PROPERTY CASES

SECOND DIVISION
G.R. No. 59731, January 11, 1990
ALFREDO CHING, PETITIONER, VS. THE HONORABLE COURT OF
APPEALS & PEDRO ASEDILLO, RESPONDENTS.

DECISION

PARAS, J.:

This is a petition for review on certiorari which seeks to nullify the decision of
respondent Court of Appeals (penned by Hon. Rodolfo A. Nocon with the
concurrence of Hon. Crisolito Pascual and Juan A. Sison) in CA-G.R. No.
12358-SP entitled Alfredo Ching v. Hon. M. V. Romillo, et al. which in effect
affirmed the decision of the Court of First Instance of Rizal, now Regional Trial
Court (penned by Judge Manuel V. Romillo, Jr. then District Judge, Branch
XXVII Pasay City) granting ex-parte the cancellation of title registered in the
name of Ching Leng in favor of Pedro Asedillo in Civil Case No. 6888-P
entitled Pedro Asedillo v. Ching Leng and/or Estate of Ching Leng.

The facts as culled from the records disclose that:

In May 1960, Decree No. N-78716 was issued to spouses Maximo Nofuente
and Dominga Lumandan in Land Registration Case No. N-2579 of the Court of
First Instance of Rizal and Original Certificate of Title No. 2433
correspondingly given by the Register of Deeds for the Province of Rizal
covering a parcel of land situated at Sitio of Kay-Biga, Barrio of San Dionisio,
Municipality of Paranaque, Province of Rizal, with an area of 51,852 square
meters (Exhibit "7", p. 80, CA Rollo).

In August 1960, 5/6 portion of the property was reconveyed by said spouses to
Francisco, Regina, Perfecta, Constancio and Matilde all surnamed Nofuente and
Transfer Certificate of Title No. 78633 was issued on August 10, 1960
accordingly (Exhibit "8", pp. 81 and 82, Ibid.).

By virtue of a sale to Ching Leng with postal address at No. 44 Libertad Street,
Pasay City, Transfer Certificate of Title No. 91137 was issued on September 18,
1961 and T. C. T. No. 78633 was deemed cancelled. (Exhibit "5-2", pp. 76-77
and 83, Ibid.).

On October 19, 1965, Ching Leng died in Boston, Massachusetts, United States
of America. His legitimate son Alfredo Ching filed with the Court of First
Instance of Rizal (now RTC) Branch III, Pasay City a petition for administration
of the estate of deceased Ching Leng docketed as Sp. Proc. No. 1956-P. Notice
of hearing on the petition was duly published in the "Daily Mirror", a newspaper
of general circulation on November 23 and 30 and December 7, 1965. No
oppositors appeared at the hearing on December 16, 1965, consequently after
presentation of evidence petitioner Alfredo Ching was appointed administrator
of Ching Leng's estate on December 28, 1965 and letters of administration
issued on January 3, 1966 (pp. 51-53, Rollo). The land covered by T. C. T. No.
91137 was among those included in the inventory submitted to the court (p. 75,
Ibid.).

Thirteen (13) years after Ching Leng's death, a suit against him was commenced
on December 27, 1978 by private respondent Pedro Asedillo with the Court
First Instance of Rizal (now RTC), Branch XXVII, Pasay City docketed as Civil
Case No. 6888-P for reconveyance of the abovesaid property and cancellation
of T.C.T. No. 91137 in his favor based on possession (p. 33, Ibid.). Ching Leng's
last known address is No. 44 Libertad Street, Pasay City which appears on the
face of T. C. T. No. 91137 (not No. 441 Libertad Street, Pasay City, as alleged in
private respondent's complaint). (Order dated May 29, 1980, p. 55, Ibid.). An
amended complaint was filed by private respondent against Ching Leng and/or
Estate of Ching Leng on January 30, 1979 alleging "That on account of the fact
that the defendant has been residing abroad up to the present, and it is not known
whether the defendant is still alive or dead, he or his estate may be served by summons
and other processes only by publication"; (p. 38, Ibid.). Summons by publication
to Ching Leng and/or his estate was directed by the trial court in its order dated
February 7, 1979. The summons and the complaint were published in the
"Economic Monitor", a newspaper of general circulation in the province of
Rizal including Pasay City on March 5, 12 and 19, 1979. Despite the lapse of the
sixty (60) day period within which to answer defendant failed to file a responsive
pleading and on motion of counsel for the private respondent, the court a quo
in its order dated May 25, 1979, allowed the presentation of evidence ex-parte. A
judgment by default was rendered on June 15, 1979, the decretal portion of
which reads:
"WHEREFORE, finding plaintiff's causes of action in the complaint to be duly
substantiated by the evidence, judgment is hereby rendered in favor of the
plaintiff and against the defendant declaring the former (Pedro Asedillo) to be
the true and absolute owner of the property covered by T.C.T. No. 91137;
ordering the defendant to reconvey the said property in favor of the plaintiff;
sentencing the defendant Ching Leng and/or the administrator of his estate to
surrender to the Register of Deeds of the Province of Rizal the owner's copy of
T.C.T. No. 91137 so that the same may be cancelled failing in which the said
T.C.T. No. 91137 is hereby cancelled and the Register of Deeds of the Province
of Rizal is hereby ordered to issue, in lieu thereof, a new transfer certificate of
title over the said property in the name of the plaintiff Pedro Asedillo of legal
age, and a resident of Estrella Street, Makati, Metro Manila, upon payment of
the fees that may be required therefor, including the realty taxes due the
Government.

"IT IS SO ORDERED." (pp. 42-44, Ibid.)

Said decision was likewise served by publication on July 2, 9 and 16, 1979
pursuant to Section 7 of Rule 13 of the Revised Rules of Court (CA Decision,
pp. 83-84, Ibid.). The title over the property in the name of Ching Leng was
cancelled and a new Transfer Certificate of Title was issued in favor of Pedro
Asedillo (p. 77, CA Rollo) who subsequently sold the property to Villa Esperanza
Development, Inc. on September 3, 1979 (pp. 125-126, Ibid.).

On October 29, 1979 petitioner Alfredo Ching learned of the abovestated

decision. He filed a verified petition on November 10, 1979 to set it aside as null
and void for lack of jurisdiction which was granted by the court on May 29,
1980 (penned by Hon. Florentino de la Pena, Vacation Judge, pp. 54-59, Rollo).

On motion of counsel for private respondent the said order of May 29, 1980
was reconsidered and set aside, the decision dated June 15, 1979 aforequoted
reinstated in the order dated September 2, 1980. (pp. 60-63, Ibid.).

On October 30, 1980, petitioner filed a motion for reconsideration of the said
latter order but the same was denied by the trial court on April 12, 1981 (pp. 77-
79, Ibid.).
Petitioner filed an original petition for certiorari with the Court of Appeals but
the same was dismissed on September 30, 1981. His motion for reconsideration
was likewise denied on February 10, 1982 (pp. 81-90, Ibid.).

Private respondent Pedro Asedillo died on June 7, 1981 at Makati, Metro Manila
during the pendency of the case with the Court of Appeals (p. 106, CA Rollo).

Hence, the instant petition.

Private respondent's comment was filed on June 1, 1982 (p. 117, Ibid.) in
compliance with the resolution dated April 26, 1982 (p. 109, Ibid.). Petitioner
filed a reply to comment on June 18, 1982 (p. 159, Ibid.) and the Court gave due
course to the petition in the resolution of June 28, 1982 (p. 191, Ibid.).

Petitioner raised the following:

ASSIGNMENTS OF ERROR

WHETHER OR NOT A DEAD MAN CHING LENG AND/OR HIS

ESTATE MAY BE VALIDLY SERVED WITH SUMMONS AND
DECISION BY PUBLICATION.

II

WHETHER OR NOT AN ACTION FOR RECONVEYANCE OF

PROPERTY AND CANCELLATION OF TITLE IS IN PERSONAM, AND
IF SO, WOULD A DEAD MAN AND/OR HIS ESTATE BE BOUND BY
SERVICE OF SUMMONS AND DECISION BY PUBLICATION.

III

WHETHER OR NOT THE PROCEEDINGS FOR RECONVEYANCE

AND CANCELLATION OF TITLE CAN BE HELD EX-PARTE.

IV

WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION

OVER THE SUBJECT MATTER AND THE PARTIES.
 V

WHETHER OR NOT PRIVATE RESPONDENT IS GUILTY OF LACHES

IN INSTITUTING THE ACTION FOR RECONVEYANCE AFTER THE
LAPSE OF 19 YEARS FROM THE TIME THE DECREE OF
REGISTRATION WAS ISSUED.

Petitioner's appeal hinges on whether or not the Court of Appeals has decided a
question of substance in a way probably not in accord with law or with the
applicable decisions of the Supreme Court.

Petitioner avers that an action for reconveyance and cancellation of title is in

personam and the court a quo never acquired jurisdiction over the deceased Ching
Leng and/or his estate by means of service of summons by publication in
accordance with the ruling laid down in Ang Lam v. Rosillosa et al., 86 Phil. 448
[1950].

On the other hand, private respondent argues that an action for cancellation of
title is quasi in rem, for while the judgment that may be rendered therein is not
strictly a judgment in rem, it fixes and settles the title to the property in
controversy and to that extent partakes of the nature of the judgment in rem,
hence, service of summons by publication may be allowed unto Ching Leng
who on the face of the complaint was a non-resident of the Philippines in line
with the doctrine enunciated in Perkins v. Dizon, 69 Phil. 186 [1939].

The petition is impressed with merit.

An action to redeem, or to recover title to or possession of, real property is not

an action in rem or an action against the whole world, like a land registration
proceeding or the probate of a will; it is an action in personam, so much so that a
judgment therein is binding only upon the parties properly impleaded and duly
heard or given an opportunity to be heard. Actions in personam and actions in rem
differ in that the former are directed against specific persons and seek personal
judgments, while the latter are directed against the thing or property or status of
a person and seek judgments with respect thereto as against the whole world.
An action to recover a parcel of land is a real action but it is an action in
personam, for it binds a particular individual only although it concerns the right to
a tangible thing (Ang Lam v. Rosillosa, supra).
Private respondent's action for reconveyance and cancellation of title being in
personam, the judgment in question is null and void for lack of jurisdiction over
the person of the deceased defendant Ching Leng. Verily, the action was
commenced thirteen (13) years after the latter's death. As ruled by this Court in
Dumlao v. Quality Plastic Products, Inc. (70 SCRA 475 [1976]) the decision of the
lower court insofar as the deceased is concerned, is void for lack of jurisdiction
over his person. He was not, and he could not have been validly served with
summons. He had no more civil personality. His juridical personality, that is
fitness to be subject of legal relations, was lost through death (Arts. 37 and 42
Civil Code).

The same conclusion would still inevitably be reached notwithstanding joinder

of Ching Leng's estate as co-defendant. It is a well-settled rule that an estate can
sue or be sued through an executor or administrator in his representative
capacity (21 Am. Jr. 872). Contrary to private respondent's claims, deceased
Ching Leng is a resident of 44 Libertad Street, Pasay City as shown in his death
certificate and T. C. T. No. 91137 and there is an on-going intestate proceedings
in the same court, Branch III commenced in 1965, and notice of hearing thereof
duly published in the same year. Such misleading and misstatement of facts
demonstrate lack of candor on the part of private respondent and his counsel,
which is censurable.

The complaint for cancellation of Ching Leng's Torrens Title must be filed in
the original land registration case, RTC, Pasig, Rizal, sitting as a land registration
court in accordance with Section 112 of the Land Registration Act (Act No.
496, as amended) not in CFI Pasay City in connection with, or as a mere
incident in Civil Case No. 6888-P (Estanislao v. Honrado, 114 SCRA 748 [1982]).

Section 112 of the same law requires "notice to all parties in interest." Since
Ching Leng was already in the other world when the summons was published he
could not have been notified at all and the trial court never acquired jurisdiction
over his person. The ex-parte proceedings for cancellation of title could not have
been held (Estanislao v. Honrado, supra).

The cited case of Perkins v. Dizon, supra is inapplicable to the case at bar since
petitioner Perkins was a non-resident defendant sued in Philippine courts and
sought to be excluded from whatever interest she has in 52,874 shares of stocks
with Benguet Consolidated Mining Company. The action being a quasi in rem,
summons by publication satisfied the constitutional requirement of due process.
The petition to set aside the judgment for lack of jurisdiction should have been
granted and the amended complaint of private respondent based on possession
and filed only in 1978 dismissed outrightly. Ching Leng is an innocent purchaser
for value as shown by the evidence adduced in his behalf by petitioner herein,
tracing back the roots of his title since 1960, from the time the decree of
registration was issued.

The sole remedy of the landowner whose property has been wrongfully or
erroneously registered in another's name after one year from the date of the
decree is not to set aside the decree, but respecting the decree as
incontrovertible and no longer open to review, to bring an ordinary action in the
ordinary court of justice for damages if the property has passed unto the hands
of an innocent purchaser for value (Sy, Sr. v. Intermediate Appellate Court, G. R.
No. 66742; Teoville Development Corporation v. IAC, et al., G. R. No. 75011, June
16, 1988).

Failure to take steps to assert any rights over a disputed land for 19 years from
the date of registration of title is fatal to the private respondent's cause of action
on the ground of laches. Laches is the failure or neglect, for an unreasonable
length of time to do that which by exercising due diligence could or should have
been done, earlier; it is negligence or omission to assert a right within a
reasonable time warranting a presumption that the party entitled to assert it
either has abandoned it or declined to assert it (Bailon-Casilao v. Court of Appeals,
G. R. No. 78178, April 15, 1988; Villamor v. Court of Appeals, G. R. No. 41508,
June 27, 1988).

The real purpose of the Torrens systems is to quiet title to land and to stop
forever any question as to its legality. Once a title is registered, the owner may
rest secure, without the necessity of waiting in the portals of the court, or sitting
on the "mirador su casa", to avoid the possibility of losing his land (National Grains
Authority v. IAC, 157 SCRA 388 [1988]).

A Torrens title is generally a conclusive evidence of the ownership of the land

referred to therein (Section 49, Act 496). A strong presumption exists that
Torrens titles are regularly issued and that they are valid. A Torrens title is
incontrovertible against any "information possessoria" or title existing prior to the
issuance thereof not annotated on the title (Salamat Vda. de Medina v. Cruz, G. R.
No. 39272, May 4, 1988).
PREMISES CONSIDERED, (1) the instant petition is hereby GRANTED;
(2) the appealed decision of the Court of Appeals is hereby REVERSED and
SET ASIDE; (3) the trial court's decision dated June 15, 1979 and the Order
dated September 2, 1980 reinstating the same are hereby declared NULL and
VOID for lack of jurisdiction and (4) the complaint in Civil Case No. 6888-P is
hereby DISMISSED.

SO ORDERED.

Melencio-Herrera, (Chairman), Sarmiento, and Regalado, JJ., concur.

Padilla, J., no part; was former counsel of Ching Leng.
 THIRD DIVISION
G.R. No. 139843, July 21, 2005
CONSUELO N. VDA. DE GUALBERTO, FE GUALBERTO-CHAVEZ,
AMADOR GUALBERTO, CESAR GUALBERTO, RODOLFO GUALBERTO,
LUZVIMINDA GUALBERTO MIRANA, AND VIRGINIA GUALBERTO,
PETITIONERS, VS. FRANCISCO H. GO, RAYMUNDO J. GO, MIRIAM J.
GO, MIRIAM G. SON, VICENTE J. GO, BELEN GO, AND ROSA JAVIER
GO, RESPONDENTS.

DECISION

GARCIA, J.:

Before the Court is this petition for review on certiorari under Rule 45 of the
Rules of Court to nullify and set aside the following issuances of the Court of
Appeals in CA-G.R. CV No. 57690, to wit:
1) Decision[1] dated May 21, 1999, affirming, with modification, an earlier
decision of the Regional Trial Court at Siniloan, Laguna in an action for
conveyance, accion publiciana, and quieting of title with damages, thereat
commenced by the petitioners against the herein respondents; and

2) Resolution[2] dated August 25, 1999, denying petitioners' motion for

reconsideration.
The pertinent factual antecedents as found by the two (2) courts below may be
briefly summarized, as follows:

Petitioners are the heirs of the late Generoso Gualberto, former registered
owner of a parcel of land situated at Redor Street, Barangay Redor, Siniloan,
Laguna under Transfer Certificate of Title (TCT) No. 9203, containing an area
of 169.59 square meters, more or less, and declared for taxation purposes under
Tax Declaration No. 4869.

Sometime in 1965, the subject parcel of land was sold by Generoso Gualberto
and his wife, herein petitioner Consuelo Natividad Vda. De Gulaberto
(Consuelo, for brevity), to respondents' father Go S. Kiang for P9,000.00, as
evidenced by a deed entitled "Kasulatan ng Bilihang Tuluyan"[3] dated January
15, 1965 ("Kasulatan", for brevity), which deed appears to have been duly
notarized by then Municipal Judge Pascual L. Serrano of the Municipal Court of
Siniloan, Laguna and recorded in his registry as Doc. No. 9, Page No. 12, Book
No.12, Series of 1965[4].

On April 1, 1973, petitioner Consuelo executed an Affidavit[5] attesting to the

fact that the aforementioned parcel of land had truly been sold by her and her
husband Generoso to the spouses Go S. Kiang and Rosa Javier Go, as borne by
the said "Kasulatan". Evidently, the affidavit was executed for purposes of
securing a new tax declaration in the name of the spouses Go.

In December, 1973, in a case for Unlawful Detainer filed by a certain Demetria

Garcia against herein petitioners, the latter alleged that therein plaintiff Garcia
"is not a real party in interest and therefore has no legal capacity and cause of
action to sue the defendants; that the real parties in interest of the parcel of
commercial land and the residential apartment in question are Generoso
Gualberto and Go S. Kiang respectively as shown by TCT No. 9203 issued by
the Register of Deeds of Laguna."[6]

In a Forcible Entry case filed by respondents against petitioners before the

Municipal Circuit Trial Court of Siniloan-Famy, Siniloan, Laguna docketed as
Civil Case No. 336, a decision was rendered in favor of respondents, which
decision was affirmed in toto by the RTC of Siniloan, Laguna. When elevated to
the Court of Appeals, that same decision was affirmed by the latter court, saying
that "the Court finds that the judgment of the court a quo affirming the
previous judgment of the municipal court is supported by sufficient and
satisfactory evidence and there is no reason for the Court to hold otherwise."[7]

In the meantime, on June 14, 1978, Original Certificate of Title (OCT) No. 1388
was issued in the name of respondent Rosa Javier Go, wife of Go S. Kiang.

Such was the state of things when, on August 10, 1995, in the Regional Trial
Court at Siniloan, Laguna petitioners filed against respondents their complaint[8]
in this case for Conveyance, Accion Publiciana, and Quieting of Title with
Damages, thereat docketed as Civil Case No. S-690. After due proceedings, the
trial court, in a decision[9] dated August 28, 1997, dismissed petitioners'
complaint and ordered them to pay attorney's fees to respondents, thus:
WHEREFORE, premises considered, judgment is hereby rendered ordering the
dismissal of the complaint. Plaintiffs are hereby ordered to pay defendants the
amount of P10,000.00 for and as Attorney's fees. To pay the cost.

SO ORDERED.
On appeal to the Court of Appeals in CA-G.R. CV No. 57690, the appellate
court, in the herein assailed decision dated May 21, 1999,[10] affirmed that of
the trial court, minus the award of attorney's fees, to wit:
WHEREFORE, subject to the modification as above indicated, the decision
appealed from is hereby AFFIRMED. Without pronouncement as costs.

SO ORDERED.
With their motion for reconsideration having been denied by the same court in
its resolution of August 25, 1999, petitioners are now with us, commending for
our resolution the following issues:

I. WHETHER OR NOT A TITLED PROPERTY CAN BE THE

SUBJECT OF A FREE PATENT TITLE.

II. WHETHER OR NOT THE RIGHT OF A REGISTERED OWNER

TO DEMAND THE RETURN OF HIS PROPERTY CAN BE LOST
BY PRESCRIPTION OR LACHES.

III. WHETHER AN ACTION FOR RECONVEYANCE OF PROPERTY

BASED ON A NULLITY OF TITLE PRESCRIBES.

We DENY.

The first issue raised by petitioners attacks the validity of respondent Rosa Javier
Go's free patent title. This cannot be done in the present recourse for two (2)
basic reasons: first, the validity of a torrens title cannot be assailed collaterally;
and second, the issue is being raised for the first time before this Court.

In Trinidad vs. Intermediate Appellate Court,[11] the Court reiterated the doctrine on
the indefeasibility of a torrens title in this wise:
The said property is covered by TCT No. 102167 of the Registry of Deeds of
Quezon City. Under the Land Registration Act, title to the property covered by
a Torrens certificate becomes indefeasible after the expiration of one year from
the entry of the decree of registration. Such decree of registration is
incontrovertible and is binding on all persons whether or not they were notified
of or participated in the registration proceedings.

