PROPERTY
Case set #5
1.) Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 84751 June 6, 1990
SPOUSES EDUARDO and ANN AGUSTIN, petitioners,
vs.
HON. COURT OF APPEALS and LABRADOR DEVELOPMENT
CORPORATION, respondents.
Victor D. Cruz for petitioners.
Singson, Mamaril & Associates for private respondent.
REGALADO, J.:
This petition for review on certiorari impugns the decision of the Court of
Appeals, dated March 28, 1988, with the following decretal portion:
WHEREFORE, the present appeal is accordingly resolved deleting the
adjudicated award of P20,000.00 as exemplary damages, and otherwise by
AFFIRMING the Decision dated October 10, 1985 in Civil Case No. Q-
42390 entitled "Labrador Development Corporation vs. Sps. Eduardo
Agustin, et al." in all other respects.
Without pronouncement as to costs. 1
Said judgment of respondent court is based on the findings of fact set out in
its decision thus:
Plaintiff-appellee, being a subdivision developer, owned Lot 14, Block 1 of
the San Pedro Compound IV at Tandang Sora, Quezon City, under Transfer
Certificate of Title No. 277209. On November 7, 1981, plaintiff-appellee
agreed to sell said parcel of land to defendants-appellants on a package deal
together with a residential house per House Plan Model B-203 to be
constructed thereon for the sum of P202,980.00 (Exh. 'B'). As therein
stipulated, the defendants-appellants were to pay P42,980.00 as equity-
P30,133.00 as down payment and the balance of P12,847.00 upon
completion and de very of the property, the other P160,000.00 to have been
funded through a Pag-Ibig Fund loan to be applied for by defendants-
appellants. Central to the above was a stipulation that in the event the
housing loan be insufficient to pay the full contract price owing, they shall
pay the same in cash on or before occupancy and acceptance of the housing
unit (ref. Exh. 'B', para. [e]). The agreement further provided
(f) Failure of the Vendee to comply with any or all of the above stipulations
shall ipso facto cancel this contract to sell; and thereupon, this contract to sell
or any other contract executed in connection thereof, shall be of no further
force and effect; and the title to the property, if already transferred in the
name of the Vendee, shall automatically revert to the Vendor.
The foregoing stipulation encompassed the necessity of transferring title to
the lot to defendants-appellants as an accommodation to enable their
application for a housing loan in their names.
Hence, plaintiff-appellee executed a deed of sale over the lot (Exh. 'C') in
favor of defendants-appellants, without additional consideration beyond the
P30,133.00 down payment adverted to, and the issuance to said defendants-
appellants of Transfer Certificate of title No. 29435 * (Exh. 'D'). Thusly
accommodated, defendants-appellants applied for a P160,000.00 housing
loan with the First Summa Savings and Mortgage Bank as an accredited
financing institution.
After initial approval in the amount applied for, the Pag-ibig housing loan
was downgraded to P128,000.00 after reassessment. Under date of December
18, 1982, plaintiff-appellee apprised defendants-appellants of said
development (Exh. 'F') enclosing the formal bank December 16, 1982 letter
(Exh. 'E') requiring a co-borrower related within the fourth degree of
consanguinity should the defendants-appellants desire approval of an
increased loan amount.
Defendants-appellants appear to have disdained a reply to plaintiff-appellee's
said letter. Thus, under date of December 28, 1982, plaintiff-appellee again
wrote a follow- up letter to defendants-appellants (Exh. 'G') affording the
latter time to decide on their options, on pain of enforcement of the terms of
the contract to sell.
Failing reaction from defendants-appellants thereto, plaintiff-appellee
resorted to enforcement of the contractual stipulations under date of March 1,
1983 (Exh. 'H') and remitted an enclosed check for P30,133.00 (Exh. 'I')
representing the equity paid in by defendants-appellants. The latter accepted
said check and deposited same into their account.
Instead of reconveyance of title to the lot, defendants-appellants however
sought time to buy the property; plaintiff-appellee agreed provided that
payment be effected in cash. Defendants-appellants failed to make such
payment in cash, despite the lapse of a second 30-day period afforded
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Case set #5
therefor. Thereupon, plaintiff-appellee demanded anew for reconveyance in a
July 27, 1984 letter (Exh. 'J').
On August 8, 1984, plaintiff-appellee filed Civil Case No. Q42390 for
reconveyance and damage. In answer, defendants-appellants maintained inter
alia that approval of a P160,000.00 housing loan had been assured upon
completion of the house with proof of its delivery and acceptance, but that
acceptance could not be reasonably given by them in that certain
specifications for the housing unit had not been complied with. 2
After trial on the merits, the lower court rendered judgment in favor of
private respondent, the dispositive part whereof reads:
WHEREFORE, judgment is hereby rendered ordering defendants, jointly and
severally:
a) to reconvey to plaintiff the parcel of land covered by Transfer Certificate
of Title No. 284735 ** of the Register of Deeds, Quezon City;
b) to pay plaintiff the sum of P20,000.00 as exemplary damages;
c) to pay plaintiff the sum of P5,000.00 as attorney's fees, plus costs of the
suit. 3
which judgment, as earlier stated, was affirmed by respondent court but with
the deletion of the award of exemplary damages.
On August 22, 1988, respondent court denied petitioners' motion for
reconsideration, hence this present petition raising the following issues:
I disregarding the original agreement of the parties, offered to purchase anew
The 'Contract to Sell' dated November 7, 1981 creates a reciprocal obligation
between Labrador Development Corporation, as seller, and spouses Eduardo
and Ann Agustin, as buyer, of the questioned house and lot.
II
The failure of Labrador Development Corporation (LADECO) to complete
construction of the housing unit pursuant to the 'Contract to Sell' constitutes a
substantial and serious breach thereof as would bar LADECO from executing
the option of cancellation (rescission) of the 'Contract to Sell' under Article
1191 of the Civil Code.
III
The justifiable refusal of Spouses Agustin to sign the 'House Acceptance
Form' certifying that they accept the house as 100% complete constitutes
merely a slight or casual breach of the 'Contract to Sell' which does not
warrant the unilateral cancellation (rescission,) of the contract under par. 4 (f)
thereof and Article 1191 of the Civil Code.
IV
The remedy of reconveyance of title of the property in question cannot be
availed of by LADECO as there was no valid, binding and effective
cancellation (rescission) of the 'Contract to Sell'.
V
Private respondent LADECO is not entitled to attorney's fees of P5,000.00
under the facts and circumstances of the case. 4
We agree with the Court of Appeals that reconveyance is proper in this case.
Herein petitioners are already barred from questioning the validity of the
cancellation of the contract to sell by their acquiescence thereto. Their
acceptance and encashment of the checks representing the total amount paid
by them to private respondent as equity, coupled by their failure to object or
file an action, despite due notice, to question the validity of the extrajudicial
cancellation of said contract and to ask for specific performance for more
than one year, clearly show that they assented to the same.
Furthermore, after receiving the check refunding their equity payment
incident to the reconveyance desired by private respondents, petitioners,
the property in question to which private respondent agreed. This novatory
agreement, however, was not consummated as petitioners again failed to
raise and pay the purchase price despite two 30-day extensions. They never
at that juncture questioned the propriety of the rescission and reconveyance
desired by private respondent. Obviously, extrajudicial rescission produces
legal effects where the other party does not oppose it. 5
Moreover, even assuming that there was no implied assent to the cancellation
of the contract to sell, reconveyance is still proper. The non-fulfillment by
petitioners of their obligation to pay, which is a suspensive condition to the
obligation of private respondent to sell and deliver the house and lot,
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rendered the contract to sell and the subsequent contract executed pursuant
thereto ineffective and without force and effect.
The contract between petitioners and private respondent is not an absolute
sale but a conditional sale or contract to sell, whereby ownership is retained
by the vender until full payment of the purchase price. Without such full
payment, there is no obligation to sell and deliver. The subsequent execution
of the deed of absolute sale and the transfer and registration of the title of the
lot in the name of petitioners is of no moment, considering that the same, by
mutual agreement of the parties, was made without consideration and solely
for the purpose of facilitating the approval and release of the PAG-IBIG loan
and not for the purpose of actually transferring ownership.
Under the contract to sell, the obligation of petitioners to completely pay the
purchase price is a condition precedent to the obligation of private
respondent to sell and deliver the house as provided in the contract to sell,
which specifically states:
5. Upon complete payment of the VENDEE/S of the purchase price herein
above stated, and faithful compliance with all his obligations stipulated
therein, the VENDOR, agrees to execute a valid deed of sale in favor of the
VENDEE/S and cause the issuance of the Certificate of Title in the name of
the latter, free from all liens and encumbrances except those provided for in
the Land Registration Act and other laws, Presidential Decrees, General
Orders, Letters of Instruction, Zoning Ordinances, and the attached Deed of
Restrictions, which form part of this Contract; ... 6
The repeated failure and refusal of petitioners, despite due notice, to look for
a co- borrower related to them within the fourth degree of consanguinity as
required by the bank in order to prevent the downgrading of the loan, nor to
communicate to private respondent the arrangement they intended to make
regarding the difference between the approved loan of P128,000.00 and the
unpaid amount of P160,000.00, clearly indicate their intention not to perform
their obligations under the contract. This constituted not only a substantial or
serious breach, but prevented the happening of the condition precedent which
would give rise to the obligation of private respondent to sell and transfer
ownership of the house and lot to petitioners.
We have repeatedly ruled that:
In contracts to sell, where ownership is retained by the seller and is not to
pass until the full payment of the price, such payment, as we said is a positive
suspensive condition, the failure of which is not a breach, casual or serious,
but simply an event that prevented the obligation of the vendor to convey
title from acquiring binding force, in accordance with Article 1117 of the Old
Civil Code. To argue that there was only a casual breach is to proceed from
the assumption that the contract is one of absolute sale, where non-payment
is a resolutory condition, which is not the case.
... appellant overlooks that its contract with appellee Myers is not the
ordinary sale envisaged by Article 1592, transferring ownership
simultaneously with the delivery of the real property sold, but one in which
the vendor retained ownership of the immovable object of the sale, merely
undertaking to convey it provided the buyer strictly complied with the terms
of the contract (see paragraph [d], ante, page 5). In suing to recover
possession of the building from Maritime, appellee Myers is not after the
resolution or setting aside of the contract and the restoration of the parties to
the status quo ante, as contemplated by Article 1592, but precisely enforcing
the provisions of the agreement that it is no longer obligated to part with the
ownership or possession of the property because Maritime failed to comply
with the specific condition precedent, which is to pay the installment as they
fell due.
The distinction between contracts of sale and contracts to sell with reserved
title has been recognized by this Court in repeated decisions upholding the
power of promissors under contracts to sell in case of failure of the other
party to complete payment, to extrajudicially terminate the operation of the
contract, refuse conveyance and retain the sums or installments already
received, where such rights are expressly provided for, as in the case at bar. 7
We repeat, the obligation of petitioners to fully comply with their
undertakings was necessarily determinative of the obligation of private
respondent to complete the construction of the house. Where one of the
parties to a contract did not perform the undertaking which he was bound by
the terms of the agreement to perform, he is not entitled to insist upon the
performance of the other party. 8 For failure of one party to assume and
perform the obligation imposed on him, the other patty does not incur in
delay. 9
Correspondingly, we reject the argument of petitioners that the failure of
private respondent to complete the construction of the house constitutes a
substantial breach as would bar the latter from cancelling the contract.
Instead, the facts of this case persuade us to hold that petitioners were merely
posturing when, after being required to reconvey the premises, they came up
with belated complaints about the imperfections or incompleteness of the
house involved, in the same manner that they also pretended to be interested
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Case set #5
in purchasing the property but failed to do so after importuning private
respondents to grant them extensions of time for that purpose.

With the foregoing circumstances, reconveyance is proper and exigible

pursuant to Paragraph 4 (f) of the contract to sell quoted in the decision of
respondent court, supra, and on the basic principle that when an obligation
has been extinguished or resolved, it is the duty of the court to require the
parties to surrender whatever they may have received from the other, and the
parties must be restored, as far as practicable, to their original situation. 10

The award to private respondent of attorney's fees, however, must be

disallowed considering that the award of exemplary damages was eliminated
by respondent court and the text of the decision of the trial court, which was
aimed by the Court of Appeals, is bereft of any findings of fact and law to
justify such award. The accepted rule is that the reason for the award of
attorney's fees must be stated in the text of the court's decision; otherwise, if
it is stated only in the dispositive portion of the decision, the same must be
disallowed on appeal. The award of attorney's fees being an exception rather
than the general rule, it is necessary for the court to make findings of facts
and law that would bring the case within the exception and justify the grant
of such award. 11

WHEREFORE, except for the award of attorney's fees which is hereby

deleted, the decision of respondent Court of Appeals is hereby AFFIRMED.

SO ORDERED.

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Case set #5
2.) Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-36359 January 31, 1974
FELIX BUCTON AND NICANORA GABAR BUCTON, petitioners,
vs.
ZOSIMO GABAR, JOSEFINA LLAMOSO GABAR AND THE
HONORABLE COURT OF APPEALS, respondents.
Rizalindo V. Diaz for petitioners.
Alfredo Ber. Pallarca for respondents.
ANTONIO, J.:1wph1.t portion for rental purposes. Plaintiffs occupied the upper portion of this
Appeal from the decision of the Court of Appeals in CA-G.R. No. 49091-R,
dated January 10, 1973, reversing the judgment of the trial court and
dismissing the complaint filed by herein petitioners, and from said appellate
court's resolution, dated February 5, 1973, denying petitioners' motion for
reconsideration.
The facts of the case, as found by the trial court, which have not been
disturbed by respondent Court of Appeals, are as follows:
Plaintiff Nicanora Gabar Bucton (wife of her co-plaintiff Felix Bucton) is the
sister of defendant Zosimo Gabar, husband of his co-defendant Josefina
Llamoso Gabar.
This action for specific performance prays, inter-alia, that defendants-
spouses be ordered to execute in favor of plaintiffs a deed of sale of the
western half of a parcel of land having an area of 728 sq. m. covered by TCT
No. II (from OCT No. 6337) of the office of the Register of Deeds of
Misamis Oriental.
Plaintiffs' evidence tends to show that sometime in 1946 defendant Josefina
Llamoso Gabar bought the above-mentioned land from the spouses Villarin
on installment basis, to wit, P500 down, the balance payable in installments.
Josefina entered into a verbal agreement with her sister-in-law, plaintiff
Nicanora Gabar Bucton, that the latter would pay one-half of the price
(P3,000) and would then own one-half of the land. Pursuant to this
understanding Nicanora on January 19, 1946 gave her sister-in-law Josefina
the initial amount of P1,000, for which the latter signed a receipt marked as
Exhibit A.
Subsequently, on May 2, 1948 Nicanora gave Josefina P400. She later signed
a receipt marked as Exhibit B.
On July 30, 1951 plaintiffs gave defendants P1,000 in concept of loan, for
which defendant Zosimo Gabar signed a receipt marked as Exhibit E.
Meanwhile, after Josefina had received in January, 1946 the initial amount of
P1,000 as above stated, plaintiffs took possession of the portion of the land
indicated to them by defendants and built a modest nipa house therein. About
two years later plaintiffs built behind the nipa house another house for rent.
And, subsequently, plaintiffs demolished the nipa house and in its place
constructed a house of strong materials, with three apartments in the lower
house as their residence, until July, 1969 when they moved to another house,
converting and leasing the upper portion as a dormitory.
In January, 1947 the spouses Villarin executed the deed of sale of the land
abovementioned in favor of defendant Josefina Llamoso Gabar, Exhibit I, to
whom was issued on June 20, 1947 TCT No. II, cancelling OCT No. 6337.
Exhibit D.
Plaintiffs then sought to obtain a separate title for their portion of the land in
question. Defendants repeatedly declined to accommodate plaintiffs. Their
excuse: the entire land was still mortgaged with the Philippine National Bank
as guarantee for defendants' loan of P3,500 contracted on June 16, 1947:
Exhibit D-1.
Plaintiffs continued enjoying their portion of the land, planting fruit trees and
receiving the rentals of their buildings. In 1953, with the consent of
defendants (who were living on their portion), plaintiffs had the entire land
surveyed and subdivided preparatory to obtaining their separate title to their
portion. After the survey and the planting of the concrete monuments
defendants erected a fence from point 2 to point 4 of the plan, Exhibit I,
which is the dividing line between the portion pertaining to defendants,
Exhibit I-1, and that pertaining to plaintiffs, Exhibit I-2.
In the meantime, plaintiffs continued to insist on obtaining their separate
title. Defendants remained unmoved, giving the same excuse. Frustrated,
plaintiffs were compelled to employ Atty. Bonifacio Regalado to intercede;
counsel tried but failed. Plaintiffs persevered, this time employing Atty.
Aquilino Pimentel, Jr. to persuade defendants to comply with their obligation
to plaintiffs; this, too, failed. Hence, this case, which has cost plaintiffs
P1,500 in attorney's fees.
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Case set #5
Defendants' evidence based only on the testimony of defendant Josefina
Llamoso Gabar denies agreement to sell to plaintiffs one-half of the land
in litigation. She declared that the amounts she had received from plaintiff
Nicanora Gabar Bucton first, P1,000, then P400 were loans, not
payment of one-half of the price of the land (which was P3,000). This
defense is devoid of merit.
When Josefina received the first amount of P1,000 the receipt she signed,
Exhibit A, reads:
Cagayan, Mis. Or.
January 19, 1946
Received from Mrs. Nicanora Gabar the sum of one thousand (P1,000)
pesos, victory currency, as part payment of the one thousand five hundred
(P1,500.00) pesos, which sum is one-half of the purchase value of Lot No.
337, under Torrens Certificate of Title No. 6337, sold to me by Mrs. Carmen
Roa Villarin.
"(Sgd.) Josefina Ll. Gabar".
On the basis of the facts quoted above the trial court on February 14, 1970,
rendered judgment the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered for plaintiffs:
1) Ordering defendants within thirty days from receipt hereof to execute a
deed of conveyance in favor of plaintiffs of the portion of the land covered
by OCT No. II, indicated as Lot 337-B in the Subdivision Plan, Exhibit I, and
described in the Technical Description, Exhibit 1-2; should defendants for
any reason fail to do so, the deed shall be executed in their behalf by the
Provincial Sheriff of Misamis Oriental or his Deputy;
2) Ordering the Register of Deeds of Cagayan de Oro, upon presentation to
him of the above-mentioned deed of conveyance, to cancel TCT No. II and in
its stead to issue Transfer Certificates of Title, to wit, one to plaintiffs and
another to defendants, based on the subdivision Plan and Technical
Description above-mentioned; and ordering defendants to present and
surrender to the Register of Deeds their TCT No. II so that the same may be
cancelled; and
3) Ordering defendants to pay unto plaintiffs attorney's fees in the amount of
P1,500 and to pay the costs.
SO ORDERED.
Appeal was interposed by private respondents with the Court of Appeals,
which reversed the judgment of the trial court and ordered petitioners'
complaint dismissed, on the following legal disquisition:
Appellees' alleged right of action was based on the receipt (Exh. A) which
was executed way back on January 19, 1946. An action arising from a
written contract does not prescribe until after the lapse of ten (10) years from
the date of action accrued. This period of ten (10) years is expressly provided
for in Article 1144 of the Civil Code.
From January 19, 1946 to February 15, 1968, when the complaint was filed
in this case, twenty-two (22) years and twenty-six (26) days had elapsed.
Therefore, the plaintiffs' action to enforce the alleged written contract (Exh.
A) was not brought within the prescriptive period of ten (10) years from the
time the cause of action accrued.
The land in question is admittedly covered by a torrens title in the name of
Josefina Llamoso Gabar so that the alleged possession of the land by the
plaintiffs since 1947 is immaterial because ownership over registered realty
may not be acquired by prescription or adverse possession (Section 40 of Act
496).
It is not without reluctance that in this case we are constrained to sustain the
defense of prescription, for we think that plaintiffs really paid for a portion of
the lot in question pursuant to their agreement with the defendants that they
would then own one-half of the land. But we cannot apply ethical principles
in lieu of express statutory provisions. It is by law provided that:
"ART. 1144. The following actions must be brought within ten years from
the time the right of action accrues:
1. Upon a written contract;
2. Upon an obligation created by law;
3. Upon a judgment."
If eternal vigilance is the price of safety, one cannot sleep on one's right and
expect it to be preserved in its pristine purity.
Petitioners' appeal is predicated on the proposition that owners of the
property by purchase from private respondents, and being in actual,
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Case set #5
continuous and physical possession thereof since the date of its purchase,
their action to compel the vendors to execute a formal deed of conveyance so
that the fact of their ownership may be inscribed in the corresponding
certificate of title, had not yet prescribed when they filed the present action.
We hold that the present appeal is meritorious.
1. There is no question that petitioner Nicanora Gabar Bucton paid P1,500.00
to respondent Josefina Gabar as purchase price of one-half of the lot now
covered by TCT No. II, for respondent Court of Appeals found as a fact "that
plaintiffs really paid for a portion of the lot in question pursuant to their
agreement with the defendants that they would own one-half (1/2) of the
land." That sale, although not consigned in a public instrument or formal
writing, is nevertheless valid and binding between petitioners and private
respondents, for the time-honored rule is that even a verbal contract of sale or
real estate produces legal effects between the parties. 1 Although at the time
said petitioner paid P1,000.00 as part payment of the purchase price on
January 19, 1946, private respondents were not yet the owners of the lot, they
became such owners on January 24, 1947, when a deed of sale was executed
in their favor by the Villarin spouses. In the premises, Article 1434 of the
Civil Code, which provides that "[w]hen a person who is not the owner of a
thing sells or alienates and delivers it, and later the seller or grantor acquires
title thereto, such title passes by operation of law to the buyer or grantee," is
applicable. 2 Thus, the payment by petitioner by Nicanora Gabar Bucton of
P1,000.00 on January 19, 1946, her second payment of P400.00 on May 2,
1948, and the compensation, up to the amount of P100.00 (out of the
P1,000.00-loan obtained by private respondents from petitioners on July 30,
1951), resulted in the full payment of the purchase price and the
consequential acquisition by petitioners of ownership over one-half of the lot.
Petitioners therefore became owners of the one-half portion of the lot in
question by virtue of a sale which, though not evidenced by a formal deed,
was nevertheless proved by both documentary and parole evidence.
2. The error of respondent Court of Appeals in holding that petitioners' right
of action had already prescribed stems from its belief that the action of
petitioners is based on the receipt Exh. "A" which was executed way back on
January 19, 1946, and, therefore, in the view of said appellate court, since
petitioners' action was filed on February 15, 1968, or after the lapse of
twenty-two (22) years and twenty-six (26) days from, the date of said
document, the same is already barred according to the provisions of Article
1144 of the New Civil Code. The aforecited document (Exh. "A"), as well as
the other documents of similar import (Exh. "B" and Exh. "E"), are the
receipts issued by private respondents to petitioners, evidencing payments by
the latter of the purchase price of one-half of the lot.
The real and ultimate basis of petitioners' action is their ownership of one-
half of the lot coupled with their possession thereof, which entitles them to a
conveyance of the property. In Sapto, et al. v. Fabiana, 3 this Court, speaking
thru Mr. Justice J.B.L. Reyes, explained that, under the circumstances no
enforcement of the contract is needed, since the delivery of possession of the
land sold had consummated the sale and transferred title to the purchaser, and
that, actually, the action for conveyance is one to quiet title, i.e., to remove
the cloud upon the appellee's ownership by the refusal of the appellants to
recognize the sale made by their predecessors. We held therein that "... it is
an established rule of American jurisprudence (made applicable in this
jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to
property in the possession of the plaintiff are imprescriptible (44 Am. Jur. p.
47; Cooper vs. Rhea, 20 L.R.A. 930; Inland Empire Land Co. vs. Grant
County, 138 Wash. 439, 245 Pac. 14).
The prevailing rule is that the right of a plaintiff to have his title to land
quieted, as against one who is asserting some adverse claim or lien thereon,
is not barred while the plaintiff or his grantors remain in actual possession of
the land, claiming to be owners thereof, the reason for this rule being that
while the owner in fee continues liable to an action, proceeding, or suit upon
the adverse claim, he has a continuing right to the aid of a court of equity to
ascertain and determine the nature of such claim and its effect on his title, or
to assert any superior equity in his favor. He may wait until his possession is
disturbed or his title in attacked before taking steps to vindicate his right. But
the rule that the statute of limitations is not available as a defense to an action
to remove a cloud from title can only be invoked by a complainant when he
is in possession. One who claims property which is in the possession of
another must, it seems, invoke remedy within the statutory period. (44 Am.
Jur., p. 47)
The doctrine was reiterated recently in Gallar v. Husain, et al., 4 where We
ruled that by the delivery of the possession of the land, the sale was
consummated and title was transferred to the appellee, that the action is
actually not for specific performance, since all it seeks is to quiet title, to
remove the cloud cast upon appellee's ownership as a result of appellant's
refusal to recognize the sale made by his predecessor, and that as plaintiff-
appellee is in possession of the land, the action is imprescriptible.
Considering that the foregoing circumstances obtain in the present case, We
hold that petitioners' action has not prescribed.
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Case set #5
WHEREFORE, the decision and resolution of respondent Court of Appeals
appealed from are hereby reversed, and the judgment of the Court of First
Instance of Misamis Oriental, Branch IV, in its Civil Case No. 3004, is
revived. Costs against private respondents.

