SECOND DIVISION

[G.R. No. 106755. February 1, 2002]

APOLINARIA AUSTRIA-MAGAT, petitioner, vs. HON. COURT OF

APPEALS and FLORENTINO LUMUBOS, DOMINGO COMIA,
TEODORA CARAMPOT, ERNESTO APOLO, SEGUNDA
SUMPELO, MAMERTO SUMPELO and RICARDO SUMPELO,
respondents.

DECISION
DE LEON, JR., J.:

Before us is a petition for review of the Decisioni[1] of the Court of Appeals,ii[2] dated
June 30, 1989 reversing the Decision,iii[3] dated August 15, 1986 of the Regional Trial
Court (RTC) of Cavite, Branch 17. The Decision of the RTC dismissed Civil Case No.
4426 which is an action for annulment of title, reconveyance and damages.
The facts of the case are as follows:
Basilisa Comerciante is a mother of five (5) children, namely, Rosario Austria,
Consolacion Austria, herein petitioner Apolinaria Austria-Magat, Leonardo, and one of
herein respondents, Florentino Lumubos. Leonardo died in a Japanese concentration
camp at Tarlac during World War II.
In 1953, Basilisa bought a parcel of residential land together with the improvement
thereon covered and described in Transfer Certificate of Title No. RT-4036 (T-3268) and
known as Lot 1, Block 1, Cavite Beach Subdivision, with an area of 150 square meters,
located in Bagong Pook, San Antonio, Cavite City.
On December 17, 1975, Basilisa executed a document designated as Kasulatan sa
Kaloobpala (Donation). The said document which was notarized by Atty. Carlos
Viniegra, reads as follows:
KASULATANG SA KALOOBPALA
(DONATION)
TALASTASIN NG LAHAT AT SINUMAN:
Na ako, si BASELISA COMERCIANTE, may sapat na gulang, Filipina, balo, at
naninirahan sa blg. 809 L. Javier Bagong Pook, San Antonio, Lungsod ng Kabite,
Filipinas, sa pamamagitan ng kasulatang itoy
NAGSASALAYSAY
Na alang-alang sa mabuting paglilingkod at pagtingin na iniukol sa akin ng apat
 kong mga tunay na anak na sila:
ROSARIO AUSTRIA, Filipina, may sapat na gulang, balo, naninirahan sa 809 L.
Javier, Bagong Pook, San Antonio, Lungsod ng Kabite;
CONSOLACION AUSTRIA, Filipina, may sapat na gulang, balo naninirahan sa
809 L. Javier, Bagong Pook, San Antonio, Lungsod ng Kabite;
APOLINARIA AUSTRIA, Filipina, may sapat na gulang, may asawa, naninirahan
sa Pasong Kawayan, Hen. Trias, Kabite;
FLORENTINO LUMUBOS, Filipino, may sapat na gulang, asawa ni Encarnacion
Magsino, at naninirahan din sa 809 L. Javier, Bagong Pook, San Antonio, Lungsod ng
Kabite; ay
Kusang loob na ibinibigay ko at ipinagkakaloob ng ganap at hindi na mababawi sa
naulit ng apat na anak ko at sa kanilang mga tagamagmana (sic), ang aking isang
lupang residential o tirahan sampu ng aking bahay nahan ng nakatirik doon na nasa
Bagong Pook din, San Antonio, Lungsod ng Kabite, at nakikilala bilang Lote no. 7,
Block no.1, of Subdivision Plan Psd-12247; known as Cavite Beach Subdivision, being
a portion of Lot No. 1055, of the Cadastral survey of Cavite, GLRO Cadastral Rec. no.
9539; may sukat na 150 metros cuadrados, at nakatala sa pangalan ko sa Titulo
Torrens bilang TCT-T-3268 (RT-4036) ng Lungsod ng Kabite;
Na ang Kaloob palang ito ay magkakabisa lamang simula sa araw na akoy
pumanaw sa mundo, at sa ilalim ng kondision na:
Magbubuhat o babawasin sa halaga ng nasabing lupa at bahay ang anumang
magugul o gastos sa aking libing at nicho at ang anumang matitira ay hahatiin ng
APAT na parte, parepareho isang parte sa bawat anak kong nasasabi sa itaas nito
upang maliwanang (sic) at walang makakalamang sinoman sa kanila;
At kaming apat na anak na nakalagda o nakadiit sa kasulatang ito ay
TINATANGGAP NAMIN ang kaloob-palang ito ng aming magulang na si Basilisa
Comerciante, at tuloy pinasasalamatan namin siya ng taos sa (sic) puso dahil sa
kagandahan look (sic) niyang ito sa amin.
SA KATUNAYAN, ay nilagdaan o diniitan namin ito sa Nobeleta, Kabite, ngayong
ika-17 ng Disyembre taong 1975.
HER MARK HER MARK
BASELISA COMERCIANTE ROSARIO AUSTRIA
Tagakaloobpala
(Sgd.) APOLINARIA AUSTRIA HER MARK
Tagatanggap-pala CONSOLACION AUSTRIA
(Sgd.)FLORENTINO LUMUBOS
Tagatanggap-pala
(Acknowledgment signed by Notary Public C.T. Viniegra is omitted).iv[4]
Basilisa and her said children likewise executed another notarized document
denominated as Kasulatan which is attached to the deed of donation. The said
document states that:
KASULATAN
TALASTASIN NG MADLA:
Na kaming mga nakalagda o nakadiit sa labak nito sila Basilisa Comerciante at
ang kanyang mga anak na sila:
Rosario Austria, Consolacion Austria, Apolonio Austria, at Florentino Lumubos,
pawang may mga sapat na gulang, na lumagda o dumiit sa kasulatang kaloob pala, na
sinangayunan namin sa harap ng Notario Publico, Carlos T. Viniegra, ay
nagpapahayag ng sumusunod:
Na ang titulo numero TCT-T-2260 (RT-4036) ng Lungsod ng Kabite, bahay sa
loteng tirahan ng Bagong Pook na nababanggit sa nasabing kasulatan, ay mananatili
sa poder o possession ng Ina, na si Basilisa Comerciante habang siya ay nabubuhay
at
Gayon din ang nasabing Titulo ay hindi mapapasangla o maipagbibili ang lupa
habang maybuhay ang nasabing Basilisa Comerciante.
Sa katunayan ang nagsilagda kaming lahat sa labak nito sa harap ng abogado
Carlos T. Viniegra at dalawang saksi.
Nobeleta, Kabite. Ika-17 ng Disyembre, 1975.v[5]
On February 6, 1979, Basilisa executed a Deed of Absolute Sale of the subject
house and lot in favor of herein petitioner Apolinaria Austria-Magat for Five Thousand
Pesos (P5,000.00). As the result of the registration of that sale, Transfer Certificate of
Title (TCT for brevity) No. RT-4036 in the name of the donor was cancelled and in lieu
thereof TCT No. T-10434 was issued by the Register of Deeds of Cavite City in favor of
petitioner Apolinaria Austria-Magat on February 8, 1979.
On September 21, 1983, herein respondents Teodora Carampot, Domingo Comia,
and Ernesto Apolo (representing their deceased mother Consolacion Austria), Ricardo,
Mamerto and Segunda, all surnamed Sumpelo (representing their deceased mother
Rosario Austria) and Florentino Lumubos filed before the Regional Trial Court of Cavite
an action, docketed as Civil Case No. 4426 against the petitioner for annulment of TCT
No. T-10434 and other relevant documents, and for reconveyance and damages.
On August 15,1986, the trial court dismissed Civil Case No. 4426 per its Decision,
the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, this Court hereby renders judgment for
defendant dismissing this case and ordering plaintiffs to pay the amount of P3,000.00
as attorneys fees and the costs of suit.
SO ORDERED.vi[6]
According to the trial court, the donation is a donation mortis causa pursuant to
Article 728 of the New Civil Code inasmuch as the same expressly provides that it
would take effect upon the death of the donor; that the provision stating that the donor
reserved the right to revoke the donation is a feature of a donation mortis causa which
must comply with the formalities of a will; and that inasmuch as the donation did not
follow the formalities pertaining to wills, the same is void and produced no effect
whatsoever. Hence, the sale by the donor of the said property was valid since she
remained to be the absolute owner thereof during the time of the said transaction.
On appeal, the decision of the trial court was reversed by the Court of Appeals in its
subject decision, the dispositive portion of which reads, to wit:
WHEREFORE, in view of the foregoing, the appealed decision is hereby SET
ASIDE and a new one rendered:
1. declaring null and void the Deed of Sale of Registered Land (Annex B) and Transfer
Certificate of Title No. T-10434 of the Registry of Deeds of Cavite City (Annex E)
and ordering the cancellation thereof; and
2. declaring appellants and appellee co-owners of the house and lot in question in
accordance with the deed of donation executed by Basilisa Comerciante on
December 17, 1975.
No pronouncement as to costs.
SO ORDERED.vii[7]
The appellate court declared in its decision that:
In the case at bar, the decisive proof that the deed is a donation inter vivos is in
the provision that :
Ibinibigay ko at ipinagkakaloob ng ganap at hindi mababawi sa naulit na
apat na anak ko at sa kanilang mga tagapagmana, ang aking lupang
residential o tirahan sampu ng aking bahay nakatirik doon xxx. (emphasis
supplied)
This is a clear expression of the irrevocability of the conveyance. The irrevocability
of the donation is a characteristic of a donation inter vivos. By the words hindi
mababawi, the donor expressly renounced the right to freely dispose of the house and
lot in question. The right to dispose of a property is a right essential to full ownership.
Hence, ownership of the house and lot was already with the donees even during the
donors lifetime. xxx
xxx xxx xxx
In the attached document to the deed of donation, the donor and her children
stipulated that:
Gayon din ang nasabing titulo ay hindi mapapasangla o maipagbibili ang
lupa habang may buhay ang nasabing Basilisa Comerciante.
The stipulation is a reiteration of the irrevocability of the dispossession on the part
of the donor. On the other hand, the prohibition to encumber, alienate or sell the
property during the lifetime of the donor is a recognition of the ownership over the
house and lot in issue of the donees for only in the concept of an owner can one
encumber or dispose a property.viii[8]
Hence this appeal grounded on the following assignment of errors:
I
 THE RESPONDENT COURT OF APPEALS, WITH DUE RESPECT, IGNORED
THE RULES OF INTERPRETATION OF CONTRACTS WHEN IT CONSIDERED
THE DONATION IN QUESTION AS INTER VIVOS.
II
THE RESPONDENT COURT OF APPEALS, AGAIN WITH DUE RESPECT,
ERRED IN NOT HOLDING THAT THE PRESENT ACTION HAS PRESCRIBED
UNDER THE STATUTE OF LIMITATIONS.ix[9]
Anent the first assignment of error, the petitioner argues that the Court of Appeals
erred in ruling that the donation was a donation inter vivos. She claims that in
interpreting a document, the other relevant provisions therein must be read in
conjunction with the rest. While the document indeed stated that the donation was
irrevocable, that must be interpreted in the light of the provisions providing that the
donation cannot be encumbered, alienated or sold by anyone, that the property donated
shall remain in the possession of the donor while she is alive, and that the donation
shall take effect only when she dies. Also, the petitioner claims that the donation is
mortis causa for the reason that the contemporaneous and subsequent acts of the
donor, Basilisa Comerciante, showed such intention. Petitioner cites the testimony of
Atty. Viniegra, who notarized the deed of donation, that it was the intent of the donor to
maintain control over the property while she was alive; that such intent was shown when
she actually sold the lot to herein petitioner.
We affirm the appellate courts decision.
The provisions in the subject deed of donation that are crucial for the determination
of the class to which the donation belongs are, as follows:
xxx xxx xxx
xxx(I)binibigay ko at ipinagkakaloob ng ganap at hindi mababawi sa naulit na apat na
anak ko at sa kanilang mga tagapagmana, ang aking lupang residential o tirahan
sampu ng aking bahay nakatirik doon na nasa Bagong Pook din, San Antonio,
Lungsod ng Kabite
xxx xxx xxx
Na ang Kaloob palang ito ay magkakabisa lamang simula sa araw na akoy pumanaw
sa mundo, xxx.
xxx xxx xxx
Na ang titulo numero TCT-T-2260 (RT-4036) ng Lungsod ng Kabite, bahay sa loteng
tirahan ng Bagong Pook na nababanggit sa nasabing kasulatan, ay mananatili sa
poder o possesion ng Ina, na si Basilisa Comerciante habang siya ay nabubuhay at
Gayon din ang nasabing Titulo ay hindi mapapasangla o maipagbibili ang lupa
habang maybuhay ang nasabing Basilisa Comerciante xxx.
It has been held that whether the donation is inter vivos or mortis causa depends on
whether the donor intended to transfer ownership over the properties upon the
execution of the deed.x[10] In Bonsato v. Court of Appeals,xi[11] this Court enumerated the
characteristics of a donation mortis causa, to wit:
 (1) It conveys no title or ownership to the transferee before the death of the transferor;
or, what amounts to the same thing, that the transferor should retain the ownership
(full or naked) and control of the property while alive;
(2) That before his death, the transfer should be revocable by the transferor at will, ad
nutum; but revocability may be provided for indirectly by means of a reserved power
in the donor to dispose of the properties conveyed;
(3) That the transfer should be void if the transferor should survive the transferee.
Significant to the resolution of this issue is the irrevocable character of the donation
in the case at bar. In Cuevas v. Cuevas,xii[12] we ruled that when the deed of donation
provides that the donor will not dispose or take away the property donated (thus making
the donation irrevocable), he in effect is making a donation inter vivos. He parts away
with his naked title but maintains beneficial ownership while he lives. It remains to be a
donation inter vivos despite an express provision that the donor continues to be in
possession and enjoyment of the donated property while he is alive. In the Bonsato
case, we held that:
(W)hat is most significant [in determining the type of donation] is the absence of
stipulation that the donor could revoke the donations; on the contrary, the deeds
expressly declare them to be irrevocable, a quality absolutely incompatible with the
idea of conveyances mortis causa where revocability is of the essence of the act, to the
extent that a testator can not lawfully waive or restrict his right of revocation (Old Civil
Code, Art.737; New Civil Code, Art. 828).xiii[13]
Construing together the provisions of the deed of donation, we find and so hold that
in the case at bar the donation is inter vivos. The express irrevocability of the same
(hindi na mababawi) is the distinctive standard that identifies that document as a
donation inter vivos. The other provisions therein which seemingly make the donation
mortis causa do not go against the irrevocable character of the subject donation.
According to the petitioner, the provisions which state that the same will only take effect
upon the death of the donor and that there is a prohibition to alienate, encumber,
dispose, or sell the same, are proofs that the donation is mortis causa. We disagree.
The said provisions should be harmonized with its express irrevocability. In Bonsato
where the donation per the deed of donation would also take effect upon the death of
the donor with reservation for the donor to enjoy the fruits of the land, the Court held
that the said statements only mean that after the donors death, the donation will take
effect so as to make the donees the absolute owners of the donated property, free from
all liens and encumbrances; for it must be remembered that the donor reserved for
himself a share of the fruits of the land donated.xiv[14]
In Gestopa v. Court of Appeals,xv[15] this Court held that the prohibition to alienate
does not necessarily defeat the inter vivos character of the donation. It even highlights
the fact that what remains with the donor is the right of usufruct and not anymore the
naked title of ownership over the property donated. In the case at bar, the provision in
the deed of donation that the donated property will remain in the possession of the
donor just goes to show that the donor has given up his naked title of ownership thereto
and has maintained only the right to use (jus utendi) and possess (jus possidendi) the
subject donated property.
 Thus, we arrive at no other conclusion in that the petitioners cited provisions are
only necessary assurances that during the donors lifetime, the latter would still enjoy
the right of possession over the property; but, his naked title of ownership has been
passed on to the donees; and that upon the donors death, the donees would get all the
rights of ownership over the same including the right to use and possess the same.
Furthermore, it also appeared that the provision in the deed of donation regarding
the prohibition to alienate the subject property is couched in general terms such that
even the donor is deemed included in the said prohibition (Gayon din ang nasabing
Titulo ay hindi mapapasangla o maipagbibili ang lupa habang maybuhay ang nasabing
Basilisa Comerciante). Both the donor and the donees were prohibited from alienating
and encumbering the property during the lifetime of the donor. If the donor intended to
maintain full ownership over the said property until her death, she could have expressly
stated therein a reservation of her right to dispose of the same. The prohibition on the
donor to alienate the said property during her lifetime is proof that naked ownership over
the property has been transferred to the donees. It also supports the irrevocable nature
of the donation considering that the donor has already divested herself of the right to
dispose of the donated property. On the other hand, the prohibition on the donees only
meant that they may not mortgage or dispose the donated property while the donor
enjoys and possesses the property during her lifetime. However, it is clear that the
donees were already the owners of the subject property due to the irrevocable character
of the donation.
The petitioner argues that the subsequent and contemporaneous acts of the donor
would show that her intention was to maintain control over her properties while she was
still living. We disagree. Respondent Domingo Comia testified that sometime in 1977
or prior to the sale of the subject house and lot, his grandmother, the donor in the case
at bar, delivered the title of the said property to him; and that the act of the donor was a
manifestation that she was acknowledging the ownership of the donees over the
property donated.xvi[16] Moreover, Atty. Viniegra testified that when the donor sold the lot
to the petitioner herein, she was not doing so in accordance with the agreement and
intent of the parties in the deed of donation; that she was disregarding the provision in
the deed of donation prohibiting the alienation of the subject property; and that she
knew that the prohibition covers her as well as the donees.xvii[17]
Another indication in the deed of donation that the donation is inter vivos is the
acceptance clause therein of the donees. We have ruled that an acceptance clause is
a mark that the donation is inter vivos. Acceptance is a requirement for donations inter
vivos. On the other hand, donations mortis causa, being in the form of a will, are not
required to be accepted by the donees during the donors lifetime.xviii[18]
We now rule on whether the donor validly revoked the donation when one of her
daughters and donees, Consolacion Austria, violated the prohibition to encumber the
property. When Consolacion Austria mortgaged the subject property to a certain Baby
Santos, the donor, Basilisa Comerciante, asked one of the respondents herein,
Domingo Comia, to redeem the property, which the latter did. After the petitioner in
turn redeemed the property from respondent Domingo, the donor, Basilisa, sold the
property to the petitioner who is one of the donees.
 The act of selling the subject property to the petitioner herein cannot be considered
as a valid act of revocation of the deed of donation for the reason that a formal case to
revoke the donation must be filed pursuant to Article 764 of the Civil Code xix[19] which
speaks of an action that has a prescriptive period of four (4) years from non-compliance
with the condition stated in the deed of donation. The rule that there can be automatic
revocation without benefit of a court action does not apply to the case at bar for the
reason that the subject deed of donation is devoid of any provision providing for
automatic revocation in event of non-compliance with the any of the conditions set forth
therein. Thus, a court action is necessary to be filed within four (4) years from the non-
compliance of the condition violated. As regards the ground of estoppel, the donor,
Basilisa, cannot invoke the violation of the provision on the prohibition to encumber the
subject property as a basis to revoke the donation thereof inasmuch as she
acknowledged the validity of the mortgage executed by the donee, Consolacion Austria,
when the said donor asked respondent Domingo Comia to redeem the same.
Thereafter, the donor, Basilisa likewise asked respondent Florentino Lumubos and the
petitioner herein to redeem the same.xx[20] Those acts implied that the donees have the
right of control and naked title of ownership over the property considering that the
donor, Basilisa condoned and acknowledged the validity of the mortgage executed by
one of the donees, Consolacion Austria.
Anent the second issue, the petitioner asserts that the action, against the petitioner,
for annulment of TCT No. T-10434 and other relevant documents, for reconveyance and
damages, filed by the respondents on September 21, 1983 on the ground of fraud
and/or implied trust has already prescribed. The sale happened on February 6, 1979
and its registration was made on February 8, 1979 when TCT No. RT-4036 in the name
of the donor was cancelled and in lieu thereof TCT No. T-10434 in the name of the
petitioner was issued. Thus, more than four (4) years have passed since the sale of the
subject real estate property was registered and the said new title thereto was issued to
the petitioner. The petitioner contends that an action for reconveyance of property on
the ground of alleged fraud must be filed within four (4) years from the discovery of
fraud which is from the date of registration of the deed of sale on February 8, 1979; and
that the same prescriptive period also applies to a suit predicated on a trust relationship
that is rooted on fraud of breach of trust.
When ones property is registered in anothers name without the formers consent,
an implied trust is created by law in favor of the true owner. Article 1144 of the New Civil
Code provides:
Art. 1144. The following actions must be brought within ten years from the time the
right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment. (n)
Thus, an action for reconveyance of the title to the rightful owner prescribes in ten (10)
years from the issuance of the title.xxi[21] It is only when fraud has been committed that the
action will be barred after four (4) years.xxii[22]
 However, the four-year prescriptive period is not applicable to the case at bar for the
reason that there is no fraud in this case. The findings of fact of the appellate court
which are entitled to great respect, are devoid of any finding of fraud. The records do
not show that the donor, Basilisa, and the petitioner ever intended to defraud the
respondents herein with respect to the sale and ownership of the said property. On the
other hand, the sale was grounded upon their honest but erroneous interpretation of the
deed of donation that it is mortis causa, not inter vivos; and that the donor still had the
rights to sell or dispose of the donated property and to revoke the donation.
There being no fraud in the trust relationship between the donor and the donees
including the herein petitioner, the action for reconveyance prescribes in ten (10) years.
Considering that TCT No. T-10434 in the name of the petitioner and covering the
subject property was issued only on February 8, 1979, the filing of the complaint in the
case at bar in 1983 was well within the ten-year prescriptive period.
The Court of Appeals, therefore, committed no reversible error in its appealed
Decision.
WHEREFORE, the appealed Decision dated June 30, 1989 of the Court of Appeals
is hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