If such title is to be challenged, it may not be done collaterally, as in the present

case, because the judicial action required is a direct attack. Section 48 of the
Property Registration Decree expressly provides that a certificate of title cannot
be subject to collateral attack and can be altered, modified or cancelled only in a
direct proceeding in accordance with law. This was the same rule under Act
496.
To stress, the action filed by petitioners is one for "Conveyance, Accion
Publiciana, and Quieting of Title With Damages", and not an action for
annulment of OCT No. 1388 issued to Rosa Javier Go. We, therefore, cannot
entertain the issue in the present petition for review on certiorari.

Besides, as it may readily be noted, petitioners never raised this issue before any
of the two (2) courts below. As it is, the issue is being raised only for the first
time in this petition before this Court. Settled is the rule that issues not raised in
the proceedings below cannot be raised for the first time on appeal.

In Labor Congress of the Philippines vs. NLRC,[12] we have made it clear that "to
allow fresh issues on appeal is violative of the rudiments of fair play, justice and
due process.[13]" Likewise, in Orosa vs. Court of Appeals[14], the Court disallowed it
because "it would be offensive to the basic rule of fair play, justice and due
process if it considered issue raised for the first time on appeal." We cannot
take an opposite stance in the present case.

The next two (2) remaining issues boil down to whether or not a registered
owner's right to assail the validity of his defendant's title and to thereafter seek
reconveyance thereof, may be lost by prescription or laches. Being interrelated,
these will be addressed jointly.

The doctrine governing prescription of actions for reconveyance of real

property was clearly stated by the Court in Salvatierra vs. Court of Appeals,[15] as
follows:
At this juncture, we find the need to remind the court a quo as well as other trial
courts to keep abreast with the latest jurisprudence so as not to cause possible
miscarriages of justice in the disposition of the cases before them. In the
relatively recent case of Caro v. CA, 180 SCRA 401, the Supreme Court clarified
the seemingly confusing precedents on the matter of prescription of actions for
reconveyance of real property, as follows:
`We disagree. The case of Liwalug Amerold, et al. v. Molok Bagumbaran, G.R. L-
33261, September 30, 1987, 154 SCRA 396 illuminated what used to be a gray
area on the prescriptive period for an action to reconvey the title to real
property and corrolarilly, its point of reference:

`x x x. It must be remembered that before August 30, 1950, the date of the
effectivity of the new Civil Code, the Old Code of Civil Procedure (Act No.
190) governed prescription. It provided:

`SEC. 43. Other civil actions; how limited. - Civil actions other than for the
recovery of real property can only be brought within the following periods after
the right of action accrues:

`3. Within four years: x x x An action for relief on the ground of fraud, but the
right of action in such case shall not be deemed to have accrued until the
discovery of the fraud:

xxx xxx xxx

`In contract (sic) under the present Civil Code, we find that just as an implied or
constructive trust in (sic) an offspring of the law (Art. 1465, Civil Code), so is
the corresponding obligation to reconvey the property and the title thereto in
favor of the true owner. In this context, and vis--vis prescription, Article 1144
of the Civil Code is applicable.

`Article 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;

xxx xxx xxx

`An action for reconveyance based on an implied or constructive trust must perforce prescribe in
ten years and not otherwise. A long line of decisions of this Court, and of very recent vintage at
that, illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance
based on an implied or constructive trust prescribes in ten years from the issuance of the
Torrens title over the property. The only discordant note, it seems, is Balbin v. Medalla, which
states that the prescriptive period for a reconveyance action is four years. However, this
variance can be explained by the erroneous reliance on Gerona v. de Guzman.
But in Gerona, the fraud was discovered on June 25, 1948, hence Section 43(3)
of Act No. 190 was applied, the New Civil Code not coming into effect until
August 30, 1950 as mentioned earlier. It must be stressed, at this juncture, that
Article 1144 and Article 1456, are new provisions. They have `no counterparts
in the old Civil Code or in the old Code of Civil Procedure, the latter being then
resorted to as legal basis of the four-year prescriptive period for an action for
reconveyance of title of real property acquired under false pretenses.

"An action for reconveyance has its basis in Section 53, paragraph 3 of
Presidential Decree No. 1529, which provides:
`In all cases of registration procured by fraud, the owner may pursue all his legal
and equitable remedies against the parties to such fraud without prejudice,
however, to the rights of any innocent holder of the decree of registration on
the original petition or application, x x x.'
"This provision should be read in conjunction with Article 1456 of the Civil
Code, which provides:

`Article 1456. If property is acquired through mistake or fraud, the person

obtaining it is, by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.'

"The law thereby creates the obligation of the trustee to reconvey the property and the title
thereto in favor of the true owner. Correlating Section 53, paragraph 3 of Presidential Decree
No. 1529 and Article 1456 of the Civil Code with Article 1144 (2) of the Civil Code,
supra, the prescriptive period for the reconveyance of fraudulently registered real property is ten
(10) years reckoned from the date of the issuance of the certificate of title. In the present
case, therefore, inasmuch as Civil Case No. 10235 was filed on June 4, 1975, it
was well-within the prescriptive period of ten (10) years from the date of the
issuance of "Original Certificate of Title No. 0-6836 on September 17, 1970."
The assailed decision of the Court of Appeals, which affirmed that of the trial
court, faithfully adhered to the above-stated doctrine. We simply find no cogent
reason to disturb the same, much less to review the factual basis of both courts'
holding that the 10-year prescriptive period had expired.

Petitioners insist that their action for reconveyance is imprescriptible.

We do not agree.

An action for reconveyance of real property based on implied or constructive

trust is not barred by the aforementioned 10-year prescriptive period only if the
plaintiff is in actual, continuous and peaceful possession of the property
involved. In DBP vs. CA,[16] the Court explained:
xxx. Generally, an action for reconveyance based on an implied or constructive
trust, such as the instant case, prescribes in 10 years from the date of issuance of
decree of registration. However, this rule does not apply when the plaintiff is in
actual possession of the land. Thus, it has been held:
". . . [A]n action for reconveyance of a parcel of land based on implied or
constructive trust prescribes in ten years, the point of reference being the date
of registration of the deed or the date of the issuance of the certificate of title
over the property, but this rule applies only when the plaintiff or the person enforcing
the trust is not in possession of the property, since if a person claiming to be the owner
thereof is in actual possession of the property, as the defendants are in the
instant case, the right to seek reconveyance, which in effect seeks to quiet title to
the property, does not prescribe. The reason for this is that one who is in actual
possession of a piece of land claiming to be the owner thereof may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate his
right, the reason for the rule being, that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity to ascertain and determine
the nature of the adverse claim of a third party and its effect on his own title,
which right can be claimed only by one who is in possession."
Here, it was never established that petitioners remained in actual possession of
the property after their father's sale thereof to Go S. Kiang in 1965 and up to
the filing of their complaint in this case on August 10, 1995. On the contrary,
the trial court's factual conclusion is that respondents had actual possession of
the subject property ever since. The action for reconveyance in the instant case
is, therefore, not in the nature of an action for quieting of title, and is not
imprescriptible.

Finally, to write finis once and for all to this case, petitioners may well be
reminded that "as a rule, the conclusions of fact of the trial court, especially
when affirmed by the Court of Appeals, are final and conclusive and cannot be
reviewed on appeal by the Supreme Court."[17] Albeit the rule admits of several
exceptions[18], none of them are in point in this case. It is not our function to
review, examine and evaluate or weigh the probative value of the evidence
adduced by the parties. In any event, we have carefully examined the factual
findings of the Court of Appeals and found the same to be borne out of the
record and sufficiently anchored on the evidence presented.

WHEREFORE, petition is hereby DENIED. No pronouncements as to

costs.

SO ORDERED.

Panganiban, (Chairman), Sandoval-Gutierrez, and Corona, JJ., concur.

Carpio-Morales, J., no part.
 SECOND DIVISION
G.R. No. 143510, November 23, 2005
PUNO, CHAIRMAN, AUSTRIA-MARTINEZ, VS. CALLEJO, SR., TINGA,
AND CHICO-NAZARIO, JJ. HEIRS OF MANUEL ABELLA,
REPRESENTED BY MERCEDES N. PROMULGATED: ABELLA,
RESPONDENTS.

DECISION

AUSTRIA-MARTINEZ, J.:

This resolves the petition for review on certiorari seeking to set aside the
Decision[1] of the Court of Appeals (CA) dated February 4, 2000 denying the
petition for review on certiorari in CA-G.R. SP No. 47747 and the Resolution
dated May 29, 2000 denying petitioner's motion for reconsideration of the
aforementioned decision.

The property in dispute is a parcel of land with an area of one hectare located
beside the Peafrancia Basilica in Naga City. It is covered by Tax Declaration
No. 004.1152 in the name of herein respondents, the heirs of Don Manuel I.
Abella (respondents). According to herein petitioner Roman Catholic
Archbishop of Caceres (petitioner) said parcel of land had been donated to him
by respondents sometime in 1981, in exchange for masses to be offered once a
month in perpetuity for the eternal repose of the soul of Don Manuel I.
Abella. Respondents, on the other hand, vehemently deny such allegation and
counter that petitioner encroached and fenced off the subject parcel of land
without their consent. The proceedings that transpired in this case had been
accurately narrated in the Decision of the Regional Trial Court (RTC) of Naga
City, Branch 23, in Civil Case No. 94-3345 in this wise:
In the action for forcible entry instituted by the Heirs of Manuel Abella
(ABELLA, for short) against the Roman Catholic Archbishop of Nueva Caceres
(ARCHBISHOP, for short) before the Municipal Trial Court of Naga City,
Branch I, docketed as Civil Case No. 8479, a judgment was rendered in favor of
the ARCHBISHOP, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
 1. The complaint is ordered dismissed for lack of merit
and the petition for preliminary mandatory injunction
is hereby denied for being already moot and academic.

2. The plaintiffs are hereby condemned jointly and

severally to respect the ownership and possession of
the one-hectare lot they had donated, transferred, and
conveyed to the Roman Catholic Archbishop of
Caceres by way of onerous donation, and to desist
from further interfering with the possession and
enjoyment of the same by the defendant Roman
Catholic Archbishop of Caceres and its representatives,
and

3. To pay the defendants, jointly and severally, the

amount of P5,000.00 as actual damages, and the further
sum of P3,000.00 as and for attorney's fees and to pay
the costs of suit.

SO ORDERED.
On appeal, the respondent court's Decision was affirmed in toto by this Court
(RTC 88-1615, Branch 22) in its Decision dated August 19, 1988. The Decision
was appealed by ABELLA to the Court of Appeals docketed as CA-G.R. SP
No. 17471. The Court of Appeals in its decision (ANNEX B, Petition) dated
July 3, 1990 affirmed the decision of this Court (Branch 22) by denying Abella's
petition for review.

While CA-G.R. SP No. 17471 was pending before the Court of Appeals,
ABELLA filed another case before this Court (Branch 24) against the
ARCHBISHOP, docketed as Civil Case No. 89-1802 for "Quieting of Title"
involving the same property subject matter of MTC Civil Case No. 8479
(Forcible Entry).

This Court (Branch 24) rendered judgment in Civil Case No. 89-1802 in favor
of ABELLA, the dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered:
 1. Declaring the herein plaintiffs as the rightful owners, as
co-owners pro-indiviso, of the one (1) hectare lot in
question and that the herein defendant has no rightful
claim of ownership over the same. And, accordingly,
the defendant is adjudged to recognize and respect the
plaintiffs' absolute ownership thereof.

2. Declaring the defendant as the absolute owner of the

total area of 1,000 square meters comprising of that
541 square meters previously donated by Manuel
Abella in August, 1979 (Exhibit 2) and the additional
459 square meters donated verbally by Mrs. Abella
sometime in 1982 which finds acceptance and
recognized by the other owners thereof, Marianito
Abella and Ma. Teresa Abella Ballesteros, co-plaintiffs
in the instant case.

3. Plaintiffs' other claims are hereby denied for lack of

merit and/or insufficiency of evidence to sustain them.

4. Defendant's counterclaim is hereby denied for lack of

merit.

No pronouncement as to costs.
The Decision in Civil Case No. 89-1802 was appealed by the ARCHBISHOP to
the Court of Appeals, docketed as CA-G.R. SP No. 27370. The Court of
Appeals rendered a Decision dated November 28, 1991 affirming this Court's
Decision (ANNEX D, Petition).

The ARCHBISHOP appealed the Decision of the Court of Appeals in CA-G.R.

SP No. 27370 to the Supreme Court which was docketed as G.R. No.
103123. The appeal was dismissed in a minute resolution dated June 1, 1992
(ANNEX E, Petition) holding that there was "no reversible error committed by
the appellate court."

Both Decisions in the Forcible Entry case and in the Quieting of Title case are
now final and executory.
The ARCHBISHOP moved to execute the Decision in the Forcible Entry case,
but the respondent court [Municipal Trial Court of Naga City, Branch 1 (MTC)]
in its Order dated May 10, 1993 (ANNEX A, Petition) denied the motion for
execution. ...[2]
Upon denial by the Municipal Trial Court of petitioner's motion for execution,
he filed a petition for certiorari and mandamus with this Court but pursuant to a
Resolution dated February 13, 1995, the case was referred to the Executive
Judge of the RTC of Naga City for raffle and was eventually raffled to Branch
23 thereof. The RTC then promulgated the aforequoted Decision dated
February 4, 1998, the dispositive portion of which reads thus:
WHEREFORE, judgment is hereby rendered, sustaining the validity of the
respondent court's Order dated May 10, 1993. Consequently, the petition is
hereby DENIED. No pronouncement as to costs.

SO ORDERED.[3]
Herein petitioner again elevated the case straight to this Court via a petition for
review on certiorari. Per Resolution dated May 13, 1998, the Court referred the
petition to the CA, and on February 4, 2000, the latter promulgated its
Decision[4] denying the petition. The CA held that:
... Admittedly, the decision in Civil Case No. 8479 for Forcible Entry has
become final and executory earlier than in Civil Case No. 89-1802 for Quieting
of Title. The finality of the decision in the quieting of title, declaring the
respondents as the true owner of the subject property is a supervening event
that renders the judgment in the forcible entry, awarding possession to
petitioner, notwithstanding its finality, unenforceable by execution. A
suspension or refusal of execution of judgment or order on equitable grounds
can only be justified upon facts and events transpiring after the judgment or
order had become executory, materially affecting judgment obligation...[5]
Petitioner moved for reconsideration of the Decision but on May 29, 2000, a
Resolution was issued denying the same.

Hence, the herein petition where the only issue for resolution is whether or not
the final and executory judgment in the case for quieting of title wherein
respondents were adjudged to be the owners of the subject property is a
supervening event that justifies the suspension or non-enforcement of the final
judgment in the previous case for forcible entry.
Petitioner insists that the judgment in the quieting of title case should not be
considered as a supervening event that bars the enforcement of the decision in
the forcible entry case because even if respondents had indeed been finally
adjudged to be the absolute owners of the disputed land, an owner of a property
is not necessarily entitled to possession thereof, such as when the owner leased
out the property to another. Petitioner advances the theory that what
respondents had actually given him is perpetual usufruct over the subject
property.

The Court finds the petition unmeritorious.

The theory advanced by petitioner from the very beginning is that he is entitled
to possession of the disputed property as the owner thereof because the
property was transferred to him by virtue of an onerous donation made by
respondents. Thus, petitioner's alleged right of possession is premised on his
claim of ownership. He cannot change his theory when the case is on review,
by presenting another theory that is inconsistent with his allegations during the
proceedings below. Petitioner cannot contradict himself by saying first that
respondents had agreed to transfer to him the ownership over the property, only
to say later that what respondents granted to him was the right to possess the
property. Petitioner is bound by the statements he made while the case was
being heard in the lower courts. As held in Philippine Airlines, Inc. vs. NLRC,[6] to
wit:
... The rule is well-settled that points of law, theories, issues and arguments not
adequately brought to the attention of the trial court need not be, and ordinarily
will not be considered by a reviewing court as they cannot be raised for the first
time on appeal because this would be offensive to the basic rules of fair play,
justice and due process. ...[7]
Furthermore, it should be emphasized that in a case for ejectment, any finding
of the court regarding the issue of ownership is merely provisional and not
conclusive. This was stressed in Umpoc vs. Mercado,[8] where the Court stated:
... we emphasize that our disquisition on the issue of ownership in ejectment
cases, as in the case at bar, is only provisional to determine who between the
parties has the better right of possession. It is, therefore, not conclusive as to
the issue of ownership, which is the subject matter of a separate case of
annulment of title filed by respondent. x x x As the law now stands, in an
ejectment suit, the question of ownership may be provisionally ruled upon for
the sole purpose of determining who is entitled to possession de facto. [9]
Thus, the finding in the forcible entry case that petitioner had become the
owner and rightful possessor of the disputed property because respondents had
donated the property to petitioner is only provisional. It is the ruling in the case
for quieting of title, adjudging herein respondents to be the absolute owners of
the subject property, which is conclusive. The finding in the case for quieting of
title that respondents never consented to petitioner's occupation of the subject
property has now become final and immutable. The CA, adopting the analysis
of the trial court, held thus:

4. The cause of the defendant [herein petitioner] is not served

any better by the fact that Monsgr. Balce had caused the
fencing of the alleged one (1) hectare donated by the
plaintiffs [herein respondents] to the church, because as the
record shows Mrs. Abellas was not aware of said fencing
which was done while she was abroad. And, when she
returned from abroad and that fact was reported to her by
her encargado, Erwin Lara, she went to the
premises. However, she no longer did anything about it
because the fence was already destroyed and/or turned
down. And, when Monsgr. Balce tried to reconstruct said
fence in 1988 she went to the place with a policeman and
stopped the laborers from continuing with their work in
fencing the property. However, on the following morning,
Monsgr. Balce ordered the same laborers to continue their
work. That prompted the plaintiffs to file a case against
Monsgr. Balce before the MTC in Naga City. x x x All
these circumstances undertaken by the plaintiffs negate the
idea that they have already parted with the property in favor
of the defendant by way of donation. [10]

Necessarily, the finding in the case for quieting of title that respondents
never agreed to donate the property or to allow petitioner to occupy the subject
land prevails over the ruling in the forcible entry case.

The foregoing findings totally foreclose petitioner's belated claim that even if
title over the property remained with respondents, he is nevertheless entitled to
possession thereof. Since respondents never made the alleged donation, there is
absolutely no legal and factual basis for petitioner to claim the right of
possession over it.

Hence, there can be no other conclusion but that the finality of the decision in
the quieting of title case constitutes a supervening event that justifies the non-
enforcement of the judgment in the forcible entry case. In Natalia Realty, Inc. vs.
Court of Appeals,[11] the Court explained thus:
... The jurisdiction of the court to amend, modify or alter its judgment
terminates when the judgment becomes final. This is the principle of
immutability of final judgment that is subject to only few exceptions, none of
which is present in this case. On the other hand, the jurisdiction of the court to
execute its judgment continues even after the judgment has become final for the
purpose of enforcement of judgment.
...

One of the exceptions to the principle of immutability of final judgments is the

existence of supervening events. Supervening events refer to facts which
transpire after judgment has become final and executory or to new circumstances
which developed after the judgment has acquired finality, including matters
which the parties were not aware of prior to or during the trial as they were not
yet in existence at that time.[12]
In the case at bar, the new circumstance which developed after the finality of
the judgment in the forcible entry is the fact that the decision in the case for
quieting of title had also attained finality and conclusively resolved the issue of
ownership over the subject land, and the concomitant right of possession
thereof. Verily, to grant execution of the judgment in the forcible entry case
would work injustice on respondents who had been conclusively declared the
owners and rightful possessors of the disputed land.

IN VIEW OF THE FOREGOING, the petition is DENIED. The Decision of

the Court of Appeals dated February 4, 2000 and its Resolution dated May 29,
2000 are AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Puno, (Chairman), Callejo, Sr., and Tinga, JJ., concur.

Chico-Nazario, J., on leave.
 SECOND DIVISION
G.R. No. 150025, July 23, 2008
SPS. NARCISO BARNACHEA AND JULITA BARNACHEA (NOW HEIRS OF
DECEASED JULITA BARNACHEA), PETITIONERS, VS. HON. COURT OF
APPEALS, HON. OSCAR C. HERRERA, JR., PRESIDING JUDGE, RTC
BRANCH 20, MALOLOS, BULACAN, HON., HORACIO T. VIOLA,
PRESIDING JUDGE, MTC PULILAN, BULACAN, AND SPS. AVELINO
AND PRISCILLA IGNACIO, RESPONDENTS.

DECISION

BRION, J.:

Before us is the Petition for Review by Certiorari filed by the spouses Narciso
and Julita Barnachea[1] (petitioners) against the spouses Avelino and Priscilla
Ignacio (respondents), rooted in the ejectment complaint the respondents filed
against the petitioners before the Municipal Trial Court (MTC) of Pulilan,
Bulacan. The petition prays that we nullify the Decision[2] of the Court of
Appeals ( CA) and its Resolution [3] denying the motion for reconsideration, and
that we suspend the ejectment proceedings in light of a pending action for
quieting of title involving the disputed property.

