3,700 square meters, was the parcel he acquired from his vendor Tito
Oriendo, which is located in barrio Puyog, Boac, Marinduque. Appellee Maderazo therefore was aware and knew that the
land sold to him is situated in barrio Puyog, Boac, and is only about 3,700 square meters (less than half a hectare in area,
not the land of about nine (9) hectares in barrio Puting Buhangin, Mogpog belonging to the plaintiff-appellant.
Defendant-appellee Catalino Maderazo cannot in good conscience assert honest belief in the validity of his right nor
absence of intention to overreach another in view of the facts and circumstances aforestated. Moreover, there is no
intimation in the record that vendor Tito Oriendo testified either in the forcible entry case before the municipal court of
Mogpog or in the reivindicatory action before the Court of First Instance of Marinduque that he owned a parcel of land
situated in Puting Buhangin, Mogpog, Marinduque, or that the land he sold to the defendant-appellee is in sitio Puting
Buhangin, Mogpog, Marinduque. Defendant-appellee did not even submit any tax declaration or tax receipts in the name
of his alleged vendor, Tito Oriendo, covering the disputed parcel of land of about nine (9) hectares.
The case of Ortiz vs. Fuentebella is hardly applicable to the case at bar because of the following facts established therein:
(1) Asuncion Fuentebella purchased, by means of a public instrument, a tract of land including a pasture land from Juan
and Sotera Cano, who believed that the disputed pasture land sold by them was included in the land they inherited from
their father Felipe Cano, and which they sold to Asuncion. As a consequence, Asuncion Fuentebella took possession of
said pasture land, built a house and introduced other improvements thereon. The pasture land turned out to have a duly
inscribed possessory information title in the name of Ramon Ortiz, father of Marcelina Ortiz, who in March, 1909, informed
Asuncion by letter that her father Ramon Ortiz owns the said pasture land and requested Asuncion to desist from further
introducing improvements thereon.
(2) It was established that Juan and Sotera as well as their father Felipe Cano possessed the land "in the neighborhood"
of the disputed pasture land.
Consequently, the Supreme Court therein ruled:
"However it be, we do not regard as decisive the evidence presented to prove that the defendant's possession was
in bad faith. The nullity of the greater part of her title is not sufficient argument to prove that she knew of the defect
in her mode of acquisition of a tract of land as belonging to Juan and Sotera Cano, when it is now demonstrated in
this case that neither Sotera, nor Juan Cano, nor even their father Felipe Cano, had at any time possessed it, but
another tract in the neighborhood, possession whereof might easily have caused error on the part of the
purchaser. Defendant's bad faith began after the warning given in a letter by the plaintiff's daughter in March, 1909,
for after having received it she then had ground to doubt that Sotera, and Juan Cano could transfer any title of
possession in the following December." 2
In the case at bar, unlike Juan and Sotera Cano, there is no showing that Tito Oriendo erroneously believed in good faith
that the disputed parcel of land of about nine (9) hectares belonging to the plaintiff-appellant is included in the deed of
sale executed by him in favor of Igmedio Maderazo which sale covers only an area of 3,700 square meters, less than half
a hectare. As repeatedly emphasized heretofore, Tito Oriendo could not possibly entertain such belief, considering the
difference in boundaries, location and area between the parcel of land of about nine (9) hectares of plaintiff-appellant and
the lot of about 3,700 square meters sold to defendant-appellee under Exhibit "A". Then again, it is not shown that the
nine hectare parcel of plaintiff-appellant is adjacent to the lot sold by Tito Oriendo to defendant-appellee Igmedio
Maderazo. On the contrary, the claim of plaintiff-appellant that her nine-hectare parcel of land is within the municipality of
Mogpog and not within the municipality of Boac, remains uncontroverted and is confirmed by her tax declaration Nos.
8431 and 8645 and by the decision of the municipal court of Mogpog in the forcible entry case as well as in the appealed
decision of the Court of First Instance of the Marinduque (pp. 36, 43, rec.).
Hence, not being a possessor in good faith, defendant-appellee Catalino Maderazo can acquire ownership over the
disputed parcel of land of about nine (9) hectares belonging to plaintiff-appellant only by extraordinary acquisitive
prescription thru an uninterrupted adverse possession of thirty (30) years (Art 1137, Civil Code of the Philippines). Since
he occupied the same for only about thirteen (13) years from 1954 until 1967, when his adverse possession was
interrupted by the filing of the action for reivindicacion on January 18, 1967 (Art. 1155, Civil Code of the Philippines), the
claim of defendant-appellee is untenable.
WHEREFORE, JUDGMENT IS HEREBY RENDERED.
(1) REVERSING THE APPEALED DECISION,
(2) DECLARING PLAINTIFF-APPELLANT IGNACIA NEGRETE AS OWNER OF THE LAND OF ABOUT NINE (9)
HECTARES DESCRIBED IN HER COMPLAINT, AND
(3) DIRECTING DEFENDANT-APPELLEE CATALINO MADERAZO TO DELIVER TO SAID PLAINTIFF-APPELLANT
THE POSSESSION OF AFORESAID LAND, TO VACATE THE SAME AND TO PAY THE COSTS.
So ordered.
||| (Negrete v. Court of First Instance of Marinduque, G.R. No. L-31267, [November 24, 1972], 150-C PHIL 322-339)
 EN BANC
[G.R. No. L-23509. June 23, 1966.]
NATY BALTAZAR, ET AL., plaintiffs-appellees, vs. SILVINA CARIDAD, ET AL., defendants-appellants.
DECISION
REYES, J.B.L., J : p

Appeal against an order, issued by the Court of First Instance of Ilocos Norte, in its Cadastral Case No. 54, GLRO Cad.
Case No. 1222, compelling respondents Silvina Caridad and Eduarda Caridad to remove their respective houses built on
the southern portion of Lot No. 8864 within thirty days from receipt of said order. Respondents originally interposed the
present appeal to the Court of Appeals, where it was docketed as its CA-G. R. No. 31289-R. The appellate court,
however, certified the appeal to this Court for raising only questions of law.
The facts are not in dispute, and are as follows:
In the cadastral proceeding above stated, the trial court rendered decision, dated January 23, 1941, awarding said Lot No.
8864 of the Laoag (Ilocos Norte) cadastre to the spouses Julio Baltazar and Constancia Valencia as their conjugal
partnership property. Said decision having become final, the corresponding decree was issued on July 12, 1941, and
pursuant thereto, said lot was registered in the names of applicant spouses under Original Certificate of Title No. O- 1445,
which was later transcribed, on November 5, 1959, in the office of the Register of Deeds of Ilocos Norte.
In the meanwhile, Julio Baltazar, the registered owner of said Lot No. 8864, died. On December 6, 1961, his surviving wife
and children, as petitioners, filed a motion, in the cadastral case praying for writ of possession against respondents Silvina
Caridad and her daughter, Eduarda Caridad, who had been in possession of the southern portion of said Lot No. 8864
since 1939, while the cadastral case involving said lot was pending before the trial court, and before the decision was
rendered and the corresponding decree issued in 1941.
No writ having theretofore been issued in petitioners' favor, the trial court issued an order, on December 11, 1961,
granting petitioners' motion, and overruled respondents' opposition but directed the sheriff not to remove or destroy the
permanent improvements on the lot without an express command. On January 2, 1962, the order having become final,
the sheriff enforced the writ and placed petitioners in possession of the southern portion of the lot.
On January 23, 1962, petitioners presented a motion to compel respondents Eduarda Caridad and her mother, Silvina
Caridad, to remove their respective houses which they built in 1958 and 1959, respectively, in the southern portion of the
disputed lot, and, in the event of their failure to do so, to order the sheriff to demolish the same. Respondents again
opposed said motion.
On March 20, 1962, the trial court, after due hearing, granted petitioners' motion, ordering respondents to remove their
respective houses from the southern portion of said lot No. 8864 within thirty days from receipt of said order. Not satisfied,
respondents appealed.
Respondents-appellants question the power or jurisdiction of the trial court, sitting as a cadastral court, to order the
removal of their respective houses which were built in the disputed lot long after the issuance of the final decree of
registration. They insist that they are builders in good faith of the houses in question, and, as such, they are accorded
rights under Article 448 of the new Civil Code, which rights cause a conflict to arise between petitioners, as registered
owners, on the one hand, and respondents, as builders in good faith, on the other; that this conflict is a new matter which
the cadastral court could not have possibly passed upon in 1941 when it rendered its decision awarding the disputed lot to
Julio Baltazar, the predecessor-in-interest of petitioners. Respondents also insist that the determination or settlement of
this controversy is cognizable only by a court exercising general jurisdiction, and that the only remedy available to
petitioners is to file an ordinary action for ejectment or recovery of possession against them. Respondents further urged
that this remedy is rendered unnecessary in view of the pendency of an action for reconveyance over the disputed portion
of said lot No. 8864, which respondents filed against petitioners in the same court and docketed (but after the writ of
possession had been asked) as its Civil Case No. 3451, and wherein the respective rights, interests and title of the parties
will ultimately be ventilated.
The above contentions of respondents are without merit. It is to be noted that respondents do not dispute that during the
pendency of the cadastral proceeding, rendition of the judgment awarding said lot No. 8864, and consequent issuance of
the final decree of registration of the same in favor of Julio Baltazar, the late Andres Caridad, his surviving spouse,
respondent Silvina Caridad, and their children, one of whom is respondent Eduarda Caridad, were in possession of the
southern portion of the disputed lot; and that respondent Eduarda Caridad claims right and title thereto as a mere heir and
successor-in-interest of said Andres Caridad. Neither do respondents dispute the propriety and validity of the order of the
cadastral court, granting the writ of possession in favor of petitioners as well as its enforcement. Under these
circumstances, we hold that the order, dated March 20, 1962, of the cadastral court, granting petitioners' motion to compel
respondents to remove their respective houses from the disputed lot, is valid and enforceable against respondents. In the
case of Marcelo vs. Mencias, etc., et al., L-15609, April 29, 1960, 58 Off. Gaz., 3349, this Court had already upheld the
jurisdiction or authority of the court of first instance, sitting as a land registration court, to order, as a consequence of the
writ of possession issued by it, the demolition of improvements introduced by the successor-in-interest of a defeated
oppositor in the land registration case. Thus, in the foregoing cited case, Mr. Justice Jesus G. Barrera, speaking for the
Court, opined:
"It is contended that respondent Judge erred in denying the petition for demolition. To this we agree. Section 13,
Rule 39 of the Rules of Court, provides:
'SEC. 13. How execution for the delivery or restitution of property enforced. The officer must
enforce an execution for the delivery or restitution of property by placing the plaintiff in possession of such
property, and by levying as hereinafter provided upon so much of the property of the judgment debtor as
will satisfy the amount of costs, damages, rents, and profits included in the execution. However, the officer
shall not destroy, demolish or remove the improvements made by the defendant or his agent on the
property, except by special order of the court, which order may only issue upon petition of the plaintiff after
due hearing and upon the defendant's failure to remove the improvements within a reasonable time to be
fixed by the court.'
"Respondent Judge is of the view that the above quoted provision of the Rules of Court applies only to ordinary
actions involving the delivery or restitution of property, and not to proceedings under the land registration law
which, according to him, is silent on the point. The view is not correct, for the reason that the provisions of the
Rules of Court are applicable to land registration cases in a suppletory character (Rule 132). Put differently, if the
writ of possession issued in a land registration proceeding implies the delivery of possession of the land to the
successful litigant therein (Demorar vs. Ibaez, 51 Off. Gaz., 2872, Pasay Estate Company vs. Del Rosario, et al.,
11 Phil. 391; Manlapas vs. Llorente, 48 Phil. 298), a writ of demolition must, likewise, issue, especially considering
that the latter writ is but a complement of the former which without said writ of demolition would be ineffective.

"Apparently, respondent Judge, in refusing to issue the writ of demolition to petitioner, was of the belief that the
latter has another remedy, namely, by resorting to ordinary civil actions in the regular courts, such as that of
forcible entry and detainer, or the recovery of possession, in which instances, said courts would then be competent
to issue said writ. Such a situation, in our opinion, could not have been intended by the law. To require a successful
litigant in a land registration case to institute another action for the purpose of obtaining possession of the land
adjudged to him, would be a cumbersome process. It would foster unnecessary and expensive litigations and result
in multiplicity of suits, which our judicial system abhors. In this connection, this Court on one occasion, said:

'But this construction of the law entirely defeats its purpose. It would compel a successful litigant in the Court of
Land Registration to commence other actions in other courts for the purpose of securing fruits of his victory. The
evident purpose of the law was to prevent that very thing; . . . " (Pasay Estates Co. vs.Del Rosario, et al., supra)
"Furthermore, Section 6, Rule 124, of the Rules of Court states that

'When by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes
and other means necessary to carry it into effect may be employed by such court or officer; and if the
procedure to be followed in the exercise of such jurisdiction is not specifically pointed out by these rules,
any suitable process or mode of proceeding may be adopted which appears most conformable to the spirit
of said rules.'

"As already stated, provisions of the Rules of Court are applicable to land registration cases in a suppletory
character. Pursuant to the provision just quoted, respondent Judge has the power to issue all auxiliary writs,
including the writ of demolition sought by petitioner, processes and other means necessary to carry into effect the
jurisdiction conferred upon it by law in land registration cases to issue a writ of possession to the successful litigant,
the petitioner herein.
"Lastly, in the case of Shioji vs. Harvey, 43 Phil 333, we pointed out that 'Independent of any statutory provision, . .
. every court has inherent power to do all things reasonably necessary for the administration of justice within the
scope of its jurisdiction.' In line with this doctrine, it may be stated the respondent Judge, in the instant case, has
the inherent power to issue the writ of demolition demanded by petitioner. Needless to say, its issuance is
reasonably necessary to do justice to petitioner who is being deprived of the possession of the lots in question, by
reason of the continued refusal of respondent Clemente Pagsisihan to remove his house thereon and restore
possession of the premises to petitioner."

We believe the above-quoted ruling aptly answers the arguments of respondents-appellants, the same having practically
identical sets of facts obtaining in the case at bar.
Appellants can not be regarded as builders in good faith because they are bound by the 1941 decree of registration that
obligated their parents and predecessors-in-interest. Good faith must rest on a colorable right in the builder, beyond a
mere stubborn belief in one's title despite judicial adjudication. The fact that in 1959 appellants demolished and replaced
their old house with new and bigger ones can not enervate the rights of the registered owners. Otherwise, the rights of the
latter to enjoy full possession of their registered property could be indefinitely defeated by an unsuccessful opponent
through the simple subterfuge of replacing his old house with a new one from time to time.
WHEREFORE, the appealed order should be, as it is hereby, affirmed. With costs against respondents-appellants.
 FIRST DIVISION
[G.R. No. 138660. February 5, 2004.]
HEIRS OF TRINIDAD DE LEON VDA. DE ROXAS, petitioners, vs. COURT OF APPEALS and
MAGUESUN MANAGEMENT AND DEVELOPMENT CORPORATION, respondents.
DECISION
CARPIO, J : p

The Case
This is a petition to cite for indirect contempt the officers of Meycauayan Central Realty Corporation ("Meycauayan") for
defying the final and executory Decision and Resolution of this Court in G.R. No. 118436 entitled "Heirs of Manuel A.
Roxas and Trinidad de Leon Vda. De Roxas v. Court of Appeals and Maguesun Management & Development
Corporation" ("G.R. No. 118436"). 1
The Antecedents
This petition stems from a case filed by Trinidad de Leon Vda. De Roxas to set aside the decree of registration over two
unregistered parcels of land in Tagaytay City granted to Maguesun Management and Development Corporation
("Maguesun") before the Regional Trial Court on the ground of actual fraud. The trial court dismissed the petition to set
aside the decree of registration. On appeal, the Court of Appeals denied the petition for review and affirmed the findings of
the trial court. On 21 March 1997, this Court reversed the appellate court's decision in G.R. No. 118436. The dispositive
portion reads:
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals in C.A. G.R. CV No.
38328 ("Trinidad de Leon Vda. de Roxas v. Maguesun Management & Development Corporation, et
al.") promulgated on December 8, 1994 is hereby REVERSED AND SET ASIDE. Accordingly, registration of title
over the subject parcels of land, described in Plan AS-04-000108, Lot Nos. 7231 and 7239, with an area of 3,461
and 10,674 square meters, respectively, as shown and supported by the corresponding technical descriptions now
forming part of the Records of LRC No. TG-373, is awarded to herein petitioner Trinidad de Leon vda. de Roxas
and her heirs, herein substituted as petitioners. Upon finality of this Decision, the Land Registration Authority is
hereby directed to ISSUE with reasonable dispatch the corresponding decree of registration and certificate of title
pursuant to Section 39 of Presidential Decree No. 1529. 2

On 22 May 1997, Meycauayan filed a Petition for Intervention in G.R. No. 118436. Meycauayan alleged that on 14 May
1992, it purchased three parcels of land from Maguesun which form part of the property awarded to the heirs of Trinidad
de Leon Vda. De Roxas RoTas heirs"). Meycauayan contended that since it is a purchaser in good faith and for value, the
Court should afford it the opportunity to be heard. Meycauayan contends that the adverse decision in G.R. No. 118436
cannot impair its rights as a purchaser in good faith and for value.
On 25 June 1997, this Court denied the Petition for Intervention. This Court also denied the Motion for Reconsideration
filed by Maguesun. Thus, on 21 August 1997, the Decision dated 21 March 1997 in G.R. No. 118436 became final and
executory.
On 13 April 1998, the Land Registration Authority ("LRA") submitted a Report to the Regional Trial Court of Tagaytay City,
Branch 18 ("land registration court"), in LR Case No. TG-373, praying that the land registration court:
a) Order the LRA to cancel Decree No. N-197092 in the name of Maguesun to enable it to issue
another decree in favor of the heirs of Manuel A. Roxas and Trinidad de Leon Vda. de Roxas;
b) Order the Register of Deeds to cancel OCT No. 0-515 and all its derivative titles; and
c) Order the issuance of the Decree with respect to the decision of the Supreme Court dated 21 March
1997.
Meycauayan filed with the land registration court a "Motion For Leave To Intervene And For Period Of Time To File
Opposition To The Report Dated March 25, 1998 Filed By The LRA And To File Complaint-in-Intervention."
On 4 June 1998, the Roxas heirs filed a Motion for Clarification with this Court raising the following issues: DCcTHa

a) Whether it is necessary for the trial court to first order the LRA "to cancel Decree No. N-197092 in the name of
Maguesun Management and Development Corporation to enable (the LRA) to issue another decree in favor of the
Heirs of Manuel A. Roxas and Trinidad de Leon Vda. de Roxas"? Or is that order necessarily included in the
dispositive portion of the Supreme Court decision directing the LRA "to issue with reasonable dispatch the
corresponding decree of registration and certificate of title" in favor of the Roxas heirs? Please note that this
necessary implication is a consequence of the Supreme Court finding that the decree in favor of Maguesun was
wrongfully issued because it was "not entitled to the registration decree" as it had no registrable title, since
"Zenaida Melliza (from whom Maguesun supposedly bought the lots) conveyed no title over the subject parcels of
land to Maguesun Corporation as she was not the owner thereof."
 b) Whether an order from the trial court is necessary for "the Register of Deeds concerned to cancel OCT No. 0-
515 and all its, derivative titles"? Or is that order necessarily included in the dispositive portion of the Supreme
Court decision directing the LRA to issue the corresponding decree of registration and certificate of titlein favor of
the Roxas heirs, considering that the original certificate of title issued to Maguesun was based on an illegal
decree of registration as found by this Honorable Court. Further, the unconditional order of the Supreme Court to
LRA to issue the corresponding certificate of title to the Roxas heirs necessarily implies that the OCT issued to
Maguesun and its derivative titles shall be canceled, for it cannot [be] assumed that the Supreme Court intended
that the same parcel of land shall be covered by more than one certificate of title.
c) Whether an order from the trial court is necessary before the LRA can comply with the Supreme Court decision
directing the LRA "to issue with reasonable dispatch the corresponding decree of registration and certificate of title"
in favor of the Roxas heirs?