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Case set #5
3.) Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 157906 November 2, 2006
JOAQUINITA P. CAPILI, Petitioner,
vs.
SPS. DOMINADOR CARDAA and ROSALITA
CARDAA, Respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for review assailing the Decision1 dated October 18,
2002 of the Court of Appeals in CA-G.R. CV. No. 54412, declaring
petitioner liable for negligence that resulted in the death of Jasmin Cardaa, a
school child aged 12, enrolled in Grade 6, of San Roque Elementary School,
where petitioner is the principal. Likewise assailed is the Resolution2 dated
March 20, 2003 denying reconsideration.
The facts are as follows:
On February 1, 1993, Jasmin Cardaa was walking along the perimeter fence
of the San Roque Elementary School when a branch of a caimito tree located
within the school premises fell on her, causing her instantaneous death. Thus,
her parents - Dominador and Rosalita Cardaa - filed a case for damages
before the Regional Trial Court of Palo, Leyte against petitioner.
The Cardaas alleged in their complaint that even as early as December 15,
1992, a resident of the barangay, Eufronio Lerios, reported on the possible
danger the tree posed to passersby. Lerios even pointed to the petitioner the
tree that stood near the principals office. The Cardaas averred that
petitioners gross negligence and lack of foresight caused the death of their
daughter.
Petitioner denied the accusation and said that at that time Lerios had only
offered to buy the tree. She also denied knowing that the tree was dead and
rotting. To prove her point, she presented witnesses who attested that she had
brought up the offer of Lerios to the other teachers during a meeting on
December 15, 1992 and assigned Remedios Palaa to negotiate the sale.
In a Decision3 dated February 5, 1996, the trial court dismissed the complaint
for failure of the respondents to establish negligence on the part of the
petitioner.
On appeal, the Court of Appeals reversed the trial courts decision. The
appellate court found the appellee (herein petitioner) liable for Jasmins
death, as follows:
Foregoing premises considered, the instant appeal is GRANTED. Appellee
Joaquinita Capili is hereby declared liable for negligence resulting to the
death of Jasmin D. Cardaa. She is hereby ordered to indemnify appellants,
parents of Jasmin, the following amounts:
1. For the life of Jasmin D. Cardaa P50,000.00;
2. For burial expenses 15,010.00;
3. For moral damages 50,000.00;
4. For attorneys fees and litigation 10,000.00.
expenses
SO ORDERED.4
Petitioners motion for reconsideration was denied. Petitioner now comes
before us submitting the following issues for our resolution:
I
WHETHER OR NOT THE COURT OF APPEALS VIS--VIS THE SET
OF FACTS STATED IN THE CHALLENGED DECISION, ERRED IN
FINDING THE PETITIONER NEGLIGENT AND THEREFORE LIABLE
FOR DAMAGES UNDER ARTICLE 2206 OF THE CIVIL CODE AND IN
ORDERING THE PETITIONER TO PAY DAMAGES TO THE
RESPONDENTS; AND
II
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DENYING
PETITIONERS MOTION FOR RECONSIDERATION.5
On the other hand, respondents posit the following issue:
Whether or not the Decision of the Honorable Court of Appeals, Twelfth
Division, in CA G.R. CV. No. 54412 promulgated on October 18, 2002
should be affirmed and respected, thus remain undisturbed.6
9
PROPERTY
Case set #5
Primarily, the issue is whether petitioner is negligent and liable for the death
of Jasmin Cardaa.
Petitioner asserts that she was not negligent about the disposal of the tree
since she had assigned her next-in-rank, Palaa, to see to its disposal; that
despite her physical inspection of the school grounds, she did not observe
any indication that the tree was already rotten nor did any of her 15 teachers
inform her that the tree was already rotten;7 and that moral damages should
not be granted against her since there was no fraud nor bad faith on her part.
On the other hand, respondents insist that petitioner knew that the tree was
dead and rotting, yet, she did not exercise reasonable care and caution which
an ordinary prudent person would have done in the same situation.
To begin, we have to point out that whether petitioner was negligent or not is
a question of fact which is generally not proper in a petition for review, and
when this determination is supported by substantial evidence, it becomes
conclusive and binding on this Court.8 However, there is an exception, that
is, when the findings of the Court of Appeals are incongruent with the
findings of the lower court.9 In our view, the exception finds application in
the present case.
The trial court gave credence to the claim of petitioner that she had no
knowledge that the tree was already dead and rotting and that Lerios merely
informed her that he was going to buy the tree for firewood. It ruled that
petitioner exercised the degree of care and vigilance which the circumstances
require and that there was an absence of evidence that would require her to
use a higher standard of care more than that required by the attendant
circumstances.10 The Court of Appeals, on the other hand, ruled that
petitioner should have known of the condition of the tree by its mere sighting
and that no matter how hectic her schedule was, she should have had the tree
removed and not merely delegated the task to Palaa. The appellate court
ruled that the dead caimito tree was a nuisance that should have been
removed soon after petitioner had chanced upon it.11
A negligent act is an inadvertent act; it may be merely carelessly done from a
lack of ordinary prudence and may be one which creates a situation involving
an unreasonable risk to another because of the expectable action of the other,
a third person, an animal, or a force of nature. A negligent act is one from
which an ordinary prudent person in the actors position, in the same or
similar circumstances, would foresee such an appreciable risk of harm to
others as to cause him not to do the act or to do it in a more careful manner.12
The probability that the branches of a dead and rotting tree could fall and
harm someone is clearly a danger that is foreseeable. As the school principal,
petitioner was tasked to see to the maintenance of the school grounds and
safety of the children within the school and its premises. That she was
unaware of the rotten state of a tree whose falling branch had caused the
death of a child speaks ill of her discharge of the responsibility of her
position.
In every tort case filed under Article 2176 of the Civil Code, plaintiff has to
prove by a preponderance of evidence: (1) the damages suffered by the
plaintiff; (2) the fault or negligence of the defendant or some other person for
whose act he must respond; and (3) the connection of cause and effect
between the fault or negligence and the damages incurred.13
The fact, however, that respondents daughter, Jasmin, died as a result of the
dead and rotting tree within the schools premises shows that the tree was
indeed an obvious danger to anyone passing by and calls for application of
the principle of res ipsa loquitur.
The doctrine of res ipsa loquitur applies where (1) the accident was of such
character as to warrant an inference that it would not have happened except
for the defendants negligence; (2) the accident must have been caused by an
agency or instrumentality within the exclusive management or control of the
person charged with the negligence complained of; and (3) the accident must
not have been due to any voluntary action or contribution on the part of the
person injured.14
The effect of the doctrine of res ipsa loquitur is to warrant a presumption or
inference that the mere falling of the branch of the dead and rotting tree
which caused the death of respondents daughter was a result of petitioners
negligence, being in charge of the school.
In the case of D.M. Consunji, Inc. v. Court of Appeals,15 this Court held:
As a rule of evidence, the doctrine of res ipsa loquitur is peculiar to the
law of negligence which recognizes that prima facie negligence may be
established without direct proof and furnishes a substitute for specific proof
of negligence.
The concept of res ipsa loquitur has been explained in this wise:
While negligence is not ordinarily inferred or presumed, and while the mere
happening of an accident or injury will not generally give rise to an inference
10
PROPERTY
Case set #5
or presumption that it was due to negligence on defendants part, under the
doctrine of res ipsa loquitur, which means, literally, the thing or transaction
speaks for itself, or in one jurisdiction, that the thing or instrumentality
speaks for itself, the facts or circumstances accompanying an injury may be
such as to raise a presumption, or at least permit an inference of negligence
on the part of the defendant, or some other person who is charged with
negligence.
x x x where it is shown that the thing or instrumentality which caused the
injury complained of was under the control or management of the defendant,
and that the occurrence resulting in the injury was such as in the ordinary
course of things would not happen if those who had its control or
management used proper care, there is sufficient evidence, or, as sometimes
stated, reasonable evidence, in the absence of explanation by the defendant,
that the injury arose from or was caused by the defendants want of care.
The procedural effect of the doctrine of res ipsa loquitur is that petitioners
negligence is presumed once respondents established the requisites for the
doctrine to apply. Once respondents made out a prima facie case of all
requisites, the burden shifts to petitioner to explain. The presumption or
inference may be rebutted or overcome by other evidence and, under
appropriate circumstances a disputable presumption, such as that of due care
or innocence, may outweigh the inference.16
Was petitioners explanation as to why she failed to have the tree removed
immediately sufficient to exculpate her?
As the school principal, petitioner was tasked to see to the maintenance of
the school grounds and safety of the children within the school and its
premises. That she was unaware of the rotten state of the tree calls for an
explanation on her part as to why she failed to be vigilant.
Petitioner contends she was unaware of the state of the dead and rotting tree
because Lerios merely offered to buy the tree and did not inform her of its
condition. Neither did any of her teachers inform her that the tree was an
imminent danger to anyone. She argues that she could not see the immediate
danger posed by the tree by its mere sighting even as she and the other
teachers conducted ground inspections. She further argues that, even if she
should have been aware of the danger, she exercised her duty by assigning
the disposition of the tree to another teacher.
We find petitioners explanation wanting. As school principal, petitioner is
expected to oversee the safety of the schools premises.1wphi1 The fact that
she failed to see the immediate danger posed by the dead and rotting tree
shows she failed to exercise the responsibility demanded by her position.
Moreover, even if petitioner had assigned disposal of the tree to another
teacher, she exercises supervision over her assignee.17 The record shows that
more than a month had lapsed from the time petitioner gave instruction to her
assistant Palaa on December 15, 1992, to the time the incident occurred on
February 1, 1993. Clearly, she failed to check seasonably if the danger posed
by the rotting tree had been removed. Thus, we cannot accept her defense of
lack of negligence.
Lastly, petitioner questions the award of moral damages. Moral damages are
awarded if the following elements exist in the case: (1) an injury clearly
sustained by the claimant; (2) a culpable act or omission factually
established; (3) a wrongful act or omission by the defendant as the proximate
cause of the injury sustained by the claimant; and (4) the award of damages
predicated on any of the cases stated in Article 2219 of the Civil
Code.18 However, the person claiming moral damages must prove the
existence of bad faith by clear and convincing evidence for the law always
presumes good faith. It is not enough that one merely suffered sleepless
nights, mental anguish, and serious anxiety as the result of the actuations of
the other party. Invariably, such action must be shown to have been willfully
done in bad faith or with ill motive.19 Under the circumstances, we have to
concede that petitioner was not motivated by bad faith or ill motive vis--vis
respondents daughters death. The award of moral damages is therefore not
proper.
In line with applicable jurisprudence, we sustain the award by the Court of
Appeals of P50,000 as indemnity for the death of Jasmin,20 and P15,010 as
reimbursement of her burial expenses.21
WHEREFORE, the petition is DENIED. The Decision dated October 18,
2002 and the Resolution dated March 20, 2003, of the Court of Appeals in
CA-G.R. CV. No. 54412 are AFFIRMED with MODIFICATION such
that the award of moral damages is hereby deleted.
Costs against petitioner.
SO ORDERED.
11
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Case set #5
4.) Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 72694 December 1, 1987
AURORA DEL BANCO, EVELYN DEL BANCO, FEDERICO TAINO,
SOLEDAD TAINO, JOVENCIO TAINO, SAMSON TAINO, NOE
TAINO, SOCORRO TAINO and CLEOFAS TAINO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT (Second Civil Cases Division),
ALEJANDRA PANSACOLA, LEONILA ENCALLADO, VEDASTO
ENCALLADO, JOSE YEPES, et al., respondents.
PARAS, J.:
This is a petition for review on certiorari by way of appeal from: (a) the
decision of respondent Court of Appeals (Intermediate Appellate
Court) * promulgated on May 17, 1985 in AC-G.R. CV No. 70460, entitled
"Alejandra Pansacola, et al. vs. Domen Villabona del Banco, et al." which
reversed and set aside the judgment ** of the trial court; and (b) its
resolution ** of October 15, 1985 in the same case, denying petitioners'
motion for reconsideration of the aforementioned decision and their
supplement to motion for reconsideration.
The dispositive portion of the questioned decision (Rollo, p. 97) reads, as
follows:
ACCORDINGLY, the decision appealed from is hereby SET ASIDE insofar
as it dismisses the complaint, and another one entered
(1) Declaring plaintiffs-appellants and defendants-appellees, in their
respective capacities as described in par. V of the complaint, as co-owners of
the property in dispute, but subject to the four-part pro-indiviso division
already made by said property;
(2) Ordering the cancellation of all certificates of title that may have been
issued to any of the parties hereto; and
(3) Ordering the complete and final partition of the subject property in
conformity with law.
For this purpose, this case is hereby remanded to the Court of origin so that a
final partition shall be made in accordance with Sections 2, 3, et. seq., Rule
69 of the Rules of Court.
Let a copy of this decision be furnished to the Register of Deeds for the
Province of Quezon.
The facts of the case are taken from the decision of the Appellate Court
(Rollo, p. 39) as follows:
In a document executed in the Municipality of San Rafael, Bulacan, on
February 11, 1859, three brothers, Benedicto Pansacola, Jose Pansacola and
Manuel Pansacola (known as Fr. Manuel Pena) entered into an agreement
which provided, among others:
(1) That they will purchase from the Spanish Government the lands
comprising the Island of Cagbalite which is located within the boundaries of
the Municipality of Mauban, Province of Tayabas (now Quezon) and has an
approximate area of 1,600 hectares;
(2) That the lands shall be considered after the purchase as their common
property;
(3) That the co-ownership includes Domingo Arce and Baldomera Angulo,
minors at that time represented by their father, Manuel Pansacola (Fr.
Manuel Pena) who will contribute for them in the proposed purchase of the
Cagbalite Island;
(4) That whatever benefits may be derived from the Island shall be shared
equally by the co-owners in the following proportion: Benedicto Pansacola-
1/4 share; Jose Pansacola-1/4 share; and, Domingo Arce and Baldomera
Angulo-2/4 shares which shall be placed under the care of their father,
Manuel Pansacola (Fr. Manuel Pena).
On August 14, 1866, co-owners entered into the actual possession and
enjoyment of the Island purchased by them from the Spanish Government.
On April 11, 1868 they agreed to modify the terms and conditions of the
agreement entered into by them on February 11, 1859. The new agreement
provided for a new sharing and distribution of the lands, comprising the
Island of Cagbalite and whatever benefits may be derived therefrom, as
follows:
(a) The first one-fourth (1/4) portion shall belong to Don Benedicto
Pansacola;
12
PROPERTY
Case set #5
(b) The second one-fourth (1/4) portion shall belong to Don Jose Pansacola;
(c) The third one-fourth(1/4) portion shall henceforth belong to the children
of their deceased brother, Don Eustaquio Pansacola, namely: Don Mariano
Pansacola,- Maria Pansacola and Don Hipolito Pansacola;
(d) The fourth and last one-fourth (1/4) portion shall belong to their nephews
and nieces (1) Domingo Arce, (2) Baldomera Angulo, (3) Marcelina
Flores, (4) Francisca Flores, (5) Candelaria dela Cruz, and (6) Gervasio
Pansacola who, being all minors, are still under the care of their brother,
Manuel Pansacola (Fr. Manuel Pena). The latter is the real father of said
minors.
About one hundred years later, on November 18, 1968, private respondents
brought a special action for partition in the Court of First Instance of Quezon,
under the provisions of Rule 69 of the Rules of Court, including as parties the
heirs and successors-in-interest of the co-owners of the Cagbalite Island in
the second contract of co-ownership dated April 11, 1968. In their answer
some of the defendants, petitioners herein, interposed such defenses as
prescription, res judicata, exclusive ownership, estoppel and laches.
After trial on the merits, the trial court rendered a decision *** dated
November 6, 1981 dismissing the complaint, the dispositive portion of which
reads as follows:
WHEREFORE, and in the fight of all the foregoing this Court finds and so
holds that the Cagbalite Island has already been partitioned into four (4) parts
among the original co-owners or their successors-in-interest.
Judgment is therefore rendered for the defendants against the plaintiffs
dismissing the complaint in the above entitled case.
Considering that the cross claims filed in the above entitled civil case are not
compulsory cross claims and in order that they may be litigated individually
the same are hereby dismissed without prejudice.
IT IS SO ORDERED.
The motion for reconsideration filed by the plaintiffs, private respondents
herein, was denied by the trial court in an order dated February 25, 1982
(Record on Appeal, p. 241).
On appeal, respondent Court reversed and set aside the decision of the lower
court (Rollo, p. 117). It also denied the motion for reconsideration and the
supplement to motion for reconsideration filed by private respondents, in its
resolution dated October 15, 1983 (Rollo, p. 86).
Instant petition was filed with the Court on December 5, 1985 (Rollo, p. 12).
Petitioners Josefina Pansacola, et al. having filed a separate petition (G.R.
No. 72620) on the same subject matter and issues raised in the instant
'petition, the counsel for private respondents filed a consolidated comment on
the separate petitions for review on February 24, 1986 with the First Division
of the Court (Rollo, p. 119). It appears that counsel for petitioners also filed a
consolidated reply to the consolidated comment of private respondents as
required by the Second Division of the Court (Rollo, p. 151). However,
petitioners filed a separate reply in the instant case on February 18,1987
(Rollo, p. 168)as required by the Court in a Resolution of the Second
Division dated November 24, 1986 (Rollo, p. 160).
On May 19, 1987, private respondents in the instant petition filed a
manifestation praying for the denial of the instant petition in the same
manner that G.R. No. 72620 was denied by the Court in its Resolution dated
July 23, 1986 (Rollo, p. 151). Their rejoinder to the reply of petitioners was
filed on May 25,1987 (Rollo, p. 179).
On June 8, 1987, the Court resolved to give due course to the petition (Rollo,
p. 192). The memorandum of private respondents was mailed on July 18,
1987 and received in the Court on July 29, 1987 (Rollo, p. 112); the
memorandum for petitioners was mailed on August 18, 1987 and received in
the Court on September 7, 1987 (Rollo, p. 177).
The sole issue to be resolved by the Court is the question of whether or not
Cagbalite Island is still undivided property owned in common by the heirs
and successors-in-interest of the brothers, Benedicto, Jose and Manuel
Pansacola.
The Pansacola brothers purchased the Island in 1859 as common property
and agreed on how they would share in the benefits to be derived from the
Island. On April 11, 1868, they modified the terms and conditions of the
agreement so as to include in the co-ownership of the island the children of
their deceased brothers Eustaquio and the other children of Manuel
Pansacola (Fr. Manuel Pena) who were committed in the agreement of
February 11, 1859. The new agreement provided for a new sharing
proportion and distribution of the Island among the co-owners.
On January 20, 1907, the representative of the heirs of all the original owners
of Cagbalite Island entered into an agreement to partition the Island,
13
PROPERTY
Case set #5
supplemented by another agreement dated April 18, 1908. The contract dated
January 20, 1907 provides as follows:
Sa Mauban, Tayabas, ika 20 ng Enero ng 1907 caming mga quinatawan ng
mga ibang co-herederos na hindi caharap, sa pulong na ito, sa nasa naming
lahat na magcaroon na ng catahimikan ang aming-aming cabahagui sa
Pulong Kagbalete sumacatuid upang mapagtoos ang hangahan ng apat na
sapul na pagcacabahagui nitong manang ito, pagcacausap na naming lahat at
maihanay at mapagtalonan ang saysay ng isa't isa, ay cusa naming
pinagcasunduan at pinasiya ang nangasosonod:
Una: Ang malaquing calupaan, alis ang lahat na pacatan ay babahaguin
alinsunod sa pagcabaki na guinawa sa croquis na niyari ng practico
agrimensor Don Jose Garcia.
Icalawa: Ang Lomingoy, doon ang tuid na guhit sa ilong ng Pait ay
pagaapatin ding sinlaqui ayon sa dating pagkakabaki.
Icatlo: Cung magawa na ang tunay na piano at icapit na sa lupa, paglalagay
ng nadarapat na mojon, ang masacupan ng guhit, sumacatuid ang caingin at
pananim ng isa na nasacupan ng pucto na noocol sa iba, ay mapapasulit sa
dapat mag-ari, na pagbabayaran nito ang nagtanim sa halagang:- bawat
caponong niog na nabunga, P 1.00 'un peso); cung ang bias ay abot sa isang
vara, P 0.50; cung bagong tanim o locloc P 0. 50 ang capono.
Icapat: Ang lahat na pacatan ay bacod na pagaapatin at bawat bahagui ay
noocol sa isat-isa sa apat na sanga ng paganacang nagmana.
Icalima: Upang ang naipatanim ng bawat isa ay matama sa canya ng
mailagan ang hirap ng loob ng nagatikha; ay pagtotolong-tolongan ng lahat
naiba na mahusay ang dalawang partes na magcalapit na mapa ayong
tumama, hangang may pagluluaran, sa nagsikap at maoyanam, maidaco sa
lugar na walang cailangang pagusapan.
Icanim: Ang casulatang ito, cung mapermahan na na magcacaharap sampong
ng mga ibang co-herederos na notipicahan nitong lahat na pinagcasundoan ay
mahahabilin sa camay ng agrimensor, Amadeo Pansacola, upang canyang
mapanusugan ang maipaganap ang dito'y naootos.
Na sa catunayan at catibayan ng lahat na nalalagda dito, sa pag galang at pag
ganap dito sa paingacaisahan ay pumirma sampo ng mga sacsing caharap at
catanto ngayong fecha ayon sa itaas.
The contract dated April 18, 1908 provides as follows:
Sa Mauban, ika 18 ng Abril ng 1908, sa pagcacatipon ng lahat na firmantes
nito ay pinagcaisahan itong nangasosonod:
Una Pinagtitibay ang mga pinagcasundoan sa itaas noong 20 ng Enero ng
1907, liban na lamang sa mga pangcat na una at icapat at tongcol doon
pinasiya naming bahaguinin ng halohalo at paparejo ang calupaan at pacatan.
Ycalawa Sa pagsucat ng agrimensor na si Amadeo at paggawa ng piano at
descripcion ay pagbabayaran siya ng sa bawat isa naoocol sa halagang isang
piso sa bawat hectares.
Icatlo Ang counting pucto sa 'Mayanibulong' na may caingin ni G. Isidro
Altamarino, asawa ni Restitute ay tutumbasan naman cay G. Norberto
Pansacola sa lugar ng Dapo calapit ng Pinangalo ng gasing sucat.
Icapat Sa inilahad na piano ay pinasiya nang itoloy at upang maca
pagparehistro ang isa't isa ay pinagcaisahang magcacagastos na parepareho
para sa tablang pangmohon at ibat iba pang cagastusan.
Sa catunayan at catibayan ay cami, pumirma. (Record on Appeal, p. 224)
There is nothing in all four agreements that suggests that actual or physical
partition of the Island had really been made by either the original owners or
their heirs or successors-in-interest. The agreement entered into in 1859
simply provides for the sharing of whatever benefits can be derived from the
island. The agreement, in fact, states that the Island to be purchased shall be
considered as their common property. In the second agreement entered in
1868 the co-owners agreed not only on the sharing proportion of the benefits
derived from the Island but also on the distribution of the Island each of the
brothers was allocated a 1/4 portion of the Island with the children of the
deceased brother, Eustaquio Pansacola allocated a 1/4 portion and the
children of Manuel Pansacola (Fr. Manuel Pena) also allocated a 1/4 portion
of the Island. With the distribution agreed upon each of the co-owner is a co-
owner of the whole, and in this sense, over the whole he exercises the right of
dominion, but he is at the same time the sole owner of a portion, in the
instant case, a 1/4 portion (for each group of co-owners) of the Island which
is truly abstract, because until physical division is effected such portion is
merely an Ideal share, not concretely determined (3 Manresa, Codigo Civil,
3rd Ed., page 486, cited in Lopez vs. Cuaycong, 74 Phil. 601; De la Cruz vs.
Cruz, 32 SCRA 307 [1970]; Felices vs. Colegado, 35 SCRA 173 [1970],;
Dultra vs. CFl 70 SCRA 465 [1976]; Gatchalian vs. Arlegui, 75 SCRA 234
[1977].)
14
PROPERTY
Case set #5
In the agreement of January 20, 1907, the heirs that were represented agreed
on how the Island was to be partitioned. The agreement of April 18, 1908
which supplements that of January 20, 1907 reveals that as of the signing of
the 1908 agreement no actual partition of the Island had as yet been done.
The second and fourth paragraphs of the agreement speaks of a survey yet to
be conducted by a certain Amadeo and a plan and description yet to be made.
Virgilio Pansacola, a son of the surveyor named Amadeo who is referred to
in the contract dated April 18, 1908 as the surveyor to whom the task of
surveying Cagbalite Island pursuant to said agreement was entrusted,
however, testified that said contracts were never implemented because
nobody defrayed the expenses for surveying the same (Record on Appeal, p.
225).
Petitioners invoke res judicata to bar this action for partition in view of the
decision of the Court in G.R. No. 21033, "Domingo Arce vs. Maria
Villabona, et al.," 21034, "Domingo Arce vs. Francisco Pansacola, et
al.," and 21035, "Domingo Arce vs. Emiliano Pansacola, et al." promulgated
on February 20, 1958 (Rollo, p. 141) and Brief for Defendants-Appellees, p.
87 Appendix 1), wherein the Court said:
Considering the facts that he waited for a period of nearly 23 years after the
return from his deportation before taking any positive action to recover his
pretended right in the property in question, gives great credit, in our opinion,
to the declaration of the witnesses for the defense (a) that the original parcel
of land was partitioned as they claim, and (b) that the plaintiff had disposed
of all the right and interest which he had in the portion which had been given
to him.
The issue in the aforementioned case which were tried together is not
whether there has already been a partition of the Cagbalite Island. The
actions were brought by the plaintiff to recover possession of three distinct
parcels of land, together with damages. In fact the word partition was used in
the metaphysical or Ideal sense (not in its physical sense).
Commenting on the above ruling of the Court in connection with the instant
case, the respondent Court said:
Concededly, the Supreme Court decision in G.R. Nos. 21033-35 (Exh. X) did
use or employ the word "partition." A careful reading of the said decision
will, however, reveal, and we so hold, that the employment or use of the
word "partition" therein was made not in its technical and legal meaning or
sense adverted to above, but, rather in its Ideal, abstract and spiritual sense,
this is (at) once evident from the bare statement in said decision to the effect
that the property was divided into four parts, without any reference to the
specific parts of the property that may have been adjudicated to each owner.
There being no such reference in the decision and in the judgment affirmed
therein to the adjudication of specific and definite portions of the property to
each co-owner, there is a clear and logical inference that there was indeed no
adjudication of specific and definite portions of the property made to each
co-owner.
It must be admitted that the word "partition" is not infrequently used both in
popular and technical parlance (Fule vs. Fule, 52 Phil. 750 [1929]). For
purposes of the aforementioned case, evidently the Court used the word
"partition" to refer to the distribution of the Cagbalite Island agreed upon by
the original owners and in the later agreements, by the heirs and their
subsequent successors-in-interest. There need not be a physical partition; a
distribution of the Island even in a state of indiviso or was sufficient in order
that a co-owner may validly sell his portion of the co-owned property. The
sale of part of a particular lot thus co-owned by one co-owner was within his
right pro-indiviso is valid in its entirety (Pamplona vs. Moreto, 96 SCRA 775
[1980]) but he may not convey a physical portion with boundaries of the land
owned in common (Mercado vs. Liwanag, 5 SCRA 472 [1962]). Definitely,
there was no physical partition of the Island in 1859. Neither could there
have been one in 1894 because the manner of subdividing the Island was
only provided for in the later agreements entered into by the heirs in 1907
and 1908. There was a distribution of the Island in 1868 as agreed upon by
the original co-owners in their agreement of April 11, 1868. Any agreement
entered into by the parties in 1894 could be no more than another agreement
as to the distribution of the Island among the heirs of the original co-owners
and the preparation of a tentative plan by a practical surveyor, a Mr. Jose
Garcia, mentioned in the first paragraph of the 1907 agreement, preparatory
to the preparation of the real plan to be prepared by the surveyor Amadeo,
mentioned in the agreement of April 18, 1908.
What is important in the Court's ruling in the three aforementioned cases is
that, the fact that there was a distribution of the Island among the co-owners
made the sale of Domingo Arce of the portion allocated to him though pro-
indiviso, valid. He thus disposed of all his rights and interests in the portion
given to him.
It is not disputed that some of the private respondents and some of the
petitioners at the time the action for partition was filed in the trial court have
been in actual possession and enjoyment of several portions of the property
in question (Rollo, p. 148). This does not provide any proof that the Island in
15
PROPERTY
Case set #5
question has already been actually partitioned and co-ownership terminated. partition of the common property, a provision which implies that the action
A co-owner cannot, without the conformity of the other co-owners or a to demand partition is imprescriptible or cannot be barred by laches (Budlong
judicial decree of partition issued pursuant to the provision of Rule 69 of the vs. Pondoc, 79 SCRA 24 [1977]). An action for partition does not lie except
Rules of Court (Rule 71 of the Old Rules), adjudicate to himself in fee simple when the co-ownership is properly repudiated by the co- owner (Jardin vs.
a determinate portion of the lot owned in common, as his share therein, to the Hollasco, 117 SCRA 532 [1982]).
exclusion of other co-owners (Santos, Jr. vs. Buenconsejo, 14 SCRA 407
[1965]; Carvajal vs. Court of Appeals, 112 SCRA 237 [1982]). It is a basic On July 23, 1986, the Court through its Second Division denied the petition
principle in the law of co-ownership both under the present Civil Code as in for the review of G.R. No. 72620, the petition for review on certiorari
the Code of 1889 that no individual co- owner can claim any definite portion separately filed by Josefina Pansacola (Rollo, p. 151).
thereof (Diversified Credit Corporation vs. Rosada 26 SCRA 470 [1968]). lt
is therefore of no moment that some of the co-owners have succeeded in PREMISES CONSIDERED, the instant petition is likewise DENIED for
securing cadastral titles in their names to some portions of the Island lack of merit.
occupied by them (Rollo, p. 10). SO ORDERED.
It is not enough that the co-owners agree to subdivide the property. They
must have a subdivision plan drawn in accordance with which they take
actual and exclusive possession of their respective portions in the plan and
titles issued to each of them accordingly (Caro vs. Court of Appeals, 113
SCRA 10 [1982]). The mechanics of actual partition should follow the
procedure laid down in Rule 69 of the Rules of Court. Maganon vs. Montejo,
146 SCRA 282 [1986]).