BACKGROUND FACTS

The respondents filed their complaint for ejectment against the petitioners
before the MTC on October 20, 1998. The subject matter of the complaint were
lots titled in respondent Avelino Ignacio's name (Subdivision Lot 16 covered by
TCT No. 86821, and Subdivision Lot 17 covered by TCT No. 86822), which
lots are adjacent to the property that the petitioners own and occupy. These
properties were originally part of a piece of land owned by a certain Luis Santos
and subsequently inherited by his daughter Purificacion Santos Imperial. The
land was subdivided and transferred to tenant-farmers Santiago Isidro (EP No.
A-050545 with TCT No. T-188-EP) and Procopio de Guzman (EP No. 445440
with TCT No. T-185-EP). The property that the petitioners own and occupy
was derived from the land transferred to Santiago Isidro. Respondent Ignacio's
properties were derived, on the other hand, from the land originally transferred
to Procopio de Guzman.
The complaint was dismissed on December 8, 1999, but was revived on April 5,
2000. The petitioners received summons on April 13, 2000 and, instead of filing
a new Answer, filed on April 18, 2000 a Motion for Extension of Time to File
Answer which the MTC denied on May 5, 2000. The petitioners responded to
this denial by filing a motion for reconsideration on May 23, 2000. Meanwhile,
the respondents filed a Motion for the Issuance of a Writ of Execution dated
May 24, 2000, which the petitioners received on May 26, 2000.

To avert the implementation of the writ of execution, the petitioners filed a

Notice of Appeal. The MTC issued a subpoena dated June 5, 2000 setting the
hearing on the petitioners' Motion for Reconsideration and the respondents'
Motion for Issuance of Writ of Execution on June 19, 2000. The petitioners
subsequently filed a Compliance that prayed, among others, that the pending
resolution on the incident and the Notice of Appeal be deemed to have been
filed ex abundanti cautela. The respondents, for their part, filed a Manifestation
and Motion praying, among others, that the petitioner's Motion for
Reconsideration of the May 5, 2000 Order be denied for being moot and
academic.

On July 21, 2000, the MTC issued an order declaring the petitioners' Motion for
Reconsideration abandoned because of the Notice of Appeal they previously
filed. Thereafter, the MTC forwarded the entire record of Civil Case No. 818 to
the Regional Trial Court, Branch 20 (RTC Branch 20), Malolos, Bulacan. On
August 24, 2000, petitioners submitted their Appeal Memorandum to the RTC
Branch 20 which affirmed the MTC decision on September 20, 2000.

On October 5, 2000, the petitioner Julita's sister, Leticia, representing herself to

be the sole owner of EP No. A-050545 (TCT No. T-188-EP), filed a Petition
for Quieting of Title with the Regional Trial Court, Branch 19 (RTC Branch 19),
Malolos, Bulacan, docketed as Civil Case No. 694-M-2000. On October 9, 2000,
prior to their receipt of the RTC Branch 20's September 20, 2000 decision, the
petitioners filed an Urgent Motion for the Suspension of Proceedings (referred
to for purposes of this decision as the urgent motion).

RTC Branch 20 denied on October 17, 2000 the petitioners' urgent motion and
their subsequent Motion for Reconsideration. The petitioners brought the
denials to the CA via a petition for certiorari under Rule 65 of the Rules of Court
on the issue of "whether the pendency of an action involving the issue of
ownership is sufficient basis for [the] suspension of an ejectment
proceeding between the same parties and relating to the same subject
matter".

THE CA'S DECISION

The CA denied the petition and the petitioners' subsequent motion for
reconsideration, essentially on the grounds that (1) the issue in an ejectment suit
is limited to the physical possession of real property and is separate and distinct
from the issue of ownership and possession de jure that either party may set
forth in his or her pleading; (2) the pendency of an action for reconveyance of
title over the same property or for annulment of deed of sale does not divest the
MTC of its jurisdiction to try the forcible entry or unlawful detainer case before
it, and that ejectment actions generally cannot be suspended pending the
resolution of a case for quieting of title between the same parties over the same
subject property; and (3) the case does not fall under the exception provided by
the case of Amagan v. Marayag[4], where the Court allowed the suspension of
ejectment proceedings because of strong reasons of equity applicable to the case
- the demolition of the petitioner's house unless the proceedings would be
suspended. The CA ruled that the petitioners' reliance on Amagan was
inappropriate because the said case only applies to unlawful detainer actions
while the petitioners' ejectment suit is an action for forcible entry. To the CA,
the initial tolerance on the part of the private respondents did not convert the
nature of their ejectment suit from forcible entry into unlawful detainer,
following the reasoning this Court applied in Munoz v. Court of Appeals.[5]

ASSIGMENT OF ERRORS

The petitioners impute the following error to the CA:

[T]he Honorable Court of Appeals erred when it ruled that the said ejectment
proceeding was not a suit for illegal detainer but one of forcible entry, thus,
denied application to the exceptional rule on suspension of ejectment
proceedings, at any stage thereof, until the action on ownership is finally
settled.[6]
From this general assignment of error, the petitioners submitted in their
memorandum the following specific issues for our resolution:
1) whether or not the ejectment case filed by the respondents against
petitioners with the MTC of Pulilan is for unlawful detainer or for forcible
entry;

2) whether the MTC of Pulilan had validly acquired and exercised

jurisdiction over the ejectment case considering that the complaint was
filed beyond one year from the demand to vacate the subject premises;
and

3) whether or not the ejectment proceedings should be suspended at any

stage until the action on ownership of the disputed portion of the subject
property is finally settled.

OUR RULING

We find the petition without merit.

1. Nature of the Action before the MTC.

The best indicator of what the plaintiff in an ejectment case intends with respect
to the nature of his or her complaint can be found in the complaint itself. In this
case, the complaint states:[7]
"That plaintiffs are the registered owners in fee simple of several residential lots
identified as lots 16 and 17 covered by Certificate of Title Nos. 86821 and 86822
issued in the name of the spouses by the Register of Deeds of Bulacan, with a
total aggregate area of 254 square meters situated at Cutcut, Pulilan, Bulacan.
Copy of the said titles are hereto attached and marked as Annex "A" and "A-1"

"That in a portion of the lots 16 and 17, a portion of the house of the
defendants was erected and built thus usurping the said portion and this was
made known to the defendants when the plaintiffs caused the relocation of the
subject lots, however, considering that the latter were not yet in need of that
portion, they allowed the former to stay on the portion by tolerance;

"That last July 1998, when the plaintiffs were in the process of fencing the
boundary of their lots, to their surprise, they were not allowed by the defendants
to extend the fence up to the portions they illegally occupied;
"That despite the advice given to them by several Geodetic Engineers
commissioned by both the plaintiffs and the herein defendants, for them to give
way and allow the plaintiffs to fence their lot, same proved futile as they
stubbornly refused to surrender possession of the subject portion;
The actions for forcible entry and unlawful detainer are similar because they are
both summary actions where the issue is purely physical possession.[8] Other
than these commonalities, however, they possess dissimilarities that are clear,
distinct, and well established in law.[9]

In forcible entry, (1) the plaintiff must prove that he was in prior physical
possession of the property until he was deprived of possession by the
defendant; (2) the defendant secures possession of the disputed property from
the plaintiff by means of force, intimidation, threat, strategy or stealth; hence,
his possession is unlawful from the beginning; (3) the law does not require a
previous demand by the plaintiff for the defendant to vacate the premises; and
(4) the action can be brought only within one-year from the date the defendant
actually and illegally entered the property.[10]

In marked contrast, unlawful detainer is attended by the following features: (1)

prior possession of the property by the plaintiff is not necessary; (2) possession
of the property by the defendant at the start is legal but the possession becomes
illegal by reason of the termination of his right to possession based on his or her
contract or other arrangement with the plaintiff; (3) the plaintiff is required by
law to make a demand as a jurisdictional requirement; and (4) the one-year
period to bring the complaint is counted from the date of the plaintiff's last
demand on the defendant.[11]

Under these standards, we do not hesitate to declare the Court of Appeals in

error when it held that the present case involves forcible entry rather than
unlawful detainer. A plain reading of the complaint shows the respondents'
positions that the petitioners were in prior possession of the disputed property;
that the respondents allowed them to occupy the disputed property by
tolerance; that the respondents eventually made a demand that the petitioners
vacate the property (on August 26, 1998, which demand the petitioners received
on August 31, 1998); and that the petitioners refused to vacate the property in
light of the defenses they presented. Separately from the complaint, the
respondents characterized the action they filed against the petitioners in the
MTC as an unlawful detainer when they stated in their memorandum that "as
alleged in the complaint, what was filed by the respondents [was] an ejectment suit for unlawful
detainer."[12]

A critical point for us in arriving at our conclusion is the complete absence of

any allegation of force, intimidation, strategy or stealth in the complaint with
respect to the petitioners' possession of the respondents' property. While
admittedly no express contract existed between the parties regarding the
petitioners' possession, the absence does not signify an illegality in the entry nor
an entry by force, intimidation, strategy or stealth that would characterize the
entry as forcible. It has been held that a person who occupies land of another at
the latter's tolerance or permission, without any contract between them, is
necessarily bound by an implied promise that he will vacate upon demand,
failing which a summary action for ejectment is the proper remedy. The status
of the defendant is analogous to that of a lessee or tenant whose terms has
expired but whose occupancy continues by tolerance of the owner.[13]

To be sure, we are aware of the Munoz v. Court of Appeals [14] ruling that the CA
relied upon to reach the conclusion that the present case involves forcible entry,
not unlawful detainer. What the CA apparently misread in Munoz was the
allegation of stealth in the complaint; anchored on this finding, the Court
concluded that the defendant's possession was illegal from the beginning so that
there could be no possession by tolerance. The allegation of stealth, of course, is
not present in the present case. On the contrary, tolerance was alleged in the
ejectment complaint itself. Thus, there is no reason for the Munoz ruling to
apply to the present case; there is no basis nor occasion to conclude that the
respondents filed a forcible entry case.

2. The Jurisdictional Issue -

Was the Ejectment Complaint
Seasonably Filed?

We point out at the outset that what the petitioners directly appealed to this
Court is the appellate court's affirmation of the RTC's refusal to suspend the
ejectment proceedings based on the quieting of title case the petitioners cited.
Hence, we are not reviewing the merits of the main ejectment case, particularly
the question of the MTC's jurisdiction, as these aspects of the case were not
appealed to us. If we touch the jurisdictional aspect of the case at all, it is only
for purposes of fully responding to the parties' arguments.
The petitioners' jurisdictional argument cannot succeed as the respondents'
ejectment complaint was filed within the one-year period for bringing an action
for unlawful detainer or forcible entry that Section 1, Rule 70 of the Rules of
Court requires. Section 1 specifically states:
Section 1. Who may institute proceedings, and when.

Subject to the provisions of the next succeeding section, a person deprived of

the possession of any land or building by force, intimidation, threat, strategy, or
stealth, or a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or
implied, or the legal representatives or assigns of any such lessor, vendor,
vendee, or other person, may, at any time within one (1) year after such
unlawful deprivation or withholding of possession, bring an action in the
proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming
under them, for the restitution of such possession, together with damages and
costs.
On the basis of this provision, the petitioners argue that the respondents' cause
of action - whether for forcible entry or for unlawful detainer - had prescribed
when the ejectment complaint was filed on April 5, 2000. They point out that
the last demand letter (the reckoning date for unlawful detainer[15]) was dated
Aug. 26, 1998 and was received by the petitioners on August 31, 1998; the
complaint was only filed on April 5, 2000 or more than 1 year after August 31,
1998. On the other hand, if the action had been for forcible entry, the
prescriptive period commenced on the discovery of the usurpation and the
computation period would have commenced either during the relocation survey
of the lots or in July 1998 when the respondents were prevented from fencing
the disputed property.

The one-year period within which to commence an ejectment proceeding is a

prescriptive period as well as a jurisdictional requirement. Hence, Article 1155 of
the Civil Code on the manner of reckoning the prescriptive period must
necessarily come into play. Under this Article, the filing of a complaint in court
interrupts the running of prescription of actions. As an action for unlawful
detainer, the one-year prescription period started running after August 31, 1998
- the date of receipt of the respondents' demand letter. The period ran for
almost two months until it was interrupted on October 20, 1998 when the
respondents filed their ejectment complaint. This complaint, however, was
dismissed on December 8, 1999. Upon this dismissal, the prescriptive period
again began to run for about four months when another interruption intervened
- the revival of the complaint on April 5, 2000. Evidently, under these
undisputed facts, the period when the prescriptive period effectively ran does
not add up to the one-year prescriptive period that would jurisdictionally bar the
ejectment case.

3. Suspension of the Ejectment

Proceedings until Resolution
of the Ownership Issue.

The issue in an unlawful detainer case is limited to physical possession. When a

claim of ownership is used as a basis for de facto possession or to assert a better
possessory right, the court hearing the case may provisionally rule on the issue of
ownership. As a rule, however, a pending civil action involving ownership of the same
property does not justify the suspension of the ejectment proceedings. Only in
rare cases has this Court allowed a suspension of the ejectment proceedings and
one of these is in the case of Amagan v. Marayag[16] that the petitioners cite. To
quote from Amagan -
[i]ndisputably, the execution of the MCTC Decision would have resulted in the
demolition of the house subject of the ejectment suit; thus, by parity of
reasoning, considerations of equity require suspension of the ejectment
proceedings. xxx [L]ike Vda. de Legaspi, the respondent's suit is one of unlawful
detainer and not of forcible entry, and most certainly, the ejectment of
petitioners would mean a demolition of their house, a matter that is likely to
create "confusion, disturbance, inconvenience and expenses" mentioned in the
said exceptional case.

Necessarily, the affirmance of the MCTC Decision would cause the respondent
to go through the whole gamut of enforcing it by physically removing the
petitioners from the premises they claim to have been occupying since 1937.
(Respondent is claiming ownership only of the land, not of the house)
Needlessly, the litigants as well as the courts will be wasting much time and
effort by proceeding at a stage wherein the outcome is at best temporary, but
the result of enforcement is permanent, unjust and probably irreparable.[17]
However, we do not find these same circumstances present in this case for the
reasons we shall discuss in detail below.

First. In Amagan, the party refusing to vacate the disputed premises (or the
deforciant in the action for unlawful detainer) was the same party seeking to quiet
his title. In the present case, the petitioners are not parties to the civil action (for
quieting of title) whose result they seek to await; the plaintiff in the quieting of
title case is Leticia, the petitioner Julita's sister. No proof whatsoever was
offered to show that petitioner Julita is asserting her own title to the property;
there is only the allegation that Leticia was appointed as the representative of
Julita and the other heirs of Isidro in their various recourses at law to vindicate
their landowners' rights.[18] The respondents in fact actively disputed petitioner
Julita's identification with the quieting of title case in their Comment since
Leticia claimed to be the sole owner of TCT No. T-188- EP in her action to
quiet title. The respondents also pointed to the document entitled "Kasulatan ng
Pagmamana ng Lupa sa Labas ng Hukuman na May Pagtalikod sa Bahagi" executed on
May 27, 1995, showing that Julita had relinquished her share over TCT No. T-
188-EP in favor of her sister Leticia. A desperation argument the petitioners
advanced in their Memorandum is that the Kasulatan was only executed
"pursuant to the agrarian reform policy proscribing the parceling of the awarded
landholding into smaller units to preserve its viability".[19] In other words, the
petitioners are disavowing, for purposes of this case, the representation they
made in completing their submission before the agrarian reform authorities. We
cannot of course recognize this line of argument as justification for the
suspension of the ejectment proceedings as the petitioners are bound by their
representations before the agrarian reform authorities and cannot simply turn
their back on these representations as their convenience requires. No less
decisive against the petitioners' argument for suspension is the decision itself of
RTC Branch 19 that the respondents attached to their Comment. This decision
shows that Civil Case No. 694-M-2000, instead of being a case for quieting of
title, is in fact a mere boundary dispute.[20]

Second. In Amagan, the MCTC decision involved the demolition of the

petitioners' house - a result that this Court found to be "permanent, unjust and
probably irreparable"; in the present case, only a portion of the petitioners'
house is apparently affected as the petitioners occupy the lot adjoining the
disputed property. Significantly, the height, width and breadth of the portion of
the house that would be affected by the execution of the RTC Branch 20
decision does not appear anywhere in the records, thus, unavoidably inviting
suspicion that the potential damage to the petitioners is not substantial. More
important than the fact of omission is its implication; the omission constitutes a
missing link in the chain of equitable reasons for suspension that the petitioners
wish to establish. Thus, the equitable consideration that drove us to rule as we
did in Amagan does not obtain in the present case.

In the absence of a concrete showing of compelling equitable reasons at least

comparable and under circumstances analogous to Amagan, we cannot override
the established rule that a pending civil action for ownership shall not ipso facto
suspend an ejectment proceeding. Additionally, to allow a suspension on the
basis of the reasons the petitioners presented in this case would create the
dangerous precedent of allowing an ejectment suit to be suspended by an action
filed in another court by parties who are not involved or affected by the
ejectment suit.

WHEREFORE, premises considered, we hereby DISMISS the petition for lack

of merit. Costs against the petitioners.

SO ORDERED.

Quisumbing, (Chairperson), Carpio Morales, Tinga, and Velasco, Jr., JJ., concur.
 FIRST DIVISION
G.R. No. L-48050, October 10, 1994
FELICIDAD JAVIER, PETITIONER, VS. HON. REGINO T. VERIDIANO II,
PRESIDING JUDGE, BRANCH I, COURT OF FIRST INSTANCE OF
ZAMBALES AND REINO ROSETE, RESPONDENTS.

DECISION

BELLOSILLO, J.:

Petitioner Felicidad Javier questions before us the order of a regional trial court
citing the final decision of the city court previously dismissing her complaint for
forcible entry, and on the basis thereof, dismissed her petition to quiet title on
the ground of res judicata. We summon the time-honored remedies accion
interdictal, accion publiciana and accion reivindicatoria or accion de reivindicacion to resolve
the issues presented in the petition.

It appears that on 25 January 1963, petitioner filed a Miscellaneous Sales

Application for Lot No. 1641, Ts-308 of the Olongapo Townsite Subdivision,
Lower Kalaklan, Olongapo City, with the District Land Officer, Bureau of
Lands, Olongapo City. Sometime in December 1970, alleging that she was
forcibly dispossessed of a portion of the land by a certain Ben Babol, she
instituted a complaint for forcible entry before the City Court of Olongapo City,
docketed as Civil Case No. 926, stating in pars. 2 and 3 therein that -

x x x plaintiff is the true, lawful and in actual, prior physical possession of a

certain parcel of land situated at Lower Kalaklan, City of Olongapo, said lot
being designated as Lot No. 1641, Ts-308 of the Olongapo Townsite
Subdivision since 1961 and up to the present time, until the day and incidents
hereinafter narrated x x x x Sometime on December 12, 1970, the defendant,
without express consent of plaintiff and without lawful authority, through
scheme, strategy and stealth, forcibly entered a portion on the southwestern part
of Lot No. 1641, Ts-308, with the assistance of hired helpers, started
construction of riprap along the Kalaklan River perimeter of said portion of
land; said entry was further augmented by removing plaintiff's chain link, fence
with galvanized iron posts embedded in concrete, likewise destroying plants
introduced by plaintiff by removing existing BL (Bureau of Lands) monuments
thereon, and by these actions, defendant started exercising illegal possession of
said portion of land which contains an area of 200 square meters, more or
less.
[1]

On 7 November 1972 the City Court of Olongapo City, Br. 4, dismissed Civil
[2]

Case No. 926 on the ground that "it appears to the Court that the Bureau of
Lands has considered the area in question to be outside Lot 1641 of the plaintiff
x x x x" The Decision of the City Court of Olongapo City became final and
[3]

executory on 30 April 1973 when the then Court of First Instance of Zambales
and Olongapo City, Br. 3, dismissed the appeal and affirmed the findings and
[4]

conclusions of the City Court holding that appellant (herein petitioner) failed to
give sufficient evidence to prove that the area in question was within the
boundaries of Lot No. 1641. [5]

Subsequently, on 17 December 1973, petitioner was granted Miscellaneous Sales

Patent No. 5548 and issued Original Certificate of Title No. P-3259 covering
Lot No. 1641. Meanwhile, Ben Babol who was the defendant and appellee in the
complaint for forcible entry had sold the property he was occupying, including
the portion of about 200 square meters in question, to a certain Reino Rosete.
Thus petitioner demanded the surrender of the same area in dispute from Reino
Rosete who repeatedly refused to comply with the demand.

On 29 June 1977, or after about four (4) years from the finality of the dismissal
of Civil Case No. 926, petitioner instituted a complaint for quieting of title and
recovery of possession with damages against Ben Babol and Reino Rosete
before the then Court of First Instance of Zambales and Olongapo City,
docketed as Civil Case No. 2203-0, alleging in pars. 2 and 3 therein that -

x x x plaintiff is the absolute owner in fee simple of a parcel of land identified as

Lot No. 1641, Ts-308, Olongapo Townsite Subdivision x x x covered by
Original Certificate of Title No. P-3259, issued by the Register of Deeds for the
province of Zambales x x x x Sometime in December, 1970, and until present,
defendants, relying on an application filed on December 23, 1969, with the
Bureau of Lands, however have squatted, illegally occupied and unlawfully
possessed the southwestern portion of plaintiff's above-described property of
about 200 square meters, then by defendant BEN BABOL and now by
defendant REINO ROSETE, the former having sold the entirety of his
property to the latter, including the portion in question x x x x [6]
Instead of filing a responsive pleading, therein defendant Reino Rosete (private
respondent herein) moved to dismiss the complaint on the ground of res judicata.
Defendant Ben Babol did not file any pleading.