Supreme Court E-Library

i[1]
Penned by Associate Justice Santiago M. Kapunan (now Associate Justice of the Supreme Court) and
concurred in by Associate Justices Ricardo J. Francisco and Minerva Gonzaga-Reyes (former
Associate Justices of the Supreme Court); Rollo, pp. 17-24.
ii[2]
Third Division.
iii[3]
Penned by Judge Rolando D. Diaz; Records, pp. 107-114.
iv[4]
Trial Court Records, p. 56.
v[5]
Records, p. 57.
vi[6]
Records, p. 114.
vii[7]
Rollo, p. 24.
viii[8]
Rollo, pp. 21-22.
ix[9]
Rollo, pp. 6-7.
x[10]
Gestopa v. Court of Appeals, 342 SCRA 105, 110 (2000) citing Reyes v. Mosqueda, 187 SCRA 661,
671 (1990).
xi[11]
95 Phil 481, 487 (1954).
xii[12]
98 Phil 68, 70-71 (1955).
xiii[13]
Supra, Note 11, pp. 487-488.
xiv[14]
Id., p. 488.
xv[15]
Supra, Note 10, p. 111.
xvi[16]
TSN dated April 10, 1986, pp. 16-17.
xvii[17]
Atty Viniegra testified: She said, it was her right to disregard that prohibition but I reminded her that
there was a sort of prohibition in that Kasulatan to the effect that nobody could dispose that but
she insisted that it was her prerogative to dispose that the way she wanted to specially at the time
she needs money xxx ; TSN dated March 1, 1985, p. 98.
xviii[18]
Alejandro v. Geraldez, 78 SCRA 245, 261 (1977).
xix[19]
Art. 764. The donation shall be revoked at the instance of the donor, when the donee fails to comply
with any of the conditions which the former imposed upon the latter.
In this case, the property donated shall be returned to the donor, the alienation made by the donee and
the mortgages imposed thereon by him being void, with the limitations established, with regard to
third persons, by the Mortgage Law and the Land Registration laws.
This action shall prescribe after four years from the noncompliance with the condition, may be transmitted
to the heirs of the donor, and may be exercised against the donees heirs.(647a)
xx[20]
TSN dated January 23, 1986, pp. 27-32.
xxi[21]
A. TOLENTINO,COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE
PHILIPPINES, VOL.4. Art. 1144 of the Civil Code (1991) citing Caete v. Benedicto 158 SCRA
575 (1989); Heirs of Bartolome Infante v. Court of Appeals 162 SCRA 431 (1988).
xxii[22]
Id. citing Damanon v. Butuan City Rural Bank, 119 SCRA 193 (1982); Marcopper Mining Corporation
v. Garcia, 143 SCRA 178 (1986); Beaterio del Santisimo Rosario de Molo v. Court of Appeals,
137 SCRA 459 (1985); Cimafranca v. Intermediate Appellate Court, 147 SCRA 611 (1987).
 [Syllabus]

THIRD DIVISION

[G.R. No. 105944. February 9, 1996]

SPOUSES ROMULO AND SALLY EDUARTE, petitioners, vs. THE

HONORABLE COURT OF APPEALS and PEDRO CALAPINE
(substituted by ALEXANDER CALAPINE and ARTEMIS
CALAPINE, respondents.

DECISION
FRANCISCO, J.:

A donation is an act of liberality whereby a person disposes gratuitously of a thing

or right in favor of another, who accepts it.xxii[1] On the part of the donor, it is an exercise
of ones generosity. However, on several occasions, instead of being accorded
recognition and appreciation for this act of beneficence, the donor ends up as a victim of
greed and ingratitude. This was the fate that befell Pedro Calapine (herein original
plaintiff) constraining him to cause the revocation of the donation that he made to his
niece in 1984. The instant petition for certiorari is interposed by the spouses Romulo
and Sally Eduarte, assailing the decision of the Court of Appeals in CA-G.R. CV No.
29175 which affirmed the revocation of the donation made by Pedro Calapine to his
niece, Helen Doria, and at the same time declared petitioners as purchasers in bad faith
of the property donated.
As set out in the appealed decision, the undisputed facts are as follows:
Pedro Calapine was the registered owner of a parcel of land located in San
Cristobal, San Pablo City, with an area of 12,199 square meters, as evidenced by
Original Certificate of Title No. P-2129 (Exhibits A and 1). On April 26, 1984, he
executed a deed entitled Pagbibigay-Pala (Donacion Inter-Vivos) ceding one-half
portion thereof to his niece Helen S. Doria (Exhibit B).
On July 26, 1984, another deed identically entitled was purportedly executed by
Pedro Calapine ceding unto Helen S. Doria the whole of the parcel of land covered by
OCT No. P-2129 (Exhibits C and D), on the basis of which said original certificate was
cancelled and in lieu thereof Transfer Certificate of Title No. T-23205 was issued in her
name (Exhibits G and 2).
On February 26, 1986, Helen S. Doria donated a portion of 157 square meters of
the parcel of land covered by TCT No. T-23205 to the Calauan Christian Reformed
Church, Inc. (Exhibit H), on the basis of which said transfer certificate of title was
cancelled and TCT No. T-24444 was issued in its name covering 157 square meters
(Exhibit 2-A) and TCT No. T-24445, in the name of Helen S. Doria covering the
remaining portion of 12,042 square meters (Exhibit 3).
On March 25, 1988, Helen S. Doria sold, transferred and conveyed unto the
spouses Romulo and Sally Eduarte the parcel of land covered by TCT No. T-24445,
save the portion of 700 square meters on which the vendors house had been erected
(Exhibits I and 3-F), on the basis of which TCT No. 24445 was cancelled and in lieu
thereof TCT No. T-27434, issued in the name of the vendees (Exhibit 4).
Claiming that his signature to the deed of donation (Exhibits C and D) was a
forgery and that, she was unworthy of his liberality, Pedro Calapine brought suit
against Helen S. Doria, the Calauan Christian Reformed Church, Inc. and the spouses
Romulo and Sally Eduarte to revoke the donation made in favor of Helen S. Doria
(Exhibit B), to declare null and void the deeds of donation and sale that she had
executed in favor of the Calauan Christian Reformed Church, Inc. and the spouses
Romulo and Sally Eduarte (Exhibits H, I and 3-F) and to cancel TCT Nos. T-24444,
24445 and T-27434.
Answering the complaint, the defendants spouses denied knowledge of the first
deed of donation and alleged that after a part of the property was donated to the
defendant Calauan Christian Reformed Church, Inc., the remaining portion thereof was
sold to them by the defendant Helen S. Doria; and that the plaintiffs purported
signature in the second deed of donation was his own, hence genuine. They prayed
that the complaint against them be dismissed; that upon their counterclaim, the plaintiff
be ordered to pay them moral and exemplary damages and attorneys fees; and that
upon their cross-claim the defendant Helen S. Doria be ordered to reimburse them the
purchase price of P110,000 and to pay them moral and exemplary damages and
attorneys fees (pp. 23-31, rec.).
The defendant Calauan Christian Reformed Church, Inc. manifested in its answer
the willingness to reconvey to the plaintiff that part of the property donated to it by
Helen S. Doria (pp. 36-38, rec.). And having executed the corresponding deed of
reconveyance, the case as against it was dismissed(pp. 81-83; 84, rec.).
The defendants Helen S. Doria and the City Assessor and the Registrar of Deeds
of San Pablo City did not file answers to the plaintiffs complaint.
After the plaintiffs death on August 27, 1989, on motion, he was substituted by his
nephews Alexander and Artemis Calapine upon order of the Court (pp. 147-152; 250,
rec.).
After trial, the Regional Trial Court, Fourth Judicial Region, Branch 30, San Pablo
City rendered judgment, the dispositive part of which provides:
WHEREFORE, premises considered, judgment is hereby rendered by the
Court in the instant case in favor of plaintiff and against defendant Eduartes to
wit:
1. DECLARING as it is hereby declared, the revocation of the Deed
of Donation dated April 26,1984;
2. ANNULLING, voiding, setting aside and declaring of no force
and effect the Deed of Donation dated July 26, 1984, the deed of absolute
sale executed on March 25, 1988 by and between spouses Eduartes and
 Helen Doria, and the Transfer Certificate of Title No-T-27434 issued under the
name of spouses Romulo and Sally Eduarte;
3. ORDERING the office of the Register of Deeds, San Pablo City,
to cancel TCT No. T-27434 or any other adverse title emanating from OCT
No. P-2129 and in lieu thereof, to issue a new transfer certificate of title
covering the subject property under the names of the substitute-plaintiffs
Alexander and Artemis both surnamed Calapine, after payment of the
corresponding fees and taxes therefor; and
4. ORDERING defendant Helen Doria to pay substitute-plaintiffs
the sum of P20,000.00 as and for attorneys fees.
Judgment on the cross-claim of defendant Eduartes against Helen Doria
is further rendered by ordering the latter to pay the former the sum of
P110,000.00 with legal interest thereon starting from March 25, 1988 until full
payment, and the further sum of P20,000.00 as and for attorneys fees.
The counterclaim of defendant Eduartes against plaintiff is hereby
dismissed for lack of merit.
Costs against defendant Helen Doria in both the complaint and the cross-
claim (pp. 11-12, decision, pp. 264-265, rec.).
Only the defendants Eduarte spouses took an appeal (p. 266, rec.),
claiming that the trial court erred -
1. In annulling, voiding, setting aside, and declaring of no force and effect -
(a) the deed of donation (Exhibits C and 1-A), dated July 26,1984;
(b) the deed of absolute sale (Exhibits 1 and 3-E) executed on March 25, 1988
by and between Spouses Eduartes and Helen Doria;
(c) TCT No. T-27434 (Exhibit 4) issued in the name of spouses Romulo Eduarte
and Sally Eduarte; and
in revoking the deed of donation (Exhibit B) dated April 26,1984;
2. In declaring the appellants Eduartes buyers in bad faith;
3. In not finding the plaintiffs guilty of estoppel by silence and/or guilty of suppression
of evidence instead of finding the appellants Eduartes guilty of suppression of
evidence; and
4. In finding that the signature of Pedro Calapine in the deed of donation (Exhibits C
and 1-A) dated July 26,1984 a forgery based on the opposite findings of the
handwriting experts presented by each party and in the absence of the testimony of
Pedro Calapine who was then still alive (pp. 1-2, appellants brief.)xxii[2]
In its decision dated April 22, 1992,xxii[3] respondent Court of Appeals dismissed
petitioners appeal and affirmed the decision of the trial court. Respondent court was in
complete accord with the trial court in giving more credence to the testimony of private
respondents expert witness, NBJ document examiner Bienvenido Albacea, who found
Pedro Calapines signature in the second deed of donation to be a forgery. It also ruled
that by falsifying Pedro Calapines signature, Helen Doria committed an act of
ingratitude which is a valid ground for revocation of the donation made in her favor in
accordance with Article 765 of the Civil Code. Furthermore, respondent court upheld the
trial courts finding that petitioners are not buyers in good faith of the donated property
as they failed to exercise due diligence in verifying the true ownership of the property
despite the existence of circumstances that should have aroused their suspicions.
Petitioners are now before us taking exception to the foregoing findings of
respondent Court of Appeals and contending that the same are not in accord with the
law and evidence on record.
Anent the revocation of the first deed of donation, petitioners submit that paragraph
(1) of Article 765 of the Civil Code does not apply in this case because the acts of
ingratitude referred to thereih pertain to offenses committed by the donee against the
person or property of the donor. Petitioners argue that as the offense imputed to herein
donee Helen Doria - falsification of a public document - is neither a crime against the
person nor property of the donor but is a crime against public interest under the Revised
Penal Code, the same is not a ground for revocation.
In support of this contention, petitioners cite the following portions found in
Tolentinos Commentaries and Jurisprudence on the Civil Code:
Offense against Donor - x x x. The crimes against the person of the donor would
include not only homicide and physical injuries, but also illegal detention, threats and
coercion; and those against honor include offenses against chastity and those against
the property, include robbery, theft, usurpation, swindling, arson, damages, etc. (5
Manresa 175-176).xxii[4]
This assertion, however, deserves scant consideration. The full text of the very
same commentary cited by petitioners belies their claim that falsification of the deed of
donation is not an act of ingratitude, to wit:
Offense Against Donor. All crimes which offend the donor show ingratitude and
are causes for revocation. There is no doubt, therefore, that the donee who commits
adultery with the wife of the donor, gives cause for revocation by reason of ingratitude.
The crimes against the person of the donor would include not only homicide and
physical injuries, but also illegal detention, threats, and coercion; those against honor
include offenses against chastity; and those against the property, include robbery,
theft, usurpation, swindling, arson, damages, etc. [Manresa 175-176].xxii[5] (Italics
supplied).
Obviously, the first sentence was deleted by petitioners because it totally
controverts their contention. As noted in the aforecited opinion all crimes which offend
the donor show ingratitude and are causes for revocation. Petitioners attempt to
categorize the offenses according to their classification under the Revised Penal Code
is therefore unwarranted considering that illegal detention, threats and coercion are
considered as crimes against the person of the donor despite the fact that they are
classified as crimes against personal liberty and security under the Revised Penal
Code.xxii[6]
Petitioners also impute grave error to respondent Court of Appeals in finding that
the second deed of donation dated July 26, 1984 was falsified. Petitioners deplore the
fact that more credence was given to the testimony of the NBI handwriting expert who
found Pedro Calapines signature in the second deed of donation to be a forgery despite
the existence of controverting testimony by PC-INP Crime Laboratory (PCCL) Chief
Document Examiner which petitioners adduced as evidence on their part.
We are not persuaded. Respondent Court of Appeals and the trial court cannot be
faulted for giving more weight and credence to the testimony of the NBI handwriting
expert considering that the examination of the said witness proved to be complete,
thorough and scientific.
In gauging the relative weight to be given to the opinion of handwriting experts, we
adhere to the following standards:
We have held that the value of the opinion of a handwriting expert depends not
upon his mere statements of whether a writing is genuine or false, but upon the
assistance he may afford in pointing out distinguishing marks, characteristics and
discrepancies in and between genuine and false specimens of writing which would
ordinarily escape notice or detection from an unpracticed observer. The test of
genuineness ought to be the resemblance, not the formation of letters in some other
specimens but to the general character of writing, which is impressed on it as the
involuntary and unconscious result of constitution, habit or other permanent course,
and is, therefore itself permanent.xxii[7]
Confronted with contradicting testimonies from two handwriting experts, the trial
court and respondent Court of Appeals were convinced by the opinion of the NB!
handwriting expert as it was more exhaustive, in contrast with the testimony of
petitioners witness from the PCCL which was discarded on account of the following
flaws:
The Court is not convinced with Cruzs explanations. Apart from the visual
inconsistencies, i.e., the strokes with which some letters were made, the variety in the
sizes of the letters, the depth, the difference in the slant which the Court itself observed
in its own examination of both the questioned signatures and those standard specimen
signatures, there is evidence showing that Cruz did not make a thorough examination
of all the signatures involved in this particular issue. Thus even in the report submitted
by the PCCL it was admitted that they omitted or overlooked the examination of at least
three (3) standard specimen signatures of Pedro Calapine which were previously
subject of the NBI examination marked as Exhibits S-9, S-10 and S-il. When
questioned regarding this oversight, Cruz testified that in his opinion, the inclusion or
non-inclusion of said exhibits in their examination will not affect the same and they
would have arrived at the same conclusion anyway. Again, when asked why they did
not bother to have the original copies of the documents being questioned (Exhs. Q-1
through Q-3) for their examination, Cruz replied that they are using a special film so it
will not matter whether the documents being examined are the original or a mere
photocopy (TSN 8, 10, 12 and 26, Hearing of Nov. 23, 1989).
The Court will not attempt to make its own conclusion or resolution on such a
technical issue as the matter at hand in the light of the cavalier attitude of Cruz. In fine,
between the examinations made by the two witnesses, that of Albaceas proved to be
complete, thorough and scientific and is worthy of credence and belief.xxii[8]
 The afore-quoted findings confirm beyond doubt the failure of petitioners expert
witness to satisfy the above-mentioned criteria for evaluating the opinion of handwriting
experts. At the same time, petitioners witness failed to rebut the convincing testimony
of the NB! handwriting expert presented by private respondents. We therefore find no
reason to deviate from the assailed conclusions as the same are amply supported by
the evidence on record.
Finally, proceeding to the crucial issue that directly affects herein petitioners, it is
reiterated that petitioners are buyers in good faith of the donated property, and
therefore, it was grave error to annul and set aside the deed of sale executed between
petitioners and donee Helen Doria.
In adjudging petitioners as buyers in bad faith, respondent Court of Appeals
affirmed the trial courts finding that the attendant circumstances, that is, the presence
of other occupants as well as houses built of strong materials and fruit bearing trees in
the subject land, should have aroused the suspicion of petitioners and impelled them to
exercise due diligence in verifying the true ownership of the property being sold.
Petitioners dispute the tower courts conclusion and argue that although there were
other occupants in the subject property, no adverse claim was made by the latter as
they were mere tenants therein, thus, petitioners were not obliged to make any further
inquiry because the property being sold was covered by a certificate of title under Helen
Dorias name.
We agree with petitioners. The rule is well-settled that mere possession cannot
defeat the title of a holder of a registered torrens title to real property. xxii[9] Moreover,
reliance on the doctrine that a forged deed can legally be the root of a valid title is
squarely in point in this case:
Although generally a forged or fraudulent deed is a nullity and conveys no title,
however there are instances when such a fraudulent document may become the root
of a valid title. One such instance is where the certificate of title was already transferred
from the name of the true owner to the forger, and while it remained that way, the land
was subsequently sold to an innocent purchaser. For then, the vendee had the right to
rely upon what appeared in the certificate.
Where there was nothing in the certificate of title to indicate any cloud or vice in
the ownership of the property, or any encumbrance thereon, the purchaser is not
required to explore further than what the Torrens Title upon its face indicates in quest
for any hidden defect or inchoate right that may subsequently defeat his right thereto. If
the rule were otherwise, the efficacy and conclusiveness of the certificate of title which
the Torrens System seeks to insure would entirely be futile and nugatory.xxii[10]
When herein petitioners purchased the subject property from Helen Doria, the same
was already covered by TCT No. T-23205 under the latters name. And although Helen
Dorias title was fraudulently secured, such fact cannot prejudice the rights of herein
petitioners absent any showing that they had any knowledge or participation in such
irregularity. Thus, they cannot be obliged to look beyond the certificate of title which
appeared to be valid on its face and sans any annotation or notice of private
respondents adverse claim. Contrary therefore to the conclusion of respondent Court,
petitioners are purchasers in good faith and for value as they bought the disputed
property without notice that some other person has a right or interest in such property,
and paid a full price for the same at the time of the purchase or before they had notice
of the claim or interest of some other person in the property.xxii[11]
Respondent Court therefore committed a reversible error when it affirmed the ruling
of the trial court annulling and setting aside the deed of absolute sale dated March 25,
1988 between petitioners and Helen
Doria, as well as the Transfer Certificate of Title No. T-27434 issued under
petitioners name, the established rule being that the rights of an innocent purchaser for
value must be respected and protected notwithstanding the fraud employed by the
seller in securing his title.xxii[12]
!n this regard, it has been held that the proper recourse of the true owner of the
property who was prejudiced and fraudulently dispossessed of the same is to bring an
action for damages against those who caused or employed the fraud, and if the latter
are insolvent, an action against the Treasurer of the Philippines may be filed for
recovery of damages against the Assurance Fund.xxii[13]
Conformably with the foregoing, having established beyond doubt that Helen Doria
fraudulently secured her title over the disputed property which she subsequently sold to
petitioners, Helen Doria should instead be adjudged liable to private respondents, and
not to petitioners as declared by the trial court and respondent Court of Appeals, for the
resulting damages to the true owner and original plaintiff, Pedro Calapine.
ACCORDINGLY, the petition is GRANTED and the appealed decision is hereby
MODIF!ED. The portions of the decision of the Regional Trial Court of San Pablo City,
Branch 30, as affirmed by the Court of Appeals in CA-G.R. CV No. 29175 which
ordered the following:
xxx xxx xxx;
2. ANNULLING, voiding, setting aside and declaring of no force and effect x x x ,
the deed of absolute sale executed on March 25, 1988 by and between spouses
Eduartes and Helen Doria, and the Transfer Certificate of Title No. T-27434 issued
under the name of spouses Romulo and Sally Eduarte;
3. ORDERING the office of the Register of Deeds, San Pablo City, to cancel TCT
No. T-27434 or any other adverse title emanating from OCT No. P-2129 and in lieu
thereof, to issue a new transfer certificate of title covering the subject property under
the names of the substitute-plaintiffs Alexander and Artemi s both surnamed Calapine,
after payment of the corresponding fees and taxes therefor: and
4 xxx . xxx xxx
Judgnient on the cross-claim of defendant Eduartes against Helen Doria is further
rendered by ordering the latter to pay the former the sum of P110,000.00 with legal
interest thereon starting from March 25, 1988 until full payment, x x x.
are hereby REVERSED and SET ASIDE.
Instead, Helen Doria is hereby ordered to pay herein private respondents the sum
of P110,000.00 with legal interest counted from March 25, 1988 until full payment, as
damages for the resulting loss to original plaintiff Pedro Calapine.
In all other respects, the appealed decision is hereby affirmed.
SO ORDERED.
Narvasa, C.]. (Chairman), Davide, Jr., Melo, and Pankaniban, JJ., concur.