Neither can such actual possession and enjoyment of some portions of the
Island by some of the petitioners herein be considered a repudiation of the
co-ownership. It is undisputed that the Cagbalite Island was purchased by the
original co-owners as a common property and it has not been proven that the
Island had been partitioned among them or among their heirs. While there is
co-ownership, a co-owner's possession of his share is co-possession which is
linked to the possession of the other co-owners (Gatchalian vs. Arlegui, 75
SCRA 234 [1977]).

Furthermore, no prescription shall run in favor of a co-owner against his co-

owners or co-heirs so long as he expressly or impliedly recognizes the co-
ownership (Valdez vs. Olonga, 51 SCRA 71 [1973], Tero vs. Tero, 131
SCRA 100 [1984]). Co-owners cannot acquire by prescription the share of
the other co-owners, absent a clear repudiation of the co-ownership clearly
communicated to the other co-owners (Mariano vs. De Vega, 148 SCRA 342
[1987]).

An action for partition does not prescribe. Article 403 of the Old Civil Code,
now Article 497, provides that the assignees of the co-owners may take part
in the partition of the common property, and Article 400 of the Old Code,
now Article 494 provides that each co-owner may demand at any time the
16
PROPERTY
Case set #5
6.) Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 78178 April 15, 1988
DELIA BAILON-CASILAO, LUZ PAULINO-ANG, EMMA
PAULINO-YBANEZ, NILDA PAULINO-TOLENTINO, and SABINA
BAILON, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and CELESTINO
AFABLE, respondents.
Veronico E. Rubio for petitioners.
Mario G. Fortes for private-respondent.
CORTES, J.:
The fate of petitioners' claim over a parcel of land rests ultimately on a
determination of whether or not said petitioners are chargeable with such
laches as may effectively bar their present action.
The petitioners herein filed a case for recovery of property and damages with
notice of lis pendens on March 13, 1981 against the defendant and herein
private respondent, Celestino Afable. The parcel of land involved in this
case, with an area of 48,849 square meters, is covered by Original Certificate
of Title No. 1771 issued on June 12, 1931, in the names of Rosalia,
Gaudencio, Sabina Bernabe, Nenita and Delia, all surnamed Bailon, as co-
owners, each with a 1/6 share. Gaudencio and Nenita are now dead, the latter
being represented in this case by her children. Luz, Emma and Nilda.
Bernabe went to China in 1931 and had not been heard from since then
[Decision of the Court of Appeals, Rollo, p. 39].
It appears that on August 23, 1948, Rosalia Bailon and Gaudencio Bailon
sold a portion of the said land consisting of 16,283 square meters to Donato
Delgado. On May 13, 1949, Rosalia Bailon alone sold the remainder of the
land consisting of 32,566 square meters to Ponciana V. Aresgado de Lanuza.
On the same date, Lanuza acquired from Delgado the 16,283 square meters
of land which the latter had earlier acquired from Rosalia and Gaudencio. On
December 3, 1975, John Lanuza, acting under a special power of attorney
given by his wife, Ponciana V. Aresgado de Lanuza, sold the two parcels of
land to Celestino Afable, Sr.
In all these transfers, it was stated in the deeds of sale that the land was not
registered under the provisions of Act No. 496 when the fact is that it is. It
appears that said land had been successively declared for taxation first, in the
name of Ciriaca Dellamas, mother of the registered co-owners, then in the
name of Rosalia Bailon in 1924, then in that of Donato Delgado in 1936,
then in Ponciana de Lanuza's name in 1962 and finally in the name of
Celestino Afable, Sr. in 1983.
In his answer to the complaint filed by the herein petitioners, Afable claimed
that he had acquired the land in question through prescription and contended
that the petitioners were guilty of laches.He later filed a third-party complaint
against Rosalia Bailon for damages allegedly suffered as a result of the sale
to him of the land.
After trial, the lower court rendered a decision:
1. Finding and declaring Celestino Afable, a co-owner of the land described
in paragraph III of the complaint having validly bought the two-sixth (2/6)
respective undivided shares of Rosalia Bailon and Gaudencio Bailon;
2. Finding and declaring the following as pro-indiviso co-owners, having 1/6
share each, of the property described in paragraph III of the complaint, to
wit:
a. Sabina Bailon
b. Bernabe Bailon
c. Heirs of Nenita Bailon-Paulino
d. Delia Bailon-Casilao;
3. Ordering the segregation of the undivided interests in the property in order
to terminate co-ownership to be conducted by any Geodetic Engineer
selected by the parties to delineate the specific part of each of the co-owners.
4. Ordering the defendant to restore the possession of the plaintiffs respective
shares as well as all attributes of absolute dominion;
5. Ordering the defendant to pay the following:
a. P5,000.00 as damages;
b. P2,000.00 as attorney's fees and;
c. to pay the costs.
[Decision of the Trial Court, Rollo, p. 37-38].
On appeal, the respondent Court of Appeals affirmed the decision of the
lower court insofar as it held that prescription does not he against plaintiffs-
appellees because they are co-owners of the original vendors. However, the
appellate court declared that, although registered property cannot be lost by
prescription, nevertheless, an action to recover it may be barred by laches,
citing the ruling in Mejia de Lucaz v. Gamponia [100 Phil. 277 (1956)].
Accordingly, it held the petitioners guilty of laches and dismissed their
17
PROPERTY
Case set #5
complaint. Hence, this petition for review on certiorari of the decision of the
Court of Appeals.
The principal issue to be resolved in this case concerns the applicability of
the equitable doctrine of laches. Initially though, a determination of the effect
of a sale by one or more co-owners of the entire property held in common
without the consent of all the co-owners and of the appropriate remedy of the
aggrieved co-owners is required.
The rights of a co-owner of a certain property are clearly specified in Article
493 of the Civil Code.Thus:
Art. 493. Each co-owner shall have the full ownership of his part and of the
acts 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. [Emphasis supplied.]
As early as 1923, this Court has ruled 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 [Punsalan v. Boon Liat 44
Phil. 320 (1923)]. This is because under the aforementioned codal provision,
the sale or other disposition 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.[Ramirez v. Bautista, 14 Phil. 528 (1909)].
Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon
which are valid with respect to their proportionate shares, and the subsequent
transfers which culminated in the sale to private respondent Celestino Afable,
the said Afable thereby became a co-owner of the disputed parcel of land as
correctly held by the lower court since the sales produced the effect of
substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil.
730 (1910)].
From the foregoing, it may be deduced that since a co-owner is entitled to
sell his undivided share, a sale of the entire property by one co-owner
without the consent of the other co-owners is not null and void. However,
only the rights of the co-owner-seller are transferred, thereby making the
buyer a co-owner of the property.
The proper action in cases like this is not for the nullification of the sale or
for the recovery of possession of the thing owned in common from the third
person who substituted the co-owner or co-owners who alienated their
shares, but the DIVISION of the common property as if it continued to
remain in the possession of the co-owners who possessed and administered
it [Mainit v. Bandoy, supra.]
Thus, it is now settled that the appropriate recourse of co-owners in cases
where their consent were not secured in a sale of the entire property as well
as in a sale merely of the undivided shares of some of the co-owners is an
action. for PARTITION under Rule 69 of the Revised Rules of Court.
Neither recovery of possession nor restitution can be granted since the
defendant buyers are legitimate proprietors and possessors in joint ownership
of the common property claimed [Ramirez v. Bautista, supra].
As to the action for petition, neither prescription nor laches can be invoked.
In the light of the attendant circumstances, defendant-appellee's defense of
prescription is a vain proposition. Pursuant to Article 494 of the Civil Code,
'(n)o co-owner shall be obliged to remain in the co-ownership. Such co-
owner may demand at anytime the partition of the thing owned in common,
insofar as his share is concerned.' [Emphasis supplied.] In Budiong v.
Bondoc [G.R. No. L-27702, September 9, 1977, 79 SCRA 241, this Court
has interpreted said provision of law to mean that the action for partition is
imprescriptible or cannot be barred by prescription. For Article 494 of the
Civil Code explicitly declares: "No prescription shall lie in favor of a co-
owner or co- heir so long as he expressly or impliedly recognizes the co-
ownership."
Furthermore, the disputed parcel of land being registered under the Torrens
System, the express provision of Act No. 496 that '(n)o title to registered land
in derogation to that of the registered owner shall be acquired by prescription
or adverse possession' is squarely applicable. Consequently, prescription will
not lie in favor of Afable as against the petitioners who remain the registered
owners of the disputed parcel of land.
It is argued however, that as to the petitioners Emma, Luz and Nelda who are
not the registered co-owners but merely represented their deceased mother,
the late Nenita Bailon, prescription lies.Respondents bolster their argument
by citing a decision of this Court in Pasion v. Pasion [G.R.No. L-15757,
May 31, 1961, 2 SCRA 486, 489] holding that "the imprescriptibility of a
Torrens title can only be invoked by the person in whose name the title is
registered" and that 'one who is not the registered owner of a parcel of land
cannot invoke imprescriptibility of action to claim the same.'
18
PROPERTY
Case set #5
Reliance on the aforesaid Pasion case is futile. The ruling therein applies
only against transferees other than direct issues or heirs or to complete
strangers. The rational is clear:
If prescription is unavailing against the registered owner, it must be equally
unavailing against the latter's hereditary successors, because they merely step
into the shoes of the decedent by operation of law (New Civil Code, Article
777; Old Civil Code, Article 657), the title or right undergoing no change by
its transmission mortis causa [Atus, et al., v. Nunez, et al., 97 Phil. 762, 764].
The latest pronouncement of this Court in Umbay v. Alecha [G. R. No.
67284, March 18, 1985, 135 SCRA 427, 429], which was promulgated
subsequent to the Pasion case reiterated the Atus doctrine. Thus:
Prescription is unavailing not only against the registered owner but also
against his hereditary successors, because they merely step into the shoes of
the decedent by operation of law and are merely the continuation of the
personality of their predecessor-in-interest. [Barcelona v. Barcelona, 100
Phil. 251, 257].
Laches is likewise unavailing as a shield against the action of herein
petitioners.
Well-stated in this jurisdiction are the four basic elements of laches, namely:
(1) conduct on the part of the defendant or of one under whom he claims,
giving rise to the situation of which complaint is made and for which the
complainant seeks a remedy; (2) delay in asserting the corporations
complainant's rights, the complainant having had knowledge or notice of the
defendant's conduct and having been afforded an opportunity to institute suit;
(3) lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit; and, (4) injury
or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held to be barred [Go China Gun, et al. v. Co
Cho et al., 96 Phil. 622 (1955)].
While the first and last elements are present in this case, the second and third
elements are missing.
The second element speaks of delay in asserting the complainant's rights.
However, the mere fact of delay is insufficient to constitute, laches. It is
required that (1) complainant must have had knowledge of the conduct of
defendant or of one under whom he claims and (2) he must have been
afforded an opportunity to institute suit. This court has pointed out that
laches is not concerned with the mere lapse of time. Thus:
Laches has been defined as 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. Tijam, et al., v. Sibonghanoy,
G.R. No. L-21450, April 25, 1968, 23 SCRA 29,35; Tendo v. Zamacoma,
G.R. No. L-63048, August 7, 1985, 138 SCRA 78, 90].
The doctrine of "laches" or of "stale demands" is based upon grounds of
public policy which requires for the peace of society, the discouragement of
stale claims and unlike the statute of limitations, is not a mere question of
time but is principally a question of inequity or unfairness of permitting a
right or claim to be enforced or asserted," [Tijam v. Sibonghanoy, supra, p.
35]. [Emphasis supplied.]
It must be noted that while there was delay in asserting petitioners' rights,
such delay was not attended with any knowledge of the sale nor with any
opportunity to bring suit. In the first place, petitioners had no notice of the
sale made by their eldest sister. It is undisputed that the petitioner co-owners
had entrusted the care and management of the parcel of land to Rosalia
Bailon who was the oldest among them [TSN, July 27, 1983, p. 14]. In fact,
Nicanor Lee, a son of Rosalia, who was presented as a witness by the
plaintiffs-petitioners, testified on cross-examination that his mother was only
the administrator of the land as she is the eldest and her brothers and sisters
were away [TSN, October 5, 1983, p. 15]. Indeed, when Delia Bailon-
Casilao left Sorsogon in 1942 after she got married, it was only in 1983 that
she returned. Sabina on the other hand, is said to be living in Zamboanga
while Bernabe who left for China in 1931 has not been heard from since
then. Consequently, when Rosalia, from whom the private respondent
derived his title, made the disputed sales covering the entire property, the
herein petitioners were unaware thereof.
In the second place, they were not afforded an opportunity to bring suit
inasmuch as until 1981, they were kept in the dark about the transactions
entered into by their sister. It was only when Delia Bailon-Casilao returned to
Sorsogon in 1981 that she found out about the sales and immediately, she
and her co-petitioners filed the present action for recovery of property. The
appellate court thus erred in holding that 'the petitioners did nothing to show
interest in the land." For the administration of the parcel of land was
entrusted to the oldest co-owner who was then in possession thereof precisely
19
PROPERTY
Case set #5
because the other co-owners cannot attend to such a task as they reside
outside of Sorsogon where the land is situated. Her co-owners also allowed
her to appropriate the entire produce for herself because it was not even
enough for her daily consumption [TSN, October 5, 1983, pp. 17-18]. And
since petitioner was the one receiving the produce, it is but natural that she
was the one to take charge of paying the real estate taxes. Now, if knowledge
of the sale by Rosalia was conveyed to the petitioners only later, they cannot
be faulted for the acts of their co-owner who failed to live up to the trust and
confidence expected of her. In view of the lack of knowledge by the
petitioners of the conduct of Rosalia in selling the land without their consent
in 1975 and the absence of any opportunity to institute the proper action until
1981, laches may not be asserted against the petitioners.
The third element of laches is likewise absent. There was no lack of
knowledge or notice on the part of the defendant that the complainants would
assert the right on which they base the suit. On the contrary, private
respondent is guilty of bad faith in purchasing the property as he knew that
the property was co-owned by six persons and yet, there were only two
signatories to the deeds of sale and no special authorization to self was
granted to the two sellers by the other co-owners.
Even as the land here was misrepresented in the deeds of sale as
"unregistered," the truth was that Afable already had notice that the land was
titled in the name of six persons by virtue of the Certificate of Title which
was already in his possession even before the sale. Such fact is apparent from
his testimony before the court a quo:
COURT:
Q: From whom did you get the certificate of Title?
A: When it was mortgaged by Ponciana Aresgado.
Q: It was mortgaged to you before you bought it?
A: Yes, Your Honor. (TSN, March 5, 1984, p. 12) When cross-examined, he
stated:
Q: Mr. Witness, the original Certificate of Title was given to you in the year
1974, was it not?
A: 1975.
Q: In 1975, you already discovered that the title was in the name of several
persons, is it not?
A: Yes, sir.
Q: When you discovered that it is in the name of several persons, you filed a
case in court for authority to cancel the title to be transferred in your name, is
it not?
A: Yes, sir.
Q: And that was denied by the Court of First Instance of Sorsogon because
there was ordinary one signatory to the deed of sale instead of six, was it not?
A: Not one but two signatories.
[Decision of the Regional Trial Court of Sorsogon, Rollo, p. 35]
Such actual knowledge of the existence of other co-owners in whose names
the lot subject of the sale was registered should have prompted a searching
inquiry by Afable considering the well- known rule in this jurisdiction that:
... a person dealing with a registered land has a right to rely upon the face of
the Torrens certificate of title and to dispense with the need of inquiring
further, except when the party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautions man to make such
inquiry. [Gonzales v. IAC and Rural Bank of Pavia, Inc., G.R. No. 69622,
January 29, 1988).
Moreover, the undisputed fact is that petitioners are relatives of his wife. As
a genuine gesture of good faith, he should have contacted the petitioners who
were still listed as co-owners in the certificate of title which was already in
his possession even before the sale. In failing to exercise even a minimum
degree of ordinary prudence required by the situation, he is deemed to have
bought the lot at his own risk. Hence any prejudice or injury that may be
occasioned to him by such sale must be borne by him.
Indeed, aware of the flaws impairing his title, Afable went to the herein
petitioner Delia Bailon-Casilao, asking the latter to sign a document
obviously to cure the flaw [TSN, July 27, 1983, p.6]. Later, he even filed a
petition in the Court of First Instance to register the title in his name which
was denied as aforesaid.
It may be gleaned from the foregoing examination of the facts that Celestino
Afable is not a buyer in good faith. Laches being an equitable defense, he
who invokes it must come to the court with clean hands.
WHEREFORE, the petition for certiorari is hereby GRANTED, the
challenged decision of the Court of Appeals is SET ASIDE, and the decision
of the trial court is REINSTATED.
SO ORDERED.
20
PROPERTY
Case set #5
7.) Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 75886 August 30, 1988
CONCEPCION ROQUE, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, ERNESTO ROQUE,
FILOMENA OSMUNDO, CECILIA ROQUE, MARCELA ROQUE,
JOSE ROQUE and RUBEN ROQUE, respondents.
Lorenzo J. Liwag for petitioner.
Dominador Ad Castillo for private respondents.
FELICIANO, J.:
The subject of the present Petition for Review is the 31 July 1986 Decision
of the former Intermediate Appellate Court in AC-G.R. CV No. 02248
(entitled, "Concepcion Roque, plaintiff-appellee, vs. Ernesto Roque,