On 23 June 1998, the Roxas heirs filed a Supplement to Motion for Clarification, the pertinent portions of which are:
1. In petitioners' Motion for Clarification, one of the items sought to be clarified is whether the derivative titles (i.e.,
the titles derived from Maguesun Management and Development Corporation's ["Maguesun"] Original Certificate of
Title No. 0-515 and issued to Meycauayan Central Realty Corp.) should be canceled, together with Maguesun's
certificates of title, so that new decree of registration and certificate of title can be issued to petitioners, as ordered
in the decision of this Honorable Court dated 21 March 1997, which has become final and executory?

2. From the Petition for Intervention filed by Meycauayan Central Realty Corporation ("Meycauayan") with this
Honorable Court on 22 May 1997, the following statements, among others, are alleged:

a. "That on May 14, 1992, the intervenor purchased for value several parcels of real property from private
respondent Maguesun Management and Development Corp. covered by TCT Nos. 24294,
24295 and 24296 containing an area of 2,019 square meters each, more or less."

b. "That prior to paying the agreed purchase price in full to respondent Maguesun, an investigation with
the Tagaytay City Office of the Register of Deeds was made to determine and ascertain the
authenticity, status and condition of the titles of Maguesun over the aforesaid properties."

c. "That investigation made by the intervenor with the Office of Register of Deeds of Tagaytay City showed
that in all the certified true copies of the titles to the properties above-mentioned which were
registered in the name of Maguesun, the last entry which appeared was the following, to wit: . . .
".

d. "Appearing that the properties to be purchased by the herein intervenor from respondent Maguesun
have no existing liens and/or encumbrances and considering that the properties do not appear to
be the subject of a pending case which would affect the titles of those who may subsequently
purchase the same, the herein intervenor proceeded to pay, in full, the total amount of ONE
MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000.00) to Maguesun. Immediately
thereafter, Maguesun, through its duly authorized officer, executed the corresponding Deeds of
Absolute Sale."

e. "That after the corresponding taxes and/or fees were paid by herein intervenor, the aforementioned
TCT Nos. T-24294, 24295 and 24296, were canceled and in lieu thereof, new titles in the name
of intervenor were issued by the Register of Deeds of Tagaytay City."

f. "That on March 25, 1997, an officer of the intervenor corporation was informed of a newspaper report
stating, in big bold letters, the following sub-headline, to wit:
SC RULES ON ROXAS FAMILY LAND ROW IN TAGAYTAY"

g. "The President of herein intervenor right after secured from the Tagaytay City Office of the Register of
Deeds certified true copies of torrens titles over its Tagaytay City properties."
h. "That only then, after it secured certified true copies of the titles mentioned in the preceding paragraph
from the Office of the Register of Deeds of Tagaytay City, did intervenor come to know of the
existence of a case involving the properties sold to it by respondent Maguesun on May 14,
1992."

3. Meycauayan's Petition for Intervention was denied by this Honorable Court in its Resolution dated 25 June 1997,
a denial that has since become final and executory. However, as stated in petitioners' Motion for Clarification,
Meycauayan committed the proscribed act of forum-shopping by filing with the trial court a motion for leave to
intervene raising again the issue of its alleged ownership of portions of the land.
4. In order to settle once and for all Meycauayan's allegation that it was a buyer in good faith, and to show that its
derivative titles should be declared void and canceled by this Honorable Court, petitioners will show herein that the
sale to Meycauayan was spurious or, at the very least, it was a buyer in bad faith.
In a Resolution dated 29 July 1998, this Court acted favorably on the Roxas heirs' Motion for Clarification and its
Supplement. The pertinent portions of the Resolution read: IDcTEA

Upon careful consideration of the points made by petitioners in their motions, this Court finds the same meritorious
and, hence, a clarification is in order. We, therefore, declare that our directive on the LRA to issue with reasonable
dispatch the corresponding decree of registration and certificate of title also includes, as part thereof, the
cancellation, without need of an order of the land registration court, of Decree No. N-197092, as well as OCT No.
0-515, and all its derivative titles. This is a necessary consequence of the Court's earlier finding that the foregoing
documents were illegally issued in the name of respondent. But in light of Section 39 ofPresidential Decree No.
1529 (the "Property Registration Decree"), Decree No. N-197092 which originated from the LRA must be cancelled
by the LRA itself. On account of this cancellation, it is now incumbent upon the LRA to issue in lieu of the cancelled
decree a new one in the name of petitioners as well as the corresponding original certificate of title. Cancellation of
OCT No. 0-515, on the other, hand, properly devolves upon the Register of Deeds who, under Section 40 of P.D.
No. 1529, has earlier entered a copy thereof in his record book. OCT No. 0-515 having been nullified, all titles
derived therefrom must also be considered void it appearing that there had been no intervening rights of an
innocent purchaser for value involving the lots in dispute.

ACCORDINGLY, the Court hereby resolves to GRANT petitioners' Motion for Clarification together with the
Supplement thereto. For this reason, the dispositive portion of our decision dated March 21, 1997 is clarified, thus:
First, the Register of Deeds shall CANCEL OCT No. 0-515 and all its derivative titles, namely, TCT Nos. T-25625,
T-25626, T-25627, T-25628, T-25688, T-25689, and T-25690, the latter three being already in the name of
Meycauayan Realty and Development Corporation (also designated as "Meycauayan Central Realty, Inc." and
"Meycauayan Realty Corporation").

Thereafter, the Land Registration Authority shall:

(a) CANCEL Decree No. N-197092 originally issued in the name of Maguesun Management and Development
Corporation without need of an order from the land registration court; and

(b) ISSUE with reasonable dispatch a new decree of registration and a new original certificate of title (OCT) in favor
of petitioners pursuant to Section 39 ofPresidential Decree No. 1529. (Emphasis added)

On 11 December 1998, the land registration court issued an order denying the LRA Report dated 25 March 1998 and the
Motion for Leave to Intervene filed by Meycauayan since the Supreme Court Resolution of 29 July 1998 had rendered
them moot.
The Register of Deeds of Tagaytay City then canceled TCT Nos. T-25626, T-25627, T-25628, T-25688, T-25689, T-25690
and T-27390. 3 TCT Nos. T-25688, T-25689, T-25690 and T-27390 were derivative titles already in the name of
Meycauayan.
On 5 April 1999, the Roxas heirs filed a Motion for Issuance of Writ of Possession with the land registration court.
On 20 April 1999, Meycauayan filed a Complaint for reconveyance, damages and quieting of title with the trial court
entitled "Meycauayan Central Realty Corp. v. Heirs of Manuel A. Roxas and Trinidad de Leon Vda. de Roxas, Maguesun
Management and Development Corp., Register of Deeds of Tagaytay City, City Assessor of Tagaytay City and Land
Registration Authority." 4 The Complaint is almost an exact reproduction of the Petition for Intervention filed by
Meycauayan before this Court. The Complaint prayed for judgment:
1. Ordering the defendants Land Registration Authority and the Register of Deeds of Tagaytay City to cancel the
titles and decree of registration they issued in lieu of TCT Nos. 25688, 25689, 25690 and 27390 registered in the
name of plaintiff Meycauayan Central Realty Corporation and reconvey said properties to the plaintiff corporation
by reinstating the said cancelled titles or if the same not be possible, cause the issuance of new decrees and titles
thereto;

2. Ordering the defendant City Assessor of Tagaytay City to reinstate the Assessments for real estate taxes it
previously cancelled covering the properties of plaintiff;

3. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff actual and/or
compensatory damages in the total amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00);

4. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff the amount of TWO
HUNDRED THOUSAND PESOS (P200,000.00) as and by way of nominal damages;

5. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff exemplary damages in the
amount of TWO HUNDRED THOUSAND PESOS (P200,000.00);
6. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff Attorney's fees in the
amount of ONE HUNDRED THOUSAND PESOS (P100,000.00); and
7. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff the costs of suit. 5
On 6 May 1999, Meycauayan filed a "Special Appearance Questioning Court Jurisdiction and Opposition to the Motion for
Issuance of Writ of Possession Against Meycauayan Central Realty Corporation" with the land registration court.
On 2 September 1999, the land registration court issued an order, the dispositive portion of which reads:
WHEREFORE, in the light of the foregoing, let a Writ of Possession be issued against Maguesun Management and
Development Corporation in these cases. However, insofar as Meycauayan Central Realty is concerned, let a
resolution of the motion filed by the movants herein be deferred until the Supreme Court had resolved with finality
the petition for contempt of herein movant in G.R. No. 138660.

On 7 March 2000, the trial court dismissed for lack of merit Meycauayan's complaint for reconveyance, damages and
quieting of title. The trial court held that (1) the nullity of OCT No. 0-515, which is the source of Meycauayan's titles, is
now res judicata; (2) the complaint's prayer for the trial court to annul the decision of the Supreme Court in G.R. No.
118436 is beyond the trial court's jurisdiction; and (3) Meycauayan is guilty of forum shopping. 6 The trial court likewise
denied Meycauayan's Motion for Reconsideration in an Order dated 20 June 2000. 7 On 24 August 2000, Meycauayan
filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals assailing the trial court's
dismissal of the complaint.
Meanwhile, the Roxas heirs filed on 2 June 1999 this petition to cite for indirect contempt the officers of Meycauayan.
The Issues
The parties raised the following issues:
1. Whether this Court's Decision and Resolution in G.R. No. 118436 bind Meycauayan; EIaDHS

2. Whether Meycauayan's act of filing with the trial court a complaint for reconveyance, damages and
quieting of title involving parcels of land, which were the subject of this Court's Decision and
Resolution in G.R. No. 118436, constitutes indirect contempt under Section 3, Rule 71 of the
Rules of Civil Procedure; and
3. Whether Meycauayan is guilty of forum shopping.
The Court's Ruling
The petition is meritorious. We find Meycauayan's Executive Vice-President Juan M. Lamson, Jr. guilty of indirect
contempt. We also find that Meycauayan committed forum shopping, and thus Meycauayan and its Executive Vice
President Juan M. Lamson, Jr. are guilty of direct contempt.
The Roxas heirs allege that the following acts of Meycauayan constitute indirect contempt under Section 3, Rule 71 of the
Rules of Civil Procedure: (1) Meycauayan's defiance of the final and executory Decision and Resolution of this Court in
G.R. No. 118436; (2) its act of filing pleadings before the land registration court to prevent execution of the Decision and
Resolution; (3) its act of filing a Complaint raising the same issues in its Petition for Intervention which this Court had
already denied and urging the trial court to ignore and countermand the orders of this Court.
On the other hand, Meycauayan alleges that the Decision in G.R. No. 118436, does not bind Meycauayan because it was
not a party in the case. According to Meycauayan, the Decision in G.R. No. 118436 may be enforced against Maguesun
but not against Meycauayan which is a stranger to the case. Meycauayan insists that as a purchaser in good faith and for
value its rights cannot be prejudiced by the alleged fraudulent acquisition by Maguesun of the subject properties.
Meycauayan, therefore, is not liable for contempt of court for filing an action for reconveyance, quieting of title and
damages.
The issue of whether the Decision in G.R. No. 118436 binds Meycauayan was already addressed by this Court when it
denied Meycauayan's Petition for Intervention. Furthermore, this Court's Resolution dated 29 July 1998 clarified the
Decision dated 21 March 1997 by ordering the Register of Deeds to CANCEL OCT No. 0-515 and all its derivative titles,
namely, TCT Nos. T-25625, T-25626, T-25627, T-25628, T-25688, T-25689, and T-25690, the latter three already in the
name of Meycauayan Realty and Development Corporation (also designated as "Meycauayan Central Realty, Inc." and
"Meycauayan Realty Corporation"). This Court also found that there had been no intervening rights of an innocent
purchaser for value involving the lots in dispute.
Indirect Contempt
Meycauayan's obstinate refusal to abide by the Court's Decision in G.R. No. 118436 has no basis in view of this Court's
clear pronouncement to the contrary. The fact that this Court specifically ordered the cancellation of Meycauayan's titles to
the disputed parcels of land in the Resolution dated 29 July 1998 should have laid to rest the issue of whether the
Decision and Resolution in G.R. No. 118436 is binding on Meycauayan. Clearly, Meycauayan's defiance of this Court's
Decision and Resolution by filing an action for reconveyance, quieting of title and damages involving the same parcels of
land which this Court already decided with finality constitutes indirect contempt under Section 3(d), Rule 71 of the Rules of
Civil Procedure. Section 3(d) of Rule 71 reads:
 SEC. 3. Indirect contempt to be punished after charge and hearing. After a charge in writing has been filed, and
an opportunity given to the respondent to comment thereon within such period as may be fixed by the court and to
be heard by himself or counsel, a person guilty of any of the following acts may be punished for indirect contempt:
xxx xxx xxx
(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of
justice;

In Halili, et al. v. CIR, et al., 8 this Court explained the concept of contempt of court:
Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as tends to bring the
authority and administration of the law into disrespect or to interfere with or prejudice parties litigant or their
witnesses during litigation (12 Am. Jur. 389, cited in 14 SCRA 813).

Contempt of court is defined as a disobedience to the Court by acting in opposition to its authority, justice and
dignity. It signifies not only a willful disregard or disobedience of the court's orders, but such conduct as tends to
bring the authority of the court and the administration of law into disrepute or in some manner to impede the due
administration of justice (17 C.J.S.4).
This Court has thus repeatedly declared that the power to punish for contempt is inherent in all courts and is
essential to the preservation of order in judicial proceedings and to the enforcement of judgments, orders, and
mandates of the court, and consequently, to the due administration of justice (Slade Perkins vs. Director of Prisons,
58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of Immigration vs. Cloribel, 20 SCRA 1241; Montalban vs.
Canonoy, 38 SCRA 1).

Meycauayan's continuing resistance to this Court's judgment is an affront to the Court and to the sovereign dignity with
which it is clothed. 9 Meycauayan's persistent attempts to raise issues long since laid to rest by a final and executory
judgment of no less than the highest tribunal of the land constitute contumacious defiance of the authority of this Court
and impede the speedy administration of justice. 10
Well-settled is the rule that when a court of competent jurisdiction has tried and decided a right or fact, so long as the
decision remains unreversed, it is conclusive on the parties and those in privity with them. 11 More so where the Supreme
Court has already decided the issue since the Court is the final arbiter of all justiciable controversies properly brought
before it. 12 As held in Buaya v. Stronghold Insurance Co., Inc.: 13
. . . An existing final judgment or decree rendered upon the merits, without fraud or collusion, by a court of
competent jurisdiction acting upon a matter within its authority is conclusive of the rights of the parties and their
privies. This ruling holds in all other actions or suits, in the same or any other judicial tribunal of concurrent
jurisdiction, touching on the points or matters in issue in the first suit.
xxx xxx xxx

Courts will simply refuse to reopen what has been decided. They will not allow the same parties or their privies to
litigate anew a question, once it has been considered and decided with finality. Litigations must end and terminate
sometime and somewhere. The effective and efficient administration of justice requires that once a judgment has
become final, the prevailing party should not be deprived of the fruits of the verdict by subsequent suits on the
same issues filed by the same parties.

This is in accordance with the doctrine of res judicata which has the following elements: (1) the former judgment must be
final; (2) the court which rendered it had jurisdiction over the subject matter and the parties; (3) the judgment must be on
the merits; and (4) there must be between the first and the second actions, identity of parties, subject matter and causes
of action. 14 The application of the doctrine of res judicata does not require absolute identity of parties but merely
substantial identity of parties. 15 There is substantial identity of parties when there is community of interest or privity of
interest between a party in the first and a party in the second case even if the first case did not implead the latter. 16 HcSCED

The Court ruled in G.R. No. 118436 that Meycauayan's predecessor-in-interest, Maguesun, committed actual fraud in
obtaining the decree of registration of the subject properties. The Decision in G.R. No. 118436 binds Meycauayan under
the principle of "privity of interest" since it was a successor-in-interest of Maguesun. Meycauayan, however, insists that it
was a purchaser in good faith because it had no knowledge of any pending case involving the lots. Meycauayan claims
that the trial court had already canceled the notice of lis pendens on the titles when it purchased the lots from Maguesun.
In its Memorandum, Meycauayan stresses that to ensure the authenticity of the titles and the annotations appearing on
the titles, particularly the cancellation of the notice of lis pendens, Meycauayan checked with the Register of Deeds and
the Regional Trial Court of Tagaytay City. 17 Since Meycauayan checked with the Regional Trial Court of Tagaytay City,
Meycauayan then had actual knowledge, before it purchased the lots, of the pending case involving the lots despite the
cancellation of the notice of lis pendens on the titles.
Furthermore, as found by this Court in G.R. No. 118436, the Roxas family has been in possession of the property
uninterruptedly through their caretaker, Jose Ramirez who resided on the property. 18 Where the land sold is in the
possession of a person other than the vendor, the purchaser must go beyond the certificates of title and make inquiries
concerning the rights of the actual possessor. 19 Meycauayan therefore cannot invoke the right of a purchaser in good
faith and could not have acquired a better right than its predecessor-in-interest. This Court has already rejected
Meycauayan's claim that it was a purchaser in good faith when it ruled in G.R. No. 118436 that there had been no
intervening rights of an innocent purchaser for value involving the lots in dispute. As held in Heirs of Pael v. Court of
Appeals: 20
In the case of Santiago Land Development Corporation vs. Court of Appeals (G.R. No. 106194, 276 SCRA 674
[1997]), petitioner maintained that as a purchaser pendente lite of the land in litigation, it had a right to intervene
under Rule 12, Section 2. We rejected this position and said that "since petitioner is not a stranger to the action
between Quisumbing and the PNB, petitioner in fact having stepped into the shoes of PNB in a manner of
speaking, it follows that it cannot claim any further right to intervene in the action." As in the instant Petition, it was
argued that the denial of the Motion to Intervene would be a denial likewise of due process. But this, too, was
struck down in Santiago Land where we held that "petitioner is not really denied protection. It is represented in the
action by its predecessor in interest." Indeed, since petitioner is a transferee pendente lite with notice of the
pending litigation between Reyes and private respondent Carreon, petitioner stands exactly in the shoes of Reyes
and is bound by any judgment or decree which may be rendered for or against the latter.