In its Order dated 27 January 1978, the then Court of First Instance of
[7]

Zambales, Br. 1, sustained the argument of Rosete and granted his motion to
[8]

dismiss. Thereafter, petitioner's motion for reconsideration was denied. Hence,

[9]

this petition for review on certiorari.

Petitioner contends that res judicata cannot apply in the instant case since there is
no identity of parties and causes of action between her complaint for forcible
entry, which had long become final and executory, and her subsequent petition
for quieting of title. She argues that private respondent Reino Rosete, who
invokes the defense of res judicata, was never impleaded in the forcible entry
case, which is an action in personam; neither was he a purchaser pendente lite who,
perhaps, could have validly invoked the defense of res judicata. With regard to the
cause of action, she maintains that there is no identity of causes of action since
the first case was for forcible entry, which is merely concerned with the
possession of the property, whereas the subsequent case was for quieting of
title, which looks into the ownership of the disputed land.

Private respondent however submits that there is identity of parties in the two
cases since he is a successor in interest by title of the defendant in the first case
after the commencement of the first action. On the issue of identity of causes of
action, he simply states that neither of the two cases, i.e., the complaint for
forcible entry and the subsequent petition for quieting of title, alleges a cause of
action. Thus, private respondent continues, both cases have to be dismissed.

Time and again it has been said that for res judicata to bar the institution of a
subsequent action the following requisites must concur: (1) There must be a
final judgment or order; (2) The court rendering the judgment must have
jurisdiction over the subject matter; (3) The former judgment is a judgment on
the merits; and, (4) There is between the first and second actions identity of
parties, of subject matter and of causes of action. The presence of the first
[10]

three requirements and the identity of subject matter in the fourth requirement
are not disputed. Hence, the only issues remaining are whether as between Civil
Case No. 926 and Civil Case No. 2203-0 there is identity of parties and of
causes of action which would bar the institution of Civil Case No. 2203-0.
Petitioner's argument that there is no identity of parties between the two actions
is without merit. We have repeatedly ruled that for res judicata to apply, what is
required is not absolute but only substantial identity of parties. It is
[11]

fundamental that the application of res judicata may not be evaded by simply
including additional parties in a subsequent litigation. In fact we have said that
there is still identity of parties although in the second action there is one party
who was not joined in the first action, if it appears that such party is not a
necessary party either in the first or second action, or is a mere nominal party.
[12] [13]

Thus, Sec. 49, par. (b), Rule 39, Rules of Court, provides that "x x x the
judgment or order is, with respect to the matter directly adjudged or as to any
other matter that could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent to the
commencement of the action or special proceeding, litigating for the same thing
and under the same title and in the same capacity."

In the case at bench, it is evident that private respondent Reino Rosete is a

successor in interest of Ben Babol by title subsequent to the commencement
and termination of the first action. Hence, there is actual, if not substantial,
identity of parties between the two actions. But, there is merit in petitioner's
argument that there is no identity of causes of action between Civil Case No.
926 and Civil Case No. 2203-0.

Civil Case No. 926 is a complaint for forcible entry, where what is at issue is
prior possession, regardless of who has lawful title over the disputed property. [14]

Thus, "[t]he only issue in an action for forcible entry is the physical or material
possession of real property, that is, possession de facto and not possession de jure.
The philosophy underlying this remedy is that irrespective of the actual
condition of the title to the property, the party in peaceable quiet possession
shall not be turned out by strong hand, violence or terror." And, a judgment
[15]

rendered in a case for recovery of possession is conclusive only on the question

of possession and not on the ownership. It does not in any way bind the title or
affect the ownership of the land or building. [16]

On the other hand, Civil Case No. 2203-0 while inaccurately captioned as an
action for "Quieting of Title and Recovery of Possession with Damages" is in
reality an action to recover a parcel of land or an accion reivindicatoria under Art.
434 of the Civil Code, and should be distinguished from Civil Case No. 926,
[17]

which is an accion interdictal. From the averments of the complaint in Civil Case
No. 2203-0, plaintiff therein (petitioner herein) clearly sets up title to herself and
prays that respondent Rosete be ejected from the disputed land and that she be
declared the owner and given possession thereof. Certainly, the allegations
partake of the nature of an accion reivindicatoria.
[18]

The doctrine in Emilia v. Bado, decided more than twenty-five years ago, is
[19]

still good law and has preserved the age-old remedies available under existing
laws and jurisprudence to recover possession of real property, namely, accion
interdictal, which is the summary action for forcible entry (detentacion) where the
defendant's possession of the property is illegal ab initio, or the summary action
for unlawful detainer (desahuico) where the defendant's possession was originally
lawful but ceased to be so by the expiration of his right to possess, both of
which must be brought within one year from the date of actual entry on the
land, in case of forcible entry, and from the date of last demand, in case of
unlawful detainer, in the proper municipal trial court or metropolitan trial
court; accion publiciana which is a plenary action for recovery of the right to
[20]

possess and which should be brought in the proper regional trial court when the
dispossession has lasted for more than one year; and, accion reivindicatoria or accion
de reivindicacion which seeks the recovery of ownership and includes the jus utendi
and the jus fruendi brought in the proper regional trial court.

Accion reivindicatoria or accion de reivindicacion is thus an action whereby plaintiff

alleges ownership over a parcel of land and seeks recovery of its full
possession. It is different from accion interdictal or accion publiciana where plaintiff
[21]

merely alleges proof of a better right to possess without claim of title. [22]

In Civil Case No. 926 petitioner merely claimed a better right or prior
possession over the disputed area without asserting title thereto. It should be
distinguished from Civil Case No. 2203-0 where she expressly alleged
ownership, specifically praying that she be declared the rightful owner and given
possession of the disputed portion. Hence, in Civil Case No. 926 petitioner
merely alleged that she was "the true, lawful (possessor) and in actual, prior
physical possession" of the subject parcel of land, whereas in Civil Case No.
2203-0 she asserted that she was "the absolute owner in fee simple" of the
parcel of land "covered by Original Transfer Certificate of Title No. P-3259."
The complaint in Civil Case No. 2203-0 definitely raises the question of
ownership and clearly gives defendants therein notice of plaintiff's claim of
exclusive and absolute ownership, including the right to possess which is an
elemental attribute of such ownership. Thus, this Court has ruled that a
judgment in a forcible entry or detainer case disposes of no other issue than
possession and declares only who has the right of possession, but by no means
constitutes a bar to an action for determination of who has the right or title of
ownership. [23]

And, applying the ruling of the Court En Banc in Quimpo v. De la Victoria, [24]

even if we treat Civil Case No. 2203-0 as a petition to quiet title, as its caption
suggests, still it has a cause of action different from that for ejectment.
Consequently, there being no identity of causes of action between Civil Case
No. 926 and Civil Case No. 2203-0, the prior complaint for ejectment cannot
bar the subsequent action for recovery, or petition to quiet title.

WHEREFORE, the petition is GRANTED. The Order dated 27 January 1978

of the then Court of First Instance of Zambales, Br. I, with station in Olongapo
City, dismissing Civil Case No. 2203-0, and its subsequent Order denying
reconsideration of the dismissal are REVERSED and SET ASIDE.

The Clerk of Court is directed to remand the records immediately to the court a
quo and the latter to proceed with the trial of Civil Case No. 2203-0 with
deliberate dispatch. This decision is immediately executory.

SO ORDERED.

Cruz, (Chairman), Davide, Jr., Quiason, and Kapunan, JJ., concur.

 SECOND DIVISION
G.R. No. 178609, August 04, 2010
MANUEL P. NEY AND ROMULO P. NEY, PETITIONERS, VS. SPOUSES
CELSO P. QUIJANO AND MINA N. QUIJANO, RESPONDENTS.

DECISION

NACHURA, J.:

On appeal is the June 29, 2007 Decision[1] of the Court of Appeals (CA) in CA-
G.R. No. CV. 86047, setting aside the August 25, 2005 Decision[2] of the
Regional Trial Court (RTC) of Manila, Branch 45.

Petitioners Manuel P. Ney and Romulo P. Ney (petitioners) are the registered
owners of a residential lot located at 1648 Main Street, Paco Manila, with an area
of 120 square meters more or less, covered by Transfer Certificate of Title
(TCT) No. 122489.[3] A three (3) door apartment was constructed on the
subject lot - one for Manuel, the other for Romulo; and the last one for their
sister Mina N. Quijano and her husband Celso Quijano (respondents).

On October 8, 1999, respondents filed with the RTC of Manila a suit for
reconveyance, partition and damages against petitioners. They averred that they
are co-owners of the subject property having paid part of its purchase price; that
Celso's name was inadvertently omitted as one of the buyers in the execution of
the deed of sale. Consequently, TCT No. 122489 covering the subject property
was issued only in the names of Manuel and Romulo. To obtain a separate
certificate of title, they requested from petitioners the segregation of the portion
allotted to them, but the latter refused. They later discovered that the entire
property was mortgaged with Metropolitan Bank & Trust Company, prompting
them to execute and register their adverse claim with the Register of Deeds; and
to file the instant complaint.[4]

Petitioners, in their answer,[5] denied respondents' allegation of co-ownership.

They averred that Celso Quijano was not a vendee of the subject lot; thus, his
name did not appear on the title. They asserted that respondents cannot validly
maintain an action against them because the latter possessed the property by
mere tolerance; and even assuming that respondents had a valid cause of action,
the same had already been barred by prescription and/or laches. Petitioners,
therefore, prayed for the dismissal of the complaint.

After trial, the RTC rendered a Decision[6] dismissing the complaint. It rejected
respondents' claim of co-ownership, and declared their documentary and
testimonial evidence unreliable. The RTC sustained petitioners' assertion that
respondents possessed part of the property through mere tolerance; and that
their cause of action, if any, already prescribed. The RTC thus ruled that
respondents can no longer demand the segregation or reconveyance of the
claimed portion of the property. Finally, the RTC granted petitioners'
counterclaim and ordered the reimbursement of the expenses they incurred in
defending the case.

The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered, the [respondents'] Complaint is hereby

DISMISSED.

On the other hand, finding merit in the [petitioners'] Counterclaim, the

[respondents] are hereby ordered to pay the [petitioners]:

a) The reduced amount of P50,000.00 for attorney's fees; and

b) The costs of suit.

SO ORDERED.[7]

From the aforesaid Decision, respondents went to the CA. They faulted the
RTC for dismissing their complaint and insisted that they are co-owners of the
subject lot; and that their share was erroneously included in petitioners'
title. Respondents also took exception to the trial court's declaration that their
action was already barred by prescription and laches. Citing Heirs of Jose Olviga v.
Court of Appeals, respondents asserted that their right to institute an action for
reconveyance is imprescriptible because they are in possession of the claimed
portion of the property.[8]

On June 29, 2007, the CA rendered the now challenged Decision,[9] reversing
the RTC. The CA found sufficient evidence to support respondents' claim that
they are indeed co-owners of the property; and were excluded by petitioners in
the deed of sale and certificate of title. The CA considered respondents'
complaint as one for quieting of title which is imprescriptible; and granted to
respondents the reliefs that they prayed for.

The CA disposed, thus:

WHEREFORE, the appeal is GRANTED. The appealed Decision dated

August 25, 2005 of the Regional Trial Court Branch 45, Manila is hereby SET
ASIDE. In its stead, a NEW ONE IS ENTERED, declaring [respondents],
spouses Celso and Mina Quijano, as co-owners of the subject lot to the extent
of one-third (1/3) thereof which corresponds to that portion where their house
stands.

Accordingly, [petitioners] are hereby ordered:

1) to partition the subject lot into three (3) equal portions of forty square
meters (40 sq.m.) each, specifically allotting to [respondents] the portion where
their house stands;

2) to reconvey to [respondents] the clean title to their portion of the subject lot;

3) to surrender the owner's copy of TCT No. 122489 to the Register of Deeds
of Manila for the annotation of [respondents'] share thereon; and

4) to pay [respondents] attorney's fees and the costs of suit in the reasonable
amount of P50,000.00.

SO ORDERED.[10]

Undaunted, petitioners took the present recourse. They ascribe reversible error
to the CA for treating respondents' action as one for quieting of title. They
claim that nowhere in the complaint does it state that respondents seek to quiet
their title to the property. All that respondents averred and prayed for in their
complaint was for petitioners to surrender their certificate of title, and for the
partition of the subject property. Petitioners assert that the CA ruled on an
issue not raised in the pleadings; and substituted the respondents' action with an
entirely new action for quieting of title.
The argument is specious.

The allegations in respondents' complaint read in part:

2) That [respondents] are co-owners of one-third (1/3) portion pro indiviso of

the residential lot where their residential house was constructed known as 1648
Main Street, Paco, Manila, covered by Transfer Certificate of Title No. 122489;
xxx

3) That in their agreement with the lot owner, the name of the [respondent]
Celso P. Quijano appears as one (1) of the Second Party [sic] who purchased the
lot at the purchase price of P50,000.00 with P40,000.00 as down payment and
the balance of P10,000.00 shall be paid on or before July 14, 1976, wherein the
[respondent] Celso P. Quijano have (sic) paid the sum of P5,000.00 on the same
due date of July 14, 1976;

4) That when the Deed of Absolute Sale was executed by the Vendor, the name
of the [respondent] Celso P. Quijano, marr[ie]d to Mina Ney Quijano was
omitted and the purchase price appeared to be only P20,000.00 and not
P50,000.00 as appearing in their Agreement, thus when the Absolute Deed of
Sale was presented to the Register of Deeds of Manila, only the names of
Manuel P. Ney and Romulo P. Ney appeared as the registered owners in the
above-mentioned Transfer Certificate of Title No.122489;

5) That Celso Quijano, however, was able to secure a Certification from the
Vend[o]r Luz J. Lim the true and correct selling price agreed upon is P50,000.00
and the Vendees were Manuel P. Ney, Romulo P. Ney and [respondent] Celso
Quijano and that the amount of P20,000.00 put in the Deed of Sale was at the
instance of the Vendor with the consent of the Vendees;

6) That sometime in March 1991, [respondents] requested from the [petitioners]

to segregate their Title to the one-third (1/3) portion of the lot [sic] where their
house was constructed with an area of about forty (40) square meters more or
less and [petitioners] agreed and executed a Deed of Reconveyance, but when
[respondent] Celso P. Quijano presented the document to the Register of Deeds
of Manila it [sic] was rejected because he can not present the Owner's copy;

xxxx
8) That from the records of the Register of Deeds of Manila, [respondent]
Celso P. Quijano discovered that the whole property was mortgaged with [sic]
the Metropolitan Bank & Trust Company, thus [respondents] were constrained
to execute and register their adverse claim that they are co-owners of one-third
(1/3) portion of the lot and their residential house therein;

9) That after the registration of the [respondent's] adverse claim, the Register of
Deeds through Expedito A. Javier notified the [petitioners] to surrender the
Owner's duplicate copy of Transfer Certificate of Title No. 122489 in order that
a Memorandum be made thereon for the Notice of Adverse Claim, but the
request of the Register of Deeds was not honored by the [petitioners];

xxxx

12) That by reason of the[petitioners'] refusal to surrender the Owner's copy of

the Title to the Register of Deeds of Manila for partition and reconveyance,
[respondents] were constrained to engage the services of counsel to protect their
interest at an agreed amount of P50,000.00 as and for attorney's fees.

These allegations make out a case for reconveyance. That reconveyance was
one of the reliefs sought was made abundantly clear by respondents in their
prayer, viz.:

WHEREFORE, it is respectfully prayed that after due hearing judgment be

rendered in favor of the [respondents] and against the [petitioners] ordering the
latter as follows:

a) To surrender the Owner's copy of TCT No. 122489 to the Court or if

refused that an Order be issued ordering the Register of Deeds of Manila to
issue to the [respondents] their co-owner's copy if [sic] the Title;

b) Ordering the partition of the lot into equal shares of forty (40) square meters
more or less and the lot where the [respondents'] residential house is
constructed known as 1648 Main Street, Paco Manila be awarded and be
reconveyed to the [respondents] as their share;

c) Ordering the [petitioners] to settle their obligations to [sic] the mortgagee

bank, if any, and to reconvey to the [respondents] clean Title over their
property.

d) Ordering [petitioners] jointly and severally to pay [respondents] moral

damages in the amount of P100,000.00, exemplary damages in the sum
of P100,000.00 and the sum of P50,000.00 as and for attorney's fees and costs.

[Respondents] further pray for such other reliefs and remedies as may be just
and equitable in the premises.

Undoubtedly, respondents did not only seek the partition of the property and
the delivery of the title, but also the reconveyance of their share which was
inadvertently included in petitioners' TCT.

An action for reconveyance is one that seeks to transfer property, wrongfully

registered by another, to its rightful and legal owner.[11] Indeed, reconveyance is
an action distinct from an action for quieting of title, which is filed whenever
there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid
or effective but is in truth and in fact, invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title for purposes of removing
such cloud or to quiet title. [12] However, we find nothing erroneous in the CA's
ruling treating respondents' action for reconveyance as an action to quiet title.

In Mendizabel v. Apao,[13] we treated a similar action for reconveyance as an

action to quiet title, explaining, thus:

The Court has ruled that the 10-year prescriptive period applies only when the
person enforcing the trust is not in possession of the property. If a person
claiming to be its owner is in actual possession of the property, the right to seek
reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. The reason is that the one who is in actual possession of the land
claiming to be its owner may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right. His undisturbed possession
gives him a continuing right to seek the aid of a court of equity to ascertain and
determine the nature of the adverse claim of a third party and its effect on his
own title, which right can be claimed only by one who is in possession.
The ruling was reiterated in Lasquite v. Victory Hills, Inc.,[14] viz.:

An action for reconveyance based on an implied trust prescribes in 10 years.

The reference point of the 10-year prescriptive period is the date of registration
of the deed or the issuance of the title. The prescriptive period applies only if
there is an actual need to reconvey the property as when the plaintiff is not in
possession of the property. However, if the plaintiff, as the real owner of the
property also remains in possession of the property, the prescriptive period to
recover title and possession of the property does not run against him. In such a
case, an action for reconveyance, if nonetheless filed, would be in the nature of
a suit for quieting of title, an action that is imprescriptible.

Indubitably, the characterization by the CA of respondents' action as in the

nature of an action for quieting of title cannot be considered a reversible error.

Petitioners next fault the CA for sustaining respondents' claim of co-

ownership. They denied that Celso Quijano is a co-owner of the property.
Unfortunately for petitioners, the records speak otherwise.

The Deed of Reconveyance[15] executed by Manuel and Romulo explicitly states that:

[W]e acknowledge and recognized the rights, interests and participation of Celso
P. Quijano, Filipino, of legal age, married to Mina P. Ney and resident of 1648
Main Street, Paco, Manila, as a co-owner of the one-third (1/3) portion of the
said lot wherein his residential house is now constructed at the above-stated
address, having paid the corresponding amount over the said 1/3 portion of the
property for the acquisition costs but whose name does not appear in the Deed
of Sale executed in our favor, thus resulting in the non-conclusion (sic) of his
name in the above-stated Transfer Certificate of Title when issued as a co-
owner.

NOW, THEREFORE, for and in consideration of the foregoing premises WE,

MANUEL P. NEY and ROMULO P. NEY, do hereby transfer and convey
unto said Spouses Celso P. Quijano and MINA P. NEY their one-third (1/3)
portion share of the aforedescribed (sic) parcel of land where their residential
house is now situated at their above-given address with an area of forty (40)
square meters more or less by virtue of this Deed of Reconveyance.
Petitioners never denied the due execution of the Deed of Reconveyance. In fact
they admitted that the signatures appearing therein are theirs.[16] The CA
cannot, therefore, be faulted for declaring respondents as co-owners of the
subject property because it merely confirmed and enforced the Deed of
Reconveyance voluntarily executed by petitioners in favor of respondents.

As aptly pronounced by the CA:

[T]he Deed of Reconveyance, duly signed by [petitioners] themselves, put to rest

the focal issue between the parties. There is no denying that it outweighs the
evidence relied upon by [petitioners] despite the fact that they have the transfer
certificate of title over the entire subject lot. It is settled that it is not the
certificate of title that vests ownership. It merely evidences such title. x x x[17]

In a number of cases, the Court has ordered reconveyance of property to the

true owner or to one with a better right, where the property had been
erroneously or fraudulently titled in another person's name. After all, the
Torrens system was not designed to shield and protect one who had committed
fraud or misrepresentation and thus holds title in bad faith.[18] Thus, the CA
acted correctly in rendering the challenged decision.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court

of Appeals in CA-G.R. CV No. 86047 is AFFIRMED. Cost against
petitioners.

SO ORDERED.

Carpio, (Chairperson), Peralta, Abad, and Mendoza, JJ., concur.