Filomena Osmunda Cecilia Roque, Marcela Roque, Jose Roque and Ruben
Roque, defendants-appellants") which reversed and set aside on appeal the
decision of the Regional Trial Court of Malolos, Branch 9.
The controversy here involves a 312 square meter parcel of land situated in
San Juan, Malolos, Bulacan and designated as Lot No. 1549 of the Cadastral
Survey of Malolos. The property was registered originally in the name of
Januario Avendao, a bachelor who died intestate and without issue on 22
October 1945.
On 21 September 1959, the intestate heirs of Januario Avendafio executed a
document entitled "Paghahati at Pagtagabuyan ng Mana sa Labas ng
Hukuman." 1 Through this instrument, extrajudicial partition of Lot No. 1549
was effected among the intestate heirs as follows:
a. One-fourth (1/4) undivided portion to Illuminada Avendao.
b. One-fourth (1/4) undivided portion to Gregorio Avendafio and Miguel
Avendao.
c. One-fourth (1/4) undivided portion to Bernardino, Bienvenido, Numeriano
and Rufina, all surnamed Avendao.
d. One-fourth (1/4) undivided portion to respondent Emesto Roque and
Victor Roque. 2
On 28 September 1959, co-owners Illuminada, Gregorio, Miguel,
Bernardino, Bienvenido, Numeriano and Rufina, all surnamed Avendao, in
consideration of the aggregate amount of P500.00, transferred their collective
and undivided threefourths (3/4) share in Lot No. 1549 to respondent Ernesto
Roque and Victor Roque, thereby vesting in the latter full and complete
ownership of the property. The transactions were embodied in two (2)
separate deeds of sale both entitled "Kasulatan ng Bilihang Patuluyan" 3 and
both duly notarized. Subsequently, in an unnotarized "Bilihan Lubos at
Patuluyan" 4 dated 27 November 1961, Emesto and Victor Roque
purportedly sold a three-fourths (3/4) undivided portion of Lot No. 1549 to
their half-sister, petitioner Concepcion Roque, for the same amount. The
property, however, remained registered in the name of the decedent, Januario
Avendao.
Upon the instance of petitioner Concepcion Roque and allegedly of
respondent Ernesto Roque, Lot No. 1549 was surveyed on 20 September
1975. Consequent thereto, a Subdivision Plan 5 was drawn up by the
Geodetic Engineer Identifying and delineating a one-fourth (1/4) portion (78
square meters) of the property as belonging to respondent Ernesto Roque and
Victor Roque (who had died on 14 April 1962), upon the one hand, and a
three-fourths (3/4) portion (234 square meters) of the same property as
belonging to petitioner Concepion Roque, upon the other hand. Petitioner
claimed that preparation of the Subdivision Plan, which was approved on 3
November 1975 by the Land Registration Commission was a preliminary
step leading eventually to partition of Lot No. 1549, partition allegedly
having been previously agreed upon inter se by the co-owners. Respondents
Ernesto Roque and the legal heirs of Victor Roque, however, refused to
acknowledge petitioner's claim of ownership of any portion of Lot No. 1549
and rejected the plan to divide the land.
Attempts at amicable settlement having fallen through, petitioner Concepcion
Roque, on 6 December 1977, filed a Complaint for "Partition with Specific
Performance" 6 (docketed as Civil Case No. 5236-M) with Branch 2 of the
then Court of First Instance of Malolos against respondents Emesto Roque
and the heirs of Victor Roque. In her complaint, petitioner (plaintiff below)
claimed legal ownership of an undivided threefourths (3/4) portion of Lot
No. 1549, by virtue of the 27 November 1961 "Bilihan Lubos at Patuluyan"
executed in her favor by Emesto Roque and Victor Roque. In support of this
claim, petitioner also presented an undated and unnotarized "Kasulatang
Pagkilala sa Bilihan Patuluyan ng Bahagui at Pagmamana sa Labas ng
Hukuman at Paghahati-hati at Abuyan ng Bahagui" 7 said to have been
signed by the respondents in acknowledgment of the existence and validity of
the Bilihan in favor of petitioner. Finally, petitioner alleged that, as a
coowner of Lot No. 1549, she had a right to seek partition of the property,
that she could not be compelled to remain in the coownership of the same.
21
PROPERTY
Case set #5
In an Answer with Compulsory Counterclaim 8 filed on 28 December 1977,
respondents (defendants below) impugned the genuineness and due
execution of the "Bilihan Lubos at Patuluyan" dated 27 November 1961 on
the ground "that the signatures appearing thereon are not the authentic
signatures of the supposed signatories ...." It was also alleged that petitioner
Concepcion Roque, far from being a co-owner of Lot No. 1549, "occupied a
portion of the lot in question by mere tolerance of the [defendants]."
Respondents also refused to honor the unnotarized Kasulatan and,
additionally, denied having had any participation in the preparation of the
Subchvision Plan.
On 27 June 1983, the trial court (now Branch 9, Regional Trial Court of
Malolos) rendered a Decision, 9 the dispositive portion of which read:
WHEREFORE, judgment is hereby rendered, in favor of the plaintiff and
against the defendants;
1. Ordering the heirs of the late Victor Roque namely Filomena Osmunda his
spouse, his children, Cecilia Roque, Marcela Roque, Jose Roque and Ruben
Roque and their uncle and co-defendant Emesto Roque, to execute a deed of
confirmation of the sale made by Emesto and Victor Roque in favor of
plaintiff Concepcion Roque, entitled "Bilihan Lubos at Patuluyan," executed
on November 27, 1961, Exh. E, over the 3/4 portion of the subject property;
2. Ordering the partition of the parcel of land described in par. 3 of tie
complaint covered by Original Certificate of Title No. 1442 Bulacan issued
in the name of Januario Avendafio, in the proportion of 3/4 to pertain to
Concepcion Roque, and 1/4 to pertain to Emesto Roque and his co-
defendants, his sister-in-law, nephews and nieces, in accordance with the
approved subdivision plan (LRC Psd-230726).
3. Ordering defendants,jointly and severally, to pay to plaintiff the sum of
P2,000.00 as and for attomey's fees and the costs of suit.
SO ORDERED.
The respondents appealed from this decision alleging the following errors:
I Appellate Court's decision appears to imply that from the moment
The lower court erred when it decided and ordered defendantsappellants to
execute a confirmation of the "Bilihan Lubos at Patuluyan," Exh. "E."
II
The lower court erred when it decided and ordered the defendantsappellant,s
to deliver unto the plaintiff [a] 3/4 share of the land in question.
III
The lower court erred in deciding this case in favor of the plaintiff-appellee,
based on an unnotarized and forged signature of defendantappellant Ernesto
Roque.
IV
The lower court erred in giving credence to the testimony of the plaintiff-
appellee Concepcion Roque despite [its] gross inconsistencies. 10
Acting on the appeal (docketed as A.C.-G.R. CV No. 02248), the
Intermediate Appellate Court, in a Decision 11dated 31 July 1986, reversed
the judgment of the trial court and dismissed both the petitioner's complaint
and the respondents' appeal. A Motion for Reconsideration of petitioner
Concepcion Roque was denied.
The present Petition for Review was filed with this Court on 18 September
1986. In a resolution dated 27 July 1987, we gave due course to the Petition
and required the parties to submit their respective Memoranda.
1. On the matter of dismissal of petitioner's complaint, the Intermediate
Appellate Court stated in its decision:
While the action filed by the plaintiff is for partition, the defendantz, after
denying plaintiff's assertion of co-ownership, asserted that they are the
exclusive and sole owners of the 314 portion of the parcel of land claimed by
the plaintiff.
Upon the issue thusjoined by the pleadings, it is obvious that the case has
become one ofownership of the disputed portion of the subject lot.
It is well settled that an action for partition will not prosper as such from the
moment an alleged co-owner asserts an adverse title. The action that may be
brought by an aggrieved co-owner is accion reivindicatoria or action for
recovery of title and possession (Jardin vs. Hallasgo, 11 7 SCRA 532, 536,
537; Paner vs. Gaspar, 3 CA Rep. 155, 158). (Emphasis supplied)
Viewed in the light of the facts of the present case, the Intermediate
respondents (defendants below) alleged absolute and exclusive ownership of
the whole of Lot No. 1549 in their Answer, the trial court should have
immediately ordered the dismissal of the action for partition and petitioner
(plaintiff below), if she so desired, should have refiled the case but this time
as an accion reinvindicatoria. Taking this analysis a step further should the
22
PROPERTY
Case set #5
reivindicatory action prosper i.e., a co-ownership relation is found to have
existed between the parties a second action for partition would still have
to be instituted in order to effect division of the property among the co-
owners.
We do not agree with the above view. An action for partition-which is
typically brought by a person claiming to be co-owner of a specified property
against a defendant or defendants whom the plaintiff recognizes to be co-
owners may be seen to present simultaneously two principal issues. First,
there is the issue of whether the plaintiff is indeed a co-owner of the property
sought to be partitioned. Second, assuming that the plaintiff successfully
hurdles the first issue, there is the secondary issue of how the property is to
be divided between plaintiff and defendant(s) i.e., what portion should go
to which co-owner.
Should the trial court find that the defendants do not dispute the status of the
plaintiff as co-owner, the court can forthwith proceed to the actual
partitioning of the property involved. In case the defendants assert in their
Answer exclusive title in themselves adversely to the plaintiff, the court
should not dismiss the plaintiffs action for partition but, on the contrary and
in the exercise of its general jurisdiction, resolve the question of whether the
plaintiff is co-owner or not. Should the trial court find that the plaintiff was
unable to sustain his claimed status as co-owner, or that the defendants are or
have become the sole and exclusive owners of the property involved, the
court will necessarily have to dismiss the action for partition. This result
would be reached, not because the wrong action was commenced by the
plaintiff, but rather because the plaintiff having been unable to show co-
ownership rights in himself, no basis exists for requiring the defendants to
submit to partition the property at stake. If, upon the other hand, the court
after trial should find the eidstence of co-ownership among the parties
litigant, the court may and should order the partition of the property in the
same action. Judgment for one or the other party being on the merits, the
losing party (respondents in this case) may then appeal the same. In either
case, however, it is quite unnecessary to require the plaintiff to file another
action, separate and independent from that for partition originally instituted.
Functionally, an action for partition may be seen to be at once an action for
declaration of coownership and for segregation and conveyance of a
determinate portion of the property involved. This is the import of our
jurisprudence on the matter. 12 and is sustained by the public policy which
abhors multiplicity of actions.
The question of prescription also needs to be addressed in this connection. It
is sometimes said that "the action for partition of the thing owned in common
(actio communi dividendo or actio familiae erciscundae) does not
prescribe." 13 This statement bears some refinement. In the words of Article
494 of the Civil Code, "each co-owner may demand at any time the partition
of the thing owned in common, insofar as his share is concemed." No matter
how long the co-ownership has lasted, a co-owner can always opt out of the
co-ownership, and provided the defendant co-owners or co-heirs have
theretofore expressly or impliedly recognized the co-ownership, they cannot
set up as a defense the prescription of the action for partition. But if the
defendants show that they had previously asserted title in themselves
adversely to the plaintiff and for the requisite period of time, the plaintiffs
right to require recognition of his status as a co-owner will have been lost by
prescription and the court cannot issue an order requiring partition. This is
precisely what happened in Jardin v. Hallasgo, 117 SCRA 532 (1982),
which the respondent appellate court cited to support its position quoted
above.
The case of Jardin involved, among others, two (2) parcels of land which
were inherited in 1920 by the brothers Catalino jardin and Galo Jardin
together with their half-brother, Sixto Hallasgo. The three (3) held these
lands in co-ownership until Sixto later (the date was not specified) repudiated
the coownership and occupied and possessed both parcels of land, claiming
the same exclusively as his own. Sometime in 1973, the heirs of Catalino and
Galo instituted an action for partition of the two (2) properties against Sixto's
heirs, who had refused to surrender any portion of the same to the former.
The trial court, assuming that prescription had started to run in that case even
before the Civil Code took effect, held that the action for partition filed by
the heirs of Catalino and Galo had already prescribed. On appeal, this Court
affirmed the trial court on this point in the following terms:
Article 494 of the Civil Code provides that "no co-owner shall be obliged to
remain in the co- ownership" and that "each co-owner may demand at any
time the partition of the thing owned in common, insofar as his share is
concerned." It also provides that 'no prescription shall run in favor of a co-
owner or co-heir against his co-owners or co-heirs so long as he expressly or
impliedly recognizes the co-ownership.
While the action for the partition of the thing owned in common (actio
communi dividendo or actio familiae erciscundae) does not prescribe, the co-
ownership does not last forever since it may be repudiated by a co-owner
[i.e., Sixto]. In such a case, the action for partition does not lie. What may be
23
PROPERTY
Case set #5
brought by the aggrieved co-owner [i.e., the heirs of Catalino and Galo] is
an accion reivindicatoria or action for recovery of title and possession. That
action may be barred by prescription.
If the co-heir or co-owner having possession of the hereditary or community
property, holds the same in his own name, that is, under claim of exclusive
ownership, he may acquire the property by prescription if his possession
meets all the other requirements of the law, and after the expiration of the
prescriptive period, his co-heir or co-owner may lose their right to demand
partition, and their action may then be held to have prescribed (De los Santos
vs. Santa Teresa, 44 Phil. 811).
xxx xxx xxx
(Emphasis supplied)
In the light of the foregoing discussion, it will be seen that the underscored
portion of the Court's opinion in Jardin is actually obiter. For there, the
Court simply held the action for partition by the heirs of Catalino and Galo
had prescribed and did not require such heirs to start a new action (which
would have been quite pointless); on the other hand, the Court remanded the
case to the lower court for further proceedings in respect of the recovery of a
350 square meter lot which the evidence showed was owned by the plaintiffs
but wrongfully included by Sixto in the cadastral survey of his share of the
adjoining lot.
In Jardin, the claim of co-ownership asserted by the heirs of Catalino and
Galo was effectively refuted by the heirs of Sixto, who not only claimed for
themselves absolute and exclusive ownership of the disputed properties but
were also in actual and adverse possesion thereof for a substantial length of
time. The Court found, further, that the action for partition initially available
to the heirs of Catalino and Galo had, as a result of the preceding
circumstance, already prescribed.
An entirely different situation, however, obtains in the case at bar. First of
all, petitioner Concepcion Roque-the co-owner seeking partition has been
and is presently in open and continuous possession of a three-fourths (3/4)
portion of the property owned in common. The Court notes in this respect the
finding of the trial court that petitioner, following execution of the "Bilihan
Lubos at Pattlluyan" on 27 November 1961, had been in "continuous
occupancy of the 3/4 portion of the lot ... up to the present, and whereon
plaintifrs house and that of her son are erected. " 14Respondents do not
dispute this finding of fact, although they would claim that petitioner's
possession is merely tolerated by them. Second, prior to filing in 1977 of the
Complaint in Civil Case No. 5236-M, neither of the parties involved had
asserted or manifested a claim of absolute and exclusive ownership over the
whole of Lot No. 1549 adverse to that of any of the other co-owners: in other
words, co-ownership of the property had continued to be recognized by all
the owners. Consequently, the action for partition could not have and, as a
matter of fact, had not yet prescribed at the time of institution by Concepcion
of the action below.
2. Coming now to the matter regarding dismissal of the respondents'appeal,
the Intermediate Appellate Court held that inasmuch as the attack on the
validity of the "Bilihan Lubos at Patuluyan" was predicated on fraud and no
action for annulment of the document had been brought by respondents
within the four (4) year prescriptive period provided under Article 1391 of
the Civil Code, such action had already prescribed.
We find it unnecessary to deal here with the issue of prescription discussed
by the respondent court in its assailed decision. The facts on record clearly
show that petitioner Concepcion Roque had been in actual, open and
continuous possession of a three-fourths (3/4) portion of Lot No. 1549 ever
since execution of the "Bilihan Lubos at Patuluyan" in November of 1961.
The Court notes that it was only in their Answer with Compulsory
Counterclaim filed with the trial court in December of 1977 more than
sixteen (16) years later that respondents first questioned the genuineness
and authenticity of the "Bilihan Lubos at Patuluyan." Not once during those
sixteen (16) years did respondents contest petitioner's occupation of a three-
fourths (3/4) portion of Lot No. 1549. Furthermore, if indeed it is true that
respondents, as they claim, are the absolute owners of the whole of Lot No.
1549, it is most unusual that respondents would have allowed or tolerated
such prolonged occupation by petitioner of a major portion (3/4) of the land
while they, upon the other hand, contented themselves with occupation of
only a fourth thereof. This latter circumstance, coupled with the passage of a
very substantial length of time during which petitioner all the while remained
undisturbed and uninterrupted in her occupation and possession, places
respondents here in laches: respondents may no longer dispute the existence
of the co-ownership between petitioner and themselves nor the validity of
petitioner's claim of a threefourths (3/4) interest in Lot No. 1549, as they are
deemed, by their unreasonably long inaction, to have acquiesced in the
coow,aership. 15 In this respect, we affirm the decision of the respondent
appellate court presently under review.
24
PROPERTY
Case set #5
WHEREFORE, the Decision of the Intermediate Appellate Court dated 31
July 1986 in A.C.-G.R. CV No. 02248 is SET ASIDE with respect to that
portion which orders the dismissal of the Complaint in Civil Case No. 5236-
M, but is AFFIRMED with respect to that portion which orders the dismissal
of the respondents'appeal in A.C.-G.R. CV No. 02248. The Decision of
Branch 9 of the Regional Trial Court of Malolos dated 27 June 1983 in Civil
Case No. 5236-M is hereby REINSTATED. No pronouncement as to costs.