Indeed, one who buys property with full knowledge of the flaws and defects of the title of his vendor and of a pending
litigation over the property gambles on the result of the litigation and is bound by the outcome of his indifference. 21 A
purchaser cannot close his eyes to facts which should put a reasonable man on guard and then claim that he acted in
good faith believing that there was no defect in the title of the vendor. 22
For the penalty for indirect contempt, Section 7 of Rule 71 of the Rules of Court provides:
SEC. 7. Punishment for indirect contempt. If the respondent is adjudged guilty of indirect contempt committed
against a Regional Trial Court or a court of equivalent or higher rank, he may be punished by a fine not exceeding
thirty thousand pesos or imprisonment not exceeding six (6) months or both. . . .

In this case, Meycauayan Executive Vice President Juan M. Lamson, Jr. caused the preparation and the filing of the
Petition for Intervention in G.R. No. 118436 and the Complaint for Reconveyance, Damages and Quieting of Title with the
trial court. 23 Juan M. Lamson, Jr. signed the verification and certification of non-forum shopping for the Petition for
Intervention and the Complaint for Reconveyance, Damages and Quieting of Title. "Even though a judgment, decree, or
order is addressed to the corporation only, the officers, as well as the corporation itself, may be punished for contempt for
disobedience to its terms, at least if they knowingly disobey the court's mandate, since a lawful judicial command to a
corporation is in effect a command to the officers." 24 Thus, for improper conduct tending to impede the orderly
administration of justice, Meycauayan Executive Vice President Juan M. Lamson, Jr. should be fined ten thousand pesos
(P10,000). 25
Direct Contempt
Meycauayan's act of filing a Complaint for Reconveyance, Quieting of Title and Damages raising the same issues in its
Petition for Intervention, which this Court had already denied, also constitutes forum shopping. Forum shopping is the act
of a party against whom an adverse judgment has been rendered in one forum, seeking another and possibly favorable
opinion in another forum other than by appeal or special civil action of certiorari. There is also forum shopping when a
party institutes two or more actions based on the same cause on the expectation that one or the other court might look
with favor on the party. 26

In this case, the Court had already rejected Meycauayan's claim on the subject lots when the Court denied Meycauayan's
Petition for Intervention in G.R. No. 118436. The Court ruled that there had been no intervening rights of an innocent
purchaser for value involving the lots in dispute. The Decision of this Court in G.R. No. 118436 is already final and
executory. The filing by Meycauayan of an action to re-litigate the title to the same property, which this Court had already
adjudicated with finality, is an abuse of the court's processes and constitutes direct contempt.
Section 5 of Rule 7 of the Rules of Court provides that "if the acts of the party or his counsel clearly constitute willful and
deliberate forum shopping, the same shall be a ground for summary dismissal with prejudice and shall constitute direct
contempt, as well as a cause for administrative sanctions." The fact that Meycauayan did mention in its certification of
non-forum shopping its attempt to intervene in G.R. No. 118436, which this Court denied, 27 does not negate the existence
of forum shopping. This disclosure does not exculpate Meycauayan for deliberately seeking a friendlier forum for its case
and re-litigating an issue which this Court had already decided with finality. 28
The general rule is that a corporation and its officers and agents may be held liable for contempt. A corporation and those
who are officially responsible for the conduct of its affairs may be punished for contempt in disobeying judgments,
decrees, or orders of a court made in a case within its jurisdiction. 29
Under Section 1 of Rule 71 of the Rules of Court, direct contempt is punishable by a fine not exceeding two thousand
pesos (P2,000) or imprisonment not exceeding ten (10) days, or both, if committed against a Regional Trial Court or a
court of equivalent or higher rank. Hence, Meycauayan 30 and its Executive Vice President Juan M. Lamson, Jr. are each
fined P2,000 for direct contempt of court for forum shopping.
WHEREFORE, we find Meycauayan Central Realty Corporation's Executive Vice President Juan M. Lamson, Jr. GUILTY
of INDIRECT CONTEMPT and FINE him TEN THOUSAND PESOS (P10,000). Furthermore, we find Meycauayan Central
Realty Corporation and its Executive Vice President Juan M. Lamson, Jr. GUILTY of DIRECT CONTEMPT for forum
shopping and FINE them TWO THOUSAND PESOS (P2,000) each. The Court warns them that a repetition of the same
or similar offense shall merit a more severe penalty. SCIcTD

SO ORDERED.
||| (Heirs of Vda. De Roxas v. Court of Appeals, G.R. No. 138660, [February 5, 2004], 466 PHIL 697-718)
 FIRST DIVISION [G.R. No. 109903. November 20, 1995.]
SPOUSES SUOBIRON, vs. COURT OF APPEALS
DECISION
BELLOSILLO, J : p

Petitioner-spouses Andres Suobiron and Socorro Suobiron, Jose Sullano Jr. and Ireneo Ferraris instituted on
2 December 1980 an action to annul the orders dated 25 August 1945 and 28 January 1946 of the then Court of First
Instance (CFI) of Iloilo in LRC Case No. 673, GLRO Record No. 54404, as well as OCT Nos. 69237 and 69238 and
the corresponding decrees issued by the Land Registration Commission. Public respondents Land Registration
Commission and Register of Deeds of the Province of Iloilo, and private respondents Fortunata Ponce Vda. de
Adelantar, Caridad A. Chanco, Florecita A. Montilla, Evangelina A. Coscolluela, and Remedios, Lynde, Douglas and
Protacio, all surnamed Adelantar, were named defendants.
Petitioners alleged in their complaint that the land registration court acted without or in excess of jurisdiction in
issuing both orders because the requirements of the law on reconstitution of court records were not complied with
thus rendering void not only the orders but also the decrees and certificates of title issued thereunder.
Private respondents denied the allegations for the annulment of the orders and decrees. They counterclaimed
for the delivery to them of the property in litigation consisting of 26.5 hectares of sugarland and for the payment of the
net produce which they could have received had they not been deprived of possession thereof.
From the evidence and the admission of the parties the trial court found that the two (2) parcels of land were
previously subject of LRC Case No. 673, GLRO Record No. 54404, before the CFI of Iloilo and that aside from the
Director of Lands, the other oppositors who appeared therein were Doroteo Legarde and Bernabe, Basilia, Quintin
and Fortunato, all surnamed Lorezo. LLcd

On 1 September 1941, after due notice, publication and hearing, the CFI rendered judgment adjudicating the
parcels of land in favor of spouses Luis Adelantar and Fortunata Ponce. The oppositors elevated the decision to the
Court of Appeals. On 23 March 1943, however, for failure of the oppositors to pay the docket fees and to deposit the
estimated cost of printing the record on appeal within the reglementary period, the appellate court dismissed the
appeal.
On 22 March 1945, four days after the American forces liberated Panay Island, the CFI was reorganized.
Pursuant to Act 3110, 1 the clerk of court submitted a report stating that all court records were destroyed or burned as
a result of the battle for liberation. Thereafter, on 7 June 1945 the court issued an order directing the reconstitution of
the records. The order was published in two (2) leading newspapers in Iloilo City, namely, "Ang Tigbatas" and "The
Times," once a week for six (6) months.
On 18 August 1945 Luis Adelantar filed a motion for reconstitution of the records of LRC Case No. 673
furnishing copies thereof to oppositors Sabas, Ireneo, Pilar and Preciosa, all surnamed Lucero, and Bernabe, Basilia,
Quintin and Fortunato, all surnamed Lorezo, through their respective counsel, as well as the Provincial Fiscal of Iloilo
representing the Director of Lands. The oppositors did not however appear when the motion was heard on 25 August
1945. Thus on the same day the CFI gave due course to the motion for reconstitution.
On 28 January 1946, on motion of the Adelantar spouses, the CFI directed the issuance of decrees covering
the property in litigation after which Decrees Nos. 766623 and 766624 were issued by the Land Registration
Commission. On the basis of these decrees OCT Nos. 69237 and 69238 were issued in the name of the spouses Luis
Adelantar and Fortunata Ponce.
Taking advantage in the meantime of the chaotic conditions during the war, Quintin Lorezo and Bernabe
Lorezo entered the litigated property and appropriated the produce thereof to the damage and prejudice of the
registered owners. Consequently, on 26 August 1947 the Adelantars filed an action in the CFI of Iloilo against the
Lorezos for recovery of possession, docketed as Civil Case No. 938. Basilia Lorezo, Isabel Lorezo and Canuto Lucero
intervened and were allowed to file their answers.
On 3 September 1953 the CFI rendered judgment declaring the Adelantar spouses owners of the property
and ordering the receiver earlier appointed by the court to deliver to them the possession thereof as well as the
produce received by the receiver since his appointment.
The decision having become final and executory the trial court issued a writ of execution which was
implemented by the Provincial Sheriff on 27 February 1954 by delivering to the spouses Luis Adelantar and Fortunata
Ponce the possession of the two (2) parcels of land. On the same occasion Luis Adelantar accepted from the receiver
the produce consisting of five (5) bultos of palay. However, after the delivery of the property by the Provincial Sheriff
to the Adelantars, Quintin, Basilia, Bernabe and Fortunato Lorezo re-entered the premises. Other persons followed
suit.
The property soon became the subject of a cadastral survey. Fortunata Ponce, who was already a widow,
filed an answer claiming ownership. The spouses Andres Suobiron and Socorro Suobiron also filed an answer
claiming ownership of portions thereof by purchases from Quintin in 1960, from Basilia and Isabel Lorezo in 1961, and
from Canuto Lucero in 1969 thus prompting the cadastral court to advise the parties to file the proper action and to
litigate the question of ownership.
Accordingly, on 22 July 1970 Fortunata Ponce and the other private respondents, as heirs of Luis Adelantar,
filed an action for quieting of title and for recovery of possession with damages before the CFI of Iloilo, docketed as
Civil Case No. 8283. The complaint however was dismissed without prejudice.
On 21 December 1972 petitioners sought annulment of the certificates of title of the Adelantars but their
action was also dismissed without prejudice on 22 February 1980. Thus petitioners filed their complaint alleging co-
ownership of the property.
On 29 August 1986, finding no factual nor legal basis to grant petitioners' prayer, the trial court dismissed the
complaint and directed them to vacate the property and deliver possession thereof to private respondents and to pay
them jointly and severally P39,750.00 annually as net produce from 1970 until possession was restored to the latter,
P10,000.00 as attorney's fees, and to pay the costs of suit. 2
On 19 January 1993 respondent Court of Appeals affirmed the ruling of the trial court except with respect to
the award of attorney's fees which was deleted as no reason was given therefor. 3 On 15 March 1993 the motion for
reconsideration was denied. 4
Petitioners raise these issues before us: whether the provisions of Act 3110 have been complied with;
whether the decision in Civil Case No. 938 is conclusive upon them; and, whether they are liable to private
respondents for damages.
Petitioners allege that Act 3110 was violated since (a) the general notice of loss required to be served by
registered mail to interested parties and its publication in the Official Gazette were not complied with; (b) no notice of
loss was sent to counsel of record of their predecessors-in-interest; and, (c) no duly certified or authentic copy of the
Court of Appeals' resolution of 23 March 1943 was produced in the reconstitution proceedings. They also claim that
the decision in Civil Case No. 938 is not conclusive upon them because the subject matter thereof does not involve
the legality of the reconstitution of LRC Case No. 673, and that damages should not have been awarded against them
as their possession of the parcels of land was lawful.
We affirm the decision of the Court of Appeals as we find no reversible error therein. Sections 1, 2 and 3
of Act 3110 provide:
SECTION 1. As soon as practicable after the occurrence of any fire or other public calamity resulting in
the loss of all or part of the records of judicial proceedings on file in the office of the clerk of a Court of First
Instance, said officer shall send a notice by registered mail to the Secretary of Justice, the Attorney-General, 5 the
Director of Lands, the Chief of the General Land Registration Office, 6 the clerk of the Supreme Court,
the judge of the province, the register of deeds of the province, the provincial fiscal; and all lawyers who
may be interested, stating the date on which such fire or public calamity occurred and whether the loss
or destruction was total or partial, and giving a brief list of the proceedings not affected in case the loss
or destruction was partial.
SECTION 2. Upon receipt of the notice mentioned in the preceding section, the court shall issue or cause to be
issued a general notice which shall be addressed and sent by registered mail to the lawyers and officers mentioned
in the preceding section, and to such other persons as might be interested, advising them of the destruction of the
records, with a brief list of the proceedings not affected in case the destruction was partial, and of the time fixed by
this Act for the reconstitution of the destroyed records.
This notice shall also be published in the Official Gazette and in one of the newspaper most widely read in the
province, once a week, for four consecutive weeks.

SECTION 3. The parties to civil cases, or their counsels, shall appear and file, within thirty days after having been
notified in accordance with the next preceding section, an application for the reconstitution of the records in which
they are interested, and the clerk of the court, upon receiving such application, shall send notice to all parties
interested, or their counsels, of the day, hour, and place when the Court will proceed to the reconstitution,
requesting them to present, on said day and hour, and at said place, all copies of motions, decrees, orders, and
other documents in their possession, having reference to the record or records to be reconstituted. cdtai

As may be gleaned from the above, the Act provides that after the occurrence of any fire or other public
calamity resulting in the loss of all or part of the records of judicial proceedings, the clerk of court shall send a notice
by registered mail, among other officers, to the judge of the province and all lawyers who may be interested in the
proceedings (Sec. 1) and upon receipt of such notice, the court shall issue a general notice which shall be addressed
and sent by registered mail to said lawyers and offices, and to such other persons as might be interested, advising
them of the destruction of the records. This notice shall be published in the Official Gazette and in one of the
newspapers of wide circulation in the province once a week for four consecutive weeks (Sec. 2). The Act likewise
provides that any interested party or his counsel shall appear and file within thirty days after having been notified of
the destruction as above stated an application for the reconstitution of the records of the case, and the clerk of court
 upon receiving such application shall send notice to other parties interested or their counsel of the day, hour and
place when the court will proceed with the reconstitution (Sec. 3).
This briefly is the procedure laid down by Act 3110 for the reconstitution of a court record in case of loss or
destruction.
In Paluay v. Bacudao 7 we held that there was substantial compliance with the law if the clerk of court sent a
notice to the judge of the province informing him of the destruction of all court records in the province and that acting
thereon the judge immediately issued an order for their reconstitution which was published in a newspaper of general
circulation in the city or province once a week for six (6) months. The law was considered substantially complied with
even if it did not appear that notice of the destruction was ever served by registered mail to all lawyers or persons who
appeared to be interested in the cases affected. It was enough that the applicant sent a copy of his petition for
reconstitution to the oppositors or their counsel in order that they may be notified of the date and place of the hearing
thereof. 8
In the case at bench, the requirements of the law for the reconstitution of a court record were fulfilled. The
clerk of court, soon after liberation, sent a notice to the then presiding judge of the Court of First Instance of Iloilo
informing him of the destruction of all court records in the province. Acting thereon the judge immediately issued an
order for their reconstitution which was published in two (2) newspapers of general circulation in the Province and City
of Iloilo once a week for six (6) months. Copies of the motion for reconstitution were served by the movant (the now
deceased Luis Adelantar) on the oppositors through their respective counsel. It appearing that Atty. Felix Evidente
was not the oppositors' counsel of record the allegation that no notice was served on him may no longer be relevant.
The Adelantar spouses might have failed to submit in the reconstitution proceedings an authentic copy of
respondent court's resolution of 23 March 1943 as what they submitted instead was the order dated 10 June 1994 of
the CFI in LRC Case No. 673 directing compliance with and execution of the resolution quoted in the order. 9 But we
find that this is another instance of substantial compliance with Act 3110, particularly Sec. 3 thereof, regarding
presentation by the interested parties of all copies of motions, decrees, orders and other documents in their
possession relative to the record or records to be reconstituted.
The decision in Civil Case No. 938 declaring the Adelantar spouses owners of the two (2) parcels of land
claimed by Basilia Lorezo, Isabel Lorezo and Canuto Lucero is conclusive upon the parties therein as well as their
successors-in-interest, the parties herein, under the doctrine of res judicata. The trial court held petitioners liable to
private respondents for the net produce of the properties in question from the time the former's possession in good
faith was legally interrupted when they were served summons in connection with private respondents' complaint for
recovery of possession with damages filed 22 July 1970, docketed as Civil Case No. 8283, at the rate of P1,500.00
per hectare or P39,750.00 for 26.5 hectares annually until possession was restored. It may be that petitioners
acquired the disputed properties in good faith and had since then occupied the same but such bona fide character of
possession ceased when they were served summons. Possession acquired in good faith may not lose this character
except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses
the thing improperly or wrongfully, conformably with Art. 528 of the Civil Code. CDTInc

As early as Rodriguez v. Francisco, 10 this Court already ruled that

. . . on the date of the service of summons upon appellee in this case considering that (appellant) was thereafter
declared owner by final judgment (G.R. No. L-12039), appellee's possession in good faith was interrupted and
hence from that time he lost the right to the fruits.
In turn, that decision was based on Tacas v. Tobon 12 where this Court, citing Manresa, 13 stated
But to every possessor in good faith there comes a time when he is considered a possessor in bad faith. When the
owner or possessor with a better right comes along, when he becomes aware that what he had taken for granted is
at least doubtful, and when he learns the grounds in support of the adverse contention, good faith ceases. The
possessor may still believe that his right is more secure, because we resign ourselves with difficulty to the sight of
our vanishing hopes; but when the final judgment of the court deprives him of the possession, all illusion
necessarily disappears. Although he may not have been convinced of it before, the possessor becomes aware that
his possession is unlawful from the time he learns of the complaint, from the time he is summoned to the trial. It is
at this time that his possession is interrupted, according to Article 1945, and that he ceases to receive the fruits,
according to the first paragraph of Article 451. The ruling of the court retroacts to that time; but shall good faith be
deemed to cease then? Although there is a great difference between requiring the possessor in good faith to return
the fruits he received from the time when his possession was legally interrupted, and considering him a possessor
in bad faith for all legal purposes from that time, the law had to establish a definite rule on the matter, which is none
other than that deducible from a combination of Articles 452, 1945 and 435. Whether or not the defendant be a
possessor in good faith, for there is no doubt that he can be, and the law makes no attempt to deny it, from the
service of judicial summons, there exists an act that this possessor knows that his right is not secure, that someone
disputes it, and that he may yet lose it; and if the court holds that restitution be made, that time determines all the
legal consequences of the interruption, the time when the possession in good faith ceased to be so before the law.

WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals dated 19 January 1993 and
its resolution of 15 March 1993 are MODIFIED. Costs against petitioners. SO ORDERED.
 THIRD DIVISION
[G.R. No. 27876. April 22, 1992.]
ADELAIDA S. MANECLANG, in her capacity as Administrator of the Intestate Estate of the late Margarita
Suri Santos, vs. JUAN T. BAUN and AMPARO S. BAUN, ET AL., defendants. CITY OF DAGUPAN.

DECISION
DAVIDE, JR., J : p

The issue presented in this case is the validity of a sale of a parcel of land by the administrator of an intestate estate
made pursuant to a petition for authority to sell and an order granting it which were filed and entered, respectively, without
notice to the heirs of the decedent.cdrep

The records disclose that on 12 June 1947, Margarita Suri Santos died intestate. She was survived by her husband
Severo Maneclang and nine (9) children. On 30 July 1947, a petition for the settlement of her estate was filed by Hector S.
Maneclang, one of her legitimate children, with the Court of First Instance at Dagupan City, Pangasinan; the case was
docketed as Special Proc. No. 3028. At the time of the filing of the petition, the ages of her children were as follows:

Hector Maneclang 21 years old

Cesar Maneclang 19
Oscar Maneclang 17
Amanda Maneclang 16
Adelaida Maneclang 13
Linda Maneclang 7
Priscila Maneclang 6
Natividad Maneclang 3
Teresita Maneclang 2

No guardian ad litem was appointed by the court for the minor children.
Margarita left several parcels of land, among which is Lot No. 203 of the Cadastral Survey of Dagupan City containing an
area of 7,401 square meters, more or less, and covered by Transfer Certificate of Title No. 1393.
On 2 September 1949, Pedro M. Feliciano, the administrator of the intestate estate of Margarita, filed a petition in SP Proc.
No. 3028 asking the court to give him "the authority to dispose of so much of the estate that is necessary to meet the debts
enumerated" in the petition. While notice thereof was given to the surviving spouse, Severo Maneclang, through his counsel,
Atty. Teofilo Guadiz, no such notice was sent to the heirs of Margarita.
On 9 September 1949, despite the absence of notice to the heirs, the intestate court issued an Order "authorizing the
administrator to mortgage or sell so much of the properties of the estate for the purposes (sic) of paying off the obligations"
referred to in the petition.
Pursuant to this Order, Oscar Maneclang, the new administrator of the intestate estate, executed on 4 October 1952 a deed
of sale 1 in favor of the City of Dagupan, represented by its mayor, Angel B. Fernandez, of a portion consisting of 4,515
square meters of the aforementioned Lot No. 203 for and in consideration of P11,687.50. This sale was approved by the
intestate court on 15 March 1954.
The City of Dagupan immediately took possession of the land and constructed thereon a public market, known as the Perez
Boulevard Public Market, at a cost of P100,000.00, more or less. It has been in continuous and uninterrupted possession
of the property since the construction of the market. 2
Some other parcels of land belonging to the intestate estate were sold by the administrator pursuant to the same authority
granted by the 9 September 1949 Order. 3
On 28 September 1965, the new judicial administratrix of the intestate estate, Adelaida S. Maneclang, daughter of the late
Margarita Suri Santos, filed with the Court of First Instance of Pangasinan an action for the annulment of the sales made
by the previous administrator pursuant to the Order of 9 September 1949, cancellation of titles, recovery of possession and
damages against the vendees Juan T. Baun and Amparo Baun, Marcelo Operaa and Aurora Pagurayan, Crispino Tandoc
and Brigida Tandoc, Jose Infante and Mercedes Uy Santos, Roberto Cabugao, Basilisa Callanta and Fe Callanta, Ricardo
Bravo and Francisca Estrada, the City of Dagupan, and Constantino Daroya and Marciana Caramat. 4 The complaint was
docketed as Civil Case No. D-1785. The cause of action against the City of Dagupan centers around the deed of sale
executed in its favor on 4 October 1952 by former judicial administrator Oscar S. Maneclang. In its Answer filed on 5
November 1965, 5 the City of Dagupan interposed the following affirmative defenses: (a) the sale in its favor is valid, legal
and above board; (b) plaintiff has no cause of action against it, or that the same, if any, had prescribed since the complaint
was filed thirteen (13) years after the execution of the sale; (c) plaintiff is barred by estoppel and by laches; (d) it is a buyer
in good faith, and (e) it has introduced necessary and useful improvements and constructed a supermarket worth
P200,000.00; hence, assuming arguendo that the sale was illegal, it has the right to retain the land and the improvements
until it is reimbursed for the said improvements.
On 30 March 1966, plaintiff and the City of Dagupan entered into a Stipulation of Facts wherein they agreed on the facts
earlier adverted to. They, however, agreed: (a) to adduce evidence concerning the reasonable rental of the property in
question and other facts not embodied therein but which are material and vital to the final determination of the case, and
(b) to request the court to take judicial notice of SP Proc. No. 3028.
The evidence adduced by plaintiff discloses that Oscar Maneclang was induced by its then incumbent Mayor, Atty. Angel
B. Fernandez, to sell the property to the City of Dagupan and that the said City has been leasing the premises out to
numerous tenants at the rate of P0.83 per square meter per month, or a total monthly rental of P3,747.45, since 4 October
1952. 6
On 9 November 1966, the trial court rendered a partial decision in Civil Case No. D-1785 against the City of Dagupan, the
dispositive portion of which reads as follows: LexLib

"IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment:

(a) Annulling (sic) the Deed of Sale executed by the Administrator on October 4, 1952 (Exh. F)
being null and void ab initio;

(b) Ordering the cancellation of the Certificate of Title issued in favor of the defendant City of
Dagupan by virtue of said Deed of Sale, and directing the Register of Deeds of said City to issue a new
Certificate of Title in favor of the plaintiff as Administratrix covering the property in question;
(c) Ordering the defendant City of Dagupan to restore the possession to the plaintiff in her capacity
as Judicial Administratrix of the Intestate Estate of Margarita Suri Santos of the parcel of land in question,
together with all the improvements thereon existing;

(d) Ordering the defendant City of Dagupan to pay the plaintiff the sum of P584,602.20 as
accumulated rentals or reasonable value of the use of the property in question from October 4, 1952 up to
the filing of the complaint in 1965, plus interest thereon at the rate of 6% per annum from the later date;

(e) Ordering the defendant City of Dagupan to pay a monthly rental or reasonable value of its
occupation of the premises in the amount of P3,747.45 from October 9, 1965 up to the date the possession
of the premises is delivered (sic) the plaintiff by said defendant, and

(f) Ordering the plaintiff to reimburse the defendant City of Dagupan the sums of P100,000.00 and
P11,687.50 both amounts to be deducted from the amount due the plaintiff from said defendant.
Defendant shall also pay the costs.
SO ORDERED." 7

In arriving at the said disposition, the trial court held that:

(a) Under Rule 90 of the Rules of Court, 8 which is similar to the provisions of Section 722 of the Code of Civil
Procedure, it is essential and mandatory that the interested parties be given notices of the application for authority
to sell the estate or any portion thereof which is pending settlement in a probate court. As held in the early case
of Estate of Gamboa vs. Floranza, 9 an order issued by a probate court for the sale of real property belonging to the
estate of a deceased person would be void if no notice for the hearing of the petition for such sale is given as required
by said Section 722. Under this section, when such a petition is made, the court shall designate a time and place for
the hearing and shall require notice of the petition and of the time and place of such hearing to be given in a
newspaper of general circulation; moreover, the court may require the giving of such further notice as it deems
proper.

In the instant case, no notice of the application was given to the heirs; hence, both the order granting authority to sell
and the deed of sale executed in favor of the City of Dagupan pursuant thereto, are null and void.

(b) Estoppel does not lie against plaintiff as no estoppel can be predicated on an illegal act and estoppel is founded
on ignorance. In the instant case, the nullity is by reason of the non-observance of the requirements of law regarding
notice; this legal defect or deficiency deprived the probate court of its jurisdiction to dispose of the property of the
estate. Besides, the City of Dagupan was represented in the transaction by lawyers who are presumed to know the
law. This being the case, they should not be allowed to plead estoppel; finally, estoppel cannot give validity to an act
which is prohibited by law or is against public policy. 10
(c) Laches and prescription do not apply. The deed of sale being void ab initio, it is in contemplation of law inexistent
and therefore the right of the plaintiff to bring the action for the declaration of inexistence of such contract does not
prescribe. 11
 (d) The City of Dagupan is not a purchaser in good faith and for value as the former judicial administrator, Oscar
Maneclang, testified that he was induced by then incumbent Mayor of the City Atty. Angel B. Fernandez, and by then
City Councilor Atty. Teofilo Guadiz, Sr. to sell the property; moreover, the City Fiscal signed as witness to the deed
of sale. These lawyers are presumed to know the law.

Not satisfied with the decision, the City of Dagupan appealed to this Court 12 alleging that said decision is contrary to law,
the facts and the evidence on record, and that the amount involved exceeds P500,000.00.
In its Brief, the City of Dagupan submits the following assigned errors:
"FIRST ERROR
THE LOWER COURT ERRED IN HOLDING THAT THE SALE EXECUTED BY THE JUDICIAL ADMINISTRATOR
TO THE CITY OF DAGUPAN IS NULL AND VOID AB INITIO.

SECOND ERROR
THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF IS NOT IN ESTOPPEL FROM ASSAILING THE
LEGALITY OF THE SALE.
THIRD ERROR
THE LOWER COURT ERRED IN HOLDING THAT THE INSTANT ACTION IS NOT BARRED BY LACHES AND
PRESCRIPTION.
FOURTH ERROR
THE LOWER COURT ERRED IN DECLARING THAT DEFENDANT CITY OF DAGUPAN IS NOT A PURCHASER
IN GOOD FAITH AND FOR VALUE.
FIFTH ERROR
THE LOWER COURT ERRED IN ORDERING DEFENDANT CITY OF DAGUPAN TO PAY THE PLAINTIFF THE
SUM OF P584,602.20 AS ACCUMULATED RENTALS OR REASONABLE VALUE OF (sic) THE USE OF THE
PROPERTY IN QUESTION FROM OCTOBER 4, 1952 UP TO THE FILING OF THE COMPLAINT IN 1965, PLUS
INTEREST THEREON AT THE RATE OF 6% PER ANNUM FROM THE LATER DATE.
SIXTH ERROR
THE LOWER COURT ERRED IN ORDERING THE DEFENDANT CITY OF DAGUPAN TO PAY A MONTHLY
RENTAL OR REASONABLE VALUE OF (sic) ITS OCCUPATION OF THE PREMISES IN THE AMOUNT OF
P3,747.45 FROM OCTOBER 9, 1965 UP TO THE DATE THE POSSESSION OF THE PREMISES IS DELIVERED
TO THE PLAINTIFF BY SAID DEFENDANT."

We shall consider these assigned errors sequentially.

1. In support of the first, appellant maintains that notice of the application for authority to sell was given to Severo Maneclang,
surviving spouse of Margarita. As the designated legal representative of the minor children in accordance with Article 320
of the Civil Code,notice to him is deemed sufficient notice to the latter; moreover, after Oscar Maneclang signed the deed
of sale 13 in his capacity as judicial administrator, he "sent copies of his annual report and the deed of sale to Severo
Maneclang, and his brothers Hector Maneclang and Oscar Maneclang and sister Amanda Maneclang, all of legal ages (sic),
while the other minor heirs received theirs through his lawyer." 14 Besides, per Flores vs. Ang Bansing, 15 the sale of property
by the judicial administrator cannot be set aside on the sole ground of lack of notice.
These contentions are without merit.
Article 320 of the Civil Code does not apply. While the petition for authority to sell was filed on 2 September 1949, the Civil
Code took effect only on 30 August 1950. 16Thus, the governing law at the time of the filing of the petition was Article 159
of the Civil Code of Spain which provides as follows: Cdpr

"The father, or in his default, the mother, shall be the legal administrator of the property of the children who are
subject to parental authority."

However, the provisions of the Code of Civil Procedure on guardianship impliedly repealed those of the Civil Code relating
to that portion of the patria potestas(parental authority) which gave to the parents the administration and usufruct of their
minor children's property; said parents were however entitled, under normal conditions, to the custody and care of the
persons of their minor children. 17
Article 320 of the present Civil Code,taken from the aforesaid Article 159, incorporates the amendment that if the property
under administration is worth more than two thousand pesos (P2,000.00), the father or the mother shall give a bond subject
to the approval of the Court of First Instance. This provision then restores the old rule 18which made the father or mother,
as such, the administrator of the child's property. Be that as it may, it does not follow that for purposes of complying with
the requirement of notice under Rule 89 of the Rules of Court, notice to the father is notice to the children. Sections 2, 4
and 7 of said Rule state explicitly that the notice, which must be in writing, must be given to the heirs, devisees, and legatees
and that the court shall fix a time and place for hearing such petition and cause notice to be given to the interested parties.
There can be no dispute that if the heirs were duly represented by counsel or by a guardian ad litem in the case of the
minors, the notice may be given to such counsel or guardian ad litem. In this case, however, only the surviving spouse,
Severo Maneclang, was notified through his counsel. Two of the heirs, Hector Maneclang and Oscar Maneclang, who were
then of legal age, were not represented by counsel. The remaining seven (7) children were still minors with no guardian ad
litem having been appointed to represent them. Obviously then, the requirement of notice was not satisfied. The requisite
set forth in the aforesaid sections of Rule 89 are mandatory and essential. Without them, the authority to sell, the sale itself
and the order approving it would be null and void ab initio. 19 The reason behind this requirement is that the heirs, as the
presumptive owners 20 since they succeed to all the rights and obligations of the deceased from the moment of the latter's
death, 21are the persons directly affected by the sale or mortgage and therefore cannot be deprived of the property except
in the manner provided by law.
Consequently, for want of notice to the children, the Order of 9 September 1949 granting the application, the sale in question
of 4 October 1952 and the Order of 15 March 1954 approving the sale are all void ab initio as against said children. Severo
Maneclang, however, stands on different ground altogether. Having been duly notified of the application, he was bound by
the said order, sale and approval of the latter. However, the only interest which Severo Maneclang would have over the
property is his right of usufruct which is equal to that corresponding by way of legitime pertaining to each of the surviving
children pursuant to Article 834 of the Civil Code of Spain, the governing law at that time since Margarita Suri Santos died
before the effectivity of the Civil Code of the Philippines.
Cdpr

2. Estoppel is unavailable as an argument against the administratrix of the estate and against the children.
As to the former, this Court, in Boaga vs. Soler, supra, reiterated the rule "that a decedent's representative is not estopped
to question the validity of his own void deed purporting to convey land; 22 and if this be true of the administrator as to his
own acts, a fortiori, his successor can not be estopped to question the acts of predecessor are not conformable to
law." 23 Not being the party who petitioned the court for authority to sell and who executed the sale, she cannot be held
liable for any act or omission which could give rise to estoppel. Under Article 1431 of the Civil Code,through estoppel and
admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against
the person relying thereon. In estoppel by pais, as related to the party sought to be estopped, it is necessary that there be
a concurrence of the following requisites: (a) conduct amounting to false representation or concealment of material facts or
at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party
subsequently attempts to assert; (b) intent, or at least expectation that this conduct shall be acted upon, or at least influenced
by the other party; and (c) knowledge, actual or constructive of the actual facts. 24 In estoppel by conduct, on the other hand,
(a) there must have been a representation or concealment of material facts; (b) the representation must have been with
knowledge of the facts; (c) the party to whom it was made must have been ignorant of the truth of the matter; and (d) it must
have been made with the intention that the other party would act upon it. 25
As to the latter, considering that, except as to Oscar Maneclang who executed the deed of sale in his capacity as judicial
administrator, the rest of the heirs did not participate in such sale, and considering further that the action was filed solely by
the administratrix without the children being impleaded as parties plaintiffs or intervenors, there is neither rhyme nor reason
to hold these heirs in estoppel. For having executed the deed of sale, Oscar Maneclang is deemed to have assented to
both the motion for and the actual order granting the authority to sell. Estoppel operates solely against him.
3. As to prescription, this Court ruled in the Boaga case that "[a]ctions to declare the inexistence of contracts do not
prescribe (Art. 1410, N.C.C.), a principle applied even before the effectivity of the new Civil Code (Eugenio, et al. vs. Perdido,
et al., supra., citing Tipton vs. Velasco, 6 Phil. 67, and Sabas vs. Germa, 66 Phil. 471)."
4. Laches is different from prescription. As this Court held in Nielson & Co., Inc. vs. Lepanto Consolidated Mining Co., 26 the
defense of laches applies independently of prescription. While prescription is concerned with the fact of delay, laches is
concerned with the effect of delay. Prescription is a matter of time; laches is principally a question of inequity of permitting
a claim to be enforced, this inequity being founded on some change in the condition of the property or the relation of the
parties. Prescription is statutory; laches is not. Laches applies in equity, whereas prescription applies at law. Prescription is
based on fixed time, laches is not.
The essential elements of laches are the following: (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 and for which the complaint seeks a remedy; (2) delay in
asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's conduct and having
been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief
is accorded to the complainant, or the suit is not held barred. 27
In the instant case, from the time the deed of sale in favor of the City of Dagupan was executed on 4 October 1952, up to
the time of the filing of the complainant for annulment on 28 September 1965, twelve (12) years, ten (10) months and twenty-
four (24) days had elapsed.
The respective ages of the children of Margarita Suri Santos on these two dates were, more or less, as follows:

Upon execution of At the filing

the deed of sale of the complaint

Hector Maneclang 26 39
Cesar Maneclang 24 37
Oscar Maneclang 22 35
Amanda Maneclang 21 34
Adelaida Maneclang 18 31
Linda Maneclang 12 25
Priscila Maneclang 11 24
Natividad Maneclang 8 21
Teresita Maneclang 7 20