Supreme Court E-Library

 THIRD DIVISION

[G.R. No. 119730. September 2, 1999]

RODOLFO NOCEDA, petitioner, vs. COURT OF APPEALS and AURORA

ARBIZO DIRECTO, respondents.

DECISION
GONZAGA-REYES, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to reverse
the decision dated March 31, 1995 of the respondent Court of Appealsxxii[1] in CA GR CV No.
38126, affirming with modification the decision of the Regional Trial Court, Branch 71, of Iba,
Zambales,xxii[2] in an action by private respondent against petitioner for recovery of possession
and ownership and rescission/annulment of donation.
The facts of the case as summarized by the respondent Court are as follows:xxii[3]
On June 1, 1981, plaintiff Aurora Directo, defendant Rodolfo Noceda, and Maria Arbizo, the
daughter, grandson, and widow, respectively, of the late Celestino Arbizo, who died in 1956,
extrajudicially settled a parcel of land, Lot 1121, located at Bitaog, San Isidro, Cabangan, Zambales,
which was said to have an area of 66,530 square meters. Plaintiff Directos share was 11,426 square
meters, defendant Noceda got 13,294 square meters, and the remaining 41,810 square meters went to
Maria Arbizo (Exhibit G). On the same date, plaintiff Directo donated 625 square meters of her share to
defendant Noceda, who is her nephew being the son of her deceased sister, Carolina (Exhibit D).
However, on August 17, 1981, another extrajudicial settlement-partition of Lot 1121 was executed by
plaintiff Directo, defendant Noceda, and Maria Arbizo. Three fifths of the said land went to Maria Arbizo
while plaintiff Directo and defendant Noceda got only one-fifth each. In said extrajudicial settlement-
partition as well as in the Tax Declaration 16-0032 over Lot 1121 in the name of the late Celestino
Arbizo, the said parcel of land was said to have an area of only 29,845 square meters (Exhibit C).
Sometime in 1981, defendant Noceda constructed his house on the land donated to him by plaintiff
Directo. Plaintiff Directo fenced the portion allotted to her in the extrajudicial settlement, excluding the
donated portion, and constructed thereon three huts. But in 1985, defendant Noceda removed the fence
earlier constructed by plaintiff Directo, occupied the three huts (3) and fenced the entire land of plaintiff
Directo without her consent. Plaintiff Directo demanded from defendant Noceda to vacate her land, but
the latter refused. Hence, plaintiff Directo filed the present suit, a complaint for the recovery of
possession and ownership and rescission/annulment of donation, against defendant Noceda before the
lower court. During the trial, the lower court ordered that a relocation survey of Lot 1121 be conducted
by Engr. Edilberto Quejada of the Bureau of Lands. After the survey of Lot 1121 in the presence of both
parties, Engr. Edilberto Quejada reported that the area of Lot 1121 stated in the extrajudicial settlement-
partition of August 17, 1981 was smaller than the actual area of Lot 1121 which is 127,298 square meters.
Engr. Quejada subdivided Lot 1121, excluding the portions occupied by third persons, known as Lot 8,
the salvage zone and the road lot, on the basis of the actual occupancy of Lot 1121 by the heirs of the late
Celestino Arbizo and the extrajudicial settlement-partition of August 17, 1981. The portion denominated
as Lot A, with an area of 12,957 square meters was the share of defendant Noceda; Lot C, with the same
area as that of Lot A, was the share of plaintiff Directo, a portion of which was donated to defendant
Noceda; and Lot B, with an area of 38,872 square meters, went to Maria Arbizo (Exhibit E).
On November 6, 1991, the Regional Trial Court, Branch 71, of Iba, Zambales rendered a
decision, the dispositive portion of which reads as follows:xxii[4]
WHEREFORE, in view of the foregoing considerations, the Court hereby renders judgment:
(a) Declaring the Extra-Judicial Settlement-Partition dated August 19, 1981, valid;
(b) Declaring the Deed of Donation dated June 1, 1981, revoked;
(c) Ordering the defendant to vacate and reconvey that donated portion of Lot 2, Lot 1121
subject of the Deed of Donation dated June 1, 1981 to the plaintiff or her heirs or assigns;
(d) Ordering the defendant to remove the house built inside the donated portion at the
defendants expense or pay a monthly rental of P300.00 Philippine Currency;
(e) Ordering the defendant to pay attorneys fees in the amount of P5,000.00; and
(f) To pay the cost.
Rodolfo Nocedo appealed to the respondent Court which affirmed the trial court as
follows:xxii[5]
WHEREFORE, judgment is hereby rendered, ORDERING defendant Rodolfo Noceda to VACATE
the portion known as Lot C of Lot 1121 per Exhibit E, which was allotted to plaintiff Aurora Arbizo
Directo. Except for this modification, the Decision, dated November 6, 1991, of the RTC-Iba, Zambales,
Branch 71, in Civil Case No. RTC-354-I, is hereby AFFIRMED in all other respects. Costs against
defendant Rodolfo Noceda.
Dissatisfied, petitioner filed the instant petition for review with the following assignment of
errors:xxii[6]
THE COURT OF APPEALS ERRED IN HOLDING THAT THE SUBJECT PROPERTY IDENTIFIED
AS LOT 1121 CONTAINS AN AREA IN EXCESS OF THAT STATED IN ITS TAX DECLARATION.
THE COURT OF APPEALS ERRED IN HOLDING THAT LOT 1121 SHOULD BE PARTITIONED
IN ACCORDANCE WITH THE EXTRA-JUDICIAL SETTLEMENT DATED 17 AUGUST 1981.
THE COURT OF APPEALS ERRED IN ADJUDICATING AND ALLOTING LOT C AS
APPEARING IN THE SURVEY PLAN PREPARED BY GEODETIC ENGINEER EDILBERTO
QUEJADA TO THE RESPONDENT.
THE COURT OF APPEALS ERRED IN FINDING THAT THE PETITIONER USURPED AN AREA
ADJUDICATED TO THE RESPONDENT.
THE COURT OF APPEALS ERRED IN REVOKING THE DEED OF DONATION DATED 1 JUNE
1981.
The first issue raised refers to the actual area of the subject lot known as Lot 1121, which
was registered under Tax Declaration No. 16-0032 under the name of the late Celestino Arbizo.
Petitioner claims that Tax Declaration No. 16-0032 contains only an area of 29,845 sq. meter;
thus the respondent Court exceeded its judicial authority when it sustained the lower courts
findings that the subject property actually contains an area of 127,289 square meters.
 We find the argument unmeritorious. The records disclose that the trial court in an Order
dated June 8, 1987 gave both parties to this case the chance to have the subject property re-
surveyed by a licensed surveyor to determine the actual area of Lot 1121.xxii[7] Plaintiff Aurora
Directo filed a motion/compliance where she suggested that Geodetic Engineer Edilberto V.
Quejada of the Bureau of Lands, Iba, Zambales be commissioned to undertake the surveyxxii[8]
said motion was also sent to defendants counsel, Atty. Eufracio Pagunuran for Comment, xxii[9]
but Atty. Pagunuran however failed to file his Comment within the given period. Thus the trial
court designated Engineer Quejada to undertake the survey of Lot 1121.xxii[10] Petitioner Noceda
through counsel belatedly filed his Comment without any opposition to the appointment of
Engineer Quejada but proposed that the latter be tasked to solely (a) re-survey, determine and
identify the metes and bounds of the lot covered by Tax Declaration No. 16-0032; (b) to identify
the areas occupied by the parties therein; and (c) to conduct the re-survey with notice and in the
presence of the parties therein and their respective counsels. xxii[11] The Comment was not,
however, acted upon by the trial court in view of its earlier Order directing Engineer Quejada to
undertake the survey of the land.xxii[12] Engr. Quejada conducted the survey with the conformity
and in the presence of both parties, taking into consideration the extrajudicial partition dated
August 17, 1981, deed of donation dated June 1, 1981 executed by plaintiff Aurora Directo in
favor of defendant Rodolfo Noceda and the actual area occupied by the parties,xxii[13] as well as
the sketch planxxii[14] and the technical description of Lot 1121 taken from the Records Section of
the Bureau of Lands, Manila.xxii[15] The report and the survey plan submitted by Engr. Quejada
were approved by the Trial Court in an Order dated December 7, 1987. xxii[16] These circumstances
show that the lower court ordered the re-survey of the lot to determine the actual area of Lot
1121 and such survey was done with the conformity and in the presence of both parties. The
actual land area based on the survey plan which was conducted in the presence of both parties,
showed a much bigger area than the area declared in the tax declaration but such differences are
not uncommon as early tax declarations are, more often than not, based on approximation or
estimation rather than on computation.xxii[17] We hold that the respondent court did not err in
sustaining the trial courts findings that the actual area of Lot 1121 is 127,289 square meters.
Petitioner also contends that said judicial determination improperly encroaches on the rights
and claims of third persons who were never impleaded below; that the subject lot was also
declared in the name of one Cecilia Obispo and a Free Patent over the said lot was also issued in
her name and that there are several residential houses constructed and existing on Lot 8 of lot
1121, thus these possessors/occupants of Lot 8 should be joined as defendants for their non-
inclusion would be fatal to respondents cause of action.
We find no merit in this argument. The respondent Court correctly ratiocinated on this issue
as follows:xxii[18]
The fact that Cecilia Obispo has tax declarations in her name over Lot 1121 and several persons
occupied a portion thereof did not make them indispensable parties in the present case. Defendant
Noceda merely presented the tax declarations in the name of Cecilia Obispo without the alleged free
patent in her name. Moreover, no evidence was presented showing that Cecilia Obispo possessed or
claimed possession of Lot 1121. Tax receipts and declarations of ownership for tax purposes are not
conclusive evidence of ownership of property (Republic vs. Intermediate Appellate Court, 224 SCRA
285).
It was not necessary that the occupants of a portion of Lot 1121, designated as Lot 8, be impleaded in
the present case. Lot 8, though part of Lot 1121, was excluded by Engr. Quejada in determining the
respective portions of Lot 1121 occupied by plaintiff Directo, defendant Noceda and Maria Arbizo
pursuant to the extrajudicial settlement which they executed on August 17, 1981. The result of the
present suit shall not in any way affect the occupants of Lot 8, since the issues involved in the present
case are the usurpation by defendant Noceda of the land adjudicated to plaintiff Directo and the propriety
of the cancellation of the deed of donation in favor of defendant Noceda due to his ingratitude to plaintiff
Directo.
Notably, defendants counsel requested for the appearance of Cecilia Obispo and despite
notice to her to appear in court and bring with her the alleged free patent in her name, xxii[19] she
failed to appear and even failed to intervene to protect whatever interest and right she has over
the subject lot. As to the other possessors of residential houses in Lot 8 of Lot 1121, they are not
considered as indispensable parties to this case. A party is not indispensable to the suit if his
interest in the controversy or subject matter is distinct and divisible from the interest of the other
parties and will not necessarily be prejudiced by a judgment which does complete justice to the
parties in court.xxii[20] Private respondent is not claiming the entire area of Lot 1121 but only a
portion thereof which was adjudicated to her based on the August 17, 1981 extrajudicial
settlement and which was denominated in the survey plan as Lot C of Lot 1121; thus there was
no need to implead the occupants of Lot 8.
Petitioner further claims that the subject property could not be partitioned based on the
extrajudicial settlement-partition dated August 17, 1981, since the distributive share of the heirs
of the late Celestino Arbizo and the area of Lot 1121 stated therein were different from the
extrajudicial settlement executed on June 1, 1981; that the discrepancies between the two deeds
of partition with respect to the area of Lot 1121 and the respective share of the parties therein
indicated that they never intended that any of the deeds to be the final determination of the
portions of Lot 1121 allotted to them; that the extrajudicial settlement-partition of August 17,
1981 could not effectively subdivide Lot 1121 because it partitioned only 29,845 square meters,
and not its actual area of 127,298 square meters.
We see no cogent reason to disturb the findings of the respondent Court as follows:xxii[21]
The discrepancies between the extrajudicial settlements executed by plaintiff Directo, defendant
Noceda and Maria Arbizo on June 1, 1981 and August 17, 1981 only meant that the latter was intended to
supersede the former. The signature of defendant Noceda in the extrajudicial settlement of August 17,
1981 would show his conformity to the new apportionment of Lot 1121 among the heirs of the late
Celestino Arbizo. The fact that defendant Noceda occupied the portion allotted to him in the extrajudicial
settlement, as well as the donated portion of the share of plaintiff Directo, presupposes his knowledge of
the extent of boundaries of the portion of Lot 1121 allotted to him. Moreover, the statement in the
extrajudicial settlement of August 17, 1981 with respect to the area of Lot 1121, which was 29,845 square
meters, is not conclusive because it was found out, after the relocation survey was conducted on Lot 1121,
that the parties therein occupied an area larger than what they were supposed to possess per the
extrajudicial settlement- partition of August 17, 1981.
Although in the extrajudicial settlement dated August 17, 1981 the heirs of Celestino Arbizo
partitioned only a 29,845 square meter lot to conform with the area declared under tax
declaration 16-0032 yet the heirs were each actually occupying a bigger portion the total area of
which exceeded 29,845 square meters. This was confirmed by Geodetic Engineer Quejada in his
report submitted to the trial court where he stated among other things:xxii[22]
 7. that upon computation of actual survey, it is informed (sic) that the area dated (sic) as per
extrajudicial settlement-partition in the name of Celestino Arbizo was smaller than the
computed lots of their actual occupancy as per survey on the ground;
8. The Lot A, Lot B, and Lot C as appearing on prepared plan for ready reference was
subdivided, base (sic) on stated sharing as per EXTRA JUDICIAL SETTLEMENT-
PARTITION base (sic) on actual occupancy.
The survey conducted on Lot 1121 was only a confirmation of the actual areas being occupied by
the heirs taking into account the percentage proportion adjudicated to each heir on the basis of
their August 17, 1981 extrajudicial settlement.
Petitioner further alleges that the said partition tries to vest in favor of a third person, Maria
Arbizo, a right over the said property notwithstanding the absence of evidence establishing that
she is an heir of the late Celestino Arbizo since Maria Arbizo was never impleaded as a party in
this case and her interest over Lot 1121 was not established.
Such contention deserves scant consideration. We find no compelling basis to disturb the
finding of the trial court on this factual issue, as follows:xxii[23]
In effect, the defendant denies the allegation of the plaintiff that Maria Arbizo was the third wife of
Celestino Arbizo and Agripina is her half sister with a common father. On this point, the Court believes
the version of the plaintiff. The Court observes that in the Extra-Judicial Settlement-Partition(Exhibit
C), Maria Arbizo is named one of the co-heirs of the defendant, being the widow of his grandfather,
Celestino Arbizo. The names of Anacleto and Agripina do not also appear in the Extra-judicial
Settlement and Partition because according to the plaintiff, they had sold their shares to Maria Arbizo.
And the defendant is one of the signatories to the said Deed of Extra-judicial Settlement-Partition
acknowledged before Notary Public Artemio Maranon. Under the circumstances, the Court is convinced
that the defendant knew that Maria Arbizo was the widow of Celestino Arbizo and he knew of the sale of
the share of Anacleto Arbizo his share, as well as that of Agripina. When the defendant signed the Extra-
Judicial Settlement, he was already an adult since when he testified in 1989, he gave his age as 50 years
old. So that in 1981, he was already 41 years old. If he did not know all of these, the defendant would
have not agreed to the sharing and signed this document and acknowledged it before the Notary Public.
And who could have a better knowledge of the relationship of Agripina and Maria Arbizo to Celestino
Arbizo than the latters daughter? Besides, at the time of the execution of the Extra-Judicial Settlement-
Partition by the plaintiff and defendant, they were still in good terms. There was no reason for the
plaintiff to favor Maria Arbizo and Agripina Arbizo over the defendant. Furthermore, the defendant had
failed to support his allegation that when his grandfather died he had no wife and child.
We likewise find unmeritorious petitioners claim that there exist no factual and legal basis
for the adjudication of Lot C of Lot 1121 to private respondent Aurora Directo. It bears stress
that the relocation survey plan prepared by Geodetic Engineer Quejada was based on the
extrajudicial settlement dated August 17, 1981, and the actual possession by the parties and the
technical description of Lot 1121. It was established by the survey plan that based on the actual
possession of the parties, and the extrajudicial settlement among the heirs the portion
denominated as Lot C of Lot 1121 of the survey plan was being occupied by private respondent
Aurora Directo and it was also shown that it is in Lot C where the 625 square meter area donated
by private respondent Directo to petitioner is located. There is no obstacle to adjudicate Lot C to
private respondent as her rightful share allotted to her in the extrajudicial settlement.
Petitioner argues that he did not usurp the property of respondent Directo since, to date, the
metes and bounds of the parcel of land left by their predecessor in interest, Celestino Arbizo, are
still undetermined since no final determination as to the exact areas properly pertaining to the
parties herein; hence they are still considered as co-owners thereof.
We do not agree.
In this case the source of co-ownership among the heirs was intestate succession. Where
there are two or more heirs, the whole estate of the decedent is, before its partition, owned in
common by such heirs subject to the payment of debts of the deceased. xxii[24] Partition, in general,
is the separation, division and assignment of a thing held in common among those to whom it
may belong.xxii[25] The purpose of partition is to put an end to co-ownership. It seeks a severance
of the individual interest of each co-owner, vesting in each a sole estate in specific property and
giving to each one a right to enjoy his estate without supervision or interference from the
other.xxii[26] And one way of effecting a partition of the decedents estate is by the heirs themselves
extrajudicially. The heirs of the late Celestino Arbizo namely Maria Arbizo, Aurora A. Directo
(private respondent) and Rodolfo Noceda (petitioner) entered into an extrajudicial settlement of
the estate on August 17, 1981 and agreed to adjudicate among themselves the property left by
their predecessor-in-interest in the following manner:
To Rodolfo Noceda goes the northern one-fifth (1/5) portion containing an area of 5,989 sq. meters;
To Maria Arbizo goes the middle three-fifths (3/5) portion;
and To Aurora Arbizo goes the southern one-fifth (1/5) portion.xxii[27]
In the survey plan submitted by Engineer Quejada, the portions indicated by red lines and
numbered alphabetically were based on the percentage proportion in the extrajudicial settlement
and the actual occupancy of each heir which resulted to these divisions as follows:xxii[28]
Lot A; the area is 2,957 sq.m.- goes to Rodolfo A. Noceda (1/5)
Lot B; 38,872 sq.m Maria Arbizo (3/5)
Lot C 12,957 sq.m. Aurora Arbizo (1/5)
Thus, the areas allotted to each heir are now specifically delineated in the survey plan. There is
no co-ownership where portion owned is concretely determined and identifiable, though not
technically described, or that said portions are still embraced in one and the same certificate of
title does not make said portions less determinable or identifiable, or distinguishable, one from
the other, nor that dominion over each portion less exclusive, in their respective owners. xxii[29] A
partition legally made confers upon each heir the exclusive ownership of the property
adjudicated to him.xxii[30]
We also find unmeritorious petitioners argument that since there was no effective and real
partition of the subject lot there exists no basis for the charge of usurpation and hence there is
also no basis for finding ingratitude against him. It was established that petitioner Noceda
occupied not only the portion donated to him by private respondent Aurora Arbizo-Directo but
he also fenced the whole area of Lot C which belongs to private respondent Directo, thus
petitioners act of occupying the portion pertaining to private respondent Directo without the
latters knowledge and consent is an act of usurpation which is an offense against the property of
the donor and considered as an act of ingratitude of a donee against the donor.xxii[31] The law does
not require conviction of the donee; it is enough that the offense be proved in the action for
revocation.xxii[32]
Finally, petitioner contends that granting revocation is proper, the right to enforce the same
had already prescribed since as admitted by private respondent, petitioner usurped her property
in the first week of September 1985 while the complaint for revocation was filed on September
16, 1986, thus more than one (1) year had passed from the alleged usurpation by petitioner of
private respondents share in Lot 1121. We are not persuaded. The respondent Court rejected
such argument in this wise:
Article 769 of the New Civil Code states that: The action granted to the donor by reason of ingratitude
cannot be renounced in advance. This action prescribes within one year to be counted from the time the
donor had knowledge of the fact and it was possible for him to bring the action. As expressly stated, the
donor must file the action to revoke his donation within one year from the time he had knowledge of the
ingratitude of the donee. Also, it must be shown that it was possible for the donor to institute the said
action within the same period. The concurrence of these two requisites must be shown by defendant
Noceda in order to bar the present action. Defendant Noceda failed to do so. He reckoned the one year
prescriptive period from the occurrence of the usurpation of the property of plaintiff Directo in the first
week of September, 1985, and not from the time the latter had the knowledge of the usurpation.
Moreover, defendant Noceda failed to prove that at the time plaintiff Directo acquired knowledge of his
usurpation, it was possible for plaintiff Directo to institute an action for revocation of her donation.
The action to revoke by reason of ingratitude prescribes within one (1) year to be counted
from the time (a) the donor had knowledge of the fact; (b) provided that it was possible for him
to bring the action. It is incumbent upon petitioner to show proof of the concurrence of these
two conditions in order that the one (1) year period for bringing the action be considered to have
already prescribed. No competent proof was adduced by petitioner to prove his allegation. In
Civil Cases, the party having the burden of proof must establish his case by preponderance of
evidence.xxii[33] He who alleges a fact has the burden of proving it and a mere allegation is not
evidence.xxii[34]
Factual findings of the Court of Appeals, supported by substantial evidence on record are
final and conclusive on the parties and carry even more weight when the Court of Appeals
affirms the factual findings of the trial court;xxii[35] for it is not the function of this Court to re-
examine all over again the oral and documentary evidence submitted by the parties unless the
findings of fact of the Court of Appeals are not supported by the evidence on record or the
judgment is based on the misapprehension of facts.xxii[36] The jurisdiction of this court is thus
limited to reviewing errors of law unless there is a showing that the findings complained of are
totally devoid of support in the record or that they are so glaringly erroneous as to constitute
serious abuse of discretion.xxii[37] We find no such showing in this case.
We find that both the trial court and the respondent Court had carefully considered the
questions of fact raised below and the respondent Courts conclusions are based on the evidence
on record. No cogent reason exists for disturbing such findings. xxii[38] We also note that petitioner
in this petition merely rehashed the same issues and arguments raised in the respondent Court in
whose decision we find no reversible error. Clearly, petitioner failed to present any substantial
argument to justify a reversal of the assailed decision.
WHEREFORE, the petition for review is hereby DENIED. Costs against appellant.
 SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

Supreme Court E-Library

 SECOND DIVISION

[G.R. No. 143643. June 27, 2003]

NATIONAL POWER CORPORATION, petitioner, vs. SPS. JOSE C.

CAMPOS, JR. and MA. CLARA LOPEZ-CAMPOS, respondents.

DECISION
CALLEJO, SR., J.:

This is a petition for review of the Decisionxxii[1] dated June 16, 2000 of the Court of
Appeals in CA-G.R. CV No. 54265. The assailed decision affirmed in toto the
Decisionxxii[2] of the Regional Trial Court (RTC) of Quezon City, Branch 98, which ordered
petitioner National Power Corporation to pay, among others, actual, moral and nominal
damages in the total amount of P1,980,000 to respondents Spouses Jose C. Campos,
Jr. and Ma. Clara A. Lopez-Campos.
The petition at bar stemmed from the following antecedents:
On February 2, 1996, the respondents filed with the court a quo an action for sum of
money and damages against the petitioner. In their complaint, the respondents alleged
that they are the owners of a parcel of land situated in Bo. San Agustin, Dasmarias,
Cavite, consisting of 66,819 square meters (subject property) covered by Transfer
Certificate of Title (TCT) No. T-957323. Sometime in the middle of 1970, Dr. Paulo C.
Campos, who was then the President of the Cavite Electric Cooperative and brother of
respondent Jose C. Campos, Jr., verbally requested the respondents to grant the
petitioner a right-of-way over a portion of the subject property. Wooden electrical posts
and transmission lines were to be installed for the electrification of Puerto Azul. The
respondents acceded to this request upon the condition that the said installation would
only be temporary in nature. The petitioner assured the respondents that the
arrangement would be temporary and that the wooden electric posts would be relocated
as soon as permanent posts and transmission lines shall have been installed. Contrary
to the verbal agreement of the parties, however, the petitioner continued to use the
subject property for its wooden electrical posts and transmission lines without
compensating the respondents therefor.xxii[3]
The complaint likewise alleged that some time in 1994, the petitioners agents
trespassed on the subject property and conducted engineering surveys thereon. The
respondents caretaker asked these agents to leave the property. Thereafter, in 1995, a
certain Mr. Raz, who claimed to be the petitioners agent, went to the office of
respondent Jose C. Campos, Jr., then Associate Justice of the Supreme Court, and
requested permission from the latter to enter the subject property and conduct a survey
in connection with the petitioners plan to erect an all-steel transmission line tower on a
24-square meter area inside the subject property. Respondent Jose Campos, Jr.,
refused to grant the permission and expressed his preference to talk to the Chief of the
Calaca Sub-station or the head of the petitioners Quezon City office. The respondents
did not hear from Mr. Raz or any one from the petitioners office since then. Sometime
in July or August of 1995, the petitioners agents again trespassed on the subject
property, presenting to the respondents caretaker a letter of authority purportedly
written by respondent Jose C. Campos, Jr. When the caretaker demanded that the
letter be given to him for verification with respondent Jose C. Campos, Jr. himself, the
petitioners agents refused to do so. Consequently, the caretaker ordered the agents to
leave the subject property.xxii[4]
The complaint further alleged that on December 12, 1995, the petitioner instituted
an expropriation case involving the subject property before the RTC of Imus, Cavite,
Branch 22. The case was docketed as Civil Case No. 1174-95. The petitioner alleged
in its complaint therein that the subject property was selected in a manner compatible
with the greatest public good and the least private injury and that it (petitioner) had tried
to negotiate with the respondents for the acquisition of the right-of-way easement on the
subject property but that the parties failed to reach an amicable settlement. xxii[5]
The respondents maintained that, contrary to the petitioners allegations, there were
other more suitable or appropriate sites for the petitioners all-steel transmission lines
and that the petitioner chose the subject property in a whimsical and capricious manner.
The respondents averred that the proposed right-of-way was not the least injurious to
them as the system design prepared by the petitioner could be further revised to avoid
having to traverse the subject property. The respondents vigorously denied negotiating
with the petitioner in connection with the latters acquisition of a right-of-way on the
subject property.xxii[6]
Finally, the complaint alleged that unaware of the petitioners intention to
expropriate a portion of the subject property, the respondents sold the same to Solar
Resources, Inc. As a consequence, the respondents stand to lose a substantial amount
of money derived from the proceeds of the sale of the subject property should the buyer
(Solar Resources, Inc.) decide to annul the sale because of the contemplated
expropriation of the subject property.xxii[7]
The complaint a quo thus prayed that the petitioner be adjudged liable to pay the
respondents, among others, actual, nominal and moral damages:
WHEREFORE, premises considered, it is respectfully prayed that the Honorable
Court award the plaintiffs:
a. Actual damages for the use of defendants property since middle 1970s,
including legal interest thereon, as may be established during the trial;
b. P1,000,000.00 as nominal damages;
c. P1,000,000.00 as moral damages;
d. Lost business opportunity as may be established during the trial;
e. P250,000.00 as attorneys fees;
 f. Costs of suit.
Plaintiffs pray for other, further and different reliefs as may be just and equitable
under the premises.xxii[8]
Upon receipt of the summons and complaint, the petitioner moved for additional
time to file its responsive pleading. However, instead of filing an answer to the
complaint, the petitioner filed a motion to dismiss on the ground that the action had
prescribed and that there was another action pending between the same parties for the
same cause (litis pendencia). The respondents opposed said motion. On May 2, 1996,
the RTC issued an order denying the petitioners motion to dismiss.
The petitioner then moved for reconsideration of the aforesaid order. The
respondents opposed the same and moved to declare the petitioner in default on the
ground that its motion for reconsideration did not have the required notice of hearing;
hence, it did not toll the running of the reglementary period to file an answer.
On July 15, 1996, the RTC issued an order denying the petitioners motion for
reconsideration. Subsequently, on July 24, 1996, it issued another order granting the
respondents motion and declared the petitioner in default for its failure to file an
answer. The petitioner filed a motion to set aside the order of default but the same was
denied by the RTC.
The petitioner filed a petition for certiorari, prohibition and preliminary injunction with
the Court of Appeals, docketed as CA-G.R. SP No. 41782, assailing the May 2, 1996,
July 15, 1996 and July 24, 1996 Orders issued by the RTC as having been issued with
grave abuse of discretion and to enjoin it from proceeding with the case. On February
13, 1996, the CA dismissed the petition for certiorari, prohibition and preliminary
injunction filed by the petitioner in CA-G.R. SP No. 41782.
In the meantime, the respondents adduced their evidence ex parte in the RTC. As
synthesized by the trial court, the respondents adduced evidence, thus:
From the evidence thus far submitted, it appears that the plaintiffs spouses, both of
whom professional of high standing in society, are the absolute owners of a certain
parcel of land situated in Bo. San Agustin, Dasmarias, Cavite, consisting of 66,819
square meters, more or less, covered and embraced in TCT No. T-95732. Sometime
in the mid-1970, Dr. Paulo C. Campos, brother of Justice Jose Campos, Jr., then
President of the Cavite Electric Cooperative, approached the latter and confided to him
the desire of the National Power Corporation to be allowed to install temporary wooden
electric posts on the portion of his wifes property in order that the high-tension
transmission line coming from Kaliraya passing thru that part of Cavite can be
continued to the direction of Puerto Azul.
Having heard the plea of his brother and the fact that National Power Corporation
was under pressure because at the time that Puerto Azul was being developed there
was no electricity nor was there electrical lines towards that place and acting on the
belief that the installation of wooden electric posts would be temporary in nature,
plaintiffs gave oral permission for the NPC personnel to enter the said parcel of land.
Dr. Paulo C. Campos, assured him that it was just a temporary measure to meet the
emergency need of the Puerto Azul and that the wooden electric posts will be relocated
when a permanent posts and transmission lines shall have been installed. Pursuant to
their understanding, the National Power Corporation installed wooden posts across a
portion of plaintiffs property occupying a total area of about 2,000 square meters more
or less. To date, defendant NPC has been using the plaintiffs property for its wooden
electrical posts and transmission lines; that the latter has estimated that the aggregate
rental (which they peg at the conservative rate of P1.00 per square meter) of the 2,000
square meters for twenty-four (24) years period, would amount to the aggregate sum of
P480,000.00.
From the time National Power Corporation installed those temporary wooden
posts, no notice was ever served upon the plaintiffs of their intention to relocate the
same or to install permanent transmission line on the property. Also, there was no
personal contact between them. However, in late 1994, plaintiffs overseer found a
group of persons of the defendant NPC conducting survey inside the said property, and
were asked to leave the premises upon being discovered that they have no authority to
do so from the owners thereof. Subsequently thereafter, or sometime in 1995, a
person by the name of Mr. Paz, bearing a letter from Calaca Regional Office, went to
see Justice Jose C. Campos, Jr. in his office, informing the latter that he was
authorized by the National Power Corporation to acquire private lands. In the same
breath, Mr. Paz requested his permission to let NPC men enter the subject property
and to conduct a survey in connection with its plan to erect an all steel transmission
line tower on a 24 square meter area inside plaintiffs property, but same was denied.
Justice Campos, however, expressed his preference to talk instead to the Chief of the
Calaca Sub-station or the Head of the NPC, Quezon City office. Since then, nothing
however transpired.
Sometime in July or August 1995, plaintiffs learned that defendants agents again
entered the subject property. This time, they have presented to the caretaker a letter
of authority supposedly from Justice Jose C. Campos, Jr. And, when prodded to see
the letter for verification, defendants agents refused to do so. So, they were ordered
out of the vicinity. Plaintiffs stressed that defendants repeated intrusions into their
property without their expressed knowledge and consent had impugned on their
constitutional right to protection over their property.
Later, on December 12, 1995, plaintiffs received copy of summons and complaint
in Civil Case No. 1174-95 filed by the defendant before the Regional Trial Court, Fourth
Judicial Region, Branch 22, Imus, Cavite for the expropriation of 5,320 square meters
of plaintiffs above-described property to be used as right-of-way for the all-steel
transmission line tower of the Calaca-Dasmarias 230 KV T/L Project. But what had
caused plaintiffs discomfiture is the allegation in said complaint stating that the parcel
of land sought to be expropriated has not been applied to nor expropriated for any
public use and is selected by plaintiff in a manner compatible with the greatest good
and the least private injury and that defendant had negotiated with (plaintiffs) for the
acquisition of the right-of-way easement over the portion of the same for the public
purpose as above-stated at a price prescribed by law, but failed to reach an agreement
with them notwithstanding the repeated negotiations between the parties.
Plaintiffs assert that at no instance was there a negotiation between them and the
NPC or its representative. The alleged talk initiated by Mr. Paz with Justice Campos,
Jr. just ended in the latters remonstrance and in prevailing upon the former of his
preference to discuss the matter with a more responsible officer of the National Power
 Corporation, such as the Chief of the Calaca Sub-Station or the Head of NPCs Office
in Quezon City. But plaintiffs plea just fell on the deaf ear. The next thing they know
was Civil Case No. Q-1174-95 already filed in court. A party to a case shall not do
falsehood nor shall mislead or misrepresent the contents of its pleading. That gross
misrepresentation had been made by the National Power Corporation in their said
pleading is irrefutable.
Plaintiffs-spouses Campos declared that there are other areas more suitable or
appropriate that can be utilized as alternative sites for the all-steel transmission line
tower. Just a few meters from the planned right-of-way is an abandoned road
occupied by squatters; it is a government property and the possession of which the
NPC need not compensate. The latter had not exercised judiciously in the proper
selection of the property to be appropriated. Evidently, NPCs choice was whimsical
and capricious. Such arbitrary selection of plaintiffs property despite the availability of
another property in a manner compatible with the greatest public good and the least
private injury, constitutes an impermissible encroachment of plaintiffs proprietary rights
and their right to due process and equal protection.
Concededly, NPCs intention is to expropriate a portion of plaintiffs property. This
limitation on the right of ownership is the paramount right of the National Power
Corporation granted by law. But before a person can be deprived of his property
through the exercise of the power of eminent domain, the requisites of law must strictly
be complied with. (Endencia vs. Lualhati, 9 Phil. 177) No person shall be deprived of
his property except by competent authority and for public use and always upon
payment of just compensation. Should this requirement be not first complied with, the
courts shall protect and, in a proper case, restore the owner in his possession. (Art.
433 Civil Code of the Philippines)
Records disclose that in breach of such verbal promise, defendant NPC had not
withdrawn the wooden electrical posts and transmission lines; said wooden electrical
posts and transmission lines still occupy a portion of plaintiffs property; that the NPC
had benefited from them for a long period of time already, sans compensation to the
owners thereof.
Without first complying with the primordial requisites appurtenant to the exercise of
the power of eminent domain, defendant NPC again boldly intruded into plaintiffs
property by conducting engineering surveys with the end in view of expropriating 5,320
square meters thereof to be used as right-of-way for the all-steel transmission line
tower of the Calaca-Dasmarias 230 KV T/L Project. Such acts constitute a
deprivation of ones property for public use without due compensation. It would
therefore seem that the expropriation had indeed departed from its own purpose and
turns out to be an instrument to repudiate compliance with obligation legally and validly
contracted.xxii[9]
On September 26, 1996, the RTC rendered a decision finding the petitioner liable
for damages to the respondents. The dispositive portion of the RTC decision reads:
WHEREFORE, in view of the foregoing consideration, justment [sic] is hereby
rendered in favor of the plaintiffs, condemning the defendant to pay
(a) Actual damages of P480,000.00 for the use of plaintiffs property;
(b) One Million Pesos (P1,000,000.00) as moral damages;
 (c ) Five Hundred Thousand Pesos (P500,000.00) as nominal damages;
(d) One Hundred Fifty Thousand Pesos (P150,000.00) as attorneys fees; and
(e) Costs of suit in the amount of P11,239.00.
SO ORDERED.xxii[10]
The petitioner appealed the decision to the Court of Appeals which on June 16,
1990 rendered a decision affirming the ruling of the RTC.
Essentially, the CA held that the respondents claim for compensation and damages
had not prescribed because Section 3(i) of the petitioners Charter, Republic Act No.
6395, as amended, is not applicable to the case. The CA likewise gave scant
consideration to the petitioners claim that the respondents complaint should be
dismissed on the ground of litis pendencia. According to the CA, the complaint a quo
was the more appropriate action considering that the venue for the expropriation case
(Civil Case No. 1174-95) was initially improperly laid. The petitioner filed the
expropriation proceedings with the RTC in Imus, Cavite, when the subject property is
located in Dasmarias, Cavite. Moreover, the parties in the two actions are not the
same since the respondents were no longer included as defendants in the petitioners
amended complaint in the expropriation case (Civil Case No. 1174-95) but were already
replaced by Solar Resources, Inc., the buyer of the subject property, as defendant
therein.
The CA likewise found the damages awarded by the RTC in favor of the
respondents just and reasonable under the circumstances obtaining in the case.
The petitioner now comes to this Court seeking to reverse and set aside the
assailed decision. The petitioner alleges as follows:
I
The Court of Appeals grievously erred and labored under a gross misapprehension of
fact in finding that the Complaint below should not be dismissed on the ground of
prescription.
II
The Court of Appeals erred in affirming the award of nominal and moral damages,
attorneys fees and costs of litigation.xxii[11]
Citing Article 620 of the Civil Code, the petitioner contends that it had already
acquired the easement of right-of-way over the portion of the subject property by
prescription, the said easement having been allegedly continuous and apparent for a
period of about twenty-three (23) years, i.e., from about the middle of 1970 to the early
part of 1994. The petitioner further invokes Section 3(i) of its Charter in asserting that
the respondents already waived their right to institute any action for compensation
and/or damages concerning the acquisition of the easement of right-of-way in the
subject property. Accordingly, the petitioner concludes that the award of damages in
favor of the respondents is not warranted.
The petition is bereft of merit.