SO ORDERED.

25
PROPERTY
Case set #5
8.) Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-46296 September 24, 1991
EPITACIO DELIMA, PACLANO DELIMA, FIDEL DELIMA,
VIRGILIO DELIMA, GALILEO DELIMA, JR., BIBIANO BACUS,
OLIMPIO BACUS and PURIFICACION BACUS, petitioners,
vs.
HON. COURT OF APPEALS, GALILEO DELIMA (deceased),
substituted by his legal heirs, namely: FLAVIANA VDA. DE DELIMA,
LILY D. ARIAS, HELEN NIADAS, ANTONIO DELIMA, DIONISIO
DELIMA, IRENEA DELIMA, ESTER DELIMA AND FELY
DELIMA, respondents.
Gabriel J. Canete for petitioners.
Emilio Lumontad, Jr. for private respondents.
MEDIALDEA, J.:p
This is a petition for review on certiorari of the decision of the Court of
Appeals reversing the trial court's judgment which declared as null and void
the certificate of title in the name of respondents' predecessor and which
ordered the partition of the disputed lot among the parties as co-owners.
The antecedent facts of the case as found both by the respondent appellate
court and by the trial court are as follows:
During his lifetime, Lino Delima acquired Lot No. 7758 of the Talisay-
Minglanilla Friar Lands Estate in Cebu by sale on installments from the
government. Lino Delima later died in 1921 leaving as his only heirs three
brothers and a sister namely: Eulalio Delima, Juanita Delima, Galileo Delima
and Vicente Delima. After his death, TCT No. 2744 of the property in
question was issued on August 3, 1953 in the name of the Legal Heirs of
Lino Delima, deceased, represented by Galileo Delima.
On September 22, 1953, Galileo Delima, now substituted by respondents,
executed an affidavit of "Extra-judicial Declaration of Heirs." Based on this
affidavit, TCT No. 2744 was cancelled and TCT No. 3009 was issued on
February 4,1954 in the name of Galileo Delima alone to the exclusion of the
other heirs.
Galileo Delima declared the lot in his name for taxation purposes and paid
the taxes thereon from 1954 to 1965.
On February 29, 1968, petitioners, who are the surviving heirs of Eulalio and
Juanita Delima, filed with the Court of First Instance of Cebu (now Regional
Trial Court) an action for reconveyance and/or partition of property and for
the annulment of TCT No. 3009 with damages against their uncles Galileo
Delima and Vicente Delima,. Vicente Delima was joined as party defendant
by the petitioners for his refusal to join the latter in their action.
On January 16, 1970, the trial court rendered a decision in favor of
petitioners, the dispositive portion of which states:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the following are
the declared owners of Lot No. 7758 of the Talisay-Minglanilla Friar Lands
Estate presently covered by transfer Certificate of Title No. 3009, each
sharing a pro-indiviso share of one-fourth;
1) Vicente Delima (one-fourth)
2) Heirs of Juanita Delima, namely: Bibiano Bacus, Olimpio Bacus and
Purificacion Bacus (on-fourth);
3) Heirs of Eulalio Delima, namely Epitacio, Pagano, Fidel, Virgilio and
Galileo Jr., all surnamed Delima (one-fourth); and
4) The Heirs of Galileo Delima, namely Flaviana Vda. de Delima, Lily D.
Arias, Helen Niadas and Dionisio, Antonio, Eotu Irenea, and Fely, all
surnamed Delima (one-fourth).
Transfer Certificate of Title No. 3009 is declared null and void and the
Register of Deeds of Cebu is ordered to cancel the same and issue in lieu
thereof another title with the above heirs as pro-indiviso owners.
After the payment of taxes paid by Galileo Delima since 1958, the heirs of
Galileo Delima are ordered to turn a over to the other heirs their respective
shares of the fruits of the lot in question computed at P170.00 per year up to
the present time with legal (interest).
Within sixty (60) days from receipt of this decision the parties are ordered to
petition the lot in question and the defendants are directed to immediately
turn over possession of the shares here awarded to the respective heirs.
Defendants are condemned to pay the costs of the suit.
The counterclaim is dismissed.
26
PROPERTY
Case set #5
SO ORDERED. (pp. 54-55, Rollo)
Not satisfied with the decision, respondents appealed to the Court of
Appeals. On May 19, 1977, respondent appellate court reversed the trial
court's decision and upheld the claim of Galileo Delima that all the other
brothers and sister of Lino Delima, namely Eulalio, Juanita and Vicente, had
already relinquished and waived their rights to the property in his favor,
considering that he (Galileo Delima) alone paid the remaining balance of the
purchase price of the lot and the realty taxes thereon (p. 26, Rollo).
Hence, this petition was filed with the petitioners alleging that the Court of
Appeals erred:
1) In not holding that the right of a co-heir to demand partition of inheritance
is imprescriptible. If it does, the defenses of prescription and laches have
already been waived.
2) In disregarding the evidence of the petitioners.(p.13, Rollo)
The issue to be resolved in the instant case is whether or not petitioners'
action for partition is already barred by the statutory period provided by law
which shall enable Galileo Delima to perfect his claim of ownership by
acquisitive prescription to the exclusion of petitioners from their shares in the
disputed property. Article 494 of the Civil Code expressly provides:
Art. 494. No co-owner shall be obliged to remain in the co-ownership. Each
co-owner may demand at any time the partition of the thing owned in
common, insofar as his share is concerned.
Nevertheless, an agreement to keep the thing undivided for a certain period
of time, not exceeding ten years, shall be valid. This term may be extended
by a new agreement.
A donor or testator may prohibit partition for a period which shall not exceed
twenty years.
Neither shall there be any partition when it is prohibited by law.
No prescription shall run in favor of a co-owner or co-heir against his co-
owners or co-heirs so long as he expressly or impliedly recognizes the co-
ownership.
As a rule, possession by a co-owner will not be presumed to be adverse to the
others, but will be held to benefit all. It is understood that the co-owner or co-
heir who is in possession of an inheritance pro-indiviso for himself and in
representation of his co-owners or co-heirs, if, as such owner, he administers
or takes care of the rest thereof with the obligation of delivering it to his co-
owners or co-heirs, is under the same situation as a depository, a lessee or a
trustee (Bargayo v. Camumot, 40 Phil, 857; Segura v. Segura, No. L-29320,
September 19, 1988, 165 SCRA 368). Thus, an action to compel partition
may be filed at any time by any of the co-owners against the actual
possessor. In other words, no prescription shall run in favor of a co-owner
against his co-owners or co-heirs so long as he expressly or impliedly
recognizes the co-ownership (Del Blanco v. Intermediate Appellate Court,
No. 72694, December 1, 1987, 156 SCRA 55).
However, from the moment one of the co-owners claims that he is the
absolute and exclusive owner of the properties and denies the others any
share therein, the question involved is no longer one of partition but of
ownership (De Castro v. Echarri, 20 Phil. 23; Bargayo v. Camumot, supra;
De los Santos v. Santa Teresa, 44 Phil. 811). In such case, the
imprescriptibility of the action for partition can no longer be invoked or
applied when one of the co-owners has adversely possessed the property as
exclusive owner for a period sufficient to vest ownership by prescription.
It is settled that possession by a co-owner or co-heir is that of a trustee. In
order that such possession is considered adverse to the cestui que
trust amounting to a repudiation of the co-ownership, the following elements
must concur: 1) that the trustee has performed unequivocal acts amounting to
an ouster of the cestui que trust; 2) that such positive acts of repudiation had
been made known to the cestui que trust; and 3) that the evidence thereon
should be clear and conclusive (Valdez v. Olorga, No. L-22571, May 25,
1973, 51 SCRA 71; Pangan v. Court of Appeals, No. L-39299, October 18,
1988, 166 SCRA 375).
We have held that when a co-owner of the property in question executed a
deed of partition and on the strength thereof obtained the cancellation of the
title in the name of their predecessor and the issuance of a new one wherein
he appears as the new owner of the property, thereby in effect denying or
repudiating the ownership of the other co-owners over their shares, the
statute of limitations started to run for the purposes of the action instituted by
the latter seeking a declaration of the existence of the co-ownership and of
their rights thereunder (Castillo v. Court of Appeals, No. L-18046, March 31,
1964, 10 SCRA 549). Since an action for reconveyance of land based on
implied or constructive trust prescribes after ten (10) years, it is from the date
of the issuance of such title that the effective assertion of adverse title for
27
PROPERTY
Case set #5
purposes of the statute of limitations is counted (Jaramil v. Court of Appeals,
No. L-31858, August 31, 1977, 78 SCRA 420).

Evidence shows that TCT No. 2744 in the name of the legal heirs of Lino
Delima, represented by Galileo Delima, was cancelled by virtue of an
affidavit executed by Galileo Delima and that on February 4, 1954, Galileo
Delima obtained the issuance of a new title in Ms name numbered TCT No.
3009 to the exclusion of his co-heirs. The issuance of this new title
constituted an open and clear repudiation of the trust or co-ownership, and
the lapse of ten (10) years of adverse possession by Galileo Delima from
February 4, 1954 was sufficient to vest title in him by prescription. As the
certificate of title was notice to the whole world of his exclusive title to the
land, such rejection was binding on the other heirs and started as against
them the period of prescription. Hence, when petitioners filed their action for
reconveyance and/or to compel partition on February 29, 1968, such action
was already barred by prescription. Whatever claims the other co-heirs could
have validly asserted before can no longer be invoked by them at this time.

ACCORDINGLY, the petition is hereby DENIED and the assailed decision

of the Court of Appeals dated May 19, 1977 is AFFIRMED.

SO ORDERED.

28
PROPERTY
Case set #5
9.) Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 82680 August 15, 1994
NICANOR SOMODIO, petitioner,
vs.
COURT OF APPEALS, EBENECER PURISIMA, and FELOMINO
AYCO, respondents.
Jose V. Panes for petitioner.
Vencer, Purisima & Associates for private respondents.
QUIASON, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules
of Court to reverse and set aside the Decision dated September 29, 1987 and
the Resolution dated February 2, 1988 of the Court of Appeals in CA-G.R.
SP No. 11602.
I
On October 21, 1974, Jose Ortigas executed an instrument designated as a
Transfer of Rights, conveying to Wilfredo Mabugat the possession of a
residential lot situated at Rajah Muda, Bula, General Santos City and
described in the said instrument as:
Lot No. (Unnumbered), bounded on the North by Temporary Road, on the
South by Customs Zone (Sarangani Bay), on the East by Public Land, and on
the West by Public Land.
Nicanor Somodio, herein petitioner, contributed one-half of the purchase
price. On October 22, 1974, Mabugat executed an Affidavit of Trust
expressly recognizing the right of petitioner over one-half undivided portion
of the lot. Later, petitioner discovered in the District Land Office that the lot
was numbered "6328-X, Csd 2281-D." Thereafter, petitioner and Mabugat
partitioned the property into two portions, with petitioner taking the western
part. Immediately after the partition, petitioner took possession of his portion
and planted thereon ipil-ipil trees, coconut trees and other fruit-bearing trees.
In 1976, petitioner began construction of a structure with a dimension of 22-
by-18 feet on his lot. His employment, however, took him to Kidapawan,
North Cotabato, and he left the unfinished structure to the case of his uncle.
He would visit the property every three months or on weekened when he had
time.
Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to
transfer his hut to petitioner's lot. About six years later, petitioner demanded
that Ayco vacate the premises but such demand proved futile. Hence, on
August 23, 1983, petitioner filed an action for unlawful detainer with
damages against respondent Ayco before the Municipal Trial Court, Branch
I, General Santos, docketed as Civil Case No. 2032-II.
Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the
land and constructed a house thereon. Four days later, petitioner filed against
respondent Purisima a complaint for forcible entry before the same court
docketed as Civil Case No. 2013-I. Said case was later consolidated with
Civil Case No. 2032-II.
In his answer, respondent Purisima averred that the lot was a portion of the
land subject of his application for miscellaneous sales patent with the Bureau
of Lands. Purisima described the lot in question as:
Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on
the North by 6328-X; on the South by Sarangani Bay; on the East by a
Municipal Road; and on the West by Lot No. 6328-W, containing an area of
1,095 square meters and covered by Tax Declaration No. 9647 (Rollo, p. 36;
Emphasis supplied).
Respondent Purisima contended that his father, a geodetic engineer, had
surveyed the parcel of land comprising of Lots Nos. 6427 and 6328 for the
Small Farmers Fishpond Association, Inc. in February 1958, and that his
father's survey plan was approved by the Director of Lands in 1960.
Respondent Ayco, on the other hand, did not present any evidence but
merely anchored his right to possess the property on the evidence of
Purisima.
On April 30, 1986, the trial court rendered a decision finding that respondent
Purisima built his house "almost on the spot where Somodio's unfinished
house" stood "thru stealth and strategy," not knowing that the house was built
on Lot No. 6328-X and not on Lot No. 6328-Y, the lot said respondent was
claiming (Rollo, p. 43). The court went on to state that:
. . . . He (private respondent Purisima) was a frequent visitor in Rajah Muda
and had sometimes stayed with Mrs. Maturan in Judge Purisima's house on
the adjoining lots, and could not have remained unaware of the possession of
29
PROPERTY
Case set #5
Somodio. He must have depended on the thought that it was his father who
made the subdivision survey and had fenced an area which he had claimed.
He did not exactly verify that the area fenced by his father had an area of
only 1,095 square meters, which did not include the are Lot No. 6328-X
could eventually be standing on his property, for Lot No. 6328-X is not
claimed by him and has not been applied for even by his father. His father
has been abroad and has not taken steps to apply for Lot No. 6328-X. This lot
is not declared for taxation purposes in the name of any claimant-applicant.
Unless and until there would be an administrative proceedings and the title
ultimately issued in favor of an applicant, the possession of the actual
claimant and occupant has to be respected and maintained in the interest of
public order . . . (Rollo, pp. 43-44).
The Municipal Trial Court further held that petitioner was the actual
possessor of Lot No. 6328-X. The court did not believe respondent Ayco's
claim that the administratrix of the estate of respondent Purisima's father
authorized him to build a hut on Lot No. 6328-X in 1976. At any rate, the
court said that respondent Ayco was willing to vacate the premises provided
he be given financial assistance to do so (Rollo, pp. 43-44).
Nothing that the ocular inspection of the area showed that the houses of
respondents Purisima and Ayco were "inside Lot No. 6328-X" and not on
Lot No. 6328-Y, the Municipal Trial Court held that the case became one
which entailed mere removal of the houses from the lot in question.
Accordingly, the court ordered private respondents to remove their respective
houses, to deliver the land to petitioner, and to pay attorney's fees and
litigation expenses.
On appeal, the Regional Trial Court, Branch 22, General Santos City,
affirmed in toto the decision of the Municipal Trial Court. Respondent then
elevated the cases on a petition for review to the Court of Appeals, which, in
its decision dated September 27, 1987, set aside the decisions of the two trial
courts and ordered the dismissal of the two complaints filed by petitioner.
The Court of Appeals held that herein petitioner had not "clearly and
conclusively established physical, prior possession over Lot No. 6328-X."
Petitioner's motion for the reconsideration of the decision of the Court of
Appeals having been denied, he filed the instant petition for review
on certiorari.
We grant the petition.
II
The procedural issue raised by private respondents should first be resolved.
The issue is whether the instant petition is proper considering that petitioner
"merely touch(es) upon questions of fact which had been carefully
considered" by the Court of Appeals (Rollo, p. 92). As a general rule, the
findings of fact of the Court of Appeals are binding on this Court. This rule,
however, is not without exceptions, one of which is when the factual findings
of the Court of Appeals and the trial court are contrary to each other. In such
a case, this Court may scrutinize the evidence on record in order to arrive at
the correct findings based on the record (Valenzuela v. Court of Appeals, 191
SCRA 1 [1990]; Roman Catholic Bishop of Malolos, Inc. v. Intermediate
Appellate Court, 191 SCRA 411 [1990]).
Upon a review of the records, we are convinced that petitioner indeed
enjoyed priority of possession over Lot No. 6328-X, notwithstanding
respondent Purisima's claim to the contrary.
In ejectment cases, the only issue for resolution is who is entitled to the
physical or material possession of the property involved, independent of any
claim of ownership set forth by any of the party-litigants. Anyone of them
who can prove prior possession de facto may recover such possession even
from the owner himself. This rule holds true regardless of the character of a
party's possession, provided, that he has in his favor priority of time which
entitles him to stay on the property until he is lawfully ejected by a person
having a better right by either accion publiciana or accion
reivindicatoria (De Luna v. Court of Appeals, 212 SCRA 276 [1992]).
Petitioner took possession of the property sometime in 1974 when he planted
the property to coconut trees, ipil- ipil trees and fruit trees. In 1976, he started
the construction of a building on the property. It is immaterial that the
building was unfinished and that he left for Kidapawan for employment
reasons and visited the property only intermittently. Possession in the eyes of
the law does not mean that a man has to have his feet on every square meter
of ground before it can be said that he is in possession (Ramos v. Director of
Lands, 39 Phil. 175 [1918]). It is sufficient that petitioner was able to subject
the property to the action of his will.
Article 531 of the Civil Code of the Philippines provides:
Possession is acquired by the material occupation of a thing or the exercise of
a right, or by the fact that it is subject to the action of our will, or by the
proper acts and legal formalities established for acquiring such right.
30
PROPERTY
Case set #5
Even if the Court of Appeals is correct in its finding that petitioner started
introducing improvements on the land only in 1981, he still enjoyed priority
of possession because respondent Purisima entered the premises only in
1983.
It should be emphasized that the Court of Appeals noted that none of the
parties had produced tax declarations or applications as public land
claimants. As such, what should have been scrutinized is who between the
claimants had priority of possession.
Forcible entry is merely a quieting process and never determines the actual
title to an estate (German Management & Services, Inc. v. Court of Appeals,
177 SCRA 495 [1989]; Manuel v. Court of Appeals, 199 SCRA 603 [1991].
WHEREFORE, the decision of the Court of Appeals is REVERSED and
SET ASIDE and that of the trial courts REINSTATED. Costs against private
respondents.
SO ORDERED.