It is an undisputed fact that the City of Dagupan immediately took possession of the property and constructed thereon
a public market; such possession was open, uninterrupted and continuous. Obviously, Hector, Cesar, Oscar and
Amanda were already of legal age when the deed of sale was executed. As it was Oscar who executed the deed of
sale, he cannot be expected to renounce his own act. With respect to Hector, Cesar and Amanda, they should have
taken immediate steps to protect their rights. Their failure to do so for thirteen (13) years amounted to such inaction and
delay as to constitute laches. This conclusion, however, cannot apply to the rest of the children Adelaida, Linda,
Priscila, Natividad and Teresita who were then minors and not represented by any legal representative. They could
not have filed an action to protect their interests; hence, neither delay nor negligence could be attributed to them as a
basis for laches. Accordingly, the estate is entitled to recover 5/9 of the questioned property.
5. In ruling out good faith, the trial court took into account the testimony of Oscar Maneclang to the effect that it was Mayor
Fernandez of Dagupan City and Councilor Teofilo Guadiz, Sr., both lawyers, who induced him to sell the property and that
the execution of the sale was witnessed by the City Fiscal.
We are unable to agree.
While the order granting the motion for authority to sell was actually issued on 9 September 1949, the same was secured
during the incumbency of the then judicial administrator Pedro Feliciano. Even if it is to be assumed that Mayor Fernandez
and Councilor Guadiz induced Oscar Maneclang to sell the property, the fact remains that there was already the order
authorizing the sale. Having been issued by a judge who was lawfully appointed to his position, he was disputably presumed
to have acted in the lawful exercise of jurisdiction and that his official duty was regularly performed. 28 It was not incumbent
upon them to go beyond the order to find out if indeed there was a valid motion for authority to sell. Otherwise, no order of
any court can be relied upon by the parties. Under Article 526 of the Civil Code,a possessor in good faith is one who is not
aware that there exists in his title or mode of acquisition any flaw which invalidates it; furthermore, mistake upon a doubtful
or difficult question of law may be the basis of good faith. It implies freedom from knowledge and circumstances which ought
to put a person on inquiry. 29 We find no circumstance in this case to have alerted the vendee, the City of Dagupan, to a
possible flaw or defect in the authority of the judicial administrator to sell the property. Since good faith is always presumed,
and upon him who alleges bad faith on the part of the possessor rests the burden of proof, 30 it was incumbent upon the
administrator to establish such proof, which We find to be wanting. However, Article 528 of the Civil Code provides that:
"Possession acquired in good faith does not lose this character except in the case and from the moment facts exist which
show that the possessor is not unaware that he possesses the thing improperly or wrongfully." The filing of a case alleging
bad faith on the part of a vendee gives cause for cessation of good faith. LexLib

In Tacas vs. Tobon, 31 this Court held that if there are no other facts from which the interruption of good faith may be
determined, and an action is filed to recover possession, good faith ceases from the date of receipt of the summons to
appear at the trial and if such date does not appear in the record, that of the filing of the answer would control. 32
The date of service of summons to the City of Dagupan in Civil Case No. D-1785 is not clear from the record. Its Answer,
however, was filed on 5 November 1965. Accordingly, its possession in good faith must be considered to have lasted up to
that date. As a possessor in good faith, it was entitled to all the fruits of the property and was under no obligation to pay any
rental to the intestate estate of Margarita for the use thereof. Under Article 544 of the Civil Code,a possessor in good faith
is entitled to the fruits received before the possession is legally interrupted. Thus, the trial court committed an error when it
ordered the City of Dagupan to pay accumulated rentals in the amount of P584,602.20 from 4 October 1952 up to the filing
of the complaint.
6. However, upon the filing of the Answer, the City of Dagupan already became a possessor in bad faith. This brings Us to
the issue of reasonable rentals, which the trial court fixed at P3,747.45 a month. The basis therefor is the monthly earnings
of the city from the lessees of the market stalls inside the Perez Boulevard Supermarket. The lessees were paying rental at
the rate of P0.83 per square meter. Appellant maintains that this is both unfair and unjust. The property in question is located
near the Chinese cemetery and at the time of the questioned sale, it had no access to the national road, was located "in the
hinterland" and, as admitted by the former judicial administrator, Oscar Maneclang, the persons who built houses thereon
prior to the sale paid only P6.00 to P8.00 as monthly rentals and the total income from them amounted only to P40.00 a
month. Appellant contends that it is this income which should be made the basis for determining the reasonable rental for
the use of the property.
There is merit in this contention since indeed, if the rental value of the property had increased, it would be because of the
construction by the City of Dagupan of the public market and not as a consequence of any act imputable to the intestate
estate. It cannot, however, be denied that considering that the property is located within the city, its value would never
decrease; neither can it be asserted that its price remained constant. On the contrary, the land appreciated in value at least
annually, if not monthly. It is the opinion of this Court that the reasonable compensation for the use of the property should
be fixed at P1,000.00 a month. Taking into account the fact that Severo Maneclang, insofar as his usufructuary right is
concerned, but only until his death, is precluded from assailing the sale, having been properly notified of the motion for
authority to sell and considering further that the heirs, Hector, Cesar, Oscar and Amanda, all surnamed Maneclang, are, as
discussed above, barred by laches, only those portions of the monthly rentals which correspond to the presumptive shares
of Adelaida, Linda, Priscila, Natividad and Teresita, all surnamed Maneclang, to the extent untouched by the usufructuary
right of Severo Maneclang, should be paid by the City of Dagupan. There is no showing as to when Severo Maneclang
died; this date of death is necessary to be able to determine the cessation of his usufructuary right and the commencement
of the full enjoyment of the fruits of the property by the unaffected heirs. Under the circumstances, and for facility of
computation, We hereby fix the presumptive shares in the rentals of the aforenamed unaffected heirs at P500.00 a month,
or at P100.00 each, effective 5 November 1965 until the City of Dagupan shall have effectively delivered to the intestate
estate 5/9 of the property in question. The latter, however, shall reimburse the City of Dagupan of that portion of the real
estate taxes it had paid on the land corresponding to 5/9 of the lot commencing from taxable year 1965 until said 5/9 part
is effectively delivered to the intestate estate.
Pursuant to Article 546 of the Civil Code,the City of Dagupan may retain possession of the property until it shall have been
fully reimbursed the value of the building in the amount of P100,000.00 and 5/9 of the purchase price amounting to
P6,493.05. Cdpr

WHEREFORE, judgment is hereby rendered AFFIRMING the decision in all respects, except to the extent as above
modified. As modified, (a) the sale in favor of the City of Dagupan, executed on 4 October 1952 (Exhibit "F"), is hereby
declared null and void; however, by reason of estoppel and laches as abovestated, only 5/9 of the subject property
representing the presumptive shares of Adelaida, Linda, Priscila, Natividad and Teresita, all surnamed Maneclang, may be
recovered; (b) subject, however, to its right to retain the property until it shall have been refunded the amounts of
P100,000.00 and P6,493.05, the City of Dagupan is hereby ordered to reconvey to the intestate estate of Margarita Suri
Santos 5/9 of the property in question, for which purpose said parties shall cause the appropriate partition thereof, expenses
for which shall be borne by them proportionately; and (c) the City of Dagupan is further ordered to pay reasonable
compensation for the use of 5/9 of the property in question at the rate of P500.00 a month from 5 November 1965 until it
shall have effectively delivered the possession of the property to the intestate estate of Margarita Suri Santos. Upon the
other hand, said intestate estate is hereby ordered to refund to the City of Dagupan that portion of the real estate taxes the
latter had paid for the lot corresponding to 5/9 thereof effective taxable year 1965 and until the latter shall have been
delivered to said intestate estate.

SO ORDERED.
||| (Maneclang v. Baun, G.R. No. 27876, [April 22, 1992], 284 PHIL 302-323)
 SECOND DIVISION
[G.R. No. 134239. May 26, 2005.]
REYNALDO VILLAFUERTE and PERLITA T. VILLAFUERTE, vs. HON. COURT OF APPEALS, EDILBERTO
DE MESA and GONZALO DALEON.
DECISION
CHICO-NAZARIO, J : p

This is a petition for review on certiorari of the Decision 1 of the Court of Appeals in CA-G.R. CV No. 41871 which
affirmed, with modification, the decision 2 of the Regional Trial Court, Branch 55, Lucena City, in Civil Case No. 90-11
entitled, "Reynaldo C. Villafuerte and Perlita Tan Villafuerte v. Edilberto De Mesa and Gonzalo Daleon."
The facts, as established by the Court of Appeals, follow:
Appellees the spouses Reynaldo C. Villafuerte and Perlita Tan-Villafuerte operated a gasoline station known
as Peewee's Petron Powerhouse Service Station and General Merchandise on the premises of three (3) adjoining
lots at the corner of Gomez Street and Quezon Avenue in Lucena City. One of these lots, Lot No. 2948-A with an
area of 575 square meters, is owned by several persons, one of whom is appellant Edilberto de Mesa, while the
other lot, Lot 2948-B with an area of 290 square meters, is owned by appellant Gonzalo Daleon and his brother
Federico A. Daleon. The remaining lot belongs to Mrs. Anicia Yap-Tan, mother of appellee Perlita Tan-Villafuerte.

Appellants Edilberto de Mesa and Gonzalo Daleon acquired their respective lots subject to the lease by Petrophil
Corporation which had built thereon the gasoline station being managed by the Villafuerte couple. When the lease
of Petrophil Corporation expired on December 31, 1988, the Villafuertes obtained a new lease on Lot No. 2948-A
from appellant Edilberto de Mesa for a period expiring on December 31, 1989.
"1 This lease will be for a period of one (1) year only, from January 1, 1989 and will terminate on the 31st of
December 1989 at a monthly rental of FOUR THOUSAND PESOS (P4,000.00)." (Exhibit "1-A-1" De Mesa).

As regards Lot 2948-B of the Daleon brothers, the Villafuertes were not as lucky. For, instead of obtaining a lease
renewal, what they received were demand letters from the brothers' counsel ordering them to vacate the premises.
Instead of complying therewith, the Villafuertes simply ignored the demand and continued operating the gas station
(Exhibits "3-B", "3-C" and "3-F", Daleon). HEISca
On May 9, 1989, in the Office of the Barangay Captain of Barangay Tres, Lucena City, a complaint for ejectment
was filed by Gonzalo Daleon against the Villafuertes (Exhibit "6", Daleon). Evidently, no settlement was reached
thereat, as shown by a certification to file action issued by the lupon.

With their problem with the Daleon brothers far from over, the Villafuertes were apt for another one; their lease
contract with Edilberto de Mesa was not renewed when it expired on December 31, 1989. Nonetheless, and
duplicating what they had done in the case of the property of the Daleon brothers, the spouses continued to
operate their gasoline station and other businesses on the lot of de Mesa despite the latter's demand to vacate.
What transpired next lays at the core of the instant controversy.

It appears that in the early morning of February 1, 1990, appellants Edilberto de Mesa and Gonzalo Daleon, with
the aid of several persons and without the knowledge of the Villafuertes, caused the closure of the latter's gasoline
station by constructing fences around it.
The following day February 2, 1990 the Villafuertes countered with a complaint for damages with preliminary
mandatory injunction against both Edilberto de Mesa and Gonzalo Daleon. Docketed in the court below as Civil
Case No. 90-11, the complaint seeks vindication for the alleged malicious and unlawful fencing of the plaintiffs'
business premises (Records, pp. 1-6).

Invoking their status as owners of the withheld premises, the defendants admitted in their respective answers
having caused the fencing of the plaintiffs' gasoline station thereat but reasoned out that they did so on account of
the plaintiffs' refusal to vacate the same despite demands.

After hearing the parties in connection with the plaintiffs' application for a writ of preliminary mandatory injunction,
the lower court, in its order of May 23, 1990, ruled that with the expiration of the lease on the defendants' property,
the plaintiffs have no more right to stay thereon and, therefore, cannot pretend to have a clear and unmistakable
right to an injunctive writ and accordingly denied their application therefore (Rec., p. 186). In a subsequent order of
July 30, 1990, the same court denied the Villafuertes' motion for reconsideration (Rec., p. 237).

Later, with leave of court, the Villafuertes amended their complaint to allege, among others, that the complained
acts of the defendants cost them the following items of actual damages: IASEca
a) Daily Sales (4000-5000 lts.) at .35lt.
mark-up, P1,750 x 270 days P472,500.00

b) Storage Fee of POL (Petroleum, Oil &

Lubricants) Recom 4 at 5% for 100,000 lts.
= 5000 lts. X 3 quarters x P6.00/lt. 90,000.00
 c) Tires, Batteries, Accessories (TBA) Gen.
Merchandise Sales, P50,000/mo. 20% mark-
Up = P10,000 x 9 months 90,000.00

d) Hauling of Petroleum products for Peewee's

Petron Powerhouse, 2 trips weekly, P1,500
X 8 trips/mo. X 9 months 108,000.00
e) Hauling of Petroleum products for military
7 trips/qtr., P1,500/trip x 21 (3 qtrs.) 31,500.00
f) Balloon Business (Sunshine Balloons)
P50,000.00 capital, P6,000/mo. Income
TOTAL LOSS 200,000.00
g) Uncollected Debts 619,030.61
h) Uncollected Checks 37,449.05

i) Merchandise Inventory as of July 25, 1990,

P141,036.50 value, 50% damaged 70,518.25
j) Damaged Office Equipments 30,000.00

k) Stampitas (Religious Articles) and other

Hermana Fausta Memorial Foundation, Inc.
printed matters entrusted in my care,
totally damaged by rain and termites 5,000.00
l) Products lost in 4 underground tanks 249,805.00

m) Interest payments to RCBC (Rizal Commercial

Banking Corporation) for additional loan
availed of to pay off products acquired on
credit from Petron Corp. but were held
inside gas station 172,490.53

TOTAL P2,176,293.44
===========
(Rec., pp. 290, 300)

The amended complaint thus prayed for the following reliefs:

"WHEREFORE, it is respectfully prayed of this Hon. Court that judgment be rendered in favor of the
plaintiffs:
A Immediately ordering the issuance of a writ of preliminary mandatory injunction against the defendants
commanding them and any person acting in their behalf to forthwith remove the fence they have
constructed around the premises in question, and after trial making the said injunction permanent.
B Ordering the defendants to pay jointly and severally the plaintiffs the following:
1) Moral damages equivalent to not less than P200,000.00;
2) Exemplary damages in the amount of P50,000.00;

3) Attorney's fee in the amount of P60,000.00 plus twenty-five percent (25%) of the amount of
damages to which plaintiffs are entitled; and
4) Litigation expenses in this instance in the amount of P10,000.00
C Requiring the defendants to pay jointly and severally actual damages representing unrealized income
and profits as well as losses referred to in paragraphs 10 and 12 hereof in such amount as may be shown
in evidence during the hearing.

D Granting the plaintiffs such other just and equitable remedies to which they may be entitled under the
law and equity." (Orig. Rec., pp. 292-293).

As later events disclosed, the defendants resumed possession of the premises in question on January 25, 1991
(Rec., p. 333). Four (4) days later, they obtained a judgment by compromise from the Municipal Trial Court in
Cities, Lucena City in connection with the suit for ejectment they earlier filed thereat against Petrophil Corporation.
 In that judgment, Petrophil bound itself to remove the materials and equipment related to the operation of the
gasoline station on the subject premises. (Rec., pp. 355-356). cEDIAa

After the parties herein had presented their respective evidence, the lower court came out with the decision now
under review. Dated November 13, 1990, the decision dispositively reads:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and ordering the defendants
Edliberto de Mesa and Gonzalo Daleon to pay, jointly and severally, plaintiffs the following:

1. Actual damages in the total amount of TWO MILLION ONE HUNDRED SEVENTY SIX THOUSAND
AND TWO HUNDRED NINETY THREE PESOS AND FORTY FOUR CENTAVOS
(P2,176,293.44);
2. Moral damages in the amount of P200,000.00;
3. Exemplary damages in the amount of P50,000.00;
4. P50,000.00, as and for attorney's fees; and
5. Costs of suit.
SO ORDERED" (Rec., pp. 408-414). 3

The trial court ruled that with the continued occupation by petitioners of the two lots belonging to private respondents,
despite the expiration of the lease contracts over the same, petitioners had become "undesirable lessees." 4 However, it
was improper for private respondents to resort to fencing their properties in order to remove petitioners from the premises
in the light of the clear provision of the Civil Code on the matter, to wit:
Art. 536. In no case may possession be acquired through force or intimidation as long as there is a possessor who
objects thereto. He who believes that he has an action or a right to deprive another of the holding of a thing, must
invoke the aid of the competent court, if the holder should refuse to deliver the thing.

Having disregarded the plain requirement of the law, private respondents were held accountable to petitioners for the
various damages prayed for by petitioners in their amended complaint.
In due time, private respondents filed their respective appeals before the Court of Appeals which affirmed, with
modification, the decision of the trial court. The dispositive portion of the appellate court's decision reads:
WHEREFORE, the decision appealed from is MODIFIED by holding the appellants jointly and severally liable to the
appellees for P50,000.00 as exemplary damages and for P27,000.00 as actual damages, itemized as follows:
1. detention of the records: P7,000.00;
2. detention of the merchandise: P10,000.00;
3. value of the damaged merchandise and religious items: P5,000; and
4. detention of offices equipment: P5,000.00,

and by holding the appellees jointly and severally liable for rental to appellants Edilberto de Mesa and Gonzalo
Daleon in the amount of P5,500.00 and P39,000.00, respectively. cHAaEC
The deficiency in the payment of the docket fees, to be computed by the clerk of court of the lower court, shall
constitute a lien on this judgment. 5

In adjudging private respondents liable for damages, the Court of Appeals substantially ruled that:
1. Private respondents could not invoke the doctrine of self-help contained in Article 429 of the Civil Code 6 reasoning that
the doctrine finds no application when occupation was effected through lawful means such as in this case where
petitioners' possession of the lots owned by private respondents was effected through lease agreements;
2. Petitioners' continued unauthorized occupation of private respondents' properties may have been illegal, however, it
was incumbent upon private respondents to abide by the express provision of Article 536 of the Civil Code requiring
recourse to the proper court prior to ousting petitioners from their (private respondents') lots;
3. On the matter of insufficient docket fees paid by petitioners during the institution of this action, the Court of Appeals
declared that "whatever deficiency there may be in the docket fees can be levied from the amount that may be awarded
the appellees (petitioners herein)" 7 and that private respondents were already estopped from assailing the jurisdiction of
the trial court;
4. Private respondents could not invoke the principle of damnum absque injuria as this doctrine only applies "when the
loss or damage does not constitute a violation of a legal right or amounts to a legal wrong" 8 and not to this case where
private respondents clearly violated the law by unilaterally displacing petitioners from the subject premises;
5. On the issue of actual damages, the appellate court substantially reduced the amount of actual damages awarded by
the court a quo upon the ground that petitioners failed to substantiate their claims thereto except for the detention of
petitioners' records of their receivables, various merchandise, damaged goods, religious items, and office equipment;
6. As for the propriety of awarding moral damages to petitioners, the Court of Appeals held that petitioners are not entitled
to this form of damage as this case does not fall within Article 2219 of the Civil Code;
7. Although Article 2219 of the Civil Code encompasses incidents which may fall within the purview of Article 21 of the
Civil Code, the latter, being a rule based on equity, necessitates the claimant to come to court with clean hands which
cannot be said of petitioners who continued to occupy the lands belonging to private respondents without the authority of
a subsisting lease agreement;
8. Private respondents are nevertheless liable for exemplary damages for having taken the law into their own hands by
fencing the premises of the Petron gasoline station operated by petitioners instead of seeking redress from the proper
court as mandated by Article 536 of the Civil Code; and
9. Petitioners are liable to pay private respondents for the unpaid rentals from the time the lease agreements over the
subject properties expired until 01 February 1990 when private respondents constructed the fence.
Dissatisfied with the ruling of the Court of Appeals, petitioners are now before us raising, in the main, the issue of whether
the appellate court erred in substantially reducing the amount of damages earlier awarded to them by the trial court. DHIcET