 The petitioners claim that, under Article 620 of the Civil Code, it had already
acquired by prescription the easement of right-of-way over that portion of the subject
property where its wooden electric posts and transmission lines were erected is
untenable. Article 620 of the Civil Code provides that:
Art. 620. Continuous and apparent easements are acquired either by virtue of a
title or by prescription of ten years.
Prescription as a mode of acquisition requires the existence of the following: (1)
capacity to acquire by prescription; (2) a thing capable of acquisition by prescription; (3)
possession of the thing under certain conditions; and (4) lapse of time provided by
law.xxii[12] Acquisitive prescription may either be ordinary, in which case the possession
must be in good faith and with just title,xxii[13] or extraordinary, in which case there is
neither good faith nor just title. In either case, there has to be possession which must
be in the concept of an owner, public, peaceful and uninterrupted. xxii[14] As a corollary,
Article 1119 of the Civil Code provides that:
Art. 1119. Acts of possessory character executed in virtue of license or by mere
tolerance of the owner shall not be available for the purposes of possession.
In this case, the records clearly reveal that the petitioners possession of that portion
of the subject property where it erected the wooden posts and transmission lines was
merely upon the tolerance of the respondents. Accordingly, this permissive use by the
petitioner of that portion of the subject property, no matter how long continued, will not
create an easement of right-of-way by prescription. The case of Cuaycong vs.
Benedictoxxii[15] is particularly instructive. In that case, the plaintiffs for more than twenty
years made use of the road that passed through the hacienda owned by the
defendants, being the only road that connected the plaintiffs hacienda to the public
road. The defendants closed the road in question and refused the use of the same
unless a toll was paid. The plaintiffs therein brought an action to enjoin the defendants
from interfering with the use of the road. In support of their action, the plaintiffs
presented evidence tending to show that they have acquired the right-of-way through
the road by prescription. This Court rejected the contention, holding as follows:
Had it been shown that the road had been maintained at the public expense, with
the acquiescence of the owners of the estates crossed by it, this would indicate such
adverse possession by the government as in course of time would ripen into title or
warrant the presumption of a grant or of a dedication. But in this case there is no such
evidence, and the claims of plaintiffs, whether regarded as members of the public
asserting a right to use the road as such, or as persons claiming a private easement of
way over the land of another must be regarded as resting upon the mere fact of user.
If the owner of a tract of land, to accommodate his neighbors or the public in
general, permits them to cross his property, it is reasonable to suppose that it is not his
intention, in so doing, to divest himself of the ownership of the land so used, or to
establish an easement upon it, and that the persons to whom such permission, tacit or
express, is granted, do not regard their privilege of use as being based upon anything
more than the mere tolerance of the owner. Clearly, such permissive use is in its
inception based upon an essentially revocable license. If the use continues for a long
period of time, no change being made in the relations of the parties by any express or
 implied agreement, does the owner of the property affected lose his right of
revocation? Or, putting the same question in another form, does the mere permissive
use ripen into title by prescription?
It is a fundamental principle of the law in this jurisdiction concerning the
possession of real property that such possession is not affected by acts of a
possessory character which are merely tolerated by the possessor, which are or due
to his license (Civil Code, arts. 444 and 1942). This principle is applicable not only with
respect to the prescription of the dominium as a whole, but to the prescription of right in
rem. In the case of Cortes vs. Palanca Yu-Tibo (2 Phil. Rep., 24, 38), the Court said:
The provision of article 1942 of the Civil Code to the effect that acts which
are merely tolerated produce no effect with respect to possession is applicable
as much to the prescription of real rights as to the prescription of the fee, it
being a glaring and self-evident error to affirm the contrary, as does the
appellant in his motion papers. Possession is the fundamental basis of
prescription. Without it no kind of prescription is possible, not even the
extraordinary. Consequently, if acts of mere tolerance produce no effect with
respect to possession, as that article provides, in conformity with article 444 of
the same Code, it is evident that they can produce no effect with respect to
prescription, whether ordinary or extraordinary. This is true whether the
prescriptive acquisition be of a fee or of real rights, for the same reason holds
in one and the other case; that is, that there has been no true possession in
the legal sense of the word. (Citations omitted)
Possession, under the Civil Code, to constitute the foundation of a prescriptive
right, must be possession under claim of title (en concepto de dueo), or to use the
common law equivalent of the term, it must be adverse. Acts of possessory character
performed by one who holds by mere tolerance of the owner are clearly not en
concepto de dueo, and such possessory acts, no matter how long so continued, do
not start the running of the period of prescription.xxii[16]
Following the foregoing disquisition, the petitioners claim that it had acquired the
easement of right-of-way by prescription must perforce fail. As intimated above,
possession is the fundamental basis of prescription, whether ordinary or extraordinary.
The petitioner never acquired the requisite possession in this case. Its use of that
portion of the subject property where it erected the wooden poles and transmission lines
was due merely to the tacit license and tolerance of the respondents. As such, it cannot
be made the basis of the acquisition of an easement of right-of-way by prescription.
Neither can the petitioner invoke Section 3(i) of its Charter (Rep. Act No. 6395, as
amended) to put up the defense of prescription against the respondents. The said
provision reads in part:
Sec. 3(i). The Corporation or its representatives may also enter upon private
property in the lawful performance or prosecution of its business or purposes, including
the construction of transmission lines thereon; Provided, that the owner of such private
property shall be paid the just compensation therefor in accordance with the provisions
hereinafter provided; Provided, further, that any action by any person claiming
compensation and/or damages shall be filed within five years after the right-of-way,
transmission lines, substations, plants or other facilities shall have been established:
 Provided, finally, that after the said period no suit shall be brought to question the said
right-of-way, transmission lines, substations, plants or other facilities nor the amounts
of compensation and/or damages involved;
Two requisites must be complied before the above provision of law may be invoked:
1. The petitioner entered upon the private property in the lawful performance or
prosecution of its businesses or purposes; and
2.The owner of the private property shall be paid the just compensation therefor.
As correctly asserted by the respondents, Section 3(i) of Rep. Act No. 6395, as
amended, presupposes that the petitioner had already taken the property through a
negotiated sale or the exercise of the power of eminent domain, and not where, as in
this case, the petitioner was merely temporarily allowed to erect wooden electrical posts
and transmission lines on the subject property. Significantly, the provision uses the
term just compensation, implying that the power of eminent domain must first be
exercised by the petitioner in accordance with Section 9, Article III of the Constitution,
which provides that no private property shall be taken for public use without just
compensation.
This Courts ruling in Lopez vs. Auditor Generalxxii[17] is likewise in point:
The petitioner brought this case to this Court on the sole issue of prescription. He
cites Alfonso vs. Pasay City in which a lot owner was allowed to bring an action to
recover compensation for the value of his land, which the Government had taken for
road purposes, despite the lapse of thirty years (1924-1954). On the other hand, the
respondents base their defense of prescription on Jaen vs. Agregado which held an
action for compensation for land taken in building a road barred by prescription
because it was brought after more than ten years (i.e., thirty three years, from 1920 to
1953). They argue that the ruling in Alfonso cannot be applied to this case because,
unlike Alfonso who made repeated demands for compensation within ten years,
thereby interrupting the running of the period of prescription, the petitioner here filed his
claim only in 1959.
It is true that in Alfonso vs. Pasay City this Court made the statement that
registered lands are not subject to prescription and that on grounds of equity, the
government should pay for private property which it appropriates though for the benefit
of the public, regardless of the passing of time. But the rationale in that case is that
where private property is taken by the Government for public use without first acquiring
title thereto either through expropriation or negotiated sale, the owners action to
recover the land or the value thereof does not prescribe. This is the point that has
been overlooked by both parties.
On the other hand, where private property is acquired by the Government and all
that remains is the payment of the price, the owners action to collect the price must be
brought within ten years otherwise it would be barred by the statue of limitations.xxii[18]
Thus, the five-year period provided under Section 3(i) of Rep. Act No. 6395, as
amended, within which all claims for compensation and/or damages may be allowed
against the petitioner should be reckoned from the time that it acquired title over the
private property on which the right-of-way is sought to be established. Prior thereto, the
claims for compensation and/or damages do not prescribe. In this case, the findings of
the CA is apropos:
Undeniably, NPC never acquired title over the property over which its wooden
electrical posts and transmission lines were erected. It never filed expropriation
proceedings against such property. Neither did it negotiate for the sale of the same. It
was merely allowed to temporarily enter into the premises. As NPCs entry was gained
through permission, it had no intention to acquire ownership either by voluntary
purchase or by the exercise of eminent domain.xxii[19]
The petitioner instituted the expropriation proceedings only on December 12, 1995.
Indisputably, the petitioner never acquired title to that portion of the subject property
where it erected the wooden electrical posts and transmission lines. Until such time, the
five-year prescriptive period within which the respondents right to file an action to claim
for compensation and/or damages for the petitioners use of their property does not
even commence to run. The CA thus correctly ruled that Section 3(i) of Rep. Act No.
6395, as amended, finds no application in this case and that the respondents action
against the petitioner has not prescribed.
With respect to the damages awarded in favor of the respondents, the petitioner
avers, thus:
The Court of Appeals erred in
affirming the award of nominal
and moral damages, attorneys
fees and costs of litigation.
It follows from Section 31(c) of R.A. 6395 that the award moral and nominal
damages, as well as attorneys fees and costs are baseless. The right to claim them
has likewise prescribed.xxii[20]
With our ruling that the claims of the respondents had not prescribed, the
petitioners contention that the respondents are not entitled to moral and nominal
damages and attorneys fees must fail. In affixing the award for moral and nominal
damages and attorneys fees, the CA ratiocinated:
With respect to the fourth assignment of error, this Court is not persuaded to
reverse much less modify the court a quos findings.
An award of moral damages would require certain conditions to be met, to wit: (1)
first, there must be an injury, whether physical, mental or psychological, clearly
sustained by the claimant; (2) second, there must be a culpable act or omission
factually established; (3) third, the wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant; and (4) fourth, the award of
damages is predicated on any of the cases stated in Article 2219 of the Civil Code.
NPC made it appear that it negotiated with the appellees when no actual
negotiations took place. This allegation seriously affected the on-going sale of the
property to Solar Resources, Inc. as appellees seemed to have sold the property
knowing fully well that a portion thereof was being expropriated. Such an act falls well
within Article 21 of the Civil Code. NPCs subterfuge certainly besmirched the
reputation and professional standing of Justice Jose C. Campos, Jr. and Professor
 Maria Clara A. Lopez-Campos, and caused them physical suffering, mental anguish,
moral shock and wounded feelings.
The records show that Justice Campos career included, among other[s], being a
Professor of Law at the University of the Philippines; Acting Chairman of the Board of
Transportation; Presiding Judge of the Court of First Instance of Pasay City, and
Associate Justice of the Court of Appeals. Such career reached its apex when he was
appointed Associate Justice of the Supreme Court in 1992. Justice Campos was a
member of the Judicial and Bar Council when NPC filed its Civil Case No. 1174-95.
Professor Maria Clara A. Lopez-Campos is a noted authority in Corporate and Banking
Laws and is a Professor Emerita of the University of the Philippines from 1981 to the
present. She had taught more than three decades at the College of Law. Against such
backdrop, it does not take too much imagination to conclude that the oppressive and
wanton manner in which NPC sought to exercise its statutory right of eminent domain
warranted the grant of moral damages.
On the award of nominal damages, such are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by
him. As previously discussed, it does not brood well for a government entity such as
NPC to disregard the tenets of private property enshrined in the Constitution. NPC not
only intentionally trespassed on appellees property and conducted engineering
surveys thereon but also sought to fool the appellees caretaker by claiming that such
entry was authorized. Moreover, NPC even justifies such trespass as falling under its
right to expropriate the property. Under the circumstances, the award of nominal
damages is sustained.
That NPCs highhanded exercise of its right of eminent domain constrained the
appellees to engage the services of counsel is obvious. As testified upon, the
appellees engaged their counsel for an agreed fee of P250,000.00. The trial court
substantially reduced this to P150,000.00. Inasmuch as such services included not
only the present action but also those for Civil Case No. 1174-95 erroneously filed by
NPC with the Regional Trial Court of Imus, Cavite, and the Petition for Certiorari in CA-
GR No. 41782, this Court finds such attorneys fees to be reasonable and equitable.xxii[21]
We agree with the CA.
The award of moral damages in favor of the respondents is proper given the
circumstances obtaining in this case. As found by the CA:
NPC made it appear that it negotiated with the appellees when no actual
negotiation took place. This allegation seriously affected the on-going sale of the
property to Solar Resources, Inc. as appellees seemed to have sold the property
knowing fully well that a portion thereof was being expropriated. Such an act falls well
within Article 21 of the Civil Code. NPCs subterfuge certainly besmirched the
reputation and professionally standing of Justice Jose C. Campos, Jr. and Professor
Maria Clara A. Lopez-Campos, and caused them physical suffering, mental anguish,
moral shock and wounded feelings.
The records show that Justice Campos career included, among other[s], being a
Professor of Law at the University of the Philippines; Acting Chairman of the Board of
Transportation; Presiding Judge of the Court of First Instance of Pasay City, and
 Associate Justice of the Court of Appeals. Such career reached its apex when he was
appointed Associate Justice of the Supreme Court in 1992. Justice Campos was a
member of the Judicial and Bar Council when NPC filed its Civil Case No. 1174-95.
Professor Maria Clara A. Lopez-Campos is a noted authority in Corporate and Banking
Laws and is a Professor Emerita of the University of the Philippines from 1981 to the
present. She had taught more than three decades at the College of Law. Against such
backdrop, it does not take too much imagination to conclude that the oppressive and
wanton manner in which NPC sought to exercise its statutory right of eminent domain
warranted the grant of moral damages.xxii[22]
Further, nominal damages are adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for any loss suffered by him.xxii[23] Similarly,
the court may award nominal damages in every case where any property right has been
invaded.xxii[24] The petitioner, in blatant disregard of the respondents proprietary right,
trespassed the subject property and conducted engineering surveys thereon. It even
attempted to deceive the respondents caretaker by claiming that its agents were
authorized by the respondents to enter the property when in fact, the respondents never
gave such authority. Under the circumstances, the award of nominal damages is
likewise warranted.
Finally, the award of attorneys fees as part of damages is deemed just and
equitable considering that by the petitioners unjustified acts, the respondents were
obviously compelled to litigate and incur expenses to protect their interests over the
subject property.xxii[25]
WHEREFORE, the petition is hereby DENIED for lack of merit. The assailed
Decision dated June 16, 2000 of the Court of Appeals in CA-G.R. CV No. 54265 is
AFFIRMED in toto.
SO ORDERED.
Bellosillo, (Chairman), and Quisumbing, JJ., concur.
Austria-Martinez, J., on official leave.