 FIRST DIVISION
G.R. No. 144225, June 17, 2003
SPOUSES GODOFREDO ALFREDO AND CARMEN LIMON ALFREDO,
SPOUSES ARNULFO SAVELLANO AND EDITHA B. SAVELLANO,
DANTON D. MATAWARAN, SPOUSES DELFIN F. ESPIRITU, JR. AND
ESTELA S. ESPIRITU AND ELIZABETH TUAZON, PETITIONERS, VS.
SPOUSES ARMANDO BORRAS AND ADELIA LOBATON BORRAS,
RESPONDENTS.

DECISION

CARPIO, J.:

The Case

Before us is a petition for review assailing the Decision[1] of the Court of

Appeals dated 26 November 1999 affirming the decision[2] of the Regional Trial
Court of Bataan, Branch 4, in Civil Case No. DH-256-94. Petitioners also
question the Resolution of the Court of Appeals dated 26 July 2000 denying
petitioners' motion for reconsideration.

The Antecedent Facts

A parcel of land measuring 81,524 square meters ("Subject Land") in Barrio

Culis, Mabiga, Hermosa, Bataan is the subject of controversy in this case. The
registered owners of the Subject Land were petitioner spouses, Godofredo
Alfredo ("Godofredo") and Carmen Limon Alfredo ("Carmen"). The Subject
Land is covered by Original Certificate of Title No. 284 ("OCT No. 284") issued
to Godofredo and Carmen under Homestead Patent No. V-69196.

On 7 March 1994, the private respondents, spouses Armando Borras

("Armando") and Adelia Lobaton Borras ("Adelia"), filed a complaint for
specific performance against Godofredo and Carmen before the Regional Trial
Court of Bataan, Branch 4. The case was docketed as Civil Case No. DH-256-
94.

Armando and Adelia alleged in their complaint that Godofredo and Carmen
mortgaged the Subject Land for P7,000.00 with the Development Bank of the
Philippines ("DBP"). To pay the debt, Carmen and Godofredo sold the Subject
Land to Armando and Adelia for P15,000.00, the buyers to pay the DBP loan
and its accumulated interest, and the balance to be paid in cash to the sellers.

Armando and Adelia gave Godofredo and Carmen the money to pay the loan to
DBP which signed the release of mortgage and returned the owner's duplicate
copy of OCT No. 284 to Godofredo and Carmen. Armando and Adelia
subsequently paid the balance of the purchase price of the Subject Land for
which Carmen issued a receipt dated 11 March 1970. Godofredo and Carmen
then delivered to Adelia the owner's duplicate copy of OCT No. 284, with the
document of cancellation of mortgage, official receipts of realty tax payments,
and tax declaration in the name of Godofredo. Godofredo and Carmen
introduced Armando and Adelia, as the new owners of the Subject Land, to the
Natanawans, the old tenants of the Subject Land. Armando and Adelia then
took possession of the Subject Land.

In January 1994, Armando and Adelia learned that hired persons had entered
the Subject Land and were cutting trees under instructions of allegedly new
owners of the Subject Land. Subsequently, Armando and Adelia discovered that
Godofredo and Carmen had re-sold portions of the Subject Land to several
persons.

On 8 February 1994, Armando and Adelia filed an adverse claim with the
Register of Deeds of Bataan. Armando and Adelia discovered that Godofredo
and Carmen had secured an owner's duplicate copy of OCT No. 284 after filing
a petition in court for the issuance of a new copy. Godofredo and Carmen
claimed in their petition that they lost their owner's duplicate copy. Armando
and Adelia wrote Godofredo and Carmen complaining about their acts, but the
latter did not reply. Thus, Armando and Adelia filed a complaint for specific
performance.

On 28 March 1994, Armando and Adelia amended their complaint to include

the following persons as additional defendants: the spouses Arnulfo Savellano
and Editha B. Savellano, Danton D. Matawaran, the spouses Delfin F. Espiritu,
Jr. and Estela S. Espiritu, and Elizabeth Tuazon ("Subsequent Buyers"). The
Subsequent Buyers, who are also petitioners in this case, purchased from
Godofredo and Carmen the subdivided portions of the Subject Land. The
Register of Deeds of Bataan issued to the Subsequent Buyers transfer
certificates of title to the lots they purchased.

In their answer, Godofredo and Carmen and the Subsequent

Buyers (collectively "petitioners") argued that the action is unenforceable under
the Statute of Frauds. Petitioners pointed out that there is no written
instrument evidencing the alleged contract of sale over the Subject Land in favor
of Armando and Adelia. Petitioners objected to whatever parole evidence
Armando and Adelia introduced or offered on the alleged sale unless the same
was in writing and subscribed by Godofredo. Petitioners asserted that the
Subsequent Buyers were buyers in good faith and for value. As counterclaim,
petitioners sought payment of attorney's fees and incidental expenses.

Trial then followed. Armando and Adelia presented the following witnesses:
Adelia, Jesus Lobaton, Roberto Lopez, Apolinario Natanawan, Rolando
Natanawan, Tomas Natanawan, and Mildred Lobaton. Petitioners presented
two witnesses, Godofredo and Constancia Calonso.

On 7 June 1996, the trial court rendered its decision in favor of Armando and
Adelia. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
plaintiffs, the spouses Adelia Lobaton Borras and Armando F. Borras, and
against the defendant-spouses Godofredo Alfredo and Carmen Limon Alfredo,
spouses Arnulfo Sabellano and Editha B. Sabellano, spouses Delfin F. Espiritu,
Jr. and Estela S. Espiritu, Danton D. Matawaran and Elizabeth Tuazon, as
follows:
1. Declaring the Deeds of Absolute Sale of the disputed parcel of
land (covered by OCT No. 284) executed by the spouses Godofredo
Alfredo and Camen Limon Alfredo in favor of spouses Arnulfo Sabellano
and Editha B. Sabellano, spouses Delfin F. Espiritu, Danton D.
Matawaran and Elizabeth Tuazon, as null and void;

2. Declaring the Transfer Certificates of Title Nos. T-163266 and

T-163267 in the names of spouses Arnulfo Sabellano and Editha B.
Sabellano; Transfer Certificates of Title Nos. T-163268 and 163272 in the
names of spouses Delfin F. Espiritu, Jr. and Estela S. Espiritu; Transfer
Certificates of Title Nos. T-163269 and T-163271 in the name of Danton
 D. Matawaran; and Transfer Certificate of Title No. T-163270 in the
name of Elizabeth Tuazon, as null and void and that the Register of
Deeds of Bataan is hereby ordered to cancel said titles;

3. Ordering the defendant-spouses Godofredo Alfredo and

Carmen Limon Alfredo to execute and deliver a good and valid Deed of
Absolute Sale of the disputed parcel of land (covered by OCT No. 284) in
favor of the spouses Adelia Lobaton Borras and Armando F. Borras
within a period of ten (10) days from the finality of this decision;

4. Ordering defendant-spouses Godofredo Alfredo and Carmen

Limon Alfredo to surrender their owner's duplicate copy of OCT No. 284
issued to them by virtue of the Order dated May 20, 1992 of the Regional
Trial Court of Bataan, Dinalupihan Branch, to the Registry of Deeds of
Bataan within ten (10) days from the finality of this decision, who, in turn,
is directed to cancel the same as there exists in the possession of herein
plaintiffs of the owner's duplicate copy of said OCT No. 284 and, to
restore and/or reinstate OCT No. 284 of the Register of Deeds of Bataan
to its full force and effect;

5. Ordering the defendant-spouses Godofredo Alfredo and

Carmen Limon Alfredo to restitute and/or return the amount of the
respective purchase prices and/or consideration of sale of the disputed
parcels of land they sold to their co-defendants within ten (10) days from
the finality of this decision with legal interest thereon from date of the
sale;

6. Ordering the defendants, jointly and severally, to pay plaintiff-

spouses the sum of P20,000.00 as and for attorney's fees and litigation
expenses; and

7. Ordering defendants to pay the costs of suit.

Defendants' counterclaims are hereby dismissed for lack of merit.

SO ORDERED.[3]
Petitioners appealed to the Court of Appeals.
On 26 November 1999, the Court of Appeals issued its Decision affirming the
decision of the trial court, thus:
WHEREFORE, premises considered, the appealed decision in Civil Case No.
DH-256-94 is hereby AFFIRMED in its entirety. Treble costs against the
defendants-appellants.

SO ORDERED.[4]
On 26 July 2000, the Court of Appeals denied petitioners' motion for
reconsideration.

The Ruling of the Trial Court

The trial court ruled that there was a perfected contract of sale between the
spouses Godofredo and Carmen and the spouses Armando and Adelia. The
trial court found that all the elements of a contract of sale were present in this
case. The object of the sale was specifically identified as the 81,524-square
meter lot in Barrio Culis, Mabigas, Hermosa, Bataan, covered by OCT No. 284
issued by the Registry of Deeds of Bataan. The purchase price was fixed at
P15,000.00, with the buyers assuming to pay the sellers' P7,000.00 DBP
mortgage loan including its accumulated interest. The balance of the purchase
price was to be paid in cash to the sellers. The last payment of P2,524.00
constituted the full settlement of the purchase price and this was paid on 11
March 1970 as evidenced by the receipt issued by Carmen.

The trial court found the following facts as proof of a perfected contract of sale:
(1) Godofredo and Carmen delivered to Armando and Adelia the Subject Land;
(2) Armando and Adelia treated as their own tenants the tenants of Godofredo
and Carmen; (3) Godofredo and Carmen turned over to Armando and Adelia
documents such as the owner's duplicate copy of the title of the Subject Land,
tax declaration, and the receipts of realty tax payments in the name of
Godofredo; and (4) the DBP cancelled the mortgage on the Subject Property
upon payment of the loan of Godofredo and Carmen. Moreover, the receipt of
payment issued by Carmen served as an acknowledgment, if not a ratification, of
the verbal sale between the sellers and the buyers. The trial court ruled that the
Statute of Frauds is not applicable because in this case the sale was perfected.

The trial court concluded that the Subsequent Buyers were not innocent
purchasers. Not one of the Subsequent Buyers testified in court on how they
purchased their respective lots. The Subsequent Buyers totally depended on the
testimony of Constancia Calonso ("Calonso") to explain the subsequent
sale. Calonso, a broker, negotiated with Godofredo and Carmen the sale of the
Subject Land which Godofredo and Carmen subdivided so they could sell anew
portions to the Subsequent Buyers.

Calonso admitted that the Subject Land was adjacent to her own lot. The trial
court pointed out that Calonso did not inquire on the nature of the tenancy of
the Natanawans and on who owned the Subject Land. Instead, she bought out
the tenants for P150,000.00. The buy out was embodied in a Kasunduan.
Apolinario Natanawan ("Apolinario") testified that he and his wife accepted the
money and signed the Kasunduan because Calonso and the Subsequent Buyers
threatened them with forcible ejectment. Calonso brought Apolinario to the
Agrarian Reform Office where he was asked to produce the documents showing
that Adelia is the owner of the Subject Land. Since Apolinario could not
produce the documents, the agrarian officer told him that he would lose the
case. Thus, Apolinario was constrained to sign the Kasunduan and accept the
P150,000.00.

Another indication of Calonso's bad faith was her own admission that she saw
an adverse claim on the title of the Subject Land when she registered the deeds
of sale in the names of the Subsequent Buyers. Calonso ignored the adverse
claim and proceeded with the registration of the deeds of sale.

The trial court awarded P20,000.00 as attorney's fees to Armando and

Adelia. In justifying the award of attorney's fees, the trial court invoked Article
2208 (2) of the Civil Code which allows a court to award attorney's fees,
including litigation expenses, when it is just and equitable to award the
same. The trial court ruled that Armando and Adelia are entitled to attorney's
fees since they were compelled to file this case due to petitioners' refusal to heed
their just and valid demand.

The Ruling of the Court of Appeals

The Court of Appeals found the factual findings of the trial court well
supported by the evidence. Based on these findings, the Court of Appeals also
concluded that there was a perfected contract of sale and the Subsequent Buyers
were not innocent purchasers.

The Court of Appeals ruled that the handwritten receipt dated 11 March 1970 is
sufficient proof that Godofredo and Carmen sold the Subject Land to Armando
and Adelia upon payment of the balance of the purchase price. The Court of
Appeals found the recitals in the receipt as "sufficient to serve as the
memorandum or note as a writing under the Statute of Frauds."[5] The Court of
Appeals then reiterated the ruling of the trial court that the Statute of Frauds
does not apply in this case.

The Court of Appeals gave credence to the testimony of a witness of Armando

and Adelia, Mildred Lobaton, who explained why the title to the Subject Land
was not in the name of Armando and Adelia. Lobaton testified that Godofredo
was then busy preparing to leave for Davao. Godofredo promised that he would
sign all the papers once they were ready. Since Armando and Adelia were close
to the family of Carmen, they trusted Godofredo and Carmen to honor their
commitment. Armando and Adelia had no reason to believe that their contract
of sale was not perfected or validly executed considering that they had received
the duplicate copy of OCT No. 284 and other relevant documents. Moreover,
they had taken physical possession of the Subject Land.

The Court of Appeals held that the contract of sale is not void even if only
Carmen signed the receipt dated 11 March 1970. Citing Felipe v. Heirs of
Maximo Aldon,[6] the appellate court ruled that a contract of sale made by the
wife without the husband's consent is not void but merely voidable. The Court
of Appeals further declared that the sale in this case binds the conjugal
partnership even if only the wife signed the receipt because the proceeds of the
sale were used for the benefit of the conjugal partnership. The appellate court
based this conclusion on Article 161[7] of the Civil Code.

The Subsequent Buyers of the Subject Land cannot claim that they are buyers in
good faith because they had constructive notice of the adverse claim of
Armando and Adelia. Calonso, who brokered the subsequent sale, testified that
when she registered the subsequent deeds of sale, the adverse claim of Armando
and Adelia was already annotated on the title of the Subject Land. The Court of
Appeals believed that the act of Calonso and the Subsequent Buyers in forcibly
ejecting the Natanawans from the Subject Land buttresses the conclusion that
the second sale was tainted with bad faith from the very beginning.
Finally, the Court of Appeals noted that the issue of prescription was not raised
in the Answer. Nonetheless, the appellate court explained that since this action
is actually based on fraud, the prescriptive period is four years, with the period
starting to run only from the date of the discovery of the fraud. Armando and
Adelia discovered the fraudulent sale of the Subject Land only in January
1994. Armando and Adelia lost no time in writing a letter to Godofredo and
Carmen on 2 February 1994 and filed this case on 7 March 1994. Plainly,
Armando and Adelia did not sleep on their rights or lose their rights by
prescription.

The Court of Appeals sustained the award of attorney's fees and imposed treble
costs on petitioners.

The Issues

Petitioners raise the following issues:

I

Whether the alleged sale of the Subject Land in favor of Armando and Adelia is
valid and enforceable, where (1) it was orally entered into and not in writing; (2)
Carmen did not obtain the consent and authority of her husband, Godofredo,
who was the sole owner of the Subject Land in whose name the title thereto
(OCT No. 284) was issued; and (3) it was entered into during the 25-year
prohibitive period for alienating the Subject Land without the approval of the
Secretary of Agriculture and Natural Resources.

II

Whether the action to enforce the alleged oral contract of sale brought after 24
years from its alleged perfection had been barred by prescription and by laches.

III

Whether the deeds of absolute sale and the transfer certificates of title over the
portions of the Subject Land issued to the Subsequent Buyers, innocent
purchasers in good faith and for value whose individual titles to their respective
lots are absolute and indefeasible, are valid.

IV

Whether petitioners are liable to pay Armando and Adelia P20,0000.00 as

attorney's fees and litigation expenses and the treble costs, where the claim of
Armando and Adelia is clearly unfounded and baseless.

Whether petitioners are entitled to the counterclaim for attorney's fees and
litigation expenses, where they have sustained such expenses by reason of
institution of a clearly malicious and unfounded action by Armando and
Adelia.[8]
The Court's Ruling

The petition is without merit.

In a petition for review on certiorari under Rule 45, this Court reviews only
errors of law and not errors of facts.[9] The factual findings of the appellate court
are generally binding on this Court.[10] This applies with greater force when both
the trial court and the Court of Appeals are in complete agreement on their
factual findings.[11] In this case, there is no reason to deviate from the findings of
the lower courts. The facts relied upon by the trial and appellate courts are
borne out by the record. We agree with the conclusions drawn by the lower
courts from these facts.

Validity and Enforceability of the Sale

The contract of sale between the spouses Godofredo and Carmen and the
spouses Armando and Adelia was a perfected contract. A contract is perfected
once there is consent of the contracting parties on the object certain and on the
cause of the obligation.[12] In the instant case, the object of the sale is the Subject
Land, and the price certain is P15,000.00. The trial and appellate courts found
that there was a meeting of the minds on the sale of the Subject Land and on
the purchase price of P15,000.00. This is a finding of fact that is binding on this
Court. We find no reason to disturb this finding since it is supported by
substantial evidence.

The contract of sale of the Subject Land has also been consummated because
the sellers and buyers have performed their respective obligations under the
contract. In a contract of sale, the seller obligates himself to transfer the
ownership of the determinate thing sold, and to deliver the same, to the buyer
who obligates himself to pay a price certain to the seller.[13] In the instant case,
Godofredo and Carmen delivered the Subject Land to Armando and Adelia,
placing the latter in actual physical possession of the Subject Land. This
physical delivery of the Subject Land also constituted a transfer of ownership of
the Subject Land to Armando and Adelia.[14] Ownership of the thing sold is
transferred to the vendee upon its actual or constructive delivery.[15] Godofredo
and Carmen also turned over to Armando and Adelia the documents of
ownership to the Subject Land, namely the owner's duplicate copy of OCT No.
284, the tax declaration and the receipts of realty tax payments.

On the other hand, Armando and Adelia paid the full purchase price as
evidenced by the receipt dated 11 March 1970 issued by Carmen. Armando
and Adelia fulfilled their obligation to provide the P7,000.00 to pay the Dir
obliagtion rmen. rchase pricend Adelia . fredo and Carmen do not deny the
existence of the cBP loan of Godofredo and Carmen, and to pay the latter the
balance of P8,000.00 in cash. The P2,524.00 paid under the receipt dated 11
March 1970 was the last installment to settle fully the purchase price. Indeed,
upon payment to DBP of the P7,000.00 and the accumulated interests, the DBP
cancelled the mortgage on the Subject Land and returned the owner's duplicate
copy of OCT No. 284 to Godofredo and Carmen.

The trial and appellate courts correctly refused to apply the Statute of Frauds to
this case. The Statute of Frauds[16] provides that a contract for the sale of real
property shall be unenforceable unless the contract or some note or
memorandum of the sale is in writing and subscribed by the party charged or his
agent. The existence of the receipt dated 11 March 1970, which is a
memorandum of the sale, removes the transaction from the provisions of the
Statute of Frauds.

The Statute of Frauds applies only to executory contracts and not to contracts
either partially or totally performed.[17] Thus, where one party has performed
one's obligation, oral evidence will be admitted to prove the agreement.[18] In the
instant case, the parties have consummated the sale of the Subject Land, with
both sellers and buyers performing their respective obligations under the
contract of sale. In addition, a contract that violates the Statute of Frauds is
ratified by the acceptance of benefits under the contract.[19] Godofredo and
Carmen benefited from the contract because they paid their DBP loan and
secured the cancellation of their mortgage using the money given by Armando
and Adelia. Godofredo and Carmen also accepted payment of the balance of
the purchase price.

Godofredo and Carmen cannot invoke the Statute of Frauds to deny the
existence of the verbal contract of sale because they have performed their
obligations, and have accepted benefits, under the verbal contract. [20] Armando
and Adelia have also performed their obligations under the verbal
contract. Clearly, both the sellers and the buyers have consummated the verbal
contract of sale of the Subject Land. The Statute of Frauds was enacted to
prevent fraud.[21] This law cannot be used to advance the very evil the law seeks
to prevent.

Godofredo and Carmen also claim that the sale of the Subject Land to Armando
and Adelia is void on two grounds. First, Carmen sold the Subject Land without
the marital consent of Godofredo. Second, the sale was made during the 25-
year period that the law prohibits the alienation of land grants without the
approval of the Secretary of Agriculture and Natural Resources.

These arguments are without basis.

The Family Code, which took effect on 3 August 1988, provides that any
alienation or encumbrance made by the husband of the conjugal partnership
property without the consent of the wife is void. However, when the sale is
made before the effectivity of the Family Code, the applicable law is the Civil
Code.[22]

Article 173 of the Civil Code provides that the disposition of conjugal property
without the wife's consent is not void but merely voidable. Article 173 reads:
The wife may, during the marriage, and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband
entered into without her consent, when such consent is required, or any act or
contract of the husband which tends to defraud her or impair her interest in the
conjugal partnership property. Should the wife fail to exercise this right, she or
her heirs, after the dissolution of the marriage, may demand the value of
property fraudulently alienated by the husband.
In Felipe v. Aldon,[23] we applied Article 173 in a case where the wife sold some
parcels of land belonging to the conjugal partnership without the consent of the
husband. We ruled that the contract of sale was voidable subject to annulment
by the husband. Following petitioners' argument that Carmen sold the land to
Armando and Adelia without the consent of Carmen's husband, the sale would
only be voidable and not void.