Petitioners insist that the appellate court "resorted to assumptions, inferences, surmises and conjectures in disallowing
certain items of actual damages like lost petroleum products valued at P249,805.00, loss of value of merchandise
detained for a quite a long time (sic) in the fenced premises and uncollected debts as against the positive testimony of
petitioner Perlita Villafuerte which remained unrebutted and uncontested even on appeal." 9 They also allege that the list
of unrealized income, collectibles and damages prepared by petitioner Perlita was based and ably supported by
documents.
Petitioners also maintain that the Court of Appeals erred in finding that they came to court with "unclean hands," thus,
depriving them of entitlement to moral damages. According to petitioners, their continued occupation of private
respondents' properties was based on their belief that their lease contract with private respondent De Mesa was modified
and extended whereas private respondent Daleon had verbally agreed to allow them to continue with their possession of
his lot for as long as the Petron Corporation's equipment remain in the premises.
Finally, petitioners argue that the trial court was correct in awarding in their favor attorney's fees in the amount of
P50,000.00 as they were compelled to engage the services of counsel in order to seek vindication from the arbitrary
action of private respondents.
After a considered review of the records of this case, we resolve to affirm, with modification, the decision of the Court of
Appeals.
Both the trial court and the Court of Appeals concluded that the lease contracts between petitioners and private
respondents over the latter's respective lots had already expired. There was also a congruence of findings that it was
wrong for private respondents to fence their properties thereby putting to a halt the operation of petitioners' gasoline
station. To this, we agree.
Article 536 of the Civil Code previously quoted explicitly provides for the proper recourse of one who claims to be entitled
to the possession of a thing. When private respondents personally took it upon themselves to evict petitioners from their
properties, which act was in clear contravention of the law, they became liable "for all the necessary and natural
consequences of [their] illegal act." 10
As expected, petitioners instituted this action praying that private respondents be held liable for actual damages, moral
damages, exemplary damages, attorney's fees, and costs of litigation. We shall resolve their right to these damages in
seriatim.
Actual or compensatory damages are those awarded in order to compensate a party for an injury or loss he suffered.
They arise out of a sense of natural justice and are aimed at repairing the wrong done. 11 Except as provided by law or by
stipulation, a party is entitled to an adequate compensation only for such pecuniary loss as he has duly proven. 12 It is
hornbook doctrine that to be able to recover actual damages, the claimant bears the onus of presenting before the court
actual proof of the damages alleged to have been suffered, thus:
A party is entitled to an adequate compensation for such pecuniary loss actually suffered by him as he has duly
proved. Such damages, to be recoverable, must not only be capable of proof, but must actually be proved with a
reasonable degree of certainty. We have emphasized that these damages cannot be presumed and courts, in
making an award must point out specific facts which could afford a basis for measuring whatever compensatory or
actual damages are borne. 13
We have exhaustively perused the records of this case and thus conclude that petitioners have miserably failed to proffer
evidence capable of sustaining their plea for actual damages. We note that when petitioner Perlita was directly examined
with respect to her unrealized income 14 for the following matters, namely: daily sales of various petroleum
products; 15 storage fee of RECOM IV's petroleum, oil, and lubricants; 16 sales of tires, batteries, accessories, and general
merchandise; 17 hauling of petroleum products for Peewee's Petron Powerhouse by the gasoline tankers owned by
petitioners; 18 hauling of petroleum products for the military; 19 and petitioner Perlita's balloon business which she
conducted within the premises of the fenced gasoline station, 20 she repeatedly testified that she arrived at these claimed
amounts based on the average of her sales for the month of January 1990, the number of trips undertaken by their
tankers, and average volume of the gasoline deposit for RECOM IV. Her testimony on these matters went as follows: CETDHA

Atty. CAMALIGAN:

May I ask that this List of Unrealized Income, Collectibles and Damages from February 1, 1990 to October 30,
1990 be marked as Exhibit AA.
xxx xxx xxx
Q: Will you explain to the court why this list you made is up to October 30, 1990?
A: I prepared this list until October 10, 1990 in preparation for our first hearing sometime in November, sir.

Q: I am calling your attention to No. 1 which is I quote, "Daily Sales (4,000 to 5,000 liters) at P0.035 per liter mark
up P1,750.00 by 270 days amounting to P472,500.00" will you explain to the court how you incurred
this damage?
(A): After the closure of our gasoline station that was February 1, 1990 and then until September, 1990 is nine (9)
months and that is 270 days. I went thru my sales for January and the average sales (is) 4,000 to 5,000
liters and so for our daily sales of 4,000 to 5,000 liters sale at P0.35 centavos mark-up, I got P1,750.00
daily so that is times 270 days until September 1990, the total is P472,500.00, sir.
COURT:
That is gross?
A: Yes, your Honor.
COURT:
What about the net income to be realized?
A: Your Honor, we will deduct from here the salaries and wages of the gasoline boys and electric bill, maybe P0.25
centavos per liter.
COURT: Proceed.

Q: Is the mark-up of P0.35 centavos per liter thru (sic), irrespective of amount of gasoline or value of gasoline per
liter?

A: We have different kinds of petroleum products, extra, regular and diesel and the average mark-up is thirty-five
(35) centavos.
xxx xxx xxx

Q: Calling your attention to No. 2 in the list which refers to storage fee of petroleum, oil and lubricant from RECOM
IV amounting to a total of ninety thousand pesos (P90,000.00) will you kindly explain how you arrived at
this amount?

A: The military, PC/INP RECOM IV which is stationed at Camp Nakar has entered into an agreement with us to
deposit their petroleum, oil and lubricant for every quarter, sir.
Q: Under what condition was that deposit made for?

A: That they will be able to withdraw the said products for a certain storage fee, sir, and the storage fee is 5%
which would cover disposing the products and also certain percent of evaporation. CADacT
COURT:
Five percent of what?
A: Five percent of the number of liters deposited with us so that if they deposited one hundred thousand (100,000)
liters we are paid in terms of gasoline also, five thousand (5,000) liters.
Q: What was the average volume of deposit made by the RECOM IV?
 A: It is on a quarterly basis, that is one hundred thousand (100,000) liters quarterly, sir.

Q: On item 3 referring to tires, batteries, accessories, general merchandise is listed an amount of ninety thousand
(P90,000.00) pesos as your losses, will you please explain how you incurred such losses?

A: Aside from petroleum products we also sell accessories for the motoring public and they are in kinds like tires,
batteries and some additives, how do you realize income out of this? (sic)

A: We have 20% mark-up on the merchandise and last January 1990 I average fifty thousand (P50,000.00) pesos
gross income on the general merchandise so for 20% mark-up that is more or less ten thousand
(P10,000.00) pesos and for nine (9) months that is ninety thousand (P90,000.00) pesos, sir.

Q: In item No. 4 appearing in your list you listed a total amount of one hundred eight thousand (P108,000.00)
pesos, for hauling of petroleum products for Peewee's Petron Powerhouse, will you explain to the court
this hauling?

A: My husband and I run a fleet of gasoline tankers and they are hauling petroleum products for our gasoline
stations and for the military accounts. We average two (2) deliveries every week so this is already a net of
one thousand five hundred (P1,500.00) pesos per delivery. It is two thousand eight hundred (P2,800.00)
pesos per delivery and deducting the salaries of the drivers, the fuel consumption and the depreciation of
the tankers, we incur a net of one thousand five hundred (P1,500.00) pesos per trip. Every month we incur
at least eight (8) trips and that is one thousand five hundred (P1,500.00) pesos times eight (8) trips times
nine (9) months and I got one hundred eight thousand (P108,000.00) pesos total.
Q: Do you own them?
A: Yes, sir.

Q: In item No. 6 you listed Balloon Business under Sunshine Balloon, you have given a total amount of two
hundred thousand (P200,000.00) pesos as your losses here, will you please explain to the Court how you
incurred these losses?
xxx xxx xxx
A: Inside the gasoline station we also operate a balloon business and we have invested fifty thousand capital on
this balloon business. This business has been thriving for several years and we usually incur six (6)
thousand monthly income from said business, sir. Now that the gasoline station was closed with all the
equipments of the balloon business inside also, we have totally lost the market for the balloon business
and I feel that two hundred thousand (P200,000.00) pesos would have to be paid for the total loss of the
business. 21

Noticeably, petitioner Perlita's testimony was replete with claims that her unrealized income, as far as these items were
concerned, were based on the "average." Except, however, for the record of daily petroleum sales for the month of
January 1990, 22 petitioners failed to present any evidence that would sufficiently establish their mean income from these
business undertakings. In the absence of any corroborative proof, this Court is not bound to award in petitioners' favor the
actual damages for items a, b, c, d, e, and f of her alleged unrealized income. Nor can we give premium on the summary
of daily petroleum sales for January 1990 prepared by petitioner Perlita as the same is not supported by any competent
evidence; at best, said exhibit is self-serving. ETDSAc

Anent the actual damages claimed for the deterioration of the items which remained inside petitioners' office, petitioner
Perlita testified that when they were able to retrieve the merchandise from the gasoline station, they noticed that most of
them were already defective and so they "valued" 23 the damages thereto at seventy (70%) of their total value. As for the
items entrusted to her by the Hermana Fausta Memorial Foundation of which she was the executive vice president at that
time, petitioner Perlita alleged that the amount of five thousand pesos represents the production cost of these materials
which the foundation purportedly paid to Imprenta Lucentina. As regards the amount of P30,000.00 sought as actual
damages for the damaged office equipment, petitioner Perlita stated before the trial court that she arrived at this figure
after computing the acquisition costs of these equipment which she "approximated" 24 to be P35,000.00.
Evidently, in establishing the amount of actual damages for the merchandise inventory, office equipment, and materials
owned by the Hermana Fausta Memorial Foundation, petitioners relied solely on their own assessment of the prices of
these items as well as the damage thereto purportedly occasioned by the fencing of the gasoline station. This is clearly
demonstrated by the inconsistent stance of petitioner Pertlita with regard to the percentage of damaged merchandise
stored in the gasoline station, thus:
ATTY. CAMALIGAN:
Q: I noticed that the total appearing on page 3 of your merchandize inventory is one hundred forty one thousand
thirty six pesos and fifty centavos (P141,036.50) only while in your list, it is ninety eight thousand seven
hundred twenty five pesos and fifty five centavos (P98,725.55), will you please explain the same?
WITNESS:
 A: This list with the total amount of one hundred forty one thousand thirty six pesos and fifty centavos
(P141,036.50) represent the total value of all the merchandize but then the reason why we have the ninety
eight thousand seven hundred twenty five pesos and fifty five centavos (P98,725.55) figure is, this
represents seventy percent (70%) of the total amount because when we retrieved the merchandize, we
noticed that most of them are already defective, so we valued the damages only seventy percent (70%) of
the total value because some of them could still be sold, sir.
ATTY. CAMALIGAN:

Q: I noticed there is a correction in Item No. 9 from ninety percent (90%) to seventy percent (70%). When did you
make that correction?

A: Only last December 30, 1990 after we have retrieved all the merchandize. I prepared this list on October 31,
1990 not realizing the extent of the real damages to the merchandize but when we retrieved them last
December 29 and upon inspection, most of the motor oil have already leaked because of the plastics that
were exposed to sun and rain, so we changed the estimate to seventy percent (70%), sir. 25

Such arbitrary estimations run afoul with our consistent pronouncement that actual or compensatory damages cannot
be presumed but must be proved with reasonable degree of certainty. 26 A court cannot simply rely on speculation,
conjecture or guesswork as to the fact and amount of damages, but is required to depend upon competent proof that
the claimant had suffered and on evidence of the actual amount thereof. 27 Failing in this regard, we resolve to delete
the award of actual damages rendered by the Court of Appeals with respect to these items. cISDHE

Similarly, we rule that petitioners are not entitled to the total amount of the 17 checks issued in their favor by their
customers and to the amount of uncollected debts owed to them by their patrons. Petitioners maintain that their customers
were used to coming to their gasoline station in order to settle their obligations but were prevented from doing after the 01
February 1990 incident. They therefore would like to hold private respondents accountable for these receivables. This, we
can not grant.
The records indicate that petitioners filed before the trial court a motion to allow them to enter the gasoline station subject
of this dispute in order to make an inventory of their property that were locked inside and to remove those they needed for
their personal use. 28 Among the items removed from the gasoline station were the receipts evidencing petitioners'
receivables from their customers 29 as well as the 17 uncollected checks. 30 Obviously, after the court-approved ocular
inspection conducted on 24 July 1990 and 25 July 1990, petitioners were already in possession of the evidences of credit
of their customers. There was nothing, not even the closure of their gasoline station, which stood in the way of petitioners'
exerting earnest efforts in going after their debtors.
Petitioners likewise seek to be compensated for the value of the petroleum products allegedly lost from the four
underground tanks between the period 01 February 1990 until 25 July 1990 when an ocular inspection was conducted
within the disputed property. According to petitioners, after they compared the volume of the tanks' contents as of the
evening of 31 January 1990 with the dipstick reading on 25 July 1990, they discovered that they had lost thousands of
liters of petroleum products. On this point, we quote with approval the conclusion of the Court of Appeals, to wit:
The appellees 31 failed to adduce convincing evidence that appellants are the ones responsible for the loss of the
petroleum products in the four (4) underground tanks (item "1," paragraph 10 of Amended Complaint). Although the
premises which were fenced by the appellants 32 adjoin the lot of Perlita's mother and are even secured by
appellees' guard, the appellees did not present anyone to testify on the fact of loss of said gasoline products.
Instead, they chose to rely on Perlita's bare assertion that she lost P249,805.00 in terms of petroleum products that
allegedly disappeared. The sheer volume of the missing fuel makes it difficult for the pilferer to commit the deed
without attracting attention. An unsubstantiated claim of loss, more so of such a dimension, cannot merit an award
therefor. 33

Finally, with respect to the interest payments to the Rizal Commercial Banking Corporation (RCBC), petitioners maintain
that because of the fencing of their gasoline station on 01 February 1990, they were forced to obtain a loan from RCBC in
order to pay off their obligations to different suppliers. This contention was effectively refuted by petitioner Perlita herself
when, during her re-direct examination, she admitted that the loan granted by the RCBC was intended for all the
businesses that she and her husband, petitioner Reynaldo, were maintaining. 34 It would, therefore, be iniquitous to
charge private respondents for the interest payments for this loan the proceeds of which were utilized to finance
petitioners' various businesses and not solely the settlement of petitioners' obligations to the suppliers of Peewee's Petron
Powerhouse. In the absence of actual proof as to how much of the RCBC loan was really used to pay the creditors of the
closed gasoline station, this Court can not affirm petitioners' right to be compensated for the amount of interest payments
they have made to the RCBC. cADaIH

We find, however, that an award of temperate damages to petitioners is in order. In lieu of actual damages, temperate
damages, which are more than nominal but less than compensatory damages, may be awarded where the court finds that
some pecuniary loss had been suffered by the claimant but its amount cannot be proved with certainty. Undoubtedly,
pecuniary loss had been inflicted upon petitioners in this case, however, due to the insufficiency of evidence before us, we
cannot place its amount with certainty. In this regard, we find the amount of P50,000.00 to be sufficient.
Petitioners also assail the removal by the Court of Appeals of the moral damages previously ordered by the trial court.
They argue that contrary to the findings of the appellate court, they came to court with "clean hands" as they believed that
the lease contract with private respondent De Mesa was modified and extended. At the same time, they contend that they
had a verbal understanding with private respondent Daleon wherein the latter permitted them to remain in his lot for as
long as Petron Corporation was not removing its equipment. Further, petitioners contend that under Article 2219 of the
Civil Code, this Court had awarded moral damages in instances where the claimants were victims of capricious, wanton,
oppressive, malicious, and arbitrary acts such as petitioners in this case. On this issue, we agree in the findings of the
Court of Appeals that:
The Court must have to disallow the lower court's award of moral damages. The concept of moral damages, as
announced in Article 2217 of the Civil Code, is designed to compensate the complainant for his physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation
and similar injury occasioned by the defendant's wrongful act or omission. Article 2219 of the same Code specifies
the cases where moral damages may be awarded, to wit:

Art. 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 309;
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The parents of the female seduced, abducted, raped or abused, referred to in No. 3 of this article, may
also recover moral damages.
The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9
of this article, in the order named.
CS

Noticeably, none of the foregoing instances has any relevant bearing to the case at bench. While Article 2219
comprehends the situation in Article 21 of the Code, whereunder "[A]ny person who willfully causes loss or injury to
another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the
damages," the appellees cannot benefit from it. The right to recover moral damages under Article 21 is based on
equity, and those who come to court to demand equity must come with clean hands (Garciano v. Court of Appeals,
212 SCRA 436 citing Padilla, CIVIL CODE ANNOTATED, Vol. 1, 1975 Ed., p. 87). The appellees knew that their
lease had expired. Yet, despite such awareness, they persisted in their unauthorized occupancy of appellants'
property. Being partly responsible for their present predicament which is very much within their power to avoid,
appellees cannot receive compensation for whatever mental anguish or suffering they went thru. 35

Similarly, we uphold the award of P50,000.00 as exemplary damages in order to deter similarly minded individuals from
pursuing the course of action taken by private respondents. The law on this matter is clear: "(h)e who believes himself
entitled to deprive another of the possession of a thing, so long as the possessor refuses delivery, must request the
assistance of the proper authority." 36 Petitioners' arbitrary conduct of fencing their properties under the claim that they
own the same brazenly violates the law and circumvents the proper procedure which should be obtained before the court.
This Court likewise adopts the conclusion reached by the Court of Appeals that petitioners do not deserve the award of
attorney's fees for it was precisely their unfounded insistence to stay on private respondents' properties that precipitated
this suit.
WHEREFORE, the Decision of the Court of Appeals dated 31 March 1998, which modified the Decision dated 13
November 1992 of the Regional Trial Court, Branch 55, Lucena City, and its Resolution of 17 June 1993 denying
reconsideration are hereby MODIFIED as follows:
1. The award of Twenty-Seven Thousand Pesos (P27,000.00) as actual damages in favor of petitioners Reynaldo and
Perlita Villafuerte is deleted; and
2. Private respondents Edilberto De Mesa and Gonzalo Daleon are held jointly and severally liable to pay petitioners the
amount of Fifty Thousand Pesos (P50,000.00) as temperate damages.
The remainder of the same Decision and Resolution of the Court of Appeals are hereby AFFIRMED. No costs.
SO ORDERED.
||| (Spouses Villafuerte v. Court of Appeals, G.R. No. 134239, [May 26, 2005], 498 PHIL 105-127)
 FIRST DIVISION
[G.R. No. 156581. September 30, 2005.]
VICTORIA R. ARAMBULO and MIGUEL R. ARAMBULO III, petitioners, vs. EMERENCIANA R.
GUNGAB, respondent.
DECISION
QUISUMBING, J : p