Supreme Court E-Library

 THIRD DIVISION

[G.R. No. 141007. September 13, 2005]

ADORACION REYES BAUTISTA, LIBRADA REYES VDA. DE

PONCIANO, ESTELA REYES QUIAMBAO, MARCELO REYES,
JR., JOSE SINO, LEONILA SINO and DOMINADOR SINO,
petitioners, vs. CELIA REYES POBLETE, MELENCIO REYES
POBLETE, ELVIRA REYES POBLETE, JULIA REYES POBLETE,
and REMEDIOS POBLETE TORIO, respondents.

DECISION
CORONA, J.:

Before us is a petition for review assailing the decision[1] dated January 7, 1999 of
the Court of Appeals:
WHEREFORE, the judgment herein appealed from is hereby REVERSED, and the
lower court is hereby directed to issue a decree of registration over Lot No. 1243 in
favor of the applicants.
SO ORDERED.[2]
This controversy stems from a petition for the registration, filed by private
respondents, of a 6.2556 hectare parcel of land identified as Lot 1243.
In their application, private respondents, the successors-in-interest of Socorro
Reyes vda. de Poblete (Socorro), claimed that Lot 1243 was donated by Marcelo Reyes
Sr. (Marcelo Sr.) to Socorro, his daughter by a second marriage; that the cadastral
survey of Lot 1243 had been undertaken primarily for and in the name of Socorro; that
they purchased the same land from their parents Socorro and Juan Poblete; and that
they and their predecessors in interest have been in open, continuous, peaceful and
notorious possession of the subject lot in the concept of owner for more than 50 years.
Thus, they prayed that the land be registered in their names as co-owners.
Petitioners, Marcelo Sr.s children by his third marriage, opposed said application
alleging that Lot 1243 had been acquired by the deceased Marcelo Reyes, Sr. by
purchase from a certain Juan Aranda. Hence, said lot should be awarded to them as
their fathers lawful heirs.
In the course of the proceedings, private respondents presented three witnesses,
namely, Socorro Reyes Poblete, Pantaleon Garcia Ancero and Cecilia Poblete. The
material portions of their testimonies were summarized by the appellate court as
follows:
 SOCORRO REYES VDA. DE POBLETE, an octogenarian, testified that Lot No.
1243 was given to her by her father, Marcelo Reyes, Sr. in 1932, by way of a deed of
donation which was destroyed when her house was burned.
Her father was married twice. By his first marriage, he had two daughters,
Candida and Carmen. By his second marriage, he also had two daughters, Socorro
and Henerosa, who is already dead. He had other children, who are the oppositors in
this case. Her father had given her sisters Candida and Carmen other parcels of land
also. The oppositors Sinos (or Seno) were given five carabaos and financial support.
She had Lot No. 1243 planted to sugar cane and palay, and had the same
surveyed by the Bureau of Lands in her name (Exh. F). She also had it tax declared
in her name (Exh. G) and had been paying the taxes thereon until she sold it to her
children, the petitioners herein (Exh. I). She did not have the land registered at once
because she thought that it first had to be tax declared.
PANTALEON GARCIA ANCERO testified that he was working in Lot No. 1243
since 1942 or 1943 first as a tenant of Socorro Reyes and thereafter of petitioner
Celia Poblete. The latter sold the property two years ago to a Chinaman, and he was
paid P700,000.00.
Of the oppositors, he knows only Marcelo Reyes, Jr. who was a candidate for
councilor and asked his help in the election campaign, and Dominador Seno who went
to the field he was cultivating twice to get a share of the harvest.
CELIA POBLETE testified that on August 10, 1983, she and her sisters bought Lot
No. 1243 for P39,000.00 from her mother, who acquired it more than fifty years before
from her father Marcelo Reyes, Sr. She brought the deed of sale to the Provincial
Capitol and had the tax declaration transferred to her and her and her sisters names
(Exh. J), and they have been paying the real estate tax since then (Exh. K). Their
mother and they have been in possession of the property for 60 years already.
The oppositors are half brothers and sisters of her mother, and they had good
relations before. The oppositors knew about the exclusive possession of Lot No. 1243
by their mother, because they lived only some 150 meters away and saw their mother
harvesting the fruits of the land. They sometimes even asked her for some of the
harvest of the land but they never made a claim on it.
The applicants sold the property to Winthrop Corporation for P20 million, of which
P3 million has been paid, and the balance to be paid upon registration of the land.[3]
To buttress their claim over Lot 1243, private respondents ventured to prove that it
was Marcelo Sr.s practice to give all his children by each of his three wives similar gifts
of land; that pursuant to this practice, Marcelo Sr. gave a six-hectare lot to his daughters
by the first marriage, Candida and Carmen Reyes; that Lot 1243 measuring 6.25
hectares was given to his daughter by a second marriage, private respondents mother
Socorro; that another six-hectare lot was given to his children by a third marriage,
petitioners Adoracion B. Bautista, Librada R. Ponciano, Estela R. Quiambao and
Marcelo Reyes, Jr.; and finally, Marcelo Sr. gave five carabaos and financial support to
his illegitimate children, petitioners Jose, Leonila and Dominador, all surnamed Sino.
Private respondents failed to present the deed of donation by which Marcelo Sr.
allegedly gave Lot 1243 to Socorro, claiming that the deed was burned when fire razed
their house sometime in 1980. Thus, the trial court dismissed the petition for
registration.
On appeal, the Court of Appeals considered private respondents contention that
even if the donation may have been invalid, the same could still serve as basis for
acquisitive prescription. Consequently, the appellate court reversed the trial courts
decision and ordered the issuance of a decree of registration over Lot 1243 in favor of
private respondents. Hence, this petition.
Perusal of the records reveals that Socorro Reyes was already in physical
possession of Lot 1243 as early as 1934, even before the death of Marcelo Sr., and had
the land planted to sugarcane and palay. Socorro filed her application as claimant of Lot
1243 with the Bureau of Lands way back in 1940 when the latter conducted a cadastral
survey. This was evidenced by the Cadastral Cost Register bearing on record that
Socorro paid the amount of P4.24, the owners proportionate cost for the cadastral
survey of Lot 1243.
Socorros claim in Cad. 285, Carmona Cadastre, Case 2 was approved on August
5, 1941. The following year, she had the land tenanted by a certain Pantaleon Ancero.
In 1948, Socorro registered Lot 1243 in her name under tax declaration no. 1430
and, thereafter, religiously paid the real estate tax on the property.
On August 1, 1983, Socorro sold Lot 1243 to her children, the private respondents.
On October 27, 1983, private respondents obtained a Declaration of Real Property
in their favor under PD 464 otherwise known as The Real Property Tax Code.
Finally, on August 28, 1991, private respondents filed a Petition for Registration of
Title to Lot 1243 before the lower court in order to perfect the sale of the lot to Winthrop
Realty Corporation for P20,694,600.
Petitioners insist that Socorro expressly and impliedly recognized their rights as her
co-heirs when she was entrusted with the management of the land in 1934; that the
harvest had always been divided among the heirs, with petitioner Dominador Sino
representing the others in getting their respective shares; that there was a demand for
partition but it did not push through because the land was tenanted.
However, other than the bare allegation of cestui que trust, petitioners failed to
present proof of their claim. There was no evidence showing that Socorro managed Lot
1243 on behalf of Marcelo Sr.s heirs, including petitioners.
Furthermore, petitioner Marcelo Jr. admitted that Lot 1243 was the only property left
by his father Marcelo Sr. when he died; that Marcelo Sr. gave a six-hectare lot to his
(Marcelo Jr.s) mother which they sold in 1951, bolstering private respondents claim
that Marcelo Sr. had given land to each of his four families.
Petitioners were obviously engaged in a fishing expedition when they opposed
private respondents petition for registration of Lot 1243. Petitioner Marcelo, Jr. was not
even sure if they were co-owners of the property. This uncertainty explained why none
of the petitioners was ever in actual possession of the property. He also admitted that
he did not know if Socorro inherited any property from their father. They were allegedly
surprised when they learned that the property was already in Socorros name.
The fact that petitioner Dominador Sino allegedly got a share of the harvest twice
did not disprove at all that the entire harvest belonged to Socorro. At most, these two
occasions only proved Socorros generosity to him, considering that he was an
illegitimate child and received almost nothing by way of inheritance. Marcelo Sr., died in
1932 under the regime of the old Civil Code which granted no successional rights to
illegitimate children. Corollarily, the inheritance rights established by the new Civil Code
in favor of illegitimate children could be claimed only by those whose parents died after
the effectivity of the law on August 30, 1950. [4] Thus, petitioners Jose, Leonila and
Dominador never really had any cause of action against private respondents.
Quite telling too was the admission of Felino Quiambao, petitioners attorney-in-fact,
that neither he nor any of petitioners (except Jose Sino) had ever been to the disputed
land despite the fact that they lived only 150 meters away from the residence of Socorro
in Carmona, Cavite; that they never filed any answer or objection to the claim of Socorro
in the cadastral proceedings over Lot 1243.[5]
There is a close parallelism between this case and Pensader v. Pensader [6] wherein
the Court held that:
It was not shown that such possession was in common with the plaintiffs. As
above stated, the origin of said possession is adverse to such community, namely, the
donation, which although it is not established by a sufficient documentary evidence,
stands in this case as a circumstance explaining the exclusive character of the
possession of Maria Revelar and Alejandra Pensader and that of their common
successor in interest Silverio P. Revelar.
The ruling was reiterated in Espique v. Espique[7] where the Court made the
following pronouncement:
There is no question that the donation in question is invalid because it involves an
immovable property and the donation was not made in a public document as required
by Article 633 of the old Civil Code, in connection with Article 1328 of the same Code
(concerning gifts propter nuptias), but it does not follow that said donation may not
serve as basis of acquisitive prescription when on the strength thereof the donee has
taken possession of the property adversely and in the concept of owner.
The appellate court, upon meticulous review of the records, found that private
respondents possession of Lot 1243 since 1934 was adverse, continuous, open, public,
peaceful and uninterrupted, and in the concept of an owner. This case was filed only in
1991. All this time, Socorro was exercising acts of dominion over the land such as
enjoying its fruits to the exclusion of all others, having the land cadastrally surveyed in
her name and faithfully paying realty taxes on Lot 1243 in her name. Assuming but not
conceding that there existed an implied trust between the parties, Socorros
aforementioned acts of dominion clearly repudiated such trust. It is the essence of the
statute of limitations that, whether the party had the right to the possession or not, if he
entered under the claim of such right and remained in possession for the period
required for acquisitive prescription, the right of action of a party claiming title is barred
by that adverse possession. The right given by the statute of limitations does not
depend on and has no necessary connection to the validity of the claim under which the
possession is held.[8]
The donation of Lot 1243 to Socorro was made in 1932. She took possession of the
land immediately thereafter. Under the Code of Civil Procedure which was then in force,
ten years of adverse possession by the person claiming to be the owner, in whatever
way such occupancy may have commenced, shall vest in the actual possessor of the
land a full and complete title.[9]
It is a settled rule that findings of fact of the Court of Appeals are binding upon this
Court if borne out by the evidence on record. We find no reversible error in the
appellate courts decision. Thus, we declare that no co-ownership existed between
petitioners and respondents. Socorro obtained possession of the land even before
Marcelo Sr. died. After his death, Socorro continued to enjoy exclusive possession of
the land with no objection from petitioners. The land was cadastrally surveyed and tax-
declared in her name, again with no protestation from petitioners. It was only when Lot
1243 was sold for P20.7 million that petitioners suddenly fantasized about being co-
owners thereof and wanted to share in the bonanza.
WHEREFORE, the petition is hereby DENIED and the assailed decision
AFFIRMED.
Costs against petitioners.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, Carpio-Morales and Garcia, JJ.,
concur.