However, Godofredo can no longer question the sale. Voidable contracts are
susceptible of ratification.[24] Godofredo ratified the sale when he introduced
Armando and Adelia to his tenants as the new owners of the Subject Land. The
trial court noted that Godofredo failed to deny categorically on the witness
stand the claim of the complainants' witnesses that Godofredo introduced
Armando and Adelia as the new landlords of the tenants.[25] That Godofredo
and Carmen allowed Armando and Adelia to enjoy possession of the Subject
Land for 24 years is formidable proof of Godofredo's acquiescence to the
sale. If the sale was truly unauthorized, then Godofredo should have filed an
action to annul the sale. He did not. The prescriptive period to annul the sale
has long lapsed. Godofredo's conduct belies his claim that his wife sold the
Subject Land without his consent.

Moreover, Godofredo and Carmen used most of the proceeds of the sale to pay
their debt with the DBP. We agree with the Court of Appeals that the sale
redounded to the benefit of the conjugal partnership. Article 161 of the Civil
Code provides that the conjugal partnership shall be liable for debts and
obligations contracted by the wife for the benefit of the conjugal partnership.
Hence, even if Carmen sold the land without the consent of her husband, the
sale still binds the conjugal partnership.

Petitioners contend that Godofredo and Carmen did not deliver the title of the
Subject Land to Armando and Adelia as shown by this portion of Adelia's
testimony on cross-examination:
Q No title was delivered to you by Godofredo Alfredo?

A I got the title from Julie Limon because my sister told me.[26]
Petitioners raise this factual issue for the first time. The Court of Appeals could
have passed upon this issue had petitioners raised this earlier. At any rate, the
cited testimony of Adelia does not convincingly prove that Godofredo and
Carmen did not deliver the Subject Land to Armando and Adelia. Adelia's cited
testimony must be examined in context not only with her entire testimony but
also with the other circumstances.

Adelia stated during cross-examination that she obtained the title of the Subject
Land from Julie Limon ("Julie"), her classmate in college and the sister of
Carmen. Earlier, Adelia's own sister had secured the title from the father of
Carmen. However, Adelia's sister, who was about to leave for the United States,
gave the title to Julie because of the absence of the other documents. Adelia's
sister told Adelia to secure the title from Julie, and this was how Adelia obtained
the title from Julie.

It is not necessary that the seller himself deliver the title of the property to the
buyer because the thing sold is understood as delivered when it is placed in the
control and possession of the vendee.[27] To repeat, Godofredo and Carmen
themselves introduced the Natanawans, their tenants, to Armando and Adelia as
the new owners of the Subject Land. From then on, Armando and Adelia acted
as the landlords of the Natanawans. Obviously, Godofredo and Carmen
themselves placed control and possession of the Subject Land in the hands of
Armando and Adelia.

Petitioners invoke the absence of approval of the sale by the Secretary of

Agriculture and Natural Resources to nullify the sale. Petitioners never raised
this issue before the trial court or the Court of Appeals. Litigants cannot raise an
issue for the first time on appeal, as this would contravene the basic rules of fair
play, justice and due process.[28] However, we will address this new issue to
finally put an end to this case.

The sale of the Subject Land cannot be annulled on the ground that the
Secretary did not approve the sale, which was made within 25 years from the
issuance of the homestead title. Section 118 of the Public Land Act
(Commonwealth Act No. 141) reads as follows:
SEC. 118. Except in favor of the Government or any of its branches,
units, or institutions or legally constituted banking corporation, lands acquired
under free patent or homestead provisions shall not be subject to encumbrance
or alienation from the date of the approval of the application and for a term of
five years from and after the date of the issuance of the patent or grant.

xxx

No alienation, transfer, or conveyance of any homestead after 5 years and

before twenty-five years after the issuance of title shall be valid without the
approval of the Secretary of Agriculture and Commerce, which approval shall
not be denied except on constitutional and legal grounds.
A grantee or homesteader is prohibited from alienating to a private individual a
land grant within five years from the time that the patent or grant is issued.[29] A
violation of this prohibition renders a sale void.[30] This prohibition, however,
expires on the fifth year. From then on until the next 20 years[31] the land grant
may be alienated provided the Secretary of Agriculture and Natural Resources
approves the alienation. The Secretary is required to approve the alienation
unless there are "constitutional and legal grounds" to deny the approval. In this
case, there are no apparent constitutional or legal grounds for the Secretary to
disapprove the sale of the Subject Land.

The failure to secure the approval of the Secretary does not ipso facto make a sale
void.[32] The absence of approval by the Secretary does not nullify a sale made
after the expiration of the 5-year period, for in such event the requirement of
Section 118 of the Public Land Act becomes merely directory[33] or a
formality.[34] The approval may be secured later, producing the effect of ratifying
and adopting the transaction as if the sale had been previously authorized.[35] As
held in Evangelista v. Montano:[36]
Section 118 of Commonwealth Act No. 141, as amended, specifically enjoins
that the approval by the Department Secretary "shall not be denied except on
constitutional and legal grounds." There being no allegation that there were
constitutional or legal impediments to the sales, and no pretense that if the sales
had been submitted to the Secretary concerned they would have been
disapproved, approval was a ministerial duty, to be had as a matter of course
and demandable if refused. For this reason, and if necessary, approval may now
be applied for and its effect will be to ratify and adopt the transactions as if they
had been previously authorized. (Emphasis supplied)
Action Not Barred by Prescription and Laches

Petitioners insist that prescription and laches have set in. We disagree.

The Amended Complaint filed by Armando and Adelia with the trial court is
captioned as one for Specific Performance. In reality, the ultimate relief sought
by Armando and Adelia is the reconveyance to them of the Subject Land. An
action for reconveyance is one that seeks to transfer property, wrongfully
registered by another, to its rightful and legal owner.[37] The body of the pleading
or complaint determines the nature of an action, not its title or heading.[38] Thus,
the present action should be treated as one for reconveyance.[39]

Article 1456 of the Civil Code provides that a person acquiring property
through fraud becomes by operation of law a trustee of an implied trust for the
benefit of the real owner of the property. The presence of fraud in this case
created an implied trust in favor of Armando and Adelia. This gives Armando
and Adelia the right to seek reconveyance of the property from the Subsequent
Buyers.[40]

To determine when the prescriptive period commenced in an action for

reconveyance, plaintiff's possession of the disputed property is material. An
action for reconveyance based on an implied trust prescribes in ten years.[41] The
ten-year prescriptive period applies only if there is an actual need to reconvey
the property as when the plaintiff is not in possession of the property.[42]
However, if the plaintiff, as the real owner of the property also remains in
possession of the property, the prescriptive period to recover title and
possession of the property does not run against him.[43] In such a case, an action
for reconveyance, if nonetheless filed, would be in the nature of a suit for
quieting of title, an action that is imprescriptible.[44]

In this case, the appellate court resolved the issue of prescription by ruling that
the action should prescribe four years from discovery of the fraud. We must
correct this erroneous application of the four-year prescriptive period. In Caro
v. Court of Appeals,[45] we explained why an action for reconveyance based on
an implied trust should prescribe in ten years. In that case, the appellate court
also erroneously applied the four-year prescriptive period. We declared in Caro:
We disagree. The case of Liwalug Amerol, et al. v. Molok Bagumbaran, G.R.
No. L-33261, September 30, 1987,154 SCRA 396 illuminated what used to be a
gray area on the prescriptive period for an action to reconvey the title to real
property and, corollarily, its point of reference:

xxx It must be remembered that before August 30, 1950, the date of the
effectivity of the new Civil Code, the old Code of Civil Procedure (Act No. 190)
governed prescription. It provided:
SEC. 43. Other civil actions; how limited.- Civil actions other than for the
recovery of real property can only be brought within the following periods after
the right of action accrues:

xxx xxx xxx

3. Within four years: xxx An action for relief on the ground of fraud, but the
right of action in such case shall not be deemed to have accrued until the
discovery of the fraud;

xxx xxx xxx

In contrast, under the present Civil Code, we find that just as an implied or
constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the
corresponding obligation to reconvey the property and the title thereto in favor
of the true owner. In this context, and vis-a-vis prescription, Article 1144 of the
Civil Code is applicable.
Article 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.
xxx xxx xxx
(Emphasis supplied).
An action for reconveyance based on an implied or constructive trust
must perforce prescribe in ten years and not otherwise. A long line of
decisions of this Court, and of very recent vintage at that, illustrates this rule.
Undoubtedly, it is now well-settled that an action for reconveyance based
on an implied or constructive trust prescribes in ten years from the
issuance of the Torrens title over the property. The only discordant note, it
seems, is Balbin vs. Medalla which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be explained by
the erroneous reliance on Gerona vs. de Guzman. But in Gerona, the fraud was
discovered on June 25,1948, hence Section 43(3) of Act No. 190, was applied,
the new Civil Code not coming into effect until August 30, 1950 as mentioned
earlier. It must be stressed, at this juncture, that article 1144 and article 1456, are
new provisions. They have no counterparts in the old Civil Code or in the old
Code of Civil Procedure, the latter being then resorted to as legal basis of the
four-year prescriptive period for an action for reconveyance of title of real
property acquired under false pretenses.

An action for reconveyance has its basis in Section 53, paragraph 3 of

Presidential Decree No. 1529, which provides:
In all cases of registration procured by fraud, the owner may pursue all his legal
and equitable remedies against the parties to such fraud without prejudice,
however, to the rights of any innocent holder of the decree of registration on
the original petition or application, xxx
This provision should be read in conjunction with Article 1456 of the Civil
Code, which provides:
Article 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.
The law thereby creates the obligation of the trustee to reconvey the property
and the title thereto in favor of the true owner. Correlating Section 53,
paragraph 3 of Presidential Decree No. 1529 and Article 1456 of the Civil Code
with Article 1144(2) of the Civil Code, supra, the prescriptive period for the
reconveyance of fraudulently registered real property is ten (10) years reckoned
from the date of the issuance of the certificate of title xxx (Emphasis
supplied)[46]
Following Caro, we have consistently held that an action for reconveyance
based on an implied trust prescribes in ten years.[47] We went further by
specifying the reference point of the ten-year prescriptive period as the date of
the registration of the deed or the issuance of the title.[48]

Had Armando and Adelia remained in possession of the Subject Land, their
action for reconveyance, in effect an action to quiet title to property, would not
be subject to prescription. Prescription does not run against the plaintiff in
actual possession of the disputed land because such plaintiff has a right to wait
until his possession is disturbed or his title is questioned before initiating an
action to vindicate his right.[49] His undisturbed possession gives him the
continuing right to seek the aid of a court of equity to determine the nature of
the adverse claim of a third party and its effect on his title.[50]

Armando and Adelia lost possession of the Subject Land when the Subsequent
Buyers forcibly drove away from the Subject Land the Natanawans, the tenants
of Armando and Adelia.[51] This created an actual need for Armando and Adelia
to seek reconveyance of the Subject Land. The statute of limitation becomes
relevant in this case. The ten-year prescriptive period started to run from the
date the Subsequent Buyers registered their deeds of sale with the Register of
Deeds.

The Subsequent Buyers bought the subdivided portions of the Subject Land on
22 February 1994, the date of execution of their deeds of sale. The Register of
Deeds issued the transfer certificates of title to the Subsequent Buyers on 24
February 1994. Armando and Adelia filed the Complaint on 7 March 1994.
Clearly, prescription could not have set in since the case was filed at the early
stage of the ten-year prescriptive period.

Neither is the action barred by laches. We have defined laches as the failure or
neglect, for an unreasonable time, to do that which, by the exercise of due
diligence, could or should have been done earlier.[52] It is negligence or omission
to assert a right within a reasonable time, warranting a presumption that the
party entitled to assert it either has abandoned it or declined to assert it.[53]
Armando and Adelia discovered in January 1994 the subsequent sale of the
Subject Land and they filed this case on 7 March 1994. Plainly, Armando and
Adelia did not sleep on their rights.
 Validity of Subsequent Sale of Portions of the Subject Land

Petitioners maintain that the subsequent sale must be upheld because the
Subsequent Buyers, the co-petitioners of Godofredo and Carmen, purchased
and registered the Subject Land in good faith. Petitioners argue that the
testimony of Calonso, the person who brokered the second sale, should not
prejudice the Subsequent Buyers. There is no evidence that Calonso was the
agent of the Subsequent Buyers and that she communicated to them what she
knew about the adverse claim and the prior sale. Petitioners assert that the
adverse claim registered by Armando and Adelia has no legal basis to render
defective the transfer of title to the Subsequent Buyers.

We are not persuaded. Godofredo and Carmen had already sold the Subject
Land to Armando and Adelia. The settled rule is when ownership or title passes
to the buyer, the seller ceases to have any title to transfer to any third person.[54]
If the seller sells the same land to another, the second buyer who has actual or
constructive knowledge of the prior sale cannot be a registrant in good faith.[55]
Such second buyer cannot defeat the first buyer's title.[56] In case a title is issued
to the second buyer, the first buyer may seek reconveyance of the property
subject of the sale.[57]

Thus, to merit protection under the second paragraph of Article 1544[58] of the
Civil Code, the second buyer must act in good faith in registering the deed.[59] In
this case, the Subsequent Buyers' good faith hinges on whether they had
knowledge of the previous sale. Petitioners do not dispute that Armando and
Adelia registered their adverse claim with the Registry of Deeds of Bataan on 8
February 1994. The Subsequent Buyers purchased their respective lots only on
22 February 1994 as shown by the date of their deeds of sale. Consequently, the
adverse claim registered prior to the second sale charged the Subsequent Buyers
with constructive notice of the defect in the title of the sellers,[60] Godofredo
and Carmen.

It is immaterial whether Calonso, the broker of the second sale, communicated

to the Subsequent Buyers the existence of the adverse claim. The registration of
the adverse claim on 8 February 1994 constituted, by operation of law, notice to
the whole world.[61] From that date onwards, the Subsequent Buyers were
deemed to have constructive notice of the adverse claim of Armando and
Adelia. When the Subsequent Buyers purchased portions of the Subject Land
on 22 February 1994, they already had constructive notice of the adverse claim
registered earlier.[62] Thus, the Subsequent Buyers were not buyers in good faith
when they purchased their lots on 22 February 1994. They were also not
registrants in good faith when they registered their deeds of sale with the
Registry of Deeds on 24 February 1994.

The Subsequent Buyers' individual titles to their respective lots are not
absolutely indefeasible. The defense of indefeasibility of the Torrens Title does
not extend to a transferee who takes the certificate of title with notice of a flaw
in his title.[63] The principle of indefeasibility of title does not apply where fraud
attended the issuance of the titles as in this case.[64]

Attorney's Fees and Costs

We sustain the award of attorney's fees. The decision of the court must state
the grounds for the award of attorney's fees. The trial court complied with this
requirement.[65] We agree with the trial court that if it were not for petitioners'
unjustified refusal to heed the just and valid demands of Armando and Adelia,
the latter would not have been compelled to file this action.

The Court of Appeals echoed the trial court's condemnation of petitioners'

fraudulent maneuverings in securing the second sale of the Subject Land to the
Subsequent Buyers. We will also not turn a blind eye on petitioners' brazen
tactics. Thus, we uphold the treble costs imposed by the Court of Appeals on
petitioners.

WHEREFORE, the petition is DENIED and the appealed decision is

AFFIRMED. Treble costs against petitioners.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and Azcuna, JJ., concur.
 FIRST DIVISION
G.R. No. 186450, April 08, 2010
NATIONAL WATER RESOURCES BOARD (NWRB), PETITIONER, VS. A.
L. ANG NETWORK, INC., RESPONDENT.

DECISION

CARPIO MORALES, J.:

In issue is whether Regional Trial Courts have jurisdiction over appeals from
decisions, resolutions or orders of the National Water Resources Board
(petitioner).

A.L. Ang Network (respondent) filed on January 23, 2003 an application for a
Certificate of Public Convenience (CPC) with petitioner to operate and maintain
a water service system in Alijis, Bacolod City.

Bacolod City Water District (BACIWA) opposed respondent's application on

the ground that it is the only government agency authorized to operate a water
service system within the city. [1]

By Decision of August 20, 2003, petitioner granted respondent's CPC

application. BACIWA moved to have the decision reconsidered, contending
that its right to due process was violated when it was not allowed to present
evidence in support of its opposition.[2]

Petitioner reconsidered its Decision and allowed BACIWA to present

evidence,[3] drawing respondent to file a petition for certiorari with the Regional
Trial Court (RTC) of Bacolod City against petitioner and BACIWA. Petitioner
moved to dismiss the petition, arguing that the proper recourse of respondent
was to the Court of Appeals, citing Rule 43 of the Rules of Court.

The RTC, by Order of April 15, 2005,[4] dismissed respondent's petition for lack
of jurisdiction, holding that it is the Court of Appeals which has "exclusive
appellate jurisdiction over all final judgments, decisions, resolutions, order[s] or
awards of . . . quasi-judicial agencies, instrumentalities, boards or commission[s]
. . . except those within the appellate jurisdiction of the Supreme Court . . . ."
Thus the RTC explained:

Art. 89 of P.D. 1067 having been long repealed by BP 129, as amended, which
has effectively and explicitly removed the Regional Trial Courts' appellate
jurisdiction over the decisions, resolutions, order[s] or awards of quasi-judicial
agencies such as [petitioner] NWRB, and vested with the Court of Appeals, very
clearly now, this Court has no jurisdiction over this instant petition.

Its motion for reconsideration having been denied, respondent filed a petition
for certiorari at the Court of Appeals, which, by Decision of January 25, 2008,[5]
annulled and set aside the RTC April 15, 2005, holding that it is the RTC
which has jurisdiction over appeals from petitioner's decisions. Thus the
appellate court discoursed.

In the analogous case of BF Northwest Homeowners Association, Inc. vs.

Intermediate Appellate Court[,] the Supreme Court . . . categorically
pronounced the RTC's jurisdiction over appeals from the decisions of the
NWRB consistent with Article 89 of P.D. No. 1067 and ratiocinated in this
wise:
x x x x.

The logical conclusion, therefore, is that jurisdiction over actions for annulment
of NWRC decisions lies with the Regional Trial Courts, particularly, when we
take note of the fact that the appellate jurisdiction of the Regional Trial Court
over NWRC decisions covers such broad and all embracing grounds as grave
abuse of discretion, questions of law, and questions of fact and law (Art. 89,
P.D. No. 1067). This conclusion is also in keeping with the Judiciary
Reorganization Act of 1980, which vests Regional Trial Courts with original
jurisdiction to issue writs of certiorari, prohibition, mandamus, etc. (Sec. 21

[1],
B.P. Blg. 129) relating to acts or omissions of an inferior court (Sec. 4, Rule
65, Rules of Court).

x x x x.
Similarly, in Tanjay Water District vs. Pedro Gabaton, the Supreme Court
conformably ruled, viz:

"Inasmuch as Civil Case No. 8144 involves the appropriation, utilization and
control of water, We hold that the jurisdiction to hear and decide the dispute in
the first instance, pertains to the Water Resources Council as provided in PD
No. 1067 which is the special law on the subject. The Court of First Instance
(now Regional Trial Court) has only appellate jurisdiction over the case."

Based on the foregoing jurisprudence, there is no doubt that [petitioner] NWRB

is mistaken in its assertion. As no repeal is expressly made, Article 89 of P.D.
No. 1067 is certainly meant to be an exception to the jurisdiction of the
Court of Appeals over appeals or petitions for certiorari of the decisions of
quasi-judicial bodies. This finds harmony with Paragraph 2, Section 4, Rule 65
of the Rules of Court wherein it is stated that, "If it involves the acts of a quasi-
judicial agency, unless otherwise provided by law or these rules, the petition shall be filed in and
cognizable only by the Court of Appeals." Evidently, not all petitions for certiorari
under Rule 65 involving the decisions of quasi-judicial agencies must be filed
with the Court of Appeals. The rule admits of some exceptions as plainly
provided by the phrase "unless otherwise provided by law or these rules" and Article 89
of P.D. No. 1067 is verily an example of these exceptions. (italics and emphasis
partly in the original; underscoring supplied)

Petitioner's motion for reconsideration having been denied by the appellate

court by Resolution of February 9, 2009,[6] petitioner filed the present petition
for review, contending that:

THE REGIONAL TRIAL COURT HAS NO CERTIORARI

JURISDICTION OVER THE [PETITIONER] SINCE SECTION 89, PD
NO. 1067, REGARDING APPEALS, HAS BEEN SUPERSEDED AND
REPEALED BY [BATAS PAMBANSA BILANG] 129 AND THE RULES
OF COURT. FURTHERMORE, PD 1067 ITSELF DOES NOT
CONTEMPLATE THAT THE REGIONAL TRIAL COURT SHOULD
HAVE CERTIORARI JURISDICTION OVER THE [PETITIONER].[7]
(underscoring supplied)

Petitioner maintains that the RTC does not have jurisdiction over a petition for
certiorari and prohibition to annul or modify its acts or omissions as a quasi-
judicial agency. Citing Section 4 of Rule 65 of the Rules of Court, petitioner
contends that there is no law or rule which requires the filing of a petition for
certiorari over its acts or omissions in any other court or tribunal other than the
Court of Appeals.[8]

Petitioner goes on to fault the appellate court in holding that Batas Pambansa
Bilang 129 (BP 129) or the Judiciary Reorganization Act did not expressly repeal
Article 89 of Presidential Decree No. 1067 (PD 1067) otherwise known as the
Water Code of the Philippines.[9]

Respondent, on the other hand, maintains the correctness of the assailed

decision of the appellate court.