For review on certiorari are the Decision 1 dated August 30, 2002 of the Court of Appeals in CA-G.R. SP No. 65042, and
its Resolution 2 dated January 6, 2003, denying the motion for reconsideration. The Court of Appeals ordered petitioners
to vacate the property subject of this case. The assailed Decision reversed and set aside the decision 3 of the Regional
Trial Court (RTC) which affirmed the joint decision 4 of the Metropolitan Trial Court (MeTC) in two ejectment cases filed by
respondent.
The facts are as follows:
Respondent Emerenciana R. Gungab is the registered owner of the contested parcel of land with improvements located in
Quezon City and covered by Transfer Certificate of Title (TCT) No. 48330.
Petitioners are her sister Victoria R. Arambulo and nephew Miguel R. Arambulo III.
In separate letters 5 dated October 19, 1998, respondent's counsel made a formal demand to petitioners to vacate the
subject property on or before November 30, 1998. Petitioners refused. 6
Respondent sought the assistance of the barangay authorities. However, no amicable settlement was reached.
On February 2, 1999, respondent filed separate ejectment complaints against the petitioners before the MeTC of Quezon
City, docketed as Civil Case Nos. 21855 7 and 21856. 8 Respondent alleged (1) that she owns the subject property; (2)
that she tolerated petitioners' occupancy of certain portions of the subject property without rent; and (3) that despite her
demands, they refused to vacate the subject property. aDcEIH

Petitioners denied respondent's claim of sole ownership of the subject property, asserting that petitioner Victoria Arambulo
is a co-owner. They stated (1) that after Pedro Reyes, father of respondent Emerenciana and petitioner Victoria, died
intestate in 1964, the property became part of the common properties of the Reyes clan; (2) that during her lifetime,
Anastacia Reyes, wife of Pedro, allowed her daughter, petitioner Victoria, to use and occupy a certain portion of the
subject property; (3) that Victoria continuously used and occupied this portion for the last 20 years; (4) that Anastacia also
allowed her grandson, petitioner Miguel, to use another portion of the subject property since 15 years ago; and (5) that
their "use and possession" of these portions of the subject property "had been with the knowledge, consent and tolerance
of all the other co-owners." 9
Aside from these ejectment cases, there is also a pending case for annulment of transfer and reconveyance of title before
the RTC of Quezon City, which Victoria and three of her brothers filed against respondent and her husband.
In its joint decision, 10 the MeTC of Quezon City, Branch 39, dismissed the ejectment cases for lack of cause of action. It
ruled that summary procedure was not the proper procedure to resolve the cases. This ruling was based on its findings (1)
that respondent's allegation of tolerance was preposterous since she failed to prove her proper acquisition of the subject
property; and (2) that petitioners were entitled to retain possession of the subject property pursuant to Article 448 11 of the
Civil Code.
Respondent appealed, but the RTC of Quezon City, Branch 80, upheld the MeTC's judgment, in toto. 12
After her motion for reconsideration was denied, respondent filed a petition for review with the Court of Appeals, which it
disposed of as follows:
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the judgment appealed from must be, as it is hereby,
REVERSED and SET ASIDE, and a new one entered ordering [petitioners] to vacate the portion of the subject
property under their occupancy or possession, and to surrender the same forthwith to [respondent]. Without special
pronouncement as to costs.
SO ORDERED. 13

In reversing the RTC, the Court of Appeals, observing that both parties raised the issue of ownership, provisionally
resolved said issue to determine the issue of possession. It noted the failure of the MeTC and RTC to evaluate thoroughly
the pieces of evidence submitted by the parties. The Court of Appeals held that respondent had a preferred right to
possess the property because she had a genuine TCT. It rejected for being unsubstantiated, petitioners' claim that
Victoria was a co-owner of the subject property.
The Court of Appeals denied petitioners' motion for reconsideration.
Hence, this petition. Petitioners allege that:
(1) THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN RELYING SOLELY
ON THE TRANSFER CERTIFICATE OF TITLE IN THE NAME OF RESPONDENT IN
REVERSING THE DECISION RENDERED BY THE REGIONAL TRIAL COURT OF QUEZON
CITY.
(2) THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST ERROR IN NOT
CONSIDERING THE CLEAR FACT THAT RESPONDENT WAS NEVER IN POSSESSION OF
THE PROPERTY IN QUESTION AND ACCORDINGLY, THERE IS NO PHYSICAL
POSSESSION TO RESTORE AND PROTECT.
(3) THE HONORABLE COURT OF APPEALS IGNORED THE CLEAR FACT THAT THERE ARE
EQUITABLE AND SPECIAL CIRCUMSTANCES OBTAINING BETWEEN THE PARTIES,
PARTICULARLY THE INTENDED SALE OF THE SUBJECT PROPERTY BY THE
RESPONDENT, THAT IS LIKELY TO CREATE CONFUSION, DISTURBANCE, AND EVEN
BLOOD-SHED, WHICH WILL JUSTIFY THE SUSPENSION OF THE DECISION IN THE
UNLAWFUL DETAINER CASE RENDERED BY THE HONORABLE COURT OF APPEALS TO
AWAIT THE DISPOSITION IN THE PENDING CIVIL ACTION FOR ANNULMENT OF
TRANSFER AND RECONVEYANCE OF TITLE OF THE SAME PROPERTY.
(4) THE HONORABLE COURT OF APPEALS ERRED IN RENDERING THE APPEALED DECISION
NOT IN ACCORD WITH LAW, EVIDENCE AND FACTS OF THE CASE. 14
The sole issue is, can respondent eject petitioners?
Petitioners contend that the Court of Appeals erred in reversing the RTC by relying only on respondent's TCT without
considering that respondent was never in possession of the property. They insist that they were in possession of the
subject property and so there was no physical possession to restore and protect. They pray that the Court suspend the
Court of Appeals' Decision pending resolution of the case for annulment of transfer and reconveyance of title before the
RTC.
Respondent counters that the Court of Appeals correctly reversed the decision of the RTC since the best proof of
ownership of a piece of land is the certificate of title. She maintains that a pending civil action for annulment of transfer
and reconveyance of title in a separate proceeding is of no moment in an ejectment case.
Pertinent to the instant case are the summary remedies of forcible entry and unlawful detainer under Section 1, Rule
70 15 of the Rules of Court. They are distinguished from each other as follows:
. . . In forcible entry, one is deprived of physical possession of land or building by means of force, intimidation,
threat, strategy, or stealth. In unlawful detainer, one unlawfully withholds possession thereof after the expiration or
termination of his right to hold possession under any contract, express or implied. In forcible entry, the possession
is illegal from the beginning and the basic inquiry centers on who has the prior possession de facto. In unlawful
detainer, the possession was originally lawful but became unlawful by the expiration or termination of the right to
possess, hence the issue of rightful possession is decisive for, in such action, the defendant is in actual possession
and the plaintiff's cause of action is the termination of the defendant's right to continue in possession.
What determines the cause of action is the nature of defendant's entry into the land. If the entry is illegal, then the
action which may be filed against the intruder within one year therefrom is forcible entry. If, on the other hand, the
entry is legal but the possession thereafter became illegal, the case is one of unlawful detainer which must be filed
within one year from the date of the last demand. 16

Here, respondent's cause of action was not deprivation of possession of the subject property by force, intimidation, threat,
strategy or stealth. Rather, these were for unlawful detainer since respondent alleged that (1) she owns the subject
property; (2) she allowed petitioners to occupy it by tolerance; (3) she withdrew her consent and demanded that
petitioners vacate it, but they refused. Her complaints were also filed within one year from the date of her last demand.
The sole issue for resolution in an unlawful detainer case is physical or material possession. 17 But even if there was a
claim of juridical possession or an assertion of ownership by the defendant, the MeTC may still take cognizance of the
case. All that the trial court can do is to make an initial determination of who is the owner of the property so that it can
resolve who is entitled to its possession absent other evidence to resolve ownership. 18 Courts in ejectment cases decide
questions of ownership only as it is necessary to decide the question of possession. The reason for this rule is to prevent
the defendant from trifling with the summary nature of an ejectment suit by the simple expedient of asserting ownership
over the disputed property. 19
In this case, the evidence showed that respondent has a Torrens Title over the land. The Court of Appeals correctly ruled
that respondent, as registered owner, is preferred to possess it. The age-old rule is that the person who has a Torrens
Title over a land is entitled to possession thereof. 20 Except for petitioners' unsubstantiated claim that Victoria Arambulo is
a co-owner of the property, they have not presented other justification for their continued stay thereon.
We stress, however, that this determination of ownership is not final. It is only an initial determination of ownership for the
sole purpose of settling the issue of possession. It would not prejudice the pending action in the RTC of Quezon City
between the same parties involving title to the property. 21

Persons who occupy the land of another at the latter's tolerance or permission, without any contract between them is
bound by an implied promise that they will vacate the same upon demand, failing which a summary action for ejectment is
the proper remedy against them. 22 Notably, Anastacia Reyes only allowed petitioners to use and occupy certain portions
of the subject property. They admitted their "use and possession" of these portions of the subject property "had been with
the knowledge, consent and tolerance of all the other co-owners." Consequently, after respondent obtained title to the
subject property and withdrew her tolerance later on, petitioners' refusal to vacate it rendered their possession thereof
unlawful.
Since petitioners' occupation of the subject property was by mere tolerance, they are not entitled to retain its possession
under Article 448 23 of the Civil Code. They are aware that their tolerated possession may be terminated any time and they
cannot be considered as builders in good faith. 24 Moreover, as aptly found by the Court of Appeals, petitioners have not
presented evidence to prove that they made improvements on the subject property and defrayed the expenses therefor.
We also cannot sustain petitioners' contention that since they had possession of the subject property, they are entitled to
remain there. Again, they confuse unlawful detainer with forcible entry. Prior physical possession by the plaintiff is not
necessary in an unlawful detainer case. It is enough that she has a better right of possession. Prior physical possession of
a property by a party is indispensable only in forcible entry cases. 25 In unlawful detainer cases, the defendant is
necessarily in prior lawful possession of the property, but his possession eventually becomes unlawful upon termination or
expiration of his right to possess. Thus, petitioners' prior physical possession of the property does not automatically entitle
them to continue in said possession and does not give them a better right to the property.
Finally, petitioners cannot seek suspension of this case pending resolution of the case for annulment of transfer and
reconveyance of title before the RTC. An action for reconveyance of property or accion reivindicatoria has no effect on
ejectment suits regarding the same property. Neither do suits for annulment of sale, or title, or document affecting
property operate to abate ejectment actions respecting the same property. 26
This case involves sisters and one of the sister's sons. However, we are constrained to affirm the Court of Appeals'
Decision, mindful of the circumstances of this case. The alleged intended sale of the subject property cannot likewise
justify suspending this case. We found no factual basis for this allegation, which was not even brought before the MeTC
and RTC, but was only brought to the Court of Appeals in petitioners' motion for reconsideration.
WHEREFORE, the petition is DENIED. The Decision dated August 30, 2002 and Resolution dated January 6, 2003 of the
Court of Appeals are AFFIRMED. aIDHET

SO ORDERED.
||| (Arambulo v. Gungab, G.R. No. 156581, [September 30, 2005], 508 PHIL 612-623)
 SECOND DIVISION
[G.R. No. 150025. July 23, 2008.]
SPS. NARCISO BARNACHEA and JULITA BARNACHEA (heirs of deceased Julita Barnachea), vs. HON. COURT
OF APPEALS, HON. OSCAR C. HERRERA, JR., Presiding Judge, RTC Branch 20, Malolos, Bulacan, HON.,
HORACIO T. VIOLA, Presiding Judge, MTC Pulilan, Bulacan, and SPS. AVELINO and PRISCILLA IGNACIO.
DECISION
BRION, J : p

Before us is the Petition for Review by Certiorari filed by the spouses Narciso and Julita
Barnachea 1 (petitioners) against the spouses Avelino and Priscilla Ignacio (respondents), rooted in the ejectment
complaint the respondents filed against the petitioners before the Municipal Trial Court (MTC) of Pulilan, Bulacan. The
petition prays that we nullify the Decision 2 of the Court of Appeals (CA) and its Resolution 3 denying the motion for
reconsideration, and that we suspend the ejectment proceedings in light of a pending action for quieting of title involving
the disputed property.
BACKGROUND FACTS
The respondents filed their complaint for ejectment against the petitioners before the MTC on October 20, 1998.
The subject matter of the complaint were lots titled in respondent Avelino Ignacio's name (Subdivision Lot 16 covered
by TCT No. 86821, and Subdivision Lot 17 covered by TCT No. 86822), which lots are adjacent to the property that the
petitioners own and occupy. These properties were originally part of a piece of land owned by a certain Luis Santos and
subsequently inherited by his daughter Purificacion Santos Imperial. The land was subdivided and transferred to tenant-
farmers Santiago Isidro (EP No. A-050545 with TCT No. T-188-EP) and Procopio de Guzman (EP No. 445440 with
TCT No. T-185-EP). The property that the petitioners own and occupy was derived from the land transferred to Santiago
Isidro. Respondent Ignacio's properties were derived, on the other hand, from the land originally transferred to Procopio
de Guzman.
The complaint was dismissed on December 8, 1999, but was revived on April 5, 2000. The petitioners received
summons on April 13, 2000 and, instead of filing a new Answer, filed on April 18, 2000 a Motion for Extension of Time
to File Answer which the MTC denied on May 5, 2000. The petitioners responded to this denial by filing a motion for
reconsideration on May 23, 2000. Meanwhile, the respondents filed a Motion for the Issuance of a Writ of Execution
dated May 24, 2000, which the petitioners received on May 26, 2000. IETCAS

To avert the implementation of the writ of execution, the petitioners filed a Notice of Appeal. The MTC issued a
subpoena dated June 5, 2000 setting the hearing on the petitioners' Motion for Reconsideration and the respondents'
Motion for Issuance of Writ of Execution on June 19, 2000. The petitioners subsequently filed a Compliance that prayed,
among others, that the pending resolution on the incident and the Notice of Appeal be deemed to have been filed ex
abundanti cautela. The respondents, for their part, filed a Manifestation and Motion praying, among others, that the
petitioner's Motion for Reconsideration of the May 5, 2000 Order be denied for being moot and academic.
On July 21, 2000, the MTC issued an order declaring the petitioners' Motion for Reconsideration abandoned
because of the Notice of Appeal they previously filed. Thereafter, the MTC forwarded the entire record of Civil Case No.
818 to the Regional Trial Court, Branch 20 (RTC Branch 20), Malolos, Bulacan. On August 24, 2000, petitioners
submitted their Appeal Memorandum to the RTC Branch 20 which affirmed the MTC decision on September 20,
2000. IcEACH

On October 5, 2000, the petitioner Julita's sister, Leticia, representing herself to be the sole owner of EP No.
A-050545 (TCT No. T-188-EP), filed a Petition for Quieting of Title with the Regional Trial Court, Branch 19 (RTC Branch
19), Malolos, Bulacan, docketed as Civil Case No. 694-M-2000. On October 9, 2000, prior to their receipt of the RTC
Branch 20's September 20, 2000 decision, the petitioners filed an Urgent Motion for the Suspension of Proceedings
(referred to for purposes of this decision as the urgent motion).
RTC Branch 20 denied on October 17, 2000 the petitioners' urgent motion and their subsequent Motion for
Reconsideration. The petitioners brought the denials to the CA via a petition for certiorari under Rule 65 of the Rules of
Court on the issue of "whether the pendency of an action involving the issue of ownership is sufficient basis for
[the] suspension of an ejectment proceeding between the same parties and relating to the same subject
matter".
THE CA'S DECISION
The CA denied the petition and the petitioners' subsequent motion for reconsideration, essentially on the
grounds that (1) the issue in an ejectment suit is limited to the physical possession of real property and is separate and
distinct from the issue of ownership and possession de jure that either party may set forth in his or her pleading; (2) the
pendency of an action for reconveyance of title over the same property or for annulment of deed of sale does not divest
the MTC of its jurisdiction to try the forcible entry or unlawful detainer case before it, and that ejectment actions generally
cannot be suspended pending the resolution of a case for quieting of title between the same parties over the same
subject property; and (3) the case does not fall under the exception provided by the case of Amagan v. Marayag, 4 where
the Court allowed the suspension of ejectment proceedings because of strong reasons of equity applicable to the case
the demolition of the petitioner's house unless the proceedings would be suspended. The CA ruled that the
petitioners' reliance on Amagan was inappropriate because the said case only applies to unlawful detainer actions while
the petitioners' ejectment suit is an action for forcible entry. To the CA, the initial tolerance on the part of the private
respondents did not convert the nature of their ejectment suit from forcible entry into unlawful detainer, following the
reasoning this Court applied in Munoz v. Court of Appeals. 5
ASSIGNMENT OF ERRORS
The petitioners impute the following error to the CA:
[T]he Honorable Court of Appeals erred when it ruled that the said ejectment proceeding was not a suit
for illegal detainer but one of forcible entry, thus, denied application to the exceptional rule on suspension of
ejectment proceedings, at any stage thereof, until the action on ownership is finally settled. 6
From this general assignment of error, the petitioners submitted in their memorandum the following specific
issues for our resolution:
1) whether or not the ejectment case filed by the respondents against petitioners with the MTC of Pulilan
is for unlawful detainer or for forcible entry;
2) whether the MTC of Pulilan had validly acquired and exercised jurisdiction over the ejectment case
considering that the complaint was filed beyond one year from the demand to vacate the subject premises; and
3) whether or not the ejectment proceedings should be suspended at any stage until the action on
ownership of the disputed portion of the subject property is finally settled. CDHcaS

OUR RULING
We find the petition without merit.
1. Nature of the Action before the MTC.
The best indicator of what the plaintiff in an ejectment case intends with respect to the nature of his or her
complaint can be found in the complaint itself. In this case, the complaint states: 7
"That plaintiffs are the registered owners in fee simple of several residential lots identified as lots 16 and
17 covered by Certificate of Title Nos. 86821 and 86822 issued in the name of the spouses by the Register of
Deeds of Bulacan, with a total aggregate area of 254 square meters situated at Cutcut, Pulilan, Bulacan. Copy of
the said titles are hereto attached and marked as Annex "A" and "A-1"
"That in a portion of the lots 16 and 17, a portion of the house of the defendants was erected and built
thus usurping the said portion and this was made known to the defendants when the plaintiffs caused the relocation
of the subject lots, however, considering that the latter were not yet in need of that portion, they allowed the former
to stay on the portion by tolerance;
"That last July 1998, when the plaintiffs were in the process of fencing the boundary of their lots, to their
surprise, they were not allowed by the defendants to extend the fence up to the portions they illegally occupied;
"That despite the advice given to them by several Geodetic Engineers commissioned by both the plaintiffs
and the herein defendants, for them to give way and allow the plaintiffs to fence their lot, same proved futile as
they stubbornly refused to surrender possession of the subject portion;
The actions for forcible entry and unlawful detainer are similar because they are both summary actions where
the issue is purely physical possession. 8 Other than these commonalities, however, they possess dissimilarities that
are clear, distinct, and well established in law. 9 aTcIEH