[1]
Penned by Associate Justice Hector L. Hofilea and concurred in by Associate Justices Jorge S.
Imperial and Omar U. Amin of the Second Division.
[2]
Rollo, p. 40.
[3]
Rollo, pp. 34-35.
[4]
Tolentino, Civil Code of the Philippines, 1973 edition, Volume III, p. 233
[5]
Under the Cadastral Law, the Application/Answer constitutes public notice of a claim of exclusive and
adverse possession and ownership over the lot.
[6]
47 Phil. 959 (1924).
[7]
99 Phil. 448 (1956).
[8]
Solis v. Court of Appeals, G.R. Nos. 467753-54, 25 August 1989, 176 SCRA 678.
[9]
Miraflor v. Court of Appeals, 225 Phil. 504 (1986).

Supreme Court E-Library

 SECOND DIVISION

[G.R. No. 125590. March 11, 1999]

BIOMIE S. OCHAGABIA, TORIBIA G. DETALLA and ROSENDA G.

DENORE, petitioners, vs. COURT OF APPEALS, LEGAL HEIRS OF
ROSENDA ABUTON DIONISIO, LUZVIMINDA A. DIONISIO, and
the ROMAN CATHOLIC CHURCH OZAMIS CITY DIOCESE
represented by BISHOP HILARION CARALOS, respondents.

DECISION
BELLOSILLO, J.:

Rights and actions can be lost by the fact of delay and by the effect of delay. The first is a
matter of fixed time; the second is principally a question of the inequity of permitting a claim to
be enforced, as when the condition of the property or the relation of the parties has subsequently
changed.
Martin Garban and Fausta Bocayong, spouses, owned Lots Nos. 1074 and 1144 with
respective areas of 2,778 square meters and 7,511 square meters, both situated in Barangay
Gango, Ozamis City. Sometime in 1926 the couple conveyed both lots to Rosenda Abuton
Dionisio by way of sale con pacto de retro.
On 20 October 1989, or sixty-three years later, petitioners Biomie S. Ochagabia, Toribia G.
Detalla and Rosenda G. Denore, all claiming to be the children and grandchild, hence the legal
heirs, of the Garban spouses, filed a complaint for redemption of mortgage, recovery of
possession, declaration of nullity of O.C.T. No. T-347, declaration of illegality of the transfer of
Lot No. 1074 to the Roman Catholic Church Ozamis City Diocese and damages against
respondents legal heirs of Rosenda Abuton Dionisio represented by Luzviminda A. Dionisio, and
the Roman Catholic Church Ozamis City Diocese, represented by Bishop Hilarion Caralos.xxii[1]
Petitioners questioned the nature of the contract entered into in 1926 between their predecessors-
in-interest and respondents' predecessor-in-interest. They asserted that it was not a true sale with
pacto de retro but only an equitable mortgage under Art. 1602 of the Civil Code since they were
in actual, peaceful and continuous possession of Lot No. 1074 up to 1977 when respondent
Roman Catholic Church took over and constructed a chapel thereon, and of Lot No. 1144 up to
the filing of the complaint in 1989; and, that the consideration for both lots of P750.50 was
inadequate. Moreover, they claimed that O.C.T. No. T-347 issued by virtue of a free patent
covering Lot No. 1144 was fraudulently secured, whereas the transfer of Lot No. 1074 to
respondent Roman Catholic Church was without lawful authority.
 Private respondents, on the other hand, maintained that the assailed contract was a genuine
sale with pacto de retro and inasmuch as the original vendors, now petitioners, failed to redeem
both lots within the prescribed period, ownership already vested in the vendee and subsequently
in her legal heirs. They denied that petitioners were ever in possession of subject lots.
Furthermore, they alleged that O.C.T. No. T-347 was duly issued in the name of respondent
Luzviminda A. Dionisio pursuant to a free patent. They then counterclaimed for moral damages,
attorney's fees and litigation expenses.
Petitioners failed to persuade the trial court which found that the respective predecessors-in-
interest of the parties indeed entered into a sale con pacto de retro. It brushed aside the claim of
petitioners that they were in possession of Lot No. 1074 considering that it was sold by Rosenda
Abuton Dionisio to respondent Roman Catholic Church which constructed a chapel thereon. It
also found that the purchase price of P750.50 was not necessarily inadequate because it could
have represented the subject lots' prevailing fair market value in 1926. Taking into account that
the Garban spouses as well as petitioners failed to exercise their right to redeem within ten (10)
years from 1926, the trial court ruled that petitioners could no longer do so by means of the
present proceedings. As regards O.C.T. No. T-347, the trial court ruled that petitioners failed to
prove that it had been fraudulently obtained. Neither did the trial court find merit in the
counterclaim. Thus, on 23 February 1990 both complaint and counterclaim were dismissed with
costs against petitioners.xxii[2]
On 14 June 1996 respondent Court of Appeals affirmed the decision of the Ozamis trial
court and added to the ratiocination its own view that even if the subject transaction between the
Garban couple and Rosenda Abuton Dionisio was an equitable mortgage, equitable mortgage,
the action to recover on the mortgage had also prescribed based on Sec. 40 of Act No. 190.xxii[3]
More significantly, estoppel by laches had worked against petitioners' claim considering that it
was brought sixty-three (63) years after the transaction.xxii[4]
Did respondent appellate court err in affirming the finding of the trial court that the subject
contract between the Garban spouses and Rosenda Abuton Dionisio was a sale with pacto de
retro and not an equitable mortgage, and that respondents had acquired a valid certificate of title
over Lot No. 1144?
Petitioners insist that the assailed undertaking is an equitable mortgage based on their
possession of subject lots. Likewise, they persist in assailing the validity of O.C.T. No. T-347 in
view of certifications from the Register of Deeds of Ozamis City dated 12 May 1981 xxii[5] and 11
November 1985,xxii[6] and from the National Land Titles and Deeds Registration Administration
dated 13 January 1986xxii[7] that "no decree or patent or title pursuant to a decree or patent has
been issued for Lot No. 1144."
Petitioners sorely miss the point. Article 1508 of the then prevailing Civil Code provided -
Art. 1508. The right referred to in the next preceding article,xxii[8] in default of an express agreement,
should endure four years, counted from the date of the contract.
Should there be an agreement, the period shall not exceed ten years.
Quite related thereto, Sec. 40 of Act No. 190 then in force stated -
Sec. 40. Period of prescription as to real estate. - An action for recovery of title to, or possession of,
real property, or an interest therein, can only be brought within ten years after the cause of such action
accrues.
Instead of presenting the actual questioned deed of sale with pacto de retro, petitioners
merely furnished the trial court a photocopy of the notarial register where the transaction was
briefly described as a sale with pacto de retro, procured from the Bureau of Records
Management, Division of Archives.xxii[9] There is therefore no means of ascertaining whether the
parties to the contract stipulated on a redemption period. Nevertheless, conformably with the
aforementioned provisions, the right to redeem should have been exercised at the latest within
ten (10) years reckoned from the execution of the contract in 1926. We agree with respondent
appellate court that the right to redeem, anchored on the 1926 sale with pacto de retro, has
definitely prescribed when petitioners initiated Civil Case No. OZ-619 only on 20 October 1989
or more than six (6) decades later.
Prescription is rightly regarded as a statute of repose whose object is to suppress fraudulent
and stale claims from springing up at great distances of time and surprising the parties or their
representatives when the facts have become obscure from the lapse of time or the defective
memory or death or removal of witnesses.xxii[10] Our laws do not favor property rights hanging in
the air, uncertain, over a long span of time.
It is baseless for petitioners to argue on the real nature of the disputed contract, i.e.,
equitable mortgage under Art. 1602 of the Civil Codexxii[11], simply because this provision was not
embodied in the old Code but is an innovation in the present Code.xxii[12]
On account of the same long lapse of time, again we agree with respondent court that
estoppel by laches, or the negligence or omission to assert a right within a reasonable time
warranting a presumption that the party entitled to assert it either has abandoned it or declined to
assert it,xxii[13] has set in against petitioners. Vigilantibus non dormientibus equitas subvenit.xxii[14]
With the foregoing conclusions which have adequately resolved the present controversy, we
deem it unnecessary to dwell on the second issue raised by petitioners.
WHEREFORE, the petition is DENIED. The Decision of respondent Court of Appeals of
14 June 1996 affirming the dismissal of petitioners' complaint is AFFIRMED. Costs against
petitioners.
SO ORDERED.
Puno, Mendoza, Quisumbing, and Buena, JJ., concur.

Supreme Court E-Library

 THIRD DIVISION

[G.R. No. 133317. June 29, 1999]

ANTONIO R. AGRA, CAYETANO FERRERIA, NAPOLEON M. GAMO

and VICENTE O. NOVALES, petitioners, vs. PHILIPPINE
NATIONAL BANK, respondent.

DECISION
PANGANIBAN, J.:

Laches is a recourse in equity. Equity, however, is applied only in the absence, never in
contravention, of statutory law. Thus, laches cannot, as a rule, abate a collection suit filed within
the prescriptive period mandated by the Civil Code.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the November 26, 1997 Decision of the Court of Appeals,xxii[1] which disposed as
follows:
IN VIEW OF THE FOREGOING, the decision of the lower court is hereby AFFIRMED,
with the modification that the award of attorneys fees is hereby DELETED and the twelve
percent (12%) interest on the P2,500,000.00 the defendant-appellants are to pay PNB should start
from August 30, 1976, the date when the complaint was filed.xxii[2]
The decretal portion of the aforementioned trial court ruling reads:
WHEREFORE, in view of the foregoing, in the interest of justice, judgment is rendered in favor of
the plaintiff ordering all the sureties jointly and severally, to pay PNB as follows:
a) the amount of P2,500,000.00 plus twelve per centum (12%) accrued interest from
August 1, 1976;
b) ten percent (10%) of the total amount due as attorneys fees and cost of the suit.
SO ORDERED.
Also assailed by petitioners is the April 2, 1998 Resolution of the Court of Appeals, which
denied their Motion for Reconsideration.xxii[3]

The Facts
 The facts are summarized by the Court of Appeals (CA) in this wise:xxii[4]
On August 30, 1976, an action for collection of a sum of money was filed by the Philippine
National Bank (PNB, for brevity) against Fil-Eastern Wood Industries, Inc. (Fil-Eastern, for short) in its
capacity as principal debtor and against Cayetano Ferreria, Pedro Atienza, Vicente O. Novales, Antonio
R. Agra, and Napoleon M. Gamo in their capacity as sureties.
In its complaint, plaintiff PNB alleged that on July 17, 1967 Fil-Eastern was granted a loan in the
amount of [t]wo [m]illion [f]ive [h]undred [t]housand [p]esos (P2,500,000.00) with interest at twelve
percent (12%) per annum. Drawings from said demand loan were made on different dates as evidenced
by several promissory notes and were credited to the account of Fil-Eastern. To secure the payment of
the said loan Fil-Eastern as principal and sureties Ferreria, Atienza, Novales, Agra, and Gamo executed a
Surety Agreement whereby the sureties, jointly and severally with the principal, guaranteed and
warranted to PNB, its successors or assigns, prompt payment of subject obligation including notes, drafts,
bills of exchange, overdrafts and other obligations of every kind, on which Fil-Eastern was indebted or
may thereafter become indebted to PNB. It was further alleged that as of May 31, 1976 the total
indebtedness of Fil-Eastern and its sureties on subject loan amounted to [f]ive [m]illion [t]wo [h]undred
[n]inety-[s]even [t]housand, [n]ine [h]undred [s]eventy-[s]ix [p]esos and [s]eventeen [c]entavos
(P5,297,976.17), excluding attorneys fees. Notwithstanding repeated demands, the defendants refused
and failed to pay their loans.
The defendants (herein sureties) filed separate answers (pp. 49, 68, 205, 208 and 231). Collating
these, We drew the following: All of them claimed that they only signed the Surety Agreement with the
understanding that the same was a mere formality required of the officers of the corporation. They did
not in any way or manner receive a single cent from the proceeds of said loan and/or derive any profit
therefrom. Neither did they receive any consideration valuable or otherwise, from defendant Fil-Eastern.
They further claim that the loan in question was negotiated and approved under highly irregular,
anomalous and suspicious circumstances to the point that the Surety Agreement executed thereafter is
invalid, null and void and without force and effect. The extension of time of payment of the loan in
question released and discharged the answering defendants from any liability under the Surety
Agreement. The Surety Agreement is null and void from the beginning due to a defect in the consent of
the defendants and that their liabilities under the Surety Agreement, if any, has been extinguished by
novation. The cause of action of the complainant is barred by laches and estoppel in that the plaintiff
with full knowledge of the deteriorating financial condition of Fil-Eastern did not take steps to collect
from said defendant corporation while still solvent. They also maintained that if anyone is liable for the
payment of said loan, it is Felipe Ysmael, Jr. and not them or it is only Fil-Eastern and the controlling
officers who profited and made use of the proceeds of the loan. Defendant Agra likewise said that he was
made to sign the Surety Agreement and he did it because of the moral influence and pressure exerted
upon him by Felipe Ysmael, Jr. (their employer at the time of signing), thereby arousing strong fears of
losing a much needed employment to support his family should he refuse to sign as Surety.
In the order of the trial court dated October 30, 1978, defendant Fil-Eastern was declared in default
for its failure to answer the complaint within the reglementary period and the case was scheduled for pre-
trial conference. The individual defendants with the courts approval thereafter filed an amended third-
party complaint against Felipe Ysmael, Jr.
The amended third-party complaint alleged that at the time of execution of the alleged Surety
Agreement subject matter of the principal complaint, third-party plaintiffs were but employees of Ysmael
Steel Manufacturing Co., owned by third-party-defendant. Third-party-plaintiffs were in no financial
position to act as sureties to a P2.5 million loan. They became incorporators of original defendant Fil-
Eastern because of fear of losing their employment brought about by the tremendous pressure and moral
influence exerted upon them by their employer-third-party-defendant. They signed the Surety Agreement
upon the order of the third-party-defendant. In signing the said document, the third-party-plaintiffs were
assured by the third-party-defendant that they had nothing to fear and worry about because the latter will
assume all liabilities as well as profits therefrom and that the loan subject of the Surety Agreement was
with the prior approval and blessing of a high government official. They were likewise assured that the
surety agreement was but a formality and that because of such pressure, influence as well as assurances,
third-party-plaintiffs signed the Surety Agreement.
Third-party-defendant Felipe Ysmael, Jr. in his answer alleged that the Surety Agreement was
freely and voluntarily signed and executed by third-party-plaintiffs without any intimidation, undue,
improper or fraudulent representations. Further, granting arguendo that the consent of third-party
plaintiffs in signing said Surety Agreement was vitiated with intimidation, undue influence or fraudulent
representation on the part of third-party-defendant, said Surety Agreement is only voidable and therefore
binding unless annulled by a proper action in court. The third-party-plaintiffs did not file the proper court
action for the annulment of said agreement. They are now barred from filing an action for annulment of
said agreement, the prescriptive period therefor being only four (4) years from the time the defect of the
consent had ceased, and from the discovery of the all[e]ged fraud. In addition, third-party plaintiffs had
ratified said agreement which they signed in July 1967 by signing their names on and execution of several
promissory thereafter.
At the pre-trial conference held on March 21, 1980, the parties failed to agree on a possible
amicable settlement hence the case was set for trial on the merits. On July 5, 1984, during the pendency
of the trial, third-party defendant Felipe Ysmael, Jr. died. He was substituted by his legal heirs Patrick
Ysmael and Jeanne Ysmael as third-party defendants. Defendant Pedro Atienza died on January 4, 1987.
It appearing that he has no legal heirs, the case against him was dismissed.
After trial, the regional trial court (RTC) ruled against herein petitioners. On appeal, the CA
modified the RTC ruling by deleting the award of attorneys fees. Hence, this recourse to this
Court.

Ruling of the Court of Appeals

In ruling that petitioners were liable under the surety agreement, the Court of Appeals
rejected their defense of laches. It held that the lapse of seven years and eight months from
December 31, 1968 until the judicial demand on August 30, 1976 cannot be considered as
unreasonable delay which would necessitate the application of laches. The action filed by the
plaintiff has not yet prescribed. It is well within the ten-year prescriptive period provided for by
law wherein actions based on written contracts can be instituted.xxii[5]
The Court of Appeals also noted that the prescriptive period did not begin to run from
December 31, 1968 as [herein petitioners] presupposed. It was only from the time of the judicial
demand on August 30, 1976 that the cause of action accrued. Thus, [private respondent] was
well within the prescriptive period of ten years when it instituted the case in court. The Court
of Appeals further ruled that placing the blame on [PNB] for its failure to immediately pounce
upon its debtors the moment the loan matured is grossly unfair for xxx demand upon the sureties
to pay is not necessary.
The appellate court also held that petitioners proved only the first of the following four
essential elements of laches: (1) conduct on the part of the defendant, or one under whom he
claims, giving rise to the situation of which complaint is made and for which the complainant
seeks a remedy; (2) delay in asserting the complainants rights, the complainant having had
knowledge or notice of the defendants conduct and having been afforded an opportunity to
institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in
the event relief is accorded to the complainant, or the suit is not held barred.

Issues

In their Memorandum, petitioners raise the following issues:xxii[6]

1. WHETHER OR NOT THE CLAIM OF THE PNB AGAINST THE PETITIONERS IS
ALREADY BARRED BY THE EQUITABLE DEFENSE OF LACHES?
2. WHETHER OR NOT THE RESPECTIVE CONJUGAL PARTNERSHIPS OF THE
PETITIONERS COULD BE HELD LIABLE FOR ANY LIABILITY OF THE PETITIONERS UNDER
THE SURETY AGREEMENT IN FAVOR OF THE PNB?
Under the first issue, petitioners submit four other questions:
1-a WHETHER OR NOT THE EQUITABLE DEFENSE OF LACHES APPLIES
INDEPENDENTLY OF PRESCRIPTION?
1-b WHETHER OR NOT THE CAUSE OF ACTION OF THE PNB AGAINST THE
PETITIONERS ACCRUED ONLY FROM THE TIME OF THE JUDICIAL DEMAND ON AUGUST
30, 1976?
1-c WHETHER OR NOT THE FOUR (4) WELL-SETTLED ELEMENTS OF LACHES
ARE PRESENT IN THIS CASE?
1-d WHETHER OR NOT THE RULING IN THE CASE OF PHILIPPINE NATIONAL
BANK VS. COURT OF APPEALS, 217 SCRA 347, IS APPLICABLE IN THIS INSTANT CASE?
In the main, the issue is whether petitioners may raise the defense of laches in order to avoid
their liability under the surety agreement. Preliminarily, we shall also take up the question of
petitioners liability as sureties.