The petition is impressed with merit.

Section 9 (1) of BP 129 granted the Court of Appeals (then known as the
Intermediate Appellate Court) original jurisdiction to issue writs of mandamus,
prohibition, certiorari, habeas corpus and quo warranto, and auxiliary writs or
processes, whether or not in aid of its appellate jurisdiction.[10]

Since the appellate court has exclusive appellate jurisdiction over quasi-judicial
agencies under Rule 43[11] of the Rules of Court, petitions for writs of certiorari,
prohibition or mandamus against the acts and omissions of quasi-judicial
agencies, like petitioner, should be filed with it. This is what Rule 65 of the
Rules imposes for procedural uniformity. The only exception to this instruction
is when the law or the Rules itself directs otherwise, as cited in Section 4, Rule
65.[12] The appellate court's construction that Article 89 of PD 1067, which
reads:

ART. 89. The decisions of the [NWRB] on water rights controversies may be
appealed to the [RTC] of the province where the subject matter of the
controversy is situated within fifteen (15) days from the date the party appealing
receives a copy of the decision, on any of the following grounds: (1) grave
abuse of discretion; (2) question of law; and (3) questions of fact and law
(emphasis and underscoring supplied),

is such an exception, is erroneous.

Article 89 of PD 1067 had long been rendered inoperative by the passage
of BP 129. Aside from delineating the jurisdictions of the Court of Appeals and
the RTCs, Section 47 of BP 129 repealed or modified:

x x x. [t]he provisions of Republic Act No. 296, otherwise known as the

Judiciary Act of 1948, as amended, of Republic Act No. 5179, as amended, of
the Rules of Court, and of all other statutes, letters of instructions and
general orders or parts thereof, inconsistent with the provisions of this Act
x x x. (emphasis and underscoring supplied)

The general repealing clause under Section 47 "predicates the intended repeal
under the condition that a substantial conflict must be found in existing and
prior acts."[13]

In enacting BP 129, the Batasang Pambansa was presumed to have knowledge of

the provision of Article 89 of P.D. No. 1067 and to have intended to change
it.[14] The legislative intent to repeal Article 89 is clear and manifest given the
scope and purpose of BP 129, one of which is to provide a homogeneous
procedure for the review of adjudications of quasi-judicial entities to the Court
of Appeals.

More importantly, what Article 89 of PD 1067 conferred to the RTC was the
power of review on appeal the decisions of petitioner. It appears that the
appellate court gave significant consideration to the ground of "grave abuse of
discretion" to thus hold that the RTC has certiorari jurisdiction over petitioner's
decisions. A reading of said Article 89 shows, however, that it only made "grave
abuse of discretion" as another ground to invoke in an ordinary appeal to the
RTC. Indeed, the provision was unique to the Water Code at the time of its
application in 1976.

The issuance of BP 129, specifically Section 9 (Jurisdiction of the Court of

Appeals, then known as Intermediate Appellate Court), and the subsequent
formulation of the Rules, clarified and delineated the appellate and certiorari
jurisdictions of the Court of Appeals over adjudications of quasi-judicial bodies.
Grave abuse of discretion may be invoked before the appellate court as a
ground for an error of jurisdiction.
It bears noting that, in the present case, respondent assailed petitioner's order
via certiorari before the RTC, invoking grave abuse of discretion amounting to
lack or excess of jurisdiction as ground-basis thereof. In other words, it invoked
such ground not for an error of judgment.

While Section 9 (3) of BP 129[15] and Section 1 of Rule 43 of the Rules of

Court[16] does not list petitioner as "among" the quasi-judicial agencies whose
final judgments, orders, resolutions or awards are appealable to the appellate
court, it is non sequitur to hold that the Court of Appeals has no appellate
jurisdiction over petitioner's judgments, orders, resolutions or awards. It is
settled that the list of quasi-judicial agencies specifically mentioned in Rule 43 is
not meant to be exclusive.[17] The employment of the word "among" clearly
instructs so.

BF Northwest Homeowners Association v. Intermediate Appellate Court, [18] a 1987 case

cited by the appellate court to support its ruling that RTCs have jurisdiction
over judgments, orders, resolutions or awards of petitioner, is no longer
controlling in light of the definitive instruction of Rule 43 of the Revised Rules
of Court.

Tanjay Water District v. Gabaton [19] is not in point either as the issue raised therein
was which between the RTC and the then National Water Resources Council
had jurisdiction over disputes in the appropriation, utilization and control of
water.

In fine , certiorari and appellate jurisdiction over adjudications of

petitioner properly belongs to the Court of Appeals.

WHEREFORE, the challenged Decision and Resolution of the Court of

Appeals are REVERSED and SET ASIDE. The April 15, 2005 Order of the
Regional Trial Court of Bacolod City dismissing petitioner's petition for lack of
jurisdiction is UPHELD.

No costs.

SO ORDERED.
Puno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Villarama, Jr., JJ.,
concur.
 FIRST DIVISION
G.R. No. 182754, June 29, 2015
SPOUSES CRISPIN AQUINO AND TERESA V. AQUINO, HEREIN
REPRESENTED BY THEIR ATTORNEY-IN-FACT, AMADOR D.
LEDESMA, PETITIONERS, VS. SPOUSES EUSEBIO AGUILAR AND
JOSEFINA V. AGUILAR, RESPONDENTS.

DECISION

SERENO, C.J.:

In this Petition for Review on Certiorari[1] filed under Rule 45 of the Rules of Court,
Petitioner spouses Crispin and Teresa Aquino (petitioners) assail the Court of Appeals (CA)
Decision dated 25 April 2008[2] in CA-GR SP No. 92778. The CA modified the Decisions of
both the Metropolitan Trial Court (MeTC) and the Regional Trial Court (RTC). The CA
ruled that although respondent spouses Eusebio and Josefina Aguilar (respondents) cannot
be considered builders in good faith, they should still be reimbursed for the improvements
they have introduced on petitioners property.[3]

The Facts

Teresa Vela Aquino (Teresa) and her husband, Crispin Aquino, are the owners of a house
and lot located at No. 6948, Rosal Street, Guadalupe Viejo, Makati City as evidenced by
Transfer of Certificate Title No. 148338.[4]

Since 1981, this property has been occupied by Teresas sister, Josefina Vela Aguilar;
Josefinas spouse Eusebio; and their family.[5] It appears from the record that respondents
stayed on the property with the consent and approval of petitioners, who were then residing
in the United States.[6]

While respondents were in possession of the property, the house previously constructed
therein was demolished, and a three-storey building built in its place.[7] Respondents
occupied half of the third floor of this new building for the next 20 years without payment
of rental.[8]

On 22 September 2003, petitioners sent a letter to respondents informing them that an

immediate family member needed to use the premises and demanding the surrender of the
property within 10 days from notice.[9] Respondents failed to heed this demand, prompting
petitioners to file a Complaint for ejectment against them before the office of the barangay
captain of Guadalupe Viejo.[10] The parties attempted to reach an amicable settlement in
accordance with Section 412 of the Local Government Code, but these efforts proved
unsuccessful.[11]

On 19 November 2003, petitioner spouses Aquino filed a Complaint[12] with the MeTC of
Makati City praying that respondents be ordered to (a) vacate the portion of the building
they were then occupying; and (b) pay petitioner a reasonable amount for the use and
enjoyment of the premises from the time the formal demand to vacate was made.[13]

In their Answer with Counterclaim,[14] respondents claimed that they had contributed to the
improvement of the property and the construction of the building, both in terms of money
and management/supervision services. Petitioners purportedly agreed to let them contribute
to the costs of construction in exchange for the exclusive use of a portion of the building.
Respondents averred:
2.3 That the construction of the three (3) storey building was also at the uncompensated
supervision of defendant Eusebio Aguilar, of which only P 2 Million was spent by plaintiffs
while defendants spent around P 1 Million as contribution to the construction cost. It was
defendants who introduced improvements on subject lot because at the time plaintiffs
bought the property it was marshy which was filled up by defendants (sic) truck load with
builders, adobe and scumbro that elevated the ground;

2.4 The original agreement was for my client to contribute his share so that they will have
the portion of the subject building for their own exclusive use. It turned out later that the
agreement they had was disowned by plaintiffs when they saw the totality of the building
constructed thereon coupled by the fact, that the value of the lot has tremendously
appreciated due to the commercialization of the vicinity which will command higher price
and windfall profits should plaintiffs sell the property which they are now contemplating on
(sic);

2.5 The portion which plaintiffs want defendants to vacate is a portion which the latter built
with their own money upon your clients agreement and consent whom they built in good
faith knowing and hoping that later on the same will be theirs exclusively. It was never an act
of generosity, liberality and tolerance. Conversely, it was one of the implied co-ownership or
partnership, because aside from the fact that defendants, who were then peacefully residing
in Laguna, made unquantifiable contributions in terms of money and services arising from
his uncompensated management and supervision over the entire subject property while
plaintiffs are abroad. By legal implications he is an industrial partner responsible for the
development and improvements of the subject property. His contribution was never without
the consent of plaintiffs. Whatever contribution defendants introduced over the said
property was made and built in good faith;[15]
Since they were allegedly co-owners of the building and builders in good faith, respondents
claimed that they had the right to be compensated for the current value of their
contribution.[16] Accordingly, they prayed for the dismissal of the Complaint and the award
of P5 million as compensation for their contributions to the construction of the building, as
well as moral damages, attorneys fees and costs of litigation.[17]

The Ruling of the MeTC

In a Decision[18] dated 12 November 2004, the MeTC ruled in favor of petitioners, stating
that they had the right to enjoy possession of the property as the registered owners
thereof.[19] Since the case was merely one for ejectment, the court held that it was no longer
proper to resolve respondents claim of co-ownership over the building.[20]

The MeTC also declared that respondents were builders in bad faith who were not entitled
to recover their purported expenses for the construction of the building.[21] It emphasized
that their occupation of the property was by mere tolerance of petitioners and, as such,
could be terminated at any time.[22] The court further noted that in a letter dated 15 July
1983, petitioners had already asked respondents to refrain from constructing improvements
on the property because it was intended to be sold.[23]

The dispositive portion of the MeTC Decision, which ordered respondents to vacate the
property, reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendants
Eusebio & Josefina Aguilar and all persons claiming rights under them to immediately vacate
the subject property, and deliver peaceful possession thereof to the plaintiffs. Defendants are
likewise ordered to pay plaintiffs P7,000.00 monthly rental commencing 22 October 2003
until such time that defendant finally vacate the premises, P10,000.00 as and by way of
attorneys fees, and the cost of suit.[24]
On 14 September 2005, respondents appealed the MeTCs Decision to the RTC. [25]

The Ruling of the RTC

In their Memorandum on Appeal[26] before the RTC, respondents assailed the MeTCs
finding that petitioners, as the registered owners of the land, were also the owners of the
improvement constructed thereon.[27] Respondents asserted that they were co-owners of the
building since they built a portion thereof using their own funds, as evidenced by various
receipts they presented before the MeTC.[28]

Respondents also maintained that they were builders in good faith. They pointed out that
petitioners never objected to the construction of the improvement on their property.[29]
According to respondents, petitioners letter dated 15 July 1983 was written at a time when
an old dilapidated house was still standing on the property.[30] Subsequently however, the
house was demolished and the new building was constructed thereon by respondents, with
petitioners knowledge and consent.[31]
In a Decision[32] dated 3 January 2006, the RTC denied the appeal and affirmed the MeTCs
Decision. According to the court, respondents did not become co-owners of the property
although they may have contributed to the construction of the building thereon.[33] Hence,
their stay in the premises remained to be by mere tolerance of the petitioners.[34]

The RTC also ruled that respondents cannot be considered builders in good faith.[35] The
court found that as early as 1983, petitioners had informed respondents of the intention to
eventually dispose of the property.[36] The RTC concluded that petitioners never consented
to the construction of any form of structure on the property.[37] Since respondents
participated in the construction of the building even after they had been notified that their
occupation may be terminated anytime, the RTC ruled that they did not build the structures
in good faith.[38] The RTC likewise noted that the improvements in question as well as other
personal belongings of the appellants were removed from the premises through a writ of
demolition, and these properties are now in their possession.[39]

The Ruling of the CA

Aggrieved by the RTC Decision, respondents elevated the matter to the CA. They reiterated
that they owned one-half of the third floor of the building on the property, having spent
their own funds for the construction thereof. Respondents also asserted that because they
built that portion in good faith, with no objection from petitioners, they were entitled to
reimbursement of all necessary and useful expenses incurred in the construction.

On 25 April 2008, the CA affirmed the conclusion of the lower courts that respondents
could not be considered co-owners of the property or builders in good faith.[40] According to
the appellate court, respondents were aware that their right to possess the property had a
limitation, because they were not the owners thereof. They knew that their occupation of the
building was by mere tolerance or permission of petitioners, who were the registered owners
of the property.

The CA likewise noted that respondents failed to prove the alleged agreement between the
parties with respect to the ownership of one-half of the third floor of the improvement.
There being no contract between them, respondents are necessarily bound to vacate the
property upon demand.[41] The CA ruled:
The Supreme Court has consistently held that those who occupy the land of another at the
latters tolerance or permission, without any contract between them, are necessarily bound
by an implied promise that the occupants will vacate the property upon demand. Based on
the principles enunciated in Calubayan v. Pascual, the status of petitioners is analogous to that
of a lessee or a tenant whose term of lease has expired but whose occupancy continued by
tolerance of the owner. In such a case, the unlawful deprivation or withholding of
possession is to be reckoned from the date of the demand to vacate.[42] (Citations omitted)
Nevertheless, the CA declared that respondents should be reimbursed for the necessary and
useful expenses they had introduced on petitioners property, pursuant to Articles 1678 and
548 of the Civil Code.[43] The dispositive portion of the CA Decision dated 25 April 2008[44]
reads:
WHEREFORE, the assailed Decision is AFFIRMED with the following
MODIFICATIONS:

1. The case is REMANDED to the court of origin for further proceedings to determine the
facts essential to the application of Article 1678 and Article 546 of the Civil Code, specifically
on the following matters:
a) To determine the cost of necessary expenses incurred by petitioners during their period
of possession.

b) To determine the cost of useful improvements introduced by petitioners in the

construction of the building.
2. After said amounts shall have been determined by competent evidence:
a) Respondents Aquino are ordered to pay petitioners the costs of necessary
improvements incurred during the period of their occupation.

b) Petitioners Aguilar are to be reimbursed one half (1/2) of the amount they expended on
the construction of the building should respondents decided to appropriate the same.
Should respondents refuse to reimburse the costs of the improvements, petitioners may
remove the improvements even though the principal thing may suffer damage thereby.

c) In both instances, petitioners shall have no right of retention over the subject premises.

d) In any event, petitioners shall pay respondents the amount of Php7,000.00 as monthly
rental commencing 22 October 2003 until such time that petitioners finally vacate the
premises. No pronouncement as to costs.
SO ORDERED.[45]
Respondents no longer appealed the Decision of the CA. This time, petitioners elevated the
matter to this Court through the instant Petition for Review[46] under Rule 45 of the Rules of
Court.

Proceedings before this Court

In their Petition, petitioners allege that the CA seriously erred in remanding the case to the
court of origin for the purpose of ascertaining the right of respondents to be reimbursed for
the improvements introduced on the property.[47] They emphasize that respondents were
builders in bad faith, and, as such, are not entitled to reimbursement under Articles 449, 450
and 451 of the Civil Code.

In their Comment,[48] respondents assert that the CA correctly ruled that their status is akin
to that of a lessee or tenant whose term of lease has expired, but whose occupancy continues
by virtue of the tolerance of the owner. They aver that the CA properly upheld their
entitlement to reimbursement pursuant to Articles 1678[49] and 546[50] of the Civil Code.[51]

In their Reply,[52] petitioners argue against supposed improvements constructed by

respondents from 1999 to 2003 amounting to P995,995.94. Petitioners say this claim is
highly ridiculous and unbelievable.[53]

Our Ruling

Since respondents no longer appealed the Decision of the CA,[54] they are considered bound
by its findings and conclusions. These include its affirmation of the earlier findings of the
MeTC and the RTC that respondents cannot be considered builders in good faith:
Both the MeTC and the RTC have rejected the idea that petitioners are builders in good
faith. We agree. The resolution of the issues at bar calls for the application of the rules on
accession under the Civil Code. The term builder in good faith as used in reference to
Article 448 of the Civil Code, refers to one who, not being the owner of the land, builds on
that land believing himself to be its owner and unaware of the land, builds on that land,
believing himself to be its owner and unaware of the defect in his title or mode of
acquisition. The essence of good faith lies in an honest belief in the validity of ones right,
ignorance of a superior claim, and absence of intention to overreach another.

In the instant case, the Spouses Aguilar cannot be considered as builders in good faith on
account of their admission that the subject lot belonged to the Spouses Aquino when they
constructed the building. At the onset, petitioners were aware of a flaw in their title and a
limit to their right to possess the property. By law, one is considered in good faith if he is not
aware that there exists in his title or mode of acquisition any flaw which invalidates it.[55]
Respondents are deemed to have acquiesced to the foregoing findings when they failed to
appeal the CA Decision. A party who does not appeal from a judgment can no longer seek
the modification or reversal thereof.[56] Accordingly, the only issue left for this Court to
determine is that which is now raised by petitioners whether the CA erred in remanding
this case to the court of origin for the determination of the necessary and useful expenses to
be reimbursed to respondents pursuant to Articles 1678 and 546 of the Civil Code.
We resolve to PARTLY GRANT the Petition and modify the ruling of the CA.

Article 1678 is not applicable to this case.

In its Decision, the CA found that respondents were occupants of the property by mere
tolerance or generosity of petitioners and were bound by an implied promise to vacate the
premises upon demand.[57]

Based on this finding, the CA held that the status of petitioners is analogous to that of a
lessee or a tenant whose term of lease has expired but whose occupancy continued by
tolerance of owner[58] pursuant to this Courts ruling in Calubayan v. Pascual.[59] As a result,
the CA concluded that Articles 1678 and 546 of the Civil Code must be applied to allow
respondents to be reimbursed for their necessary and useful expenses.

We disagree. By its express provision, Article 1678 of the Civil Code applies only to lessees
who build useful improvements on the leased property. It does not apply to those who
possess property by mere tolerance of the owners, without a contractual right.

A careful reading of the statement made by this Court in Calubayan would show that it did
not, as it could not, modify the express provision in Article 1678, but only noted an
analogous situation. According to the Court, the analogy between a tenant whose term of
lease has expired and a person who occupies the land of another at the latters tolerance lies
in their implied obligation to vacate the premises upon demand of the owner. The Court stated:
To begin with, it would appear that although the defendant is regarded by the plaintiffs as a
"squatter" his occupancy of the questioned premises had been permitted or tolerated even
before the Philippine Realty Corporation sold the lots to the plaintiffs. Otherwise, the latter
would not have found him on the premises. It may be true that upon their acquisition of the
parcels of land in 1957, plaintiffs notified and requested defendant to see them, but despite
defendant's failure to heed these requests, plaintiffs did not choose to bring an action in
court but suffered the defendant instead to remain in the premises for almost six years. Only
on February 2, 1963, did the plaintiffs for the first time notify the defendant that "they now
need the two parcels of land in question" and requested him to vacate the same. In allowing
several years to pass without requiring the occupant to vacate the premises nor filing an
action to eject him, plaintiffs have acquiesced to defendant's possession and use of the
premises. It has been held that a person who occupies the land of another at the latter's
tolerance or permission, without any contract between them, is necessarily bound by an
implied promise that he will vacate upon demand, failing which a summary action for
ejectment is the proper remedy against them. The status of defendant is analogous to that of
a lessee or tenant whose term of lease has expired but whose occupancy continued by
tolerance of the owner. In such a case, the unlawful deprivation or withholding of
possession is to be counted from the date of the demand to vacate.[60] (Emphasis in the
original)
It is clear from the above that Calubayan is not sufficient basis to confer the status and rights
of a lessee on those who occupy property by mere tolerance of the owner.

In this case, there is absolutely no evidence of any lease contract between the parties. In fact,
respondents themselves never alleged that they were lessees of the lot or the building in
question. Quite the opposite, they insisted that they were co-owners of the building and
builders in good faith under Article 448 of the Civil Code. For that reason, respondents
argue that it was erroneous for the CA to consider them as lessees and to determine their
rights in accordance with Article 1678.

As builders in bad faith, respondents are not entitled to reimbursement of useful

expenses.

Furthermore, even if we were to subscribe to the CAs theory that the situation of
respondents is analogous to that of a lessee or tenant whose term of lease has expired but
whose occupancy continued by tolerance, the absence of good faith on their part prevents
them from invoking the provisions of Article 1678.