In forcible entry, (1) the plaintiff must prove that he was in prior physical possession of the property until he was
deprived of possession by the defendant; (2) the defendant secures possession of the disputed property from the plaintiff
by means of force, intimidation, threat, strategy or stealth; hence, his possession is unlawful from the beginning; (3) the
law does not require a previous demand by the plaintiff for the defendant to vacate the premises; and (4) the action can
be brought only within one-year from the date the defendant actually and illegally entered the property. 10
In marked contrast, unlawful detainer is attended by the following features: (1) prior possession of the property
by the plaintiff is not necessary; (2) possession of the property by the defendant at the start is legal but the possession
becomes illegal by reason of the termination of his right to possession based on his or her contract or other arrangement
with the plaintiff; (3) the plaintiff is required by law to make a demand as a jurisdictional requirement; and (4) the one-
year period to bring the complaint is counted from the date of the plaintiff's last demand on the defendant. 11
Under these standards, we do not hesitate to declare the Court of Appeals in error when it held that the present
case involves forcible entry rather than unlawful detainer. A plain reading of the complaint shows the respondents'
positions that the petitioners were in prior possession of the disputed property; that the respondents allowed them to
occupy the disputed property by tolerance; that the respondents eventually made a demand that the petitioners vacate
the property (on August 26, 1998, which demand the petitioners received on August 31, 1998); and that the petitioners
refused to vacate the property in light of the defenses they presented. Separately from the complaint, the respondents
characterized the action they filed against the petitioners in the MTC as an unlawful detainer when they stated in their
memorandum that "as alleged in the complaint, what was filed by the respondents [was] an ejectment suit for unlawful
detainer." 12
A critical point for us in arriving at our conclusion is the complete absence of any allegation of force, intimidation,
strategy or stealth in the complaint with respect to the petitioners' possession of the respondents' property. While
admittedly no express contract existed between the parties regarding the petitioners' possession, the absence does not
signify an illegality in the entry nor an entry by force, intimidation, strategy or stealth that would characterize the entry
as forcible. It has been held that a person who occupies land of another at the latter's tolerance or permission, without
any contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which
a summary action for ejectment is the proper remedy. The status of the defendant is analogous to that of a lessee or
tenant whose terms has expired but whose occupancy continues by tolerance of the owner. 13
To be sure, we are aware of the Munoz v. Court of Appeals 14 ruling that the CA relied upon to reach the
conclusion that the present case involves forcible entry, not unlawful detainer. What the CA apparently misread
in Munoz was the allegation of stealth in the complaint; anchored on this finding, the Court concluded that the
defendant's possession was illegal from the beginning so that there could be no possession by tolerance. The allegation
of stealth, of course, is not present in the present case. On the contrary, tolerance was alleged in the ejectment complaint
itself. Thus, there is no reason for the Munoz ruling to apply to the present case; there is no basis nor occasion to
conclude that the respondents filed a forcible entry case. CDHAcI

2. The Jurisdictional Issue Was the Ejectment Complaint Seasonably Filed?

We point out at the outset that what the petitioners directly appealed to this Court is the appellate court's
affirmation of the RTC's refusal to suspend the ejectment proceedings based on the quieting of title case the petitioners
cited. Hence, we are not reviewing the merits of the main ejectment case, particularly the question of the MTC's
jurisdiction, as these aspects of the case were not appealed to us. If we touch the jurisdictional aspect of the case at
all, it is only for purposes of fully responding to the parties' arguments.
The petitioners' jurisdictional argument cannot succeed as the respondents' ejectment complaint was filed
within the one-year period for bringing an action for unlawful detainer or forcible entry that Section 1, Rule 70 of the
Rules of Court requires. Section 1 specifically states:
Section 1. Who may institute proceedings, and when.
Subject to the provisions of the next succeeding section, a person deprived of the possession of any land
or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to
hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such
lessor, vendor, vendee, or other person, may, at any time within one (1) year after such unlawful deprivation
or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons
unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution
of such possession, together with damages and costs. DHSACT
On the basis of this provision, the petitioners argue that the respondents' cause of action whether for forcible entry
or for unlawful detainer had prescribed when the ejectment complaint was filed on April 5, 2000. They point out that
the last demand letter (the reckoning date for unlawful detainer) 15 was dated Aug. 26, 1998 and was received by the
petitioners on August 31, 1998; the complaint was only filed on April 5, 2000 or more than 1 year after August 31, 1998.
On the other hand, if the action had been for forcible entry, the prescriptive period commenced on the discovery of the
usurpation and the computation period would have commenced either during the relocation survey of the lots or in July
1998 when the respondents were prevented from fencing the disputed property.
The one-year period within which to commence an ejectment proceeding is a prescriptive period as well as a
jurisdictional requirement. Hence, Article 1155 of the Civil Code on the manner of reckoning the prescriptive period must
necessarily come into play. Under this Article, the filing of a complaint in court interrupts the running of prescription of
actions. As an action for unlawful detainer, the one-year prescription period started running after August 31, 1998
the date of receipt of the respondents' demand letter. The period ran for almost two months until it was interrupted on
October 20, 1998 when the respondents filed their ejectment complaint. This complaint, however, was dismissed on
December 8, 1999. Upon this dismissal, the prescriptive period again began to run for about four months when another
interruption intervened the revival of the complaint on April 5, 2000. Evidently, under these undisputed facts, the
period when the prescriptive period effectively ran does not add up to the one-year prescriptive period that would
jurisdictionally bar the ejectment case.
3. Suspension of the Ejectment Proceedings until Resolution of the Ownership Issue.
 The issue in an unlawful detainer case is limited to physical possession. When a claim of ownership is used as
a basis for de facto possession or to assert a better possessory right, the court hearing the case may provisionally rule
on the issue of ownership. As a rule, however, a pending civil action involving ownership of the same property does not
justify the suspension of the ejectment proceedings. Only in rare cases has this Court allowed a suspension of the
ejectment proceedings and one of these is in the case of Amagan v. Marayag 16 that the petitioners cite. To quote
from Amagan
[i]ndisputably, the execution of the MCTC Decision would have resulted in the demolition of the house
subject of the ejectment suit; thus, by parity of reasoning, considerations of equity require suspension of the
ejectment proceedings. . . . [L]ike Vda. de Legaspi, the respondent's suit is one of unlawful detainer and not of
forcible entry, and most certainly, the ejectment of petitioners would mean a demolition of their house, a matter
that is likely to create "confusion, disturbance, inconvenience and expenses" mentioned in the said exceptional
case.
Necessarily, the affirmance of the MCTC Decision would cause the respondent to go through the whole
gamut of enforcing it by physically removing the petitioners from the premises they claim to have been occupying
since 1937. (Respondent is claiming ownership only of the land, not of the house) Needlessly, the litigants as well
as the courts will be wasting much time and effort by proceeding at a stage wherein the outcome is at best
temporary, but the result of enforcement is permanent, unjust and probably irreparable. 17 HCaIDS
However, we do not find these same circumstances present in this case for the reasons we shall discuss in detail below.
First. In Amagan, the party refusing to vacate the disputed premises (or the deforciant in the action for unlawful
detainer) was the same party seeking to quiet his title. In the present case, the petitioners are not parties to the civil
action (for quieting of title) whose result they seek to await; the plaintiff in the quieting of title case is Leticia, the petitioner
Julita's sister. No proof whatsoever was offered to show that petitioner Julita is asserting her own title to the property;
there is only the allegation that Leticia was appointed as the representative of Julita and the other heirs of Isidro in their
various recourses at law to vindicate their landowners' rights. 18 The respondents in fact actively disputed petitioner
Julita's identification with the quieting of title case in their Comment since Leticia claimed to be the sole owner of TCT
No. T-188-EP in her action to quiet title. The respondents also pointed to the document entitled "Kasulatan ng
Pagmamana ng Lupa sa Labas ng Hukuman na May Pagtalikod sa Bahagi" executed on May 27, 1995, showing that
Julita had relinquished her share over TCT No. T-188-EP in favor of her sister Leticia. A desperation argument the
petitioners advanced in their Memorandum is that the Kasulatan was only executed "pursuant to the agrarian reform
policy proscribing the parceling of the awarded landholding into smaller units to preserve its viability". 19 In other words,
the petitioners are disavowing, for purposes of this case, the representation they made in completing their submission
before the agrarian reform authorities. We cannot of course recognize this line of argument as justification for the
suspension of the ejectment proceedings as the petitioners are bound by their representations before the agrarian
reform authorities and cannot simply turn their back on these representations as their convenience requires. No less
decisive against the petitioners' argument for suspension is the decision itself of RTC Branch 19 that the respondents
attached to their Comment. This decision shows that Civil Case No. 694-M-2000, instead of being a case for quieting
of title, is in fact a mere boundary dispute. 20
Second. In Amagan, the MCTC decision involved the demolition of the petitioners' house a result that this
Court found to be "permanent, unjust and probably irreparable"; in the present case, only a portion of the petitioners'
house is apparently affected as the petitioners occupy the lot adjoining the disputed property. Significantly, the height,
width and breadth of the portion of the house that would be affected by the execution of the RTC Branch 20 decision
does not appear anywhere in the records, thus, unavoidably inviting suspicion that the potential damage to the
petitioners is not substantial. More important than the fact of omission is its implication; the omission constitutes a
missing link in the chain of equitable reasons for suspension that the petitioners wish to establish. Thus, the equitable
consideration that drove us to rule as we did in Amagan does not obtain in the present case.
In the absence of a concrete showing of compelling equitable reasons at least comparable and under
circumstances analogous to Amagan, we cannot override the established rule that a pending civil action for ownership
shall not ipso facto suspend an ejectment proceeding. Additionally, to allow a suspension on the basis of the reasons
the petitioners presented in this case would create the dangerous precedent of allowing an ejectment suit to be
suspended by an action filed in another court by parties who are not involved or affected by the ejectment suit. EaScHT

WHEREFORE, premises considered, we hereby DISMISS the petition for lack of merit. Costs against the
petitioners.
SO ORDERED.
||| (Spouses Barnachea v. Court of Appeals, G.R. No. 150025, [July 23, 2008], 581 PHIL 337-352)
 SECOND DIVISION [G.R. No. 142882. May 2, 2006.]
SPS. RICARDO AND LYDIA LLOBRERA, SPS. BENJAMIN AND ESTHER LLOBRERA, SPS. MIKE AND
RESIDA MALA, SPS. OTOR AND DOLINANG BAGONTE, SPS. EDUARDO AND DAMIANA ICO, SPS.
ANTONIO AND MERLY SOLOMON, SPS. ANSELMO AND VICKY SOLOMON, SPS. ALEX AND CARMELITA
CALLEJO, SPS. DEMETRIO AND JOSEFINA FERRER, SPS. BENJAMIN AND ANITA MISLANG, SPS.
DOMINGO AND FELICIDAD SANCHEZ, SPS. FERNANDO AND CARMELITA QUEBRAL, SPS. BERNARDO
AND PRISCILLA MOLINA, PRISCILLA BAGA AND BELEN SEMBRANO, vs. JOSEFINA V. FERNANDEZ.
DECISION
GARCIA, J : p

Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to nullify and set aside the
following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 48918, to wit:
1. Decision dated June 30, 1999, 1 affirming the Decision dated August 7, 1998 of the Regional Trial Court (RTC)
of Dagupan City, Branch 41, in Civil Case No. 98-02353-D which affirmed an earlier decision of the
Municipal Trial Court in Cities (MTCC), Dagupan City, Branch 2, in Civil Case No. 10848, entitled
"Josefina F. De Venecia Fernandez vs. Sps. Mariano and Lourdes Melecio, et al.," an action for
ejectment.

2. Resolution dated March 27, 2000, 2 denying petitioners' motion for reconsideration.

Subject of the controversy is a 1,849 square-meter parcel of land, covered by Transfer Certificate of Title No. 9042.
Respondent Josefina V. Fernandez, as one of the registered co-owners of the land, served a written demand letter upon
petitioners Spouses Llobrera, et al., to vacate the premises within fifteen (15) days from notice. Receipt of the demand
letter notwithstanding, petitioners refused to vacate, necessitating the filing by the respondent of a formal complaint
against them before the Barangay Captain of Barangay 11, Dagupan City. Upon failure of the parties to reach any
settlement, the Barangay Captain issued the necessary certification to file action.
Respondent then filed a verified Complaint for ejectment and damages against the petitioners before the MTCC of
Dagupan City, which complaint was raffled to Branch 2 thereof.
By way of defense, petitioners alleged in their Answer that they had been occupying the property in question beginning
the year 1945 onwards, when their predecessors-in-interest, with the permission of Gualberto de Venecia, one of the
other co-owners of said land, developed and occupied the same on condition that they will pay their monthly rental of
P20.00 each. From then on, they have continuously paid their monthly rentals to Gualberto de Venecia or Rosita de
Venecia or their representatives, such payments being duly acknowledged by receipts. Beginning sometime June 1996,
however, the representative of Gualberto de Venecia refused to accept their rentals, prompting them to consign the same
to Banco San Juan, which bank deposit they continued to maintain and update with their monthly rental payments.
In a decision dated February 18, 1998, the MTCC rendered judgment for the respondent as plaintiff, thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the
defendants as follows:

1. Ordering each of the defendants to vacate the portion of the land in question they respectively occupy and to
restore the possession thereof to the plaintiff and her co-owners;

2. Ordering each of the defendants to pay to the plaintiff the amount of P300.00 per month from January 17, 1997
until they vacate the land in question as the reasonable compensation for the use and occupation of the
premises; cEaCTS

3. Ordering the defendants to pay proportionately the amount of P10,000.00 as attorney's fee and P2,000.00 as
litigation expenses, and to pay the cost of suit.
SO ORDERED.

On petitioners' appeal to the RTC of Dagupan City, Branch 41 thereof, in its decision of August 7, 1998, affirmed the
foregoing judgment.
Therefrom, petitioners went to the CA whereat their recourse was docketed as CA-G.R. SP. No. 48918. As stated at the
threshold hereof, the CA, in its Decision of June 30, 1999, affirmed that of the RTC. With the CA's denial of their motion
for reconsideration, in its Resolution of March 27, 2000, petitioners are now before this Court with the following
assignment of errors:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN:
A. HOLDING THAT THE OCCUPATION AND POSSESSION OF THE PROPERTY IN QUESTION IS BY MERE
TOLERANCE OF THE RESPONDENT.
B. HOLDING THAT THE FAILURE OF THE PETITIONERS (defendants) TO VACATE THE PREMISES AFTER
DEMANDS WERE MADE UPON THEM IS A VALID GROUND FOR THEIR EJECTMENT. HCacTI
 C. HOLDING THAT THE CONSIGNATION MADE BY PETITIONERS IN CONTEMPLATION OF ARTICLE 1256
OF THE NEW CIVIL CODE IS NOT LEGALLY TENABLE.
D. AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT DATED AUGUST 7, 1998 WHICH,
LIKEWISE AFFIRMED THE DECISION OF THE MTCC DECISION DATED FEBRUARY 18, 1998
INSOFAR AS THE ORDER FOR THE PETITIONERS (DEFENDANTS) TO PAY RENTAL AND
ATTORNEY'S FEES AND LITIGATION EXPENSES.
At the heart of the controversy is the issue of whether petitioners' possession of the subject property is founded on
contract or not. This factual issue was resolved by the three (3) courts below in favor of respondent. As tersely put by the
CA in its assailed decision of June 30, 1999:
Petitioners failed to present any written memorandum of the alleged lease arrangements between them and
Gualberto De Venecia. The receipts claimed to have been issued by the owner were not presented on the excuse
that the March 19, 1996 fire burned the same. Simply put, there is a dearth of evidence to substantiate the averred
lessor-lessee relationship. . . . . 3

Consistent with this Court's long-standing policy, when the three courts below have consistently and unanimously ruled on
a factual issue, such ruling is deemed final and conclusive upon this Court, especially in the absence of any cogent
reason to depart therefrom.
From the absence of proof of any contractual basis for petitioners' possession of the subject premises, the only legal
implication is that their possession thereof is by mere tolerance. In Roxas vs. Court of Appeals, 4 we ruled:
A person who occupies the land of another at the latter's tolerance or permission, without any contract between
them, is necessarily bound by an implied promise that he will vacate upon demand, failing which, a summary action
for ejectment is the proper remedy against him.

The judgment favoring the ejectment of petitioners being consistent with law and jurisprudence can only be affirmed. The
alleged consignation of the P20.00 monthly rental to a bank account in respondent's name cannot save the day for the
petitioners simply because of the absence of any contractual basis for their claim to rightful possession of the subject
property. Consignation based on Article 1256 of the Civil Code indispensably requires a creditor-debtor relationship
between the parties, in the absence of which, the legal effects thereof cannot be availed of.
Article 1256 pertinently provides:
Art. 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the
debtor shall be released from responsibility by the consignation of the thing or sum due.

Unless there is an unjust refusal by a creditor to accept payment from a debtor, Article 1256 cannot apply. In the present
case, the possession of the property by the petitioners being by mere tolerance as they failed to establish through
competent evidence the existence of any contractual relations between them and the respondent, the latter has no
obligation to receive any payment from them. Since respondent is not a creditor to petitioners as far as the alleged P20.00
monthly rental payment is concerned, respondent cannot be compelled to receive such payment even through
consignation under Article 1256. The bank deposit made by the petitioners intended as consignation has no legal effect
insofar as the respondent is concerned. IDASHa

Finally, as regards the damages awarded by the MTCC in favor of the respondent, as affirmed by both the RTC and the
CA, petitioners failed to present any convincing argument for the Court to modify the same. The facts of the case duly
warrant payment by the petitioners to respondent of actual and compensatory damages for depriving the latter of the
beneficial use and possession of the property. Also, the unjustified refusal to surrender possession of the property by the
petitioners who were fully aware that they cannot present any competent evidence before the court to prove their claim to
rightful possession as against the true owners is a valid legal basis to award attorney's fees as damages, as well as
litigation expenses and cost of suit.
Rule 70 of the Rules of Court relevantly reads:
Sec. 17. Judgment. If after trial the court finds that the allegations of the complaint are true, it shall render
judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as arrears of rent or as
reasonable compensation for the use and occupation of the premises, attorney's fees and costs. If it finds that
said allegations are not true, it shall render judgment for the defendant to recover his costs. If a counterclaim is
established, the court shall render judgment for the sum found in arrears from either party and award costs as
justice requires. (Emphasis supplied). DcTSHa

There is no doubt whatsoever that it is within the MTCC's competence and jurisdiction to award attorney's fees and costs
in an ejectment case. After thoroughly considering petitioners' arguments in this respect, the Court cannot find any strong
and compelling reason to disturb the unanimous ruling of the three (3) courts below on the matter of damages.
WHEREFORE, the petition is hereby DENIED for lack of merit, with costs against petitioners. SO ORDERED.