The Courts Ruling

The appeal is not meritorious.

Preliminary Matter: Liability of Petitioners as Sureties

The present controversy began when the Philippine National Bank (PNB) sought to enforce
the Surety Agreement. The pertinent provisions of said Agreement are as follows:
 WHEREAS, FIL-EASTERN WOOD INDUSTRIES, INC. herein referred to as the Principal, has
obtained and/or desires to obtain certain credits, loans, overdrafts, discounts, etc., from the Creditor, for
all of which the Creditor requires security; and the Surety, on account of valuable consideration received
from the Principal, has agreed and undertake to assist the principal by becoming such Surety.
NOW THEREFORE, for the purpose above mentioned, the Surety, jointly and severally with the
Principal, hereby guarantees and warrants to the Creditor, its successors or assigns, the prompt payment
at maturity of all the notes, drafts, bills of exchange, overdrafts and other obligations of every kind, on
which the Principal may now be indebted or may hereafter become indebted to the Creditor, but the
liability of the Surety shall not at any time exceed the sum of TWO MILLION FIVE HUNDRED
THOUSAND ONLY (P2,500,000.00) (demand loan of P2,500,000.00), Philippine Currency, plus the
interest thereon at the rate of (___%) per cent per annum, and the cost and expenses of the Creditor
incurred in connection with the granting of the credits, loans, overdrafts, etc., covered by this surety
agreement, including those for the custody, maintenance and preservation of the securities given therefor
and also for the collection thereof.
Both the Principal and the Surety shall be considered in default when they fail to pay the obligation
upon maturity with or without demand and in such case the Surety agrees to pay to the creditor, its
[successors] or assigns, all outstanding obligations of the Principal, whether due or not due and whether
held by the Creditor as principal or agent, and it is agreed that a certified statement by the Creditor as to
the amount due from the Principal shall be accepted as correct by the Surety without question.
The Surety expressly waives all rights to demand for payment and notice of non-payment and
protest, and agrees that the securities of every kind, that are now and may hereafter be left with the
Creditor, its successors, indorsees or assigns, as collateral to any evidence of debt or obligations or upon
which a lien may exist thereon may be withdrawn or surrendered at any time, and the time of payment
thereof extended, without notice to, or consent by the Surety; and that the liability on this guaranty shall
be solidary, direct and immediate and not contingent upon the pursuit by the Creditor, its successors,
indorsees or assigns, of whatever remedies it or they have against the Principal or the securities or liens it
or they may possess and the Surety will at any time, whether due or not due, pay to the Creditor with or
without demand upon the Principal, any obligation or indebtedness of the Principal not in excess of the
amount abovementioned.
This instrument is intended to be a complete and perfect indemnity to the Creditor to the extent
above stated, for any indebtedness or liability of any kind owing by the Principal to the Creditor from
time to time, and to be valid and continuous without further notice to the Surety, and may be revoked by
the Surety at any time, but only after forty-eight hours notice in writing to the Creditor, and such
revocation shall not operate to relieve the Surety from responsibility for obligations incurred by the
Principal prior to the termination of such period. (Emphasis supplied.)
It must be stressed that petitioners, as sureties, bound themselves solidarily for the
obligation of Fil-Eastern to PNB. Petitioners admit that they signed the Surety Agreement, but
they challenge their liability thereon on the ground that they were allegedly coerced by their
employer into signing the deed. The argument is too late at best.
As pointed out by the Court of Appeals, petitioners failed to challenge their consent to the
Agreement within the prescriptive period. Article 1391 of the Civil Code provides that the
action to annul a contract vitiated by intimidation, violence or undue influence shall be filed
within four years from the cessation of such defects. In this case, Petitioners Agra, Gamo and
Novales resigned from Fil-Eastern in 1967, 1968 and 1969, respectively. It was only in 1976,
when PNB sought to enforce the contract, that they alleged a defect in their consent. By their
inaction, their alleged cause of action based on vitiated consent had precribed. There was no
question that petitioners, in their capacity as sureties, were answerable for the obligations of Fil-
Eastern to PNB.
We shall now go to the main issue of this case: Whether petitioners may invoke the defense
of laches, considering that PNBs claim had not yet prescribed.

Main Issue: Laches

Petitioners admit that PNBs claim, though filed more than seven years from the maturity of
the obligation, fell within the ten-year prescriptive period. They argue, however, that the cause
was already barred by laches, which is defined as the failure or neglect for an unreasonable or
unexplained length of time to do that which by exercising due diligence, could or should have
been done earlier warranting a presumption that he has abandoned his right or declined to assert
it.xxii[7] In arguing that the appellate court erred in rejecting the defense of laches, petitioners cite
four reasons: (1) the defense of laches applies independently of prescription; (2) the cause of
action against petitioners accrued from the maturity of the obligation, not from the time of
judicial demand; (3) the four well-settled elements of laches were duly proven; and (4) PNB v.
CA applies in the instant case. As will be shown below, all these arguments are devoid of merit.

Application of Laches

Assailing the CA ruling that laches was inapplicable because the claim was brought within
the ten-year prescriptive period, petitioners stress that the defense of laches differs from and is
applied independently of prescription. In support, they cite, among others, Nielson & Co., Inc. v.
Lepanto Consolidated Mining Co.,xxii[8] in which the Supreme Court ruled:
[T]he defense of laches applies independently of prescription. Laches is different from the statute
of limitations. Prescription is concerned with the fact of delay, whereas laches is concerned with the
effect of delay. Prescription is a matter of time; laches is principally a question of inequity of permitting a
claim to be enforced, this inequity being founded on some change in the condition of the property or the
relation of the parties. Prescription is statutory; laches is not. Laches applies in equity; whereas
prescription applies at law. Prescription is based on fixed time, laches is not.
True, prescription is different from laches, but petitioners reliance on Nielson is misplaced.
As held in the aforecited case, laches is principally a question of equity. Necessarily, there is no
absolute rule as to what constitutes laches or staleness of demand; each case is to be determined
according to its particular circumstances. The question of laches is addressed to the sound
discretion of the court and since laches is an equitable doctrine, its application is controlled by
equitable considerations.xxii[9] Petitioners, however, failed to show that the collection suit against
herein sureties was inequitable. Remedies in equity address only situations tainted with
inequity, not those expressly governed by statutes. Indeed, the petitioners failed to prove the
presence of all the four established requisites of laches, viz:
(1) conduct on the part of the defendant or one under whom he claims, giving rise to the situation of
which complaint is made and for which the complainant seeks a remedy;
(2) delay in asserting the complainants right, the complainant having had knowledge or notice of
defendants conduct and having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant would assert the
right on which he bases his claim; and
(4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit
is not held barred.xxii[10]
That the first element exists is undisputed. Neither Fil-Eastern nor the sureties, herein
petitioners, paid the obligation under the Surety Agreement.
The second element cannot be deemed to exist. Although the collection suit was filed more
than seven years after the obligation of the sureties became due, the lapse was within the
prescriptive period for filing an action. In this light, we find immaterial petitioners insistence
that the cause of action accrued on December 31, 1968, when the obligation became due, and not
on August 30, 1976, when the judicial demand was made. In either case, both submissions fell
within the ten-year prescriptive period. In any event, the fact of delay, standing alone, is
insufficient to constitute laches.xxii[11]
Petitioners insist that the delay of seven years was unreasonable and unexplained, because
demand was not necessary. Again we point that, unless reasons of inequitable proportions are
adduced, a delay within the prescriptive period is sanctioned by law and is not considered to be a
delay that would bar relief. In Chavez v. Bonto-Perez,xxii[12] the Court reiterated an earlier
holding, viz:
Laches is a doctrine in equity while prescription is based on law. Our courts are basically courts of
law and not courts of equity. Thus, laches cannot be invoked to resist the enforcement of an existing legal
right. We have ruled in Arsenal v. Intermediate Appellate Court x x x that it is a long standing principle
that equity follows the law. Courts exercising equity jurisdiction are bound by rules of law and have no
arbitrary discretion to disregard them. In Zabat, Jr. v. Court of Appeals x x x, this Court was more
emphatic in upholding the rules of procedure. We said therein:
As for equity, which has been aptly described as justice outside legality, this is applied
only in the absence of, and never against, statutory law or, as in this case, judicial rules of
procedure. Aequetas nunquam contravenit legis. This pertinent positive rules being present
here, they should preempt and prevail over all abstract arguments based only on equity.
Thus, where the claim was filed within the three-year statutory period, recovery therefore cannot be
barred by laches.
Petitioners also failed to prove the third element of laches. It is absurd to maintain that
petitioners did not know that PNB would assert its right under the Surety Agreement. It is
unnatural, if not unheard of, for banks to condone debts without adequate recompense in some
other form. Petitioners have not given us reason why they assumed that PNB would not enforce
the Agreement against them.
Finally, petitioners maintain that the fourth element is present because they would suffer
damage or injury as a result of PNBs claim. This is the crux of the controversy. In addition to
the payment of the amount stipulated in the Agreement, other equitable grounds were
enumerated by petitioners, viz:
1. Petitioners acted as sureties under pressure from Felipe Baby Ysmael, Jr., the headman of the
Ysmael Group of Companies where the petitioners were all employed in various executive positions.
2. Petitioners did not receive a single centavo in consideration of their acting as sureties.
3. The surety agreement was not really a requisite for the grant of the loan to FIL-EASTERN
because the first release on the loan was made on July 17, 1967, or even before the Surety Agreement was
executed by petitioners on July 21, 1967.
4. Petitioners were assured that the Surety Agreement was merely a formality, and they had reason
to believe that assurance because the loan was principally secured by an assignment of 15% of the
proceeds of the sale of logs of FIL-EASTERN to Iwai & Co., Ltd., and such assignment was clearly
stated in PNB Board Resolution No. 407. In fact, while it was expressly stated in all of the eight (8)
promissory notes covering the releases of the loan that the said loan was secured by 15% of the contract
of sale with Iwai & Co., Ltd., only three (3) promissory notes stated that the loan was also secured by the
joint and several signatures of the officers of the corporation. It is to be noted that no mention was
even made of the joint and several signatures of petitioners as sureties. In other words, the principal
security was the assignment of 15% of the contract for the sale of logs to Iwai & Co., Ltd.
5. For reasons not explained by PNB, PNB did not collect the 15% of the proceeds of the sale of the
logs to Iwai & Co., Ltd., and such failure resulted in the non-collection of the P2,500,000.00 demand
loan, or at least a portion of it.
6. For reasons likewise unexplained by PNB, PNB did not make any demand upon petitioners to pay
the unpaid loan of FIL-EASTERN until after FIL-EASTERN had become bankrupt, and PNB was aware
of this fact because it foreclosed the chattel mortgages on the other loans of FIL-EASTERN which were
secured by said chattel mortgages.xxii[13] (Emphasis found in the original.)
These circumstances do not justify the application of laches. Rather, they disclose
petitioners failure to understand the language and the nature of the Surety Arrangement. They
cannot now argue that the Surety Agreement was merely a formality, secondary to the
assignment of 15 percent of the proceeds of the sale of Fil-Easterns logs to Iwai and Co., Ltd.
Neither can they rely on PNBs failure to collect the assigned share in the sale of the logs or to
make a demand on petitioners until after Fil-Eastern had become bankrupt. The Court stresses
that the obligation of a surety is direct, primary and absolute. Thus, the Court has held:
[A]lthough the contract of a surety is in essence secondary only to a valid principal obligation, his
liability to the creditor or promisee of the principal is said to be direct, primary, and absolute; in other
words, he is directly and equally bound with the principal. The surety therefore becomes liable for the
debt or duty of another although he possesses no direct or personal interest over the obligations nor does
he receive any benefit therefrom.xxii[14]
When petitioners signed as sureties, they expressly and unequivocally agreed to the
stipulation that the liability on this guaranty shall be solidary, direct and immediate and not
contingent upon the pursuit by the creditor, its successors, indorsees or assigns, of whatever
remedies it or they have against the principal or the securities or liens it or they may possess.
If they had mistaken the import of the Surety Agreement, they could have easily asked for
its revocation. The Agreement stipulates that it may be revoked by the Surety at any time, but
only after forty-eight hours notice in writing to the Creditor, and such revocation shall not
operate to relieve the Surety from responsibility for obligations incurred by the Principal prior to
the termination of such period. This they did not do.
Equally unavailing is petitioners allegation that the Surety Agreement was not a requisite
for the grant of the loan. Even if their assertion is true, the fact remains that they signed the
contract and voluntarily bound themselves to be solidarily liable for the loan amounting to
P2,500,000.
The other equitable circumstances above enumerated fail to support petitioners cause. As
earlier stated, petitioners are already barred from questioning the voluntariness of their consent.
Furthermore, this Court has categorically ruled that a surety is liable for the debt of another,
although he or she received no benefit therefrom.xxii[15]
Clearly, aside from the fact that the collection suit was filed only after the lapse of seven
years from the date the obligation became due and demandable, petitioners failed to adduce any
showing of inequity. Hence, the rules on equity cannot protect them.

Applicability of PNB v. CA

Petitioners allege that the CA committed grave error in failing to apply PNB v. Court of
Appeals,xxii[16] which they insist to be analogous to the present case. The facts in said case are as
follows:
Private Respondent B.P. Mata & Co. Inc. (Mata), is a private corporation engaged in providing
goods and services to shipping companies. Since 1966, it has acted as a manning or crewing agent for
several foreign firms, one of which is Star Kist foods, Inc., USA (Star Kist). As part of their agreement,
Mata makes advances for the crews basic personal needs. Subsequently, Mata sends monthly billings to
its foreign principal Star Kist, which in turn reimburses Mata by sending a telegraphic transfer through
banks for credit to the latters account.
Against this background, on February 21, 1975, Security Pacific National Bank (SEPAC) of Los
Angeles which had an agency arrangement with Philippine National Bank (PNB), transmitted a cable
message to the International Department of PNB to pay the amount of US$14,000 to Mata by crediting
the latters account with the Insular Bank of Asia and America (IBAA), per order of Star Kist. Upon
receipt of this cabled message on February 24, 1975, PNBs International Department noticed an error
and sent a service message to SEPAC Bank. The latter replied with the instructions that the amount of
US$14,000 should only be for US$1,400.
On the basis of the cable message dated February 24, 1975, Cashiers Check No. 269522 in the
amount of US$1,400 (P9,772.96) representing reimbursement from Star Kist, was issued by the Star Kist
for the account of Mata on February 25, 1975 through the Insular Bank of Asia and America (IBAA).
However, fourteen days after or on March 11, 1975, PNB effected another payment through
Cashiers Check No. 270271 in the amount of US$14,000 (P97,878.60) purporting to be another
transmittal of reimbursement from Star Kist, private respondents foreign principal.
Six years later, or more specifically, on May 13, 1981, PNB requested Mata for refund of
US$14,000 (P97,878.60) after it discovered its error in effecting the second payment.
On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000 against
Mata arguing that based on a constructive trust under Article 1456 of the Civil Code, it has a
right to recover the said amount it erroneously credited to respondent Mata.xxii[17]
On the ground of laches, the Court decided against the claim of PNB, stating that:
[i]t is amazing that it took petitioner almost seven years before it discovered that it had erroneously
paid private respondent. Petitioner would attribute its mistake to the heavy volume of international
transactions handled by the Cable and Remittance Division of the International Department of PNB.
Such specious reasoning is not persuasive. It is unbelievable for a bank, and a government bank at that,
which regularly publishes its balanced financial statements annually or more frequently, by the quarter, to
notice its error only seven years later. As a universal bank with worldwide operations, PNB cannot afford
to commit such costly mistakes. Moreover, as between parties where negligence is imputable to one and
not to the other, the former must perforce bear the consequences of its neglect. Hence, petitioner should
bear the cost of its own negligence.
Petitioners maintain that the delay in PNB v. CA was even shorter than that in the present
case. If the bank in the aforesaid case was negligent in not discovering the overpayment, herein
petitioners assert that the negligence was even more culpable in the present case. They add that,
given the standard practice of banks to flag delinquent accounts, the inaction for almost seven
years of herein respondent bank was gross and inexcusable.
We are not persuaded. There are no absolute rules in the application of equity, and each
case must be examined in the light of its peculiar facts. In PNB v. CA, there was a mistake, an
inexcusable one, on the part of petitioner bank in making an overpayment and repeating the same
error fourteen days later. If the bank could not immediately discover the mistake despite all its
agents and employees, the beneficiary of the amount could not be expected to do so. It is, thus,
inequitable to allow PNB to collect the amount, after such a long delay, from the beneficiary who
had assumed, after all those years, that the amount really belonged to it.
In the present case, there is no showing of any mistake or any inequity. The fact alone that
seven years had lapsed before PNB filed the collection suit does not mean that it discovered the
obligation of the sureties only then. There was a Surety Arrangement, and the law says that the
said contract can be enforced by action within ten years. The bank and the sureties all knew that
the action to enforce the contract did not have to be filed immediately. In other words, the bank
committed no mistake or inequitable conduct that needed correction, and the sureties had no
misconception about their liabilities under the contract.
Clearly, petitioners have no recourse in equity, because they failed to show any inequity on
the part of PNB.

Additional Issue: Liability of Conjugal Assets

In their Memorandum, petitioners belatedly ask the Court to rule that, in case of a court
ruling adverse to them, the conjugal properties would not be liable for the husbands debts that
did not redound to the benefit of the conjugal partnership.xxii[18]
This issue cannot be allowed, for it is being raised for the first time only in petitioners
Memorandum. Issues, arguments, theories and causes of action not raised below may no longer
be posed on appeal.xxii[19] Furthermore, petitioners are asking the Court to issue a ruling on a
hypothetical situation. In effect, they are asking the Court to render an advisory opinion, a task
which is beyond its constitutional mandate.
WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of
Appeals is AFFIRMED. Costs against petitioners.
SO ORDERED.
Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
Romero, J., (Chairman), abroad on official leave.

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