Moreover, neither is the fact that respondent Purisima's father surveyed the
property of help to his cause. As the Court of Appeals found, respondent
Purisima's father surveyed the land for the Small Farmers Fishpond
Association, Inc., not for himself. Although respondent Purisima now claims
that Lot No. 6328-X was in payment of his fee for the services of his father
and that he caused the construction of a perimeter wall in the area, these facts
do not mean that respondent Purisima himself had prior possession. He did
not present any proof that his father had authorized him to enter the land as
his successor-in-interest. Neither did he present proof that between 1958,
when his father allegedly took possession of the land, and 1983, when said
respondent himself entered the land, his father ever exercised whatever right
of possession he should have over the property. Under these circumstances,
priority in time should be the pivotal cog in resolving the issue of possession.

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

In his answer to the complaint, respondent Purisima claimed possession over

Lot No. 6328-Y, while petitioner identified the lot adjacent to it, Lot
NO. 6328-X, as the area where private respondents built their houses. That
these two lots are distinct from one another was resolved by the ocular
inspection conducted by a Senior Geodetic Engineer of the Office of the City
Engineer, who found that "south of lot 6328-H across a 10 meter wide road is
lot 6328-Y and from thence to the south is lot 6328-X." On June 13, 1985,
the Municipal Trial Court judge himself went to the premises in question and
discovered that aside from the houses of respondents Purisima and Ayco,
five other houses had been built on Lot No. 6328-X.

Petitioner's prior possession over the property, however, is not synonymous

with his right of ownership over the same. As earlier stated, resolution of the
issue of possession is far from the resolution of the issue of ownership.
31
PROPERTY
Case set #5
10.) Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 46623 December 7, 1939
MARCIAL KASILAG, petitioner,
vs.
RAFAELA RODRIGUEZ, URBANO ROQUE, SEVERO MAPILISAN
and IGNACIO DEL ROSARIO, respondents.
Luis M. Kasilag for petitioner.
Fortunato de Leon for respondents.
IMPERIAL, J.:
This is an appeal taken by the defendant-petitioner from the decision of the
Court of Appeals which modified that rendered by the court of First Instance
of Bataan in civil case No. 1504 of said court and held: that the contract
Exhibit "1" is entirely null and void and without effect; that the plaintiffs-
respondents, then appellants, are the owners of the disputed land, with its
improvements, in common ownership with their brother Gavino Rodriguez,
hence, they are entitled to the possession thereof; that the defendant-
petitioner should yield possession of the land in their favor, with all the
improvements thereon and free from any lien; that the plaintiffs-respondents
jointly and severally pay to the defendant-petitioner the sum of P1,000 with
interest at 6 percent per annum from the date of the decision; and absolved
the plaintiffs-respondents from the cross-complaint relative to the value of
the improvements claimed by the defendant-petitioner. The appealed
decision also ordered the registrar of deeds of Bataan to cancel certificate of
title No. 325, in the name of the deceased Emiliana Ambrosio and to issue in
lieu thereof another certificate of title in favor of the plaintiffs-respondents
and their brother Gavino Rodriguez, as undivided owners in equal parts, free
of all liens and incumbrances except those expressly provided by law,
without special pronouncement as to the costs.
The respondents, children and heirs of the deceased Emiliana Ambrosio,
commenced the aforesaid civil case to the end that they recover from the
petitioner the possession of the land and its improvements granted by way of
homestead to Emiliana Ambrosio under patent No. 16074 issued on January
11, 1931, with certificate of title No. 325 issued by the registrar of deeds of
Bataan on June 27, 1931 in her favor, under section 122 of Act No. 496,
which land was surveyed and identified in the cadastre of the municipality of
Limay, Province of Bataan, as lot No. 285; that the petitioner pay to them the
sum of P650 being the approximate value of the fruits which he received
from the land; that the petitioner sign all the necessary documents to transfer
the land and its possession to the respondents; that he petitioner be restrained,
during the pendency of the case, from conveying or encumbering the land
and its improvements; that the registrar of deeds of Bataan cancel certificate
of title No. 325 and issue in lieu thereof another in favor of the respondents,
and that the petitioner pay the costs of suit.
The petitioner denied in his answer all the material allegations of the
complaint and by way of special defense alleged that he was in possession of
the land and that he was receiving the fruits thereof by virtue of a mortgage
contract, entered into between him and the deceased Emiliana Ambrosio on
May 16, 1932, which was duly ratified by a notary public; and in
counterclaim asked that the respondents pay him the sum of P1,000 with 12
per cent interest per annum which the deceased owed him and that, should
the respondents be declared to have a better right to the possession of the
land, that they be sentenced to pay him the sum of P5,000 as value of all the
improvements which he introduced upon the land.lawphil.net
On May 16, 1932 Emiliana Ambrosio, in life, and the petitioner executed the
following public deed:
"This agreement, made and entered into this 16th day of May, 1932, by and
between Emiliana Ambrosio, Filipino, of legal age, widow and resident of
Limay, Bataan, P.L., hereinafter called the party of the first part, and Marcial
Kasilag, Filipino, of legal age, married to Asuncion Roces, and resident at
312 Perdigon Street, Manila, P.L., hereinafter called party of the second part.
WITNESSETH: That the parties hereto hereby covenant and agree to and
with each other as follows:
ARTICLE I. That the party of the first part is the absolute registered owner
of a parcel of land in the barrio of Alngan, municipality of Limay, Province
of Bataan, her title thereto being evidenced by homestead certificate of title
No. 325 issued by the Bureau of Lands on June 11, 1931, said land being lot
No. 285 of the Limay Cadastre, General Land Registration Office Cadastral
Record No. 1054, bounded and described as follows:
Beginning at point marked 1 on plan E-57394, N. 84 32' W. 614.82 m. from
B.B.M. No. 3, thence N. 66 35' E. 307.15 m. to point "2"; S. 5 07' W. to
point "5"; S.6 10' E. 104.26 m. to point "4"; S. 82 17' W. to point "5"; S. 28
53' W. 72.26 m. to point "6"; N. 71 09' W. to point "7"; N. 1 42' E. 173.72
m. to point 1, point of beginning, "Containing an area of 6.7540 hectares.
32
PROPERTY
Case set #5
"Points 1,2,6 and 7, B.L.; points 3,4 and 5, stakes; points 4, 5 and 6 on bank
of Alangan River. "Bounded on the North, by property claimed by Maria
Ambrosio; on the East, by Road; on the South, by Alangan River and
property claimed by Maxima de la Cruz; and on the West, by property
claimed by Jose del Rosario. "Bearing true. Declination 0 51' E. "Surveyed
under authority of sections 12-22, Act No. 2874 and in accordance with
existing regulations of the Bureau of Lands, by Mamerto Jacinto, public land
surveyor, on July 8, 1927 and approved on February 25, 1931.
ARTICLE II. That the improvements on the above described land consist of
the following:
Four (4) mango trees, fruit bearing: one hundred ten (110) hills of bamboo
trees; one (1) tamarind and six (6) boga trees.
ARTICLE III. That the assessed value of the land is P940 and the assessed
value of the improvements is P860, as evidenced by tax declaration No. 3531
of the municipality of Limay, Bataan.
ARTICLE IV. That for and in consideration of the sum of one thousand
pesos (P1,000) Philippine currency, paid by the party of second part to the
party of the first part, receipt whereof is hereby acknowledged, the party of
the first part hereby encumbers and hypothecates, by way of mortgage, only
the improvements described in Articles II and III hereof, of which
improvements the party of the first part is the absolute owner.
ARTICLE V. That the condition of said mortgage is such that if the party of
the first part shall well and truly pay, or cause to paid to the party of the
second part, his heirs, assigns, or executors, on or before the 16th day of
November, 1936, or four and one-half (4) years after date of the execution
of this instrument, the aforesaid sum of one thousand pesos (P1,000) with
interest at 12 per cent per annum, then said mortgage shall be and become
null and void; otherwise the same shall be and shall remain in full force and
effect, and subject to foreclosure in the manner and form provided by law for
the amount due thereunder, with costs and also attorney's fees in the event of
such foreclosure.lawphil.net
ARTICLE VI. That the party of the first part shall pay all taxes and
assessments which are or may become due on the above described land and
improvements during the term of this agreement.
ARTICLE VII. That within thirty (30) days after date of execution of this
agreement, the party of the first part shall file a motion before the Court of
First Instance at Balanga, Bataan, P. I., requesting cancellation of Homestead
Certificate of Title No. 325 referred to in Article I hereof and the issuance, in
lieu thereof, of a certificate of title under the provisions of Land Registration
Act No. 496, as amended by Act 3901.
ARTICLE III. It if further agreed that if upon the expiration of the period of
time (4) years stipulated in this mortgage, the mortgagor should fail to
redeem this mortgage, she would execute a deed of absolute sale of the
property herein described for the same amount as this mortgage, including all
unpaid interests at the rate of 12 per cent per annum, in favor of the
mortgagee.
ARTICLE IX. That in the event the contemplated motion under Article VII
hereof is not approved by the Court, the foregoing contract of sale shall
automatically become null and void, and the mortgage stipulated under
Article IV and V shall remain in full force and effect.
In testimony whereof, the parties hereto have hereunto set their hands the day
and year first herein before written.
(Sgd.) MARCIAL KASILAG
(Sgd.) EMILIANA AMBROSIO
Signed in the presence of:
(Sgd.) ILLEGIBLE
(Sgd.) GAVINO RODRIGUEZ.
PHILIPPINE ISLANDS } ss.
BALANGA, BATAAN } ss.
Before me this day personally appeared Emiliana Ambrosio without cedula
by reason of her sex, to me known and known to me to be the person who
signed the foregoing instrument, and acknowledged to me that she executed
the same as her free and voluntary act and deed.
I hereby certify that this instrument consists of three (3) pages including this
page of the acknowledgment and that each page thereof is signed by the
parties to the instrument and the witnesses in their presence and in the
33
PROPERTY
Case set #5
presence of each other, and that the land treated in this instrument consists of
only one parcel.
In witness whereof I have hereunto set my hand and affixed my notarial seal,
this 16th day of May, 1932.
(Sgd.) NICOLAS NAVARRO
Notary Public
My commission expires December 31, 1933.
Doc. No. 178
Page 36 of my register
Book No. IV
One year after the execution of the aforequoted deed, that is, in 1933, it came
to pass that Emiliana Ambrosio was unable to pay the stipulated interests as
well as the tax on the land and its improvements. For this reason, she and the
petitioner entered into another verbal contract whereby she conveyed to the
latter the possession of the land on condition that the latter would not collect
the interest on the loan, would attend to the payment of the land tax, would
benefit by the fruits of the land, and would introduce improvements thereon.
By virtue of this verbal contract, the petitioner entered upon the possession of
the land, gathered the products thereof, did not collect the interest on the
loan, introduced improvements upon the land valued at P5,000, according to
him and on May 22, 1934 the tax declaration was transferred in his name and
on March 6, 1936 the assessed value of the land was increased from P1,020
to P2,180.
After an analysis of the conditions of Exhibit "1" the Court of Appeals came
to the conclusion and so held that the contract entered into by and between
the parties, set out in the said public deed, was one of absolute purchase and
sale of the land and its improvements. And upon this ruling it held null and
void and without legal effect the entire Exhibit 1 as well as the subsequent
verbal contract entered into between the parties, ordering, however, the
respondents to pay to the petitioner, jointly and severally, the loan of P1,000
with legal interest at 6 per cent per annum from the date of the decision. In
this first assignment of error the petitioner contends that the Court of Appeals
violated the law in holding that Exhibit 1 is an absolute deed of sale of the
land and its improvements and that it is void and without any legal effect.
The cardinal rule in the interpretation of contracts is to the effect that the
intention of the contracting parties should always prevail because their will
has the force of law between them. Article 1281 of the Civil Code
consecrates this rule and provides, that if the terms of a contract are clear and
leave no doubt as to the intention of the contracting parties, the literal sense
of its stipulations shall be followed; and if the words appear to be contrary to
the evident intention of the contracting parties, the intention shall prevail.
The contract set out in Exhibit 1 should be interpreted in accordance with
these rules. As the terms thereof are clear and leave no room for doubt, it
should be interpreted according to the literal meaning of its clauses. The
words used by the contracting parties in Exhibit 1 clearly show that they
intended to enter into the principal contract of loan in the amount of P1,000,
with interest at 12 per cent per annum, and into the accessory contract of
mortgage of the improvements on the land acquired as homestead, the parties
having moreover, agreed upon the pacts and conditions stated in the deed. In
other words, the parties entered into a contract of mortgage of the
improvements on the land acquired as homestead, to secure the payment of
the indebtedness for P1,000 and the stipulated interest thereon. In clause V
the parties stipulated that Emiliana Ambrosio was to pay, within four and a
half years, or until November 16, 1936, the debt with interest thereon, in
which event the mortgage would not have any effect; in clause VI the parties
agreed that the tax on the land and its improvements, during the existence of
the mortgage, should be paid by the owner of the land; in clause VII it was
covenanted that within thirty days from the date of the contract, the owner of
the land would file a motion in the Court of First Instance of Bataan asking
that certificate of title No. 325 be cancelled and that in lieu thereof another be
issued under the provisions of the Land Registration Act No. 496, as
amended by Act No. 3901; in clause VIII the parties agreed that should
Emiliana Ambrosio fail to redeem the mortgage within the stipulated period
of four years and a half, she would execute an absolute deed of sale of the
land in favor of the mortgagee, the petitioner, for the same amount of the
loan of P1,000 including unpaid interest; and in clause IX it was stipulated
that in case the motion to be presented under clause VII should be
disapproved by the Court of First Instance of Bataan, the contract of sale
would automatically become void and the mortgage would subsist in all its
force.
Another fundamental rule in the interpretation of contracts, not less important
than those indicated, is to the effect that the terms, clauses and conditions
contrary to law, morals and public order should be separated from the valid
and legal contract and when such separation can be made because they are
independent of the valid contract which expresses the will of the contracting
parties. Manresa, commenting on article 1255 of the Civil Code and stating
the rule of separation just mentioned, gives his views as follows:
34
PROPERTY
Case set #5
On the supposition that the various pacts, clauses or conditions are valid, no
difficulty is presented; but should they be void, the question is as to what
extent they may produce the nullity of the principal obligation. Under the
view that such features of the obligation are added to it and do not go to its
essence, a criterion based upon the stability of juridical relations should tend
to consider the nullity as confined to the clause or pact suffering therefrom,
except in case where the latter, by an established connection or by manifest
intention of the parties, is inseparable from the principal obligation, and is a
condition, juridically speaking, of that the nullity of which it would also
occasion. (Manresa, Commentaries on the Civil Code, Volume 8, p. 575.)
The same view prevails in the Anglo-American law, as condensed in the
following words:
Where an agreement founded on a legal consideration contains several
promises, or a promise to do several things, and a part only of the things to
be done are illegal, the promises which can be separated, or the promise, so
far as it can be separated, from the illegality, may be valid. The rule is that a
lawful promise made for a lawful consideration is not invalid merely because
an unlawful promise was made at the same time and for the same
consideration, and this rule applies, although the invalidity is due to violation
of a statutory provision, unless the statute expressly or by necessary
implication declares the entire contract void. . . . (13 C. J., par. 470, p. 512;
New York Cent. etc. R. Co. v. Gray, 239 U.S., 583; 60 Law ed., 451; U.S. v.
Mora, 97 U.S., 413, 24 Law. ed., 1017; U.S. v. Hodson, 10 Wall, 395; 19
Law ed. 937; Gelpcke v. Dubuque, 1 Wall. 175, 17 Law ed., 520; U.S. v.
Bradly, 10 Pet. 343, 9 Law. ed., 448; Borland v. Prindle, 144 Fed 713;
Western Union Tel. Co. v. Kansas Pac. R. Co., 4 Fed., 284; Northern Pac. R.
Co. v. U.S., 15 Ct. Cl., 428.)
Addressing ourselves now to the contract entered into by the parties, set out
in Exhibit 1, we stated that the principal contract is that of loan and the
accessory that of mortgage of the improvements upon the land acquired as a
homestead. There is no question that the first of these contract is valid as it is
not against the law. The second, or the mortgage of the improvements, is
expressly authorized by section 116 of Act No. 2874, as amended by section
23 of Act No. 3517, reading:
SEC. 116. Except in favor of the Government or any of its branches, units or
institutions, or legally constituted banking corporations, lands acquired under
the 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 issuance of the patent or grant, nor
shall they become liable to the satisfaction of any debt contracted prior to the
expiration of said period; but the improvements or crops on the land may be
mortgaged or pledged to qualified persons, associations, or corporations.
It will be recalled that by clause VIII of Exhibit 1 the parties agreed that
should Emiliana Ambrosio fail to redeem the mortgage within the stipulated
period of four and a half years, by paying the loan together with interest, she
would execute in favor of the petitioner an absolute deed of sale of the land
for P1,000, including the interest stipulated and owing. The stipulation was
verbally modified by the same parties after the expiration of one year, in the
sense that the petitioner would take possession of the land and would benefit
by the fruits thereof on condition that he would condone the payment of
interest upon the loan and he would attend to the payment of the land tax.
These pacts made by the parties independently were calculated to alter the
mortgage a contract clearly entered into, converting the latter into a contract
of antichresis. (Article 1881 of the Civil Code.) The contract of antichresis,
being a real encumbrance burdening the land, is illegal and void because it is
legal and valid.
The foregoing considerations bring us to the conclusion that the first
assignment of error is well-founded and that error was committed in holding
that the contract entered into between the parties was one of absolute sale of
the land and its improvements and that Exhibit 1 is null and void. In the
second assignment of error the petitioner contends that the Court of Appeals
erred in holding that he is guilty of violating the Public Land Act because he
entered into the contract, Exhibit 1. The assigned error is vague and not
specific. If it attempts to show that the said document is valid in its entirety,
it is not well-founded because we have already said that certain pacts thereof
are illegal because they are prohibited by section 116 of Act No. 2874, as
amended.
In the third assignment of error the petitioner insists that his testimony, as to
the verbal agreement entered into between him and Emiliana Ambrosio,
should have been accepted by the Court of Appeals; and in the fourth and last
assignment of error the same petitioner contends that the Court of Appeals
erred in holding that he acted in bad faith in taking possession of the land and
in taking advantage of the fruits thereof, resulting in the denial of his right to
be reimbursed for the value of the improvements introduced by him.
We have seen that subsequent to the execution of the contract, Exhibit 1, the
parties entered into another verbal contract whereby the petitioner was
authorized to take possession of the land, to receive the fruits thereof and to
introduce improvements thereon, provided that he would renounce the
35
PROPERTY
Case set #5
payment of stipulated interest and he would assume payment of the land tax.
The possession by the petitioner and his receipt of the fruits of the land,
considered as integral elements of the contract of antichresis, are illegal and
void agreements because, as already stated, the contract of antichresis is a
lien and such is expressly prohibited by section 116 of Act No. 2874, as
amended. The Court of Appeals held that the petitioner acted in bad faith in
taking possession of the land because he knew that the contract he made with
Emiliana Ambrosio was an absolute deed of sale and, further, that the latter
could not sell the land because it is prohibited by section 116. The Civil Code
does not expressly define what is meant by bad faith, but section 433
provides that "Every person who is unaware of any flaw in his title, or in the
manner of its acquisition, by which it is invalidated, shall be deemed a
possessor in good faith"; and provides further, that "Possessors aware of such
flaw are deemed possessors in bad faith". Article 1950 of the same Code,
covered by Chapter II relative to prescription of ownership and other real
rights, provides, in turn, that "Good faith on the part of the possessor consists
in his belief that the person from whom he received the thing was the owner
of the same, and could transmit the title thereto." We do not have before us a
case of prescription of ownership, hence, the last article is not squarely in
point. In resume, it may be stated that a person is deemed a possessor in bad
faith when he knows that there is a flaw in his title or in the manner of its
acquisition, by which it is invalidated.
Borrowing the language of Article 433, the question to be answered is
whether the petitioner should be deemed a possessor in good faith because he
was unaware of any flaw in his title or in the manner of its acquisition by
which it is invalidated. It will be noted that ignorance of the flaw is the
keynote of the rule. From the facts found established by the Court of Appeals
we can neither deduce nor presume that the petitioner was aware of a flaw in
his title or in the manner of its acquisition, aside from the prohibition
contained in section 116. This being the case, the question is whether good
faith may be premised upon ignorance of the laws. Manresa, commenting on
article 434 in connection with the preceding article, sustains the affirmative.
He says:
"We do not believe that in real life there are not many cases of good faith
founded upon an error of law. When the acquisition appears in a public
document, the capacity of the parties has already been passed upon by
competent authority, and even established by appeals taken from final
judgments and administrative remedies against the qualification of registrars,
and the possibility of error is remote under such circumstances; but,
unfortunately, private documents and even verbal agreements far exceed
public documents in number, and while no one should be ignorant of the law,
the truth is that even we who are called upon to know and apply it fall into
error not infrequently. However, a clear, manifest, and truly unexcusable
ignorance is one thing, to which undoubtedly refers article 2, and another and
different thing is possible and excusable error arising from complex legal
principles and from the interpretation of conflicting doctrines.
But even ignorance of the law may be based upon an error of fact, or better
still, ignorance of a fact is possible as to the capacity to transmit and as to the
intervention of certain persons, compliance with certain formalities and
appreciation of certain acts, and an error of law is possible in the
interpretation of doubtful doctrines. (Manresa, Commentaries on the Spanish
Civil Code. Volume IV, pp. 100, 101 and 102.)
According to this author, gross and inexcusable ignorance of law may not be
the basis of good faith, but possible, excusable ignorance may be such basis.
It is a fact that the petitioner is not conversant with the laws because he is not
a lawyer. In accepting the mortgage of the improvements he proceeded on
the well-grounded belief that he was not violating the prohibition regarding
the alienation of the land. In taking possession thereof and in consenting to
receive its fruits, he did not know, as clearly as a jurist does, that the
possession and enjoyment of the fruits are attributes of the contract of
antichresis and that the latter, as a lien, was prohibited by section 116. These
considerations again bring us to the conclusion that, as to the petitioner, his
ignorance of the provisions of section 116 is excusable and may, therefore,
be the basis of his good faith. We do not give much importance to the change
of the tax declaration, which consisted in making the petitioner appear as the
owner of the land, because such an act may only be considered as a sequel to
the change of possession and enjoyment of the fruits by the petitioner, to
about which we have stated that the petitioner's ignorance of the law is
possible and excusable. We, therefore, hold that the petitioner acted in good
faith in taking possession of the land and enjoying its fruits.
The petitioner being a possessor in good faith within the meaning of article
433 of the Civil Code and having introduced the improvements upon the land
as such, the provisions of article 361 of the same Code are applicable;
wherefore, the respondents are entitled to have the improvements and plants
upon indemnifying the petitioner the value thereof which we fix at P3,000, as
appraised by the trial court; or the respondents may elect to compel the
petitioner to have the land by paying its market value to be fixed by the court
of origin.
36
PROPERTY
Case set #5
The respondents also prayed in their complaint that the petitioner be P1,000, without interest, as that stipulated is set off by the value of the fruits
compelled to pay them the sum of P650, being the approximate value of the of the mortgaged improvements which petitioner received, and in default
fruits obtained by the petitioner from the land. The Court of Appeals thereof the petitioner may ask for the public sale of said improvements for
affirmed the judgment of the trial court denying the claim or indemnity for the purpose of applying the proceeds thereof to the payment of his said
damages, being of the same opinion as the trial court that the respondents credit. Without special pronouncement as to the costs in all instances. So
may elect to compel the petitioner to have the land. The Court of Appeals ordered.
affirmed the judgment of the trial court that the respondents have not
established such damages. Under the verbal contract between the petitioner
and the deceased Emiliana Ambrosio, during the latter's lifetime, the former
would take possession of the land and would receive the fruits of the
mortgaged improvements on condition that he would no longer collect the
stipulated interest and that he would attend to the payment of the land tax.
This agreement, at bottom, is tantamount to the stipulation that the petitioner
should apply the value of the fruits of the land to the payment of stipulated
interest on the loan of P1,000 which is, in turn, another of the elements
characterizing the contract of antichresis under article 1881 of the Civil
Code. It was not possible for the parties to stipulate further that the value of
the fruits be also applied to the payment of the capital, because the truth was
that nothing remained after paying the interest at 12% per annum. This
interest, at the rate fixed, amounted to P120 per annum, whereas the market
value of the fruits obtainable from the land hardly reached said amount in
view of the fact that the assessed value of said improvements was, according
to the decision, P860. To this should be added the fact that, under the verbal
agreement, from the value of the fruits had to be taken a certain amount to
pay the annual land tax. We mention these data here to show that the
petitioner is also not bound to render an accounting of the value of the fruits
of the mortgaged improvements for the reason stated that said value hardly
covers the interest earned by the secured indebtednes.