As discussed above, the MeTC, the RTC and the CA all rejected the claims of respondents
that they were builders in good faith. This pronouncement is considered conclusive upon
this Court, in view of respondents failure to appeal from the CA decision. This rule bars the
application of Article 1678 as well as Articles 448 and 576 of the Civil Code and all other
provisions requiring good faith on the part of the builder.

We are aware that in some instances, this Court has allowed the application of Article 448 to
a builder who has constructed improvements on the land of another with the consent of the
owner.[61] In those cases, the Court found that the owners knew and approved of the
construction of improvements on the property. Hence, we ruled therein that the structures
were built in good faith, even though the builders knew that they were constructing the
improvement on land owned by another.

Although the factual circumstances in the instant case are somewhat similar, there is one
crucial factor that warrants a departure from the above-described rulings: the presence of
evidence that petitioners prohibited respondents from building their own structure on a
portion of the property.

Based on the findings of fact of the MeTC and the RTC, petitioners had already warned
respondents not to build a structure on the property as early as 1983. The MeTC explained:
Likewise, in a letter dated 15 July 1983 sent by plaintiffs to the defendants marked as Exhibit
2 of defendants Position Paper, Teresa Aquino made known to the defendants not to
construct on the premises as she planned to sell the same when the value of the property
shall increase (sic). Defendants are undoubtedly builders in bad faith for despite the
prohibition made upon them, they continued their construction activities upon respondents
property.[62]
This ruling was affirmed by the RTC in its Decision dated 3 January 2006, which reads:
An examination of appellants Exhibit 2 which is a letter dated July 15, 1983, sent to
appellant Josefina Aguilar, the sister of appellee Teresa Aquino, abundantly shows that their
occupancy of the premises in question is by tolerance of the appellees. Thus, the letter
expressly states that the appellants are advised not to put up a shop, as the appellees had
plan (sic) then of disposing the property (the land) in question for a reasonable profit after a
period of three or four years, thereby placing on notice them (appellants) that their
possession of the said property is temporary in nature and by mere generosity of the
appellees, they being sisters.

The letter likewise advised them to apply for a housing project so that by the time the
property in question is sold, they have a place to transfer to. All these undisputed
antecedents which can be considered as judicially admitted by the appellants being their own
evidence marked as Exhibit 2, coupled with the fact that since the time they occupied the
premises in 1983 up to the time when the complaint was filed, they were not asked to pay
any monthly rental for the use, enjoyment and occupancy of the said property, ineluctably
established the fact that their possession of the said property is by mere tolerance of the
appellees.[63]

xxxx

Their contention that pursuant to Article 453 of the Civil Code, they should be considered
builders in good faith even if they have acted in bad faith, since their act of introducing
improvements to one-half of the third floor of the three storey building was with knowledge
and without opposition on the part of the appellants, cannot be sustained, principally on the
ground that as stated earlier, their Exhibit 2 is very limpid on the act that they were already
forewarned as early as 1983 not to introduce any improvements thereon as the property is
slated to be sold as it was only bought for investment purposes. The fact that the appellees
did not thereafter remind them of this, is of no moment, as this letter was not likewise
withdrawn by a subsequent one or modified by the appellees.[64]
We find no reason to depart from the conclusions of the trial courts. Respondents were
evidently prohibited by petitioners from building improvements on the land because the
latter had every intention of selling it. That this sale did not materialize is irrelevant. What is
crucial is that petitioners left respondents clear instructions not to build on the land.

We also agree with the RTCs ruling that the lack of constant reminders from petitioners
about the prohibition expressed in the 1983 letter was immaterial. The prohibition is
considered extant and continuing since there is no evidence that this letter was ever
withdrawn or modified. Moreover, no evidence was presented to show that petitioners were
aware of what was happening: that respondents were constructing a portion of the building
with their own funds and for their exclusive use and ownership. Neither were respondents
able to present evidence that petitioners had agreed to share the expenses with them, or that
the former had given consent to the latters contribution, if any.

In view of the foregoing, this Courts previous rulings on Article 448 cannot be applied to
this case. Hence, we hold that petitioners, as the owners of the land, have the right to
appropriate what has been built on the property, without any obligation to pay indemnity
therefor;[65] and that respondents have no right to a refund of any improvement built
therein,[66] pursuant to Articles 449 and 450 of the Civil Code:
Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is
built, planted or sown without right of indemnity.

Art. 450. The owner of the land on which anything has been built, planted or sown in bad
faith may demand the demolition of the work, or that the planting or sowing be removed, in
order to replace things in their former condition at the expense of the person who built,
planted or sowed; or he may compel the builder or planter to pay the price of the land, and
the sower the proper rent.

Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages
from the builder, planter or sower.
Respondents may recover the necessary expenses incurred for the preservation of the
property but without the right of retention.

Pursuant to Article 452 of the Civil Code, a builder in bad faith is entitled to recoup the
necessary expenses incurred for the preservation of the land.[67] The CA correctly ruled that
respondents in this case are similarly entitled to this reimbursement. However, being builders
in bad faith, they do not have the right of retention over the premises.[68]

While the evidence before this Court does not establish the amount of necessary expenses
incurred by respondents during their stay in the property, we note that even petitioners do
not deny that such expenses were incurred. In fact, in a letter dated 15 July 1983, petitioners
acknowledged that respondents had spent personal money for the maintenance of the
property. Petitioners even promised to reimburse them for those expenses.[69] In this light,
we find it proper to order the remand of this case to the court a quo for the purpose of
determining the amount of necessary expenses to be reimbursed to respondents.

With respect to the award of actual damages to petitioners, we find no reason to reverse or
modify the ruling of the CA. This Court has consistently held that those who occupy the
land of another at the latter's tolerance or permission, even without any contract between
them, are necessarily bound by an implied promise that the occupants would vacate the
property upon demand.[70] Failure to comply with this demand renders the possession
unlawful and actual damages may be awarded to the owner from the date of the demand to
vacate[71] until the actual surrender of the property.

Accordingly, we affirm the CAs award of actual damages to petitioners in the amount of
P7,000 per month from the date of demand (22 October 2003) until the subject properties
are vacated. This amount represents a reasonable compensation for the use and occupation
of respondents property[72] as determined by the RTC and the MeTC.

As to petitioners prayer for attorneys fees, we find no cogent basis for the award.

WHEREFORE, the Petition is PARTLY GRANTED.

The Court of Appeals Decision dated 25 April 2008 is REVERSED insofar as it ordered:
(a) the reimbursement of the useful expenses incurred by respondents while in possession of
the property; and (b) the determination of the cost of these useful improvements by the
court of origin. The rest of the Decision of the Court of Appeals is hereby AFFIRMED.

Accordingly, this case is REMANDED to the court of origin for the determination of the
necessary expenses of preservation of the land, if any, incurred by respondent spouses
Eusebio and Josefina Aguilar while they were in possession of the property, which expenses
shall be reimbursed to them by petitioner spouses Crispin and Teresa Aquino.

On the other hand, respondents and all persons claiming rights under them are ordered,
upon finality of this Decision without awaiting the resolution of the matter of necessary
expenses by the trial court, to immediately VACATE the subject property and DELIVER
its peaceful possession to petitioners. Respondents are likewise ordered to PAY petitioners
P7,000 as monthly rental plus interest thereon at the rate of 6% per annum, to be computed
from 22 October 2003 until the finality of this Decision.

No pronouncement as to costs.

SO ORDERED.

Leonardo-De Castro, Bersamin, Perez, and Perlas-Bernabe, JJ., concur.

 FIRST DIVISION
G.R. No. 187987, November 26, 2014
VICENTE TORRES, JR., CARLOS VELEZ, AND THE HEIRS OF MARIANO
VELEZ, NAMELY: ANITA CHIONG VELEZ, ROBERT OSCAR CHIONG
VELEZ, SARAH JEAN CHIONG VELEZ AND TED CHIONG VELEZ,
PETITIONERS, VS. LORENZO LAPINID AND JESUS VELEZ,
RESPONDENTS.

DECISION

PEREZ, J.:

This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court
filed by the petitioners assailing the 30 January 2009 Decision[2] and 14 May
2009 Resolution[3] of the Twentieth Division of the Court of Appeals in CA-
G.R. CV No. 02390, affirming the 15 October 2007 Decision[4] of the Regional
Trial Court of Cebu City (RTC Cebu City) which dismissed the complaint for
the declaration of nullity of deed of sale against respondent Lorenzo Lapinid
(Lapinid).

The facts as reviewed are the following:

On 4 February 2006, Vicente V. Torres, Jr. (Vicente), Mariano Velez

(Mariano)[5] and Carlos Velez (petitioners) filed a Complaint[6] before RTC Cebu
City praying for the nullification of the sale of real property by respondent Jesus
Velez (Jesus) in favor of Lapinid; the recovery of possession and ownership of
the property; and the payment of damages.

Petitioners alleged in their complaint that they, including Jesus, are co-owners of
several parcels of land including the disputed Lot. No. 4389[7] located at Cogon,
Carcar, Cebu. Sometime in 1993, Jesus filed an action for partition of the parcels
of land against the petitioners and other co-owners before Branch 21 of RTC
Cebu City. On 13 August 2001, a judgment was rendered based on a
compromise agreement signed by the parties wherein they agreed that Jesus,
Mariano and Vicente were jointly authorized to sell the said properties and
receive the proceeds thereof and distribute them to all the co-owners. However,
the agreement was later amended to exclude Jesus as an authorized seller.
Pursuant to their mandate, the petitioners inspected the property and discovered
that Lapinid was occupying a specific portion of the 3000 square meters of Lot
No. 4389 by virtue of a deed of sale executed by Jesus in favor of Lapinid. It
was pointed out by petitioner that as a consequence of what they discovered, a
forcible entry case was filed against Lapinid.

The petitioners prayed that the deed of sale be declared null and void arguing
that the sale of a definite portion of a co-owned property without notice to the
other co-owners is without force and effect. Further, the complainants prayed
for payment of rental fees amounting to P1,000.00 per month from January
2004 or from the time of deprivation of property in addition to attorneys fees
and litigation expenses.

Answering the allegations, Jesus admitted that there was a partition case
between him and the petitioners filed in 1993 involving several parcels of land
including the contested Lot No. 4389. However, he insisted that as early as 6
November 1997, a motion[8] was signed by the co-owners (including the
petitioners) wherein Lot No. 4389 was agreed to be adjudicated to the co-
owners belonging to the group of Jesus and the other lots be divided to the
other co-owners belonging to the group of Torres. Jesus further alleged that
even prior to the partition and motion, several co-owners in his group had
already sold their shares to him in various dates of 1985, 1990 and 2004.[9] Thus,
when the motion was filed and signed by the parties on 6 November 1997, his
rights as a majority co-owner (73%) of Lot No. 4389 became consolidated. Jesus
averred that it was unnecessary to give notice of the sale as the lot was already
adjudicated in his favor. He clarified that he only agreed with the 2001
Compromise Agreement believing that it only pertained to the remaining parcels
of land excluding Lot No. 4389.[10]

On his part, Lapinid admitted that a deed of sale was entered into between him
and Jesus pertaining to a parcel of land with an area of 3000 square meters.
However, he insisted on the validity of sale since Jesus showed him several
deeds of sale making him a majority owner of Lot No. 4389. He further denied
that he acquired a specific and definite portion of the questioned property, citing
as evidence the deed of sale which does not mention any boundaries or specific
portion. He explained that Jesus permitted him to occupy a portion not
exceeding 3000 square meters conditioned on the result of the partition of the
co-owners.[11]
Regarding the forcible entry case, Jesus and Lapinid admitted that such case was
filed but the same was already dismissed by the Municipal Trial Court of Carcar,
Cebu. In that decision, it was ruled that the buyers, including Lapinid, were
buyers in good faith since a proof of ownership was shown to them by Jesus
before buying the property.[12]

On 15 October 2007, the trial court dismissed the complaint of petitioners in

this wise:
Therefore, the Court DISMISSES the Complaint. At the same time, the Court
NULLIFIES the site assignment made by Jesus Velez in the Deed of Sale, dated
November 9, 1997, of Lorenzo Lapinids portion, the exact location of which
still has to be determined either by agreement of the co-owners or by the Court
in proper proceedings.[13]
Aggrieved, petitioners filed their partial motion for reconsideration which was
denied through a 26 November 2007 Order of the court.[14] Thereafter, they
filed a notice of appeal on 10 December 2007.[15]

On 30 January 2009, the Court of Appeals affirmed[16] the decision of the trial
court. It validated the sale and ruled that the compromise agreement did not
affect the validity of the sale previously executed by Jesus and Lapinid. It
likewise dismissed the claim for rental payments, attorneys fees and litigation
expenses of the petitioners.

Upon appeal before this Court, the petitioners echo the same arguments posited
before the lower courts. They argue that Lapinid, as the successor-in-interest of
Jesus, is also bound by the 2001 judgment based on compromise stating that the
parcels of land must be sold jointly by Jesus, Mariano and Vicente and the
proceeds of the sale be divided among the co-owners. To further strengthen
their contention, they advance the argument that since the portion sold was a
definite and specific portion of a co-owned property, the entire deed of sale
must be declared null and void.

We deny the petition.

Admittedly, Jesus sold an area of land to Lapinid on 9 November 1997. To

simplify, the question now is whether Jesus, as a co-owner, can validly sell a
portion of the property he co-owns in favor of another person. We answer in
the affirmative.

A co-owner has an absolute ownership of his undivided and pro-indiviso share in

the co-owned property.[17] He has the right to alienate, assign and mortgage it,
even to the extent of substituting a third person in its enjoyment provided that
no personal rights will be affected. This is evident from the provision of the
Civil Code:
Art. 493. Each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage,
with respect to the co-owners, shall be limited to the portion which may be
allotted to him in the division upon the termination of the co-ownership.
A co-owner is an owner of the whole and over the whole he exercises the right of dominion, but
he is at the same time the owner of a portion which is truly abstract.[18] Hence, his co-
owners have no right to enjoin a co-owner who intends to alienate or substitute
his abstract portion or substitute a third person in its enjoyment.[19]

In this case, Jesus can validly alienate his co-owned property in favor of Lapinid,
free from any opposition from the co-owners. Lapinid, as a transferee, validly
obtained the same rights of Jesus from the date of the execution of a valid sale.
Absent any proof that the sale was not perfected, the validity of sale subsists. In
essence, Lapinid steps into the shoes of Jesus as co-owner of an ideal and
proportionate share in the property held in common.[20] Thus, from the
perfection of contract on 9 November 1997, Lapinid eventually became a co-
owner of the property.

Even assuming that the petitioners are correct in their allegation that the
disposition in favor of Lapinid before partition was a concrete or definite
portion, the validity of sale still prevails.

In a catena of decisions,[21] the Supreme Court had repeatedly held that no

individual can claim title to a definite or concrete portion before partition of co-
owned property. Each co-owner only possesses a right to sell or alienate his
ideal share after partition. However, in case he disposes his share before
partition, such disposition does not make the sale or alienation null and void.
What will be affected on the sale is only his proportionate share, subject to the
results of the partition. The co-owners who did not give their consent to the sale
stand to be unaffected by the alienation.[22]

As explained in Spouses Del Campo v. Court of Appeals:[23]

We are not unaware of the principle that a co-owner cannot rightfully dispose of
a particular portion of a co-owned property prior to partition among all the co-
owners. However, this should not signify that the vendee does not acquire
anything at all in case a physically segregated area of the co-owned lot is in fact
sold to him. Since the co-owner/vendors undivided interest could properly be
the object of the contract of sale between the parties, what the vendee obtains
by virtue of such a sale are the same rights as the vendor had as co-owner, in an
ideal share equivalent to the consideration given under their transaction. In
other words, the vendee steps into the shoes of the vendor as co-owner and
acquires a proportionate abstract share in the property held in common.[24]
Also worth noting is the pronouncement in Lopez v. Vda. De Cuaycong:[25]
x x x The fact that the agreement in question purported to sell a concrete portion of
the hacienda does not render the sale void, for it is a well-established principle that the
binding force of a contract must be recognized as far as it is legally possible to do so. Quando
res non valet ut ago, valeat quantum valere potest. (When a thing is of no force as I do
it, it shall have as much force as it can have).[26] (Italics theirs).
Consequently, whether the disposition involves an abstract or concrete portion
of the co-owned property, the sale remains validly executed.

The validity of sale being settled, it follows that the subsequent compromise
agreement between the other co-owners did not affect the rights of Lapinid as a
co-owner.

Records show that on 13 August 2001, a judgment based on compromise

agreement was rendered with regard to the previous partition case involving the
same parties pertaining to several parcels of land, including the disputed lot. The
words of the compromise state that:
COME NOW[,] the parties and to this Honorable Court, most respectfully state
that instead of partitioning the properties, subject matter of litigation, that they
will just sell the properties covered by TCT Nos. 25796, 25797 and 25798 of the
Register of Deeds of the Province of Cebu and divide the proceeds among
themselves.

That Jesus Velez, Mariano Velez and Vicente Torres, Jr. are currently authorized
to sell said properties, receive the proceeds thereof and distribute them to the
parties.[27]
Be that as it may, the compromise agreement failed to defeat the already accrued
right of ownership of Lapinid over the share sold by Jesus. As early as 9
November 1997, Lapinid already became a co-owner of the property and thus,
vested with all the rights enjoyed by the other co-owners. The judgment based
on the compromise agreement, which is to have the covered properties sold, is
valid and effectual provided as it does not affect the proportionate share of the
non-consenting party. Accordingly, when the compromise agreement was
executed without Lapinids consent, said agreement could not have affected his
ideal and undivided share. Petitioners cannot sell Lapinids share absent his
consent. Nemo dat quod non habet no one can give what he does not have.[28]

This Court has ruled in many cases that even if a co-owner sells the whole
property as his, the sale will affect only his own share but not those of the other
co-owners who did not consent to the sale. This is because the sale or other
disposition of a co-owner affects only his undivided share and the transferee
gets only what would correspond to his grantor in the partition of the thing
owned in common.[29]

We find unacceptable the argument that Lapinid must pay rental payments to
the other co-owners.

As previously discussed, Lapinid, from the execution of sale, became a co-owner

vested with rights to enjoy the property held in common.

Clearly specified in the Civil Code are the following rights:

Art. 486. Each co-owner may use the thing owned in common, provided he
does so in accordance with the purpose for which it is intended and in such a
way as not to injure the interest of the co-ownership or prevent the other co-
owners from using it according to their rights. The purpose of the co-ownership
may be changed by agreement, express or implied.

Art. 493. Each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted
to him in the division upon the termination of the co-ownership.
Affirming these rights, the Court held in Aguilar v. Court of Appeals that:[30]
x x x Each co-owner of property held pro indiviso exercises his rights over the
whole property and may use and enjoy the same with no other limitation than
that he shall not injure the interests of his co-owners, the reason being that until
a division is made, the respective share of each cannot be determined and every
co-owner exercises, together with his co-participants joint ownership over the
pro indiviso property, in addition to his use and enjoyment of the same.[31]
From the foregoing, it is absurd to rule that Lapinid, who is already a co-owner,
be ordered to pay rental payments to his other co-owners. Lapinids right of
enjoyment over the property owned in common must be respected despite
opposition and may not be limited as long he uses the property to the purpose
for which it is intended and he does not injure the interest of the co-ownership.

Finally, we find no error on denial of attorneys fees and litigation expenses.

Pursuant to Article 2208 of the New Civil Code, attorneys fees and expenses of
litigation, in the absence of stipulation, are awarded only in the following
instances:
xxxx

1. When exemplary damages are awarded;

2. When the defendants act or omission has compelled the

plaintiff to litigate with third persons or to incur
expenses to protect his interests;

3. In criminal cases of malicious prosecution against the

plaintiff;

4. In case of a clearly unfounded civil action or proceeding

against the plaintiff;

5. Where the defendant acted in gross and evident bad faith in

refusing to satisfy the plaintiffs plainly valid and demandable
claim;
 6. In actions for legal support;

7. In actions for the recovery of wages of household helpers,

laborers and skilled workers;

8. In actions for indemnity under workmens compensation and

employers liability laws;

9. In a separate civil action to recover civil liability arising from

a crime;

10. When at least double judicial costs are awarded;

11. In any other case where the court deems it just and equitable
that attorneys fees and expenses of litigation should be
recovered.

In all cases, the attorneys fees and expenses of litigation must be reasonable.
Petitioners cite Jesus act of selling a definite portion to Lapinid as the reason
which forced them to litigate and file their complaint. However, though the
Court may not fault the complainants when they filed a complaint based on
their perceived cause of action, they should have also considered thoroughly
that it is well within the rights of a co-owner to validly sell his ideal share
pursuant to law and jurisprudence.

WHEREFORE, the petition is DENIED. Accordingly, the Decision and

Resolution of the Court of Appeals dated 30 January 2009 and 14 May 2009 are
hereby AFFIRMED.

SO ORDERED.

Sereno, Chief Justice, (Chairperson), Leonardo-De Castro, Bersamin , and Villarama, Jr.,*
JJ., concur.