For all the foregoing considerations, the appealed decision is reversed, and
we hereby adjudge: (1) that the contract of mortgage of the improvements,
set out in Exhibit 1, is valid and binding; (2) that the contract of antichresis
agreed upon verbally by the parties is a real incumbrance which burdens the
land and, as such, is a null and without effect; (3) that the petitioner is a
possessor in good faith; (4) that the respondents may elect to have the
improvements introduced by the petitioner by paying the latter the value
thereof, P3,000, or to compel the petitioner to buy and have the land where
the improvements or plants are found, by paying them its market value to be
filed by the court of origin, upon hearing the parties; (5) that the respondents
have a right to the possession of the land and to enjoy the mortgaged
improvements; and (6) that the respondents may redeem the mortgage of the
improvements by paying to the petitioner within three months the amount of
37
PROPERTY
Case set #5
11.) Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. L-20300-01 April 30, 1965
ANTONINO DIZON, ADELAIDA D. REYES, CONSOLACION
DEGOLLACION, ET AL., petitioners,
vs.
HON. JUAN DE G. RODRIGUEZ, as Secretary of Agriculture &
Natural Resources,
HERACLITO MONTALBAN, as Acting Director of Fisheries,
MIGUEL TOLENTINO, REPUBLIC OF THE PHILIPPINES, ET
AL., respondents.
-----------------------------
G.R. Nos. L-20355-56 April 30, 1965
REPUBLIC OF THE PHILIPPINES, THE SECRETARY OF
AGRICULTURE & NATURAL RESOURCES, DIRECTOR OF
FISHERIES, MIGUEL TOLENTINO, and CLEMENCIA
TOLENTINO, petitioners,
vs.
HON. COURT OF APPEALS, ANTONINO DIZON, ADELAIDA D.
REYES, CONSOLACION DE DEGOLLACION, ARTEMIO DIZON,
AMORANDO DIZON, REMEDIOS MANAPAT SY-JUCO, and
LEONILA SIOCHI GOCO, respondents.
Jalandoni and Jamir for petitioners Antonino Dizon, et al.
Office of the Solicitor General for respondents Republic, et al.
Miguel Tolentino for and in his own behalf.
BARRERA, J.:
These are separate appeals instituted by Antonino Dizon, et al. (G.R. Nos. L-
20300-01) and the Republic of the Philippines, et al. (G.R. Nos. L-20355-
56), from a single decision of the Court of Appeals, as modified by its
resolution of August 20, 1962, holding that Lots Nos. 49 and 1 of subdivision
plan Psd.-27941 are parts of the navigable boundary of the Hacienda
Calatagan, covered by Transfer Certificate of Title No. T-722, and declaring
the occupants Dizon, et al. possessors in good faith, entitled to remain therein
until reimbursed, by the intervenor Republic of the Philippines, of the
necessary expenses made on the lots in the sum of P40,000.00 and
P25,000.00, respectively.
The facts of these cases, briefly stated, are as follows:
Hacienda Calatagan owned by Alfonso and Jacobo Zobel was originally
covered by TCT No. T-722. In 1938, the Hacienda constructed a pier, called
"Santiago Landing," about 600 meters long from the shore into the navigable
waters of the Pagaspas Bay, to be used by vessels loading sugar produced by
the Hacienda sugar mill. When the sugar mill ceased its operation in 1948,
the owners of the Hacienda converted the pier into a fishpond dike and built
additional strong dikes enclosing an area of about 30 hectares (of the Bay)
and converted the same into a fishpond. The Hacienda owners also enclosed
a similar area of about 37 hectares of the Bay on the other side of the pier
which was also converted into a fishpond.
In 1949, the Zobels ordered the subdivision of the Hacienda by ordering the
preparation of the subdivision plan Psd-27941 wherein fishpond No. 1 (with
30 hectares) was referred to as Lot No. 1 and fishpond No. 2 (with 37
hectares) was referred to as Lot No. 49. The plan was approved by the
Director of Lands, and the Register of Deeds issued, from TCT No. T-722,
TCT No. 2739 for lots 49 and 1 in the name of Jacobo Zobel.
In 1950, Jacobo Zobel sold to Antonino Dizon, et al. Lot 49 for which said
purchasers obtained at first TCT No. T-2740 and later T-4718, Lot 1, on the
other hand, was purchased by Carlos Goco, et al., who, in turn, sold one-half
thereof to Manuel Sy-Juco, et al. Transfer Certificate of Title No. 4159 was
issued in the names of the Gocos and Sy-Jucos.
On May 24, 1952, Miguel Tolentino filed with the Bureau of Fisheries an
application for ordinary fishpond permit or lease for Lot 49, and an
application for a similar permit, for Lot 1, was filed by his daughter
Clemencia Tolentino.
The Dizons, Sy-Jucos, and Gocos filed a protest with the Bureau of Fisheries,
claiming the properties to be private land covered by a certificate of title.
This protest was dismissed by the Director of Fisheries, on the ground that
the areas applied for are outside the boundaries of TCT No. T-722 of
Hacienda Calatagan. This ruling was based upon the findings of the
committee created by the Secretary of Agriculture and Natural Resources to
look into the matter, that Lots 1 and 49 are not originally included within the
boundaries of the hacienda.
On October 1, 1954, the protestants Dizons, Sy-Jucos, and Gocos filed an
action in the Court of First Instance of Manila (Civ. Case No. 24237) to
restrain the Director of Fisheries from issuing the fishpond permits applied
for by the Tolentinos. The court dismissed this petition for non-exhaustion of
administrative remedy, it appearing that petitioners had not appealed from
38
PROPERTY
Case set #5
the decision of the Director of Fisheries to the Secretary of Agriculture and
Natural Resources. On appeal to this Court, the decision of the lower court
was sustained (G.R. No. L-8654, promulgated April 28, 1956). The
protestants then filed an appeal with the Secretary of Agriculture and Natural
Resources. This time, the same was dismissed for being filed out of
time.1wph1.t
the decision as thus modified that defendants Tolentinos and the intervenor
Republic of the Philippines appealed (in G.R. Nos. L-20355-56), claiming
that plaintiffs' possession became in bad faith when their protest against the
application for lease was denied by the Director of Fisheries. In addition, the
intervenor contends that being such possessors in bad faith, plaintiffs are not
entitled to reimbursement of the expenses made on the properties.

On August 16, 1956, the Dizons filed Civil Case 135 and the Sy-Jucos and
Gocos, Civil Case 136, in the Court of First Instance of Batangas, to quiet
their titles over Lots 49 and 1. Named defendants were the Secretary of
Agriculture and Natural Resources and applicants Tolentinos. The Republic
of the Philippines was allowed to intervene in view of the finding by the
investigating committee created by the respondent Secretary, that the lots
were part of the foreshore area before their conversion into fishponds by the
hacienda-owners.
On January 30, 1958, after due hearing, the Court of First Instance of
Batangas promulgated a joint decision making the finding, among others,
that the subdivision plan Psd-27941 was prepared in disregard of the
technical description stated in TCT No. T-722, because the surveyor merely
followed the existing shoreline and placed his monuments on the southwest
lateral of Lot 49, which was the pier abutting into the sea; and made the
conclusion that Lots 1 and 49 of Psd-27941 were part of the foreshore lands.
As the certificate of title obtained by petitioners covered lands not subject to
registration, the same were declared null and void, and Lots 1 and 49 were
declared properties of the public domain. Petitioners appealed to the Court of
Appeals.
In its decision of October 31, 1961, as well as the resolution of August 20,
1962, the appellate court adopted the findings of the lower court, that the lots
in question are part of the foreshore area and affirmed the ruling cancelling
the titles to plaintiffs. Although in the decision of October 31, 1961, the
Court of Appeals awarded to applicants Tolentinos damages in the amount of
P200.00 per hectare from October 1, 1954, when plaintiffs were notified of
the denial of their protest by the Director of Fisheries, such award was
eliminated in the resolution of August 20, 1962, for the reason that plaintiffs,
who relied on the efficacy of their certificates of title, cannot be considered
possessors in bad faith until after the legality of their said titles has been
finally determined. Appellants were thus declared entitled to retention of the
properties until they are reimbursed by the landowner, the Republic of the
Philippines, of the necessary expenses made on the lands, in the sums of
P40,000.00 (for Lot 49) and P25,000.00 (for Lot 1). It is from this portion of
In G.R. Nos. L-20300-01, plaintiffs Dizon, et al., claim that the finding that
the Lots in question are part of the seashore or foreshore area was erroneous,
because from defendants' own evidence, the same appear to be marshland
before their conversion into fishponds.
It is noteworthy in connection with the appeal of plaintiffs, that they do not
contest the existence of the pier that was used by the hacienda owners in the
loading of their manufactured sugar to vessels. The fact that said pier jutted
out 600 meters to the sea indicates that the area over which such cemented
structure spanned was part of the sea or at least foreshore land. And,
plaintiffs were not able to disprove the testimonial evidence that the
fishponds in question were constructed by enclosing the areas with dikes,
using the pier as one of the ends of the fishponds. It is clear that the areas
thus enclosed and converted into fishponds were really part of the foreshore.
This, and the fact that the subdivision plan Psd-27941 was found to have
been prepared not in accordance with the technical descriptions in TCT No.
T-722 but in disregard of it, support the conclusion reached by both the lower
court and the Court of Appeals that Lots 49 and 1 are actually part of the
territorial waters and belong to the State. And, it is an elementary principle
that the incontestable and indefeasible character of a Torrens certificate of
title does not operate when the land thus covered is not capable of
registration.
On the matter of possession of plaintiffs-appellants, the ruling of the Court of
Appeals must be upheld. There is no showing that plaintiffs are not
purchasers in good faith and for value. As such title-holders, they have
reason to rely on the indefeasible character of their certificates.
On the issue of good faith of the plaintiffs, the Court of Appeals reasoned
out:
The concept of possessors in good faith given in Art. 526 of the Civil Code
and when said possession loses this character under Art. 528, needs to be
reconciled with the doctrine of indefeasibility of a Torrens Title. Such
reconciliation can only be achieved by holding that the possessor with a

39
PROPERTY
Case set #5
Torrens Title is not aware of any flaw in his Title which invalidates it until
his Torrens Title is declared null and void by final judgment of the Courts.

Even if the doctrine of indefeasibility of a Torrens Title were not thus

reconciled, the result would be the same, considering the third paragraph of
Art. 526 which provides that:

ART. 526. ...

Mistake upon a doubtful or difficult question of law may be the basis of good
faith.

The legal question whether plaintiffs-appellants' possession in good faith,

under their Torrens Titles acquired in good faith, does not lose this character
except in the case and from the moment their Titles are declared null and
void by the Courts, a difficult one. Even the members of this Court were for a
long time divided, two to one, on the answer. It was only after several
sessions, where the results of exhaustive researches on both sides were
thoroughly discussed, that an undivided Court finally found the answer given
in the next preceding paragraph. Hence, even if it be assumed for the sake of
argument that the Supreme Court would find that the law is not as we have
stated it in the next preceding paragraph and that the plaintiffs-appellants
made a mistake in relying thereon, such mistake on a difficult question of
law may be the basis of good faith. Hence, their possession in good faith
does not lose this character except in the case and from the moment their
Torrens Titles are declared null and void by the Courts.

Under the circumstances of the case, especially where the subdivision plan
was originally approved by the Director of Lands, we are not ready to
conclude that the above reasoning of the Court of Appeals on this point is a
reversible error. Needless to state, as such occupants in good faith, plaintiffs
have the right to the retention of the property until they are reimbursed the
necessary expenses made on the lands.

With respect to the contention of the Republic of the Philippines that the
order for the reimbursement by it of such necessary expenses constitutes a
judgment against the government in a suit not consented to by it, suffice it to
say that the Republic, on its own initiative, asked and was permitted to
intervene in the case and thereby submitted itself voluntarily to the
jurisdiction of the court.

IN VIEW OF THE FOREGOING CONSIDERATIONS, the decision

appealed from is hereby affirmed in all respects, without costs. So ordered.

40
PROPERTY
Case set #5
12.) [G.R. No. 111737. October 13, 1999]
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE
HONORABLE COURT OF APPEALS AND SPOUSES TIMOTEO and
SELFIDA S. PIEDA, respondents.
DECISION
GONZAGA-REYES, J.:
Before us is a Petition for Review on Certiorari of the decision of the Court
of Appeals[1] in CA-G.R. CV No. 28549 entitled SPOUSES TIMOTEO
PIEDA, ET. AL. vs. DEVELOPMENT BANK OF THE PHILIPPINES
which affirmed the decision of the Regional Trial Court (RTC), Branch 16[2],
Roxas City in Civil Case No. V-4590, for cancellation of certificate of title
and/or specific performance, accounting and damages with a prayer for the
issuance of a writ of preliminary injunction.
The records show that respondent spouses Pieda (PIEDAS) are the registered
owners of a parcel of land (Lot 11-14-1-14) situated at barangay Astorga
Dumarao, Capiz containing an area of 238,406 square meters, more or less,
and covered by Homestead Patent No. 0844 and Original Certificate of Title
No. P-1930. On March 7, 1972, the PIEDAS mortgaged the above described
parcel of land to petitioner, Development Bank of the Philippines (DBP) to
secure their agricultural loan in the amount of P20,000.00. The PIEDAS
failed to comply with the terms and conditions of the mortgage compelling
DBP to extrajudicially foreclose on February 2, 1977. In the foreclosure sale,
DBP was the highest bidder and a Sheriff Certificate of Sale was executed in
its favor. In the corresponding Certificate of Sale, the sheriff indicated that
This property is sold subject to the redemption within five (5) years from the
date of registration of this instrument and in the manner provided for by law
applicable to this case. The certificate of sale was registered in the Register
of Deeds of Capiz on April 25, 1977. On March 10, 1978, after the expiration
of the one-year redemption period provided for under Section 6, ACT 3135,
DBP consolidated its title over the foreclosed property by executing an
Affidavit of Consolidation of Ownership. Subsequently, a Final Deed of Sale
was executed in DBPs favor, which was registered together with the
Affidavit of Consolidation of Ownership with the Register of Deeds of Capiz
on May 30, 1978. Consequently, Original Certificate of Title No. P-1930 was
cancelled and TCT No. T-15559 was issued in the name of DBP. Thereafter,
DBP took possession of the foreclosed property and appropriated the produce
thereof.
On July 5, 1978, the Ministry of Justice issued Opinion No. 92, Series of
1978[3] which declared that lands covered by P.D. No. 27[4], like the herein
subject property, may not be the object of foreclosure proceedings after the
promulgation of said decree on Oct. 21, 1972.
On August 24, 1981, the PIEDAS offered to redeem the foreclosed property
by offering P10,000.00 as partial redemption payment. This amount was
accepted by DBP who issued O.R. No. 1665719 and through a letter,
conditionally approved the offer of redemption considering the P10,000.00 as
down payment.[5] However, on November 11, 1981, DBP sent the PIEDAS
another letter informing them that pursuant to P.D. 27, their offer to redeem
and/or repurchase the subject property could not be favorably considered for
the reason that said property was tenanted.[6] On November 16, 1981, in
deference to the above-mentioned opinion, DBP through Ramon Buenaflor
sent a letter to the Acting Register of Deeds of Capiz requesting the latter to
cancel TCT No. T-15559 and to restore Original Certificate of Title No. P-
1930 in the name of the PIEDAS. The Acting Register of Deeds, in reply to
such request, suggested that DBP file a petition in court pursuant to Section
108 of Presidential Decree 1529[7]. In compliance with said suggestion, DBP
petitioned for the cancellation of TCT No. T-15559 with then Court of First
Instance of Capiz, Branch II, docketed as Special Case No. 2653. The
petition was favorably acted upon on February 22, 1982. Thus, the
foreclosure proceeding conducted on February 2, 1977 was declared null and
void and the Register of Deeds of Capiz was ordered to cancel TCT No.
15559; OCT No. 1930 was ordered revived.
Meanwhile, on December 21, 1981, the PIEDAS filed the instant complaint
against DBP for cancellation of certificate of title and/or specific
performance, accounting and damages with a prayer for the issuance of a writ
of preliminary injunction averring that DBP, in evident bad faith, caused the
consolidation of its title to the parcel of land in question in spite of the fact
that the 5-year redemption period expressly stated in the Sheriffs Certificate
of Sale had not yet lapsed and that their offer to redeem the foreclosed
property was made well within said period of redemption.[8]
After trial, the RTC ruled in favor of the PIEDAS stating that DBP violated
the stipulation in the Sheriffs Certificate of Sale which provided that the
redemption period is five (5) years from the registration thereof in
consonance with Section 119[9] of CA No. 141[10]. DBP should therefore
assume liability for the fruits that said property produced from said land
considering that it prematurely took possession thereof. The dispositive
portion of the decision reads:
41
PROPERTY
Case set #5
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and
against the defendant Development Bank of the Philippines as follows:
1. Condemning the defendant DBP to pay the plaintiffs P201,138.28 less
whatever amount the plaintiffs still have to pay the said defendant DBP as
balance of their loan account reckoned up to the date of this
decision; P20,000.00 as attorneys fees; P5,000.00 as litigation expenses and
costs.
SO ORDERED.[11]
DBP appealed to the Court of Appeals, which affirmed the decision of the
RTC. The Court of Appeals stated that since DBP was in evident bad faith
when it unlawfully took possession of the property subject of the dispute and
defied what was written on the Sheriffs Certificate of Sale, the PIEDAS were
entitled to recover the fruits produced by the property or its equivalent valued
at P72,000.00 per annum or a total of P216,000.00 for the three-year
period.Respondent court stated that said amount was not rebutted by DBP
and was fair considering the size of the land in question. The court added that
any discussion with respect to the redemption period was of little
significance since the foreclosure proceeding was declared null and void in
Special Civil Case No. 2653[12] on February 22, 1982. Thus, the right of the
PIEDAS to redeem the property has become moot and academic. Finally, the
award of attorneys fees amounting to P10,000.00[13] was justified considering
that the PIEDAS were compelled to protect their interests.[14]
DBPs Motion for Reconsideration[15] was denied; hence this petition where it
assigns the following errors:
Ground No. 1 The Honorable Court Of Appeals Gravely Erred In Affirming
The Court A Quos Decision Awarding Actual Damages In The Amount Of
P216,000.00 In Favor Of The Private Respondents Notwithstanding The
Absence Of Evidence Substantiating Said Award. Thus, The Honorable
Court Of Appeals Had Decided This Instant Case In A Way Not In Accord
With Applicable Law And Jurisprudence.
2. Ground No. 2 - The Honorable Court Of Appeals Gravely Erred In
Affirming The Court A Quos Finding That DBP Was In Bad Faith When It
Took Possession Of The Property In Question Notwithstanding the Contrary
Evidence Adduced By Petitioner DBP. Thus, The Honorable Court Of
Appeals Departed From The Accepted And Usual Course of Judicial
Proceedings.
3. Ground No. 3 - The Honorable Court Of Appeals Gravely Erred In
Affirming The Court A Quos Decision Awarding Attorneys Fees And
Litigation Costs In Favor Of The Private Respondents Notwithstanding
Absence Of Evidence Proving the Same. Clearly, The Lower Court
Committed Misapprehension Of Facts That Can Be Considered A Question
Of Law.[16]
DBP maintains that the valuation of the income derived from the property in
dispute allegedly amounting to P216,000.00 was not proven by the
PIEDAS. DBP argues that they granted the PIEDAS a loan of P20,000.00 in
March 7, 1972 and up to the time of the foreclosure of the property, the
PIEDAS have paid only P2,000.00 on their principal. The failure of the
PIEDAS to pay this loan is attributable to the fact that said property did not
produce income amounting to P72,000.00 per annum. According to DBP, in
the absence of receipts or other evidence to support such a claim, the Court
of Appeals should not have granted said amount considering that the
PIEDAS had the burden of proving actual damages. Furthermore, Selfida
Pieda herself admitted that the property never produced income amounting
to P72,000.00 per annum. At any rate, the actual amount earned by the
property in terms of rentals turned over by the tenant-farmers or caretakers of
the land were duly receipted and were duly accounted for by the DBP.
DBP also alleges that the mere fact that DBP took possession and
administration of the property does not warrant a finding that DBP was in
bad faith. First, records show that the PIEDAS consented to and approved the
takeover of DBP. Second, Sec. 7[17] of Act No. 3135[18] allows the
mortgagee-buyer to take possession of the mortgaged property even during
the redemption period. Third, DBPs act of consolidating the title of the
property in its name does not constitute bad faith as there is no law which
prohibits the purchaser at public auction from consolidating title in its name
after the expiration of the one (1) year redemption period reckoned from the
time the Certificate of Sale was registered; and neither is there any law or
jurisprudence which prohibits the PIEDAS from exercising their right of
redemption over said property within five (5) years even if title is
consolidated in the name of the purchaser. When DBP consolidated title over
the property in its name, the new TCT issued in its favor was subject to the
lien i.e. the right of redemption of the PIEDAS; if there was a failure to
register this in the TCT, DBP should not be faulted.Besides, even if the five
(5) year period of redemption was not indicated therein, Sec. 44[19] and
46[20] of Presidential Decree No. 1529[21] attaches such lien by operation of
law even in the absence of an annotation in the title.Moreover, Sec. 119 of
42
PROPERTY
Case set #5
CA No. 141 also makes said right of redemption a statutory lien, which
subsists and binds the whole world despite the absence of registration.
DBP also could not have been in bad faith when it denied the PIEDAS offer
to redeem the property since the denial was premised on Opinion No. 92 of
the Minister of Justice series of 1978 which stated that said land was covered
under P.D. 27 and could not be the subject of foreclosure proceedings. For
this reason, DBP immediately filed a petition to nullify the foreclosure
proceedings which was favorably acted upon prior to the service of summons
and the complaint in the present case on DBP on June 30,1982. If DBP was
really in bad faith, it would not have filed said petition for said petition was
against its own interests.
Further, DBP asserts that PIEDAS appointed DBP as their attorney-in-fact or
agent in case of foreclosure of the property under Section 4 of the mortgage
contract, which provides:
4. xxx In case of foreclosure, the Mortgagor hereby consents to the
appointment of the mortgagee or any of its employees as receiver, without
any bond, to take charge of the mortgage property at once, and to hold
possession of the case and the rents and profits derived from the mortgaged
property before the sale. xxx[22]
DBP was therefore entitled to take possession of the property pursuant to the
mortgage contract.
Finally, considering that DBP lawfully had material possession of the
property after it consolidated its title, DBP was entitled to the fruits and
income thereof pursuant to Section 34, Rule 39 of the Rules of Court:
Sec. 34. Rents and Profits Pending Redemption. Statement thereof and credit
therefor on redemption. The purchaser, from the time of the sale until a
redemption, and a redemptioner, from the time of his redemption until
another redemption, is entitled to receive the rents of the property sold or the
value of the use or occupation thereof when such property is in the
possession of a tenant. xxx
Taking all this into consideration, DBP cannot be faulted for taking over
possession of the property in question.
The core issue in this case is whether DBP was in bad faith when it took
possession of the disputed lot.
We rule in the negative and find DBPs contentions meritorious.
A possessor in good faith is one who is not aware that there exists in his title
or mode of acquisition any flaw, which invalidates it.[23] Good faith is always
presumed, and upon him who alleges bad faith on the part of a possessor
rests the burden of proof.[24] It was therefore incumbent on the PIEDAS to
prove that DBP was aware of the flaw in its title i.e. the nullity of the
foreclosure. This, they failed to do.
Respondent PIEDAS argue that DBPs bad faith stems from the fact that DBP
consolidated title over the disputed property despite the statement in the
Sheriffs Certificate of Sale to the effect that said land was subject to a five
year redemption period. The period of redemption of extrajudicially
foreclosed land is provided under Section 6 of ACT No. 3135 to wit:
Sec. 6. In all cases in which an extrajudicial sale is made under the special
power hereinbefore referred to, the debtor, his successors in interest or any
judicial creditor or judgment creditor of said debtor, or any person having a
lien on the property subsequent to the mortgage or deed of trust under which
the property is sold, may redeem the same at any time within the term of one
year from and after the date of sale; and such redemption shall be governed
by the provisions of section four hundred and sixty-four to four hundred and
sixty-six, inclusive, of the Code of Civil Procedure[25], in so far as these are
not inconsistent with the provisions of this Act.
If no redemption is made within one year, the purchaser is entitled as a
matter of right to consolidate[26] and to possess[27] the
property.[28] Accordingly, DBPs act of consolidating its title and taking
possession of the subject property after the expiration of the period of
redemption was in accordance with law. Moreover, it was in consonance
with Section 4 of the mortgage contract between DBP and the PIEDAS
where they agreed to the appointment of DBP as receiver to take charge and
to hold possession of the mortgage property in case of foreclosure. DBPs acts
cannot therefore be tainted with bad faith.
The right of DBP to consolidate its title and take possession of the subject
property is not affected by the PIEDAS right to repurchase said property
within five years from the date of conveyance granted by Section 119 of CA
No. 141. In fact, without the act of DBP consolidating title in its name, the
PIEDAS would not be able to assert their right to repurchase granted under
the aforementioned section. Respondent PIEDAS are of the erroneous belief
that said section prohibits a purchaser of homestead land in a foreclosure sale
from consolidating his title over said property after the one-year period to
redeem said property has expired. Section 119 does not contain any
prohibition to convey homestead land but grants the homesteader, his widow
43
PROPERTY
Case set #5
or legal heirs a right to repurchase said land within a period of five years in
the event that he conveys said land. This is in consonance with the policy of
homestead laws to distribute disposable agricultural lands of the State to
land-destitute citizens for their home and cultivation.[29] The right to
repurchase under Section 119 aims to preserve and keep in the family of the
homesteader that portion of public land which the State had gratuitously
given him.[30] Such right is based on the assumption that the person under
obligation to reconvey the property has the full title to the property because it
was voluntarily conveyed to him or that he consolidated his title thereto by
reason of a redemptioners failure to exercise his right of redemption.[31] It is
also settled that the five-year period of redemption fixed in Section 119 of
the Public Land Law of homestead sold at extrajudicial foreclosure begins to
run from the day after the expiration of the one-year period of repurchase
allowed in an extrajudicial foreclosure.[32] Thus DBPs consolidation of title
did not derogate from or impair the right of the PIEDAS to redeem the same
under C.A. No. 141.
incur expenses to protect his interest by reason of an unjustified act or
omission of the party from whom it is sought[37], we hold that DBPs acts
were clearly not unjustified.
WHEREFORE, the instant petition is hereby GRANTED, and the appealed
decision of the Court of Appeals is REVERSED. The Development Bank of
the Philippines is absolved from any liability to Timoteo and Selfida Pieda in
so far as it orders the DBP to pay the PIEDAS P216,000.00 as annual
produce value of the land; P20,000.00 in attorneys fees, P5,000.00 in
litigation expenses and the costs of the suit. This decision is without
prejudice to whatever liability the PIEDAS may still have to the DBP with
respect to their loan.
SO ORDERED.

It may be argued that P.D. 27 was already in effect when DBP foreclosed the
property. However, the legal propriety of the foreclosure of the land was put
into question only after Opinion No. 92 series of 1978 of the Ministry of
Justice declared that said land was covered by P.D. 27 and could not be
subject to foreclosure proceedings. The Opinion of the Ministry of Justice
was issued on July 5, 1978 or almost two months after DBP consolidated its
title to the property on March 10, 1978. By law and jurisprudence, a mistake
upon a doubtful or difficult question of law may properly be the basis of
good faith.[33]

In the case of Maneclang vs. Baun,[34] we held that when a contract of sale is
void, the possessor is entitled to keep the fruits during the period for which it
held the property in good faith. Good faith of the possessor ceases when an
action to recover possession of the property is filed against him and he is
served summons therefore.[35] In the present case, DBP was served summons
on June 30, 1982.[36] By that time, it was no longer in possession of the
disputed land as possession thereof was given back to the PIEDAS after the
foreclosure of DBP was declared null and void on February 22,
1982. Therefore, any income collected by DBP after it consolidated its title
and took possession of the property on May 30, 1978 up to February 22,
1982 belongs to DBP as a possessor in good faith since its possession was
never legally interrupted.

Finally, we delete the award for attorneys fees. Although attorneys fees may
be awarded if the claimant is compelled to litigate with third persons or to

44
PROPERTY
Case set #5
13.) THIRD DIVISION
Upon Anacletos death on July 26, 1993, his wife, Sixta P. Nieto, and their
three children, namely, Eulalio P. Nieto, Gaudencio Nieto and Corazon
HEIRS OF ANACLETO B. NIETO, namely, G.R. No. 150654 Nieto-Ignacio, herein petitioners, collated all the documents pertaining to his
SIXTA P. NIETO, EULALIO P. NIETO, estate. When petitioners failed to locate the owners duplicate copy of TCT
GAUDENCIO P. NIETO, and CORAZON P. No. T-24.055 (M), they filed a petition for the issuance of a second owners
NIETO-IGNACIO, represented by EULALIO P. Present: copy with the RTC, Malolos, Bulacan. In that case, petitioners discovered
NIETO, that the missing copy of the title was in the possession of the respondent.
Petitioners, YNARES-SANTIAGO, J., Consequently, petitioners withdrew the petition and demanded
Chairperson, from respondent the return of property and the certificate of title.
AUSTRIA-MARTINEZ,
- versus - CHICO-NAZARIO, On February 23, 1994, petitioners formally demanded from respondent the
NACHURA, and return of the possession and full control of the property, and payment of a
REYES, JJ. monthly rent with interest from January 1964. Respondent did not comply
MUNICIPALITY OF MEYCAUAYAN, with petitioners demand.[2]
BULACAN, represented by MAYOR EDUARDO
ALARILLA, On December 28, 1994, petitioners filed a complaint[3] for recovery of
Respondent. Promulgated: possession and damages against respondent alleging that the latter was in
possession of the owners copy of TCT No. T-24.055 (M). They averred that,
December 13, 2007 in 1966, respondent occupied the subject property by making it appear that it
would expropriate the same. Respondent then used the land as a public
market site and leased the stalls therein to several persons without paying
Anacleto Nieto the value of the land or rent therefor. Petitioners prayed that
DECISION respondent be ordered to surrender to them the owners copy of TCT No. T-
24.055 (M), vacate the property, and pay them the rents thereon from 1966
until the date of the filing of the complaint for the total of P1,716,000.00,
and P10,000.00 a month thereafter, as well as P300,000.00 as moral
NACHURA, J.: damages, and P100,000.00 as attorneys fees.

This is a petition for review on certiorari of the Decision[1] of the Court of
Appeals, dated October 30, 2001, which dismissed the petition for review of
the Decision of the Regional Trial Court (RTC) of Malolos, Bulacan. The
latter dismissed a complaint to recover possession of a registered land on the
ground of prescription and laches.
The antecedents are as follows:
Anacleto Nieto was the registered owner of a parcel of land, consisting of
3,882 square meters, situated at Poblacion, Meycauayan, Bulacan and
covered by TCT No. T-24.055 (M). The property is being used by
respondent, Municipality of Meycauayan, Bulacan, which constructed an
extension of the public market therein.
In its Answer,[4] respondent alleged that the property was donated to it and
that the action was already time-barred because 32 years had elapsed since it
possessed the property.
Respondent and counsel failed to appear during the scheduled pre-trial
conference.[5] Upon petitioners motion, respondent was declared as in default
and petitioners were allowed to present evidence ex parte. Respondent filed a
motion for reconsideration which the RTC granted. Respondent was then
allowed to cross-examine petitioners lone witness and present its own
evidence. However, despite notice, respondent failed again to appear during
the scheduled hearing. Hence, the RTC considered respondent to have
waived its right to cross-examine petitioners witness and present its own
evidence. The case was then submitted for decision.
45
PROPERTY
Case set #5
On August 1, 1995, the RTC rendered a Decision dismissing the complaint
as well as respondents counterclaims for damages. For lack of proof, the
RTC disregarded respondents claim that Anacleto Nieto donated the property
to it in light of the fact that the title remained in the name of Anacleto.
Nonetheless, the RTC did not rule in favor of petitioners because of its
finding that the case was already barred by prescription. It held that the
imprescriptibility of actions to recover land covered by the Torrens System
could only be invoked by the registered owner, Anacleto Nieto, and that the
action was also barred by laches.
Petitioners appealed the case to the Court of Appeals (CA). On October 30,
2001, the CA rendered a Decision dismissing the case for lack of jurisdiction.
According to the CA, the petition involved a pure question of law; hence,
petitioners should have filed a petition directly with this Court.[6]
Accordingly, petitioners elevated the case to this Court through a petition for
review on certiorari, raising the following issues:
A. Are lands covered by the Torrens System subject to prescription?
B. May the defense of [l]aches be invoked in this specific case?
C. May the defense of imprescriptibility only be invoked by the registered
owner to the exclusion of his legitimate heirs?[7]
The petition is meritorious.
Respondent argues that the action of petitioner to recover possession of the
property is already barred by prescription.
We do not agree.
An action to recover possession of a registered land never prescribes in view
of the provision of Section 44 of Act No. 496 to the effect that no title to
registered land in derogation of that of a registered owner shall be acquired
by prescription or adverse possession.[8] It follows that an action by the
registered owner to recover a real property registered under the Torrens
System does not prescribe.
Despite knowledge of this avowed doctrine, the trial court ruled that
petitioners cause of action had already prescribed on the ground that the
imprescriptibility to recover lands registered under the Torrens System can
only be invoked by the person under whose name the land is registered.
Again, we do not agree. It is well settled that the rule on imprescriptibility of
registered lands not only applies to the registered owner but extends to the
heirs of the registered owner as well.[9]Recently in Mateo v. Diaz,[10] the
Court held that prescription is unavailing not only against the registered
owner, but also against his hereditary successors because the latter step into
the shoes of the decedent by operation of law and are the continuation of the
personality of their predecessor-in-interest. Hence, petitioners, as heirs of
Anacleto Nieto, the registered owner, cannot be barred by prescription from
claiming the property.
Aside from finding that petitioners cause of action was barred by
prescription, the trial court reinforced its dismissal of the case by holding that
the action was likewise barred by laches.
Laches has been defined as the failure or neglect, for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence
could or should have been done earlier. It is negligence or omission to assert
a right within a reasonable time, warranting the presumption that the party
entitled to assert his right has either abandoned or declined to assert it.[11]
In a number of cases, the Court has held that an action to recover registered
land covered by the Torrens System may not be barred by laches.[12] Laches
cannot be set up to resist the enforcement of an imprescriptible legal
right.[13] Laches, which is a principle based on equity, may not prevail against
a specific provision of law, because equity, which has been defined as justice
outside legality, is applied in the absence of and not against statutory law or
rules of procedure.[14]
In recent cases, [15] however, the Court held that while it is true that
a Torrens title is indefeasible and imprescriptible, the registered landowner
may lose his right to recover possession of his registered property by reason
of laches.
Yet, even if we apply the doctrine of laches to registered lands, it would still
not bar petitioners claim. It should be stressed that laches is not concerned
46
PROPERTY
Case set #5
only with the mere lapse of time.[16]The following elements must be present
in order to constitute laches:
(1) conduct on the part of the defendant, or of one under whom he claims,
giving rise to the situation of which complaint is made for which the
complaint seeks a remedy;
(2) delay in asserting the complainants rights, the complainant having had
knowledge or notice, of the defendants conduct and having been afforded an
opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit; and
(4) injury or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held to be barred.[17]
We note that the certificate of title in the name of Anacleto Nieto was found
in respondents possession but there was no evidence that ownership of the
property was transferred to the municipality either through a donation or by
expropriation, or that any compensation was paid by respondent for the use
of the property. Anacleto allegedly surrendered the certificate of title to
respondent upon the belief that the property would be expropriated. Absent
any showing that this certificate of title was fraudulently obtained by
respondent, it can be presumed that Anacleto voluntarily delivered the same
to respondent. Anacletos delivery of the certificate of title to respondent
could, therefore, be taken to mean acquiescence to respondents plan to
expropriate the property, or a tacit consent to the use of the property pending
its expropriation.
This 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.[18] The status of the possessor is analogous to that of
a lessee or tenant whose term of lease has expired but whose occupancy
continues by tolerance of the owner. In such case, the unlawful deprivation
or withholding of possession is to be counted from the date of the demand to
vacate.[19] Upon the refusal to vacate the property, the owners cause of action
accrues.
In this case, the first element of laches occurred the moment respondent
refused to vacate the property, upon petitioners demand, on February 23,
1994. The filing of the complaint on December 28, 1994, after the lapse of a
period of only ten months, cannot be considered as unreasonable delay
amounting to laches.
Moreover, case law teaches that if the claimants possession of the land is
merely tolerated by its lawful owner, the latters right to recover possession is
never barred by laches. Even if it be supposed that petitioners were aware of
respondents occupation of the property, and regardless of the length of that
possession, the lawful owners have a right to demand the return of their
property at any time as long as the possession was unauthorized or merely
tolerated, if at all.[20]
Furthermore, the doctrine of laches cannot be invoked to defeat justice or to
perpetrate fraud and injustice. It is the better rule that courts, under the
principle of equity, will not be guided or bound strictly by the statute of
limitations or the doctrine of laches when by doing so, manifest wrong or
injustice would result.[21]
Finally, we find that the rentals being prayed for by petitioners are reasonable
considering the size and location of the subject property. Accordingly, the
award of rentals is warranted.
WHEREFORE, premises considered, the petition is GRANTED. The
Decision of the Regional Trial Court of Malolos, Bulacan, dated August 1,
1995, is REVERSED and SET ASIDE. Respondent is ORDERED (a) to
vacate and surrender peaceful possession of the property to petitioners, or
pay the reasonable value of the property; (b) to pay P1,716,000.00 as
reasonable compensation for the use of the property from 1966 until the
filing of the complaint and P10,000.00 monthly rental thereafter until it
vacates the property, with 12% interest from the filing of the complaint until
fully paid; and (c) to return to petitioners the duplicate copy of TCT No. T-
24.055 (M).
SO ORDERED.
47