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 Yu v. Pacleb, G.R. No. 130316, January 24, 2007

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 130316 January 24, 2007

ERNESTO V. YU and ELSIE O. YU, Petitioners,

vs.
BALTAZAR PACLEB,1 Respondent.

DECISION

CORONA, J.:

The present petition filed under Rule 45 of the Rules of Court originated from an action for forcible entry and
damages filed by petitioners Ernesto and Elsie Yu against respondent Baltazar Pacleb.

The antecedent facts follow.

Sometime in September 1992, Ruperto Javier allegedly offered to sell Lot No. 6853-D to petitioners for P75 per
sq.m.lawphil.net The lot was approximately 18,000 square meters and was located in Barangay Langkaan,
Dasmariñas, Cavite. Javier supposedly purchased the lot from one Rebecca del Rosario who, in turn, acquired
it from respondent and his wife. The title of the property (Transfer Certificate of Title [TCT] No. T-118375),
however, remained in the names of respondent and his wife. The instruments in support of the series of alleged
sales were not registered.

On September 11, 1992, petitioners accepted the offer and gave Javier P200,000 as downpayment for the lot.
Javier then delivered his supposed muniments of title to petitioners. After the execution of a contract to sell, he
formally turned over the property to petiti oners.

At the time of the turn-over, a portion of the lot was occupied by Ramon C. Pacleb, respondent’s son, and his
wife as tenants. On September 12, 1992, Ramon and his wife allegedly surrendered possession of their portion
to petitioners. Later on, petitioners appointed Ramon as their trustee over the subject lot.

Aside from taking possession of the property, petitioners also caused the annotation on TCT No. T-118375 of a
decision rendered in their favor in Civil Case No. 741-93.2 This decision attained finality on April 19, 1995.

Petitioners alleged that they exercised ownership rights as well as enjoyed open, public and peaceful
possession over the property from September 12, 1992 until the early part of September 1995. During this time,
respondent was in the United States.

Upon respondent’s return to the Philippines in May 1995, he allegedly entered the property by means of force,
threat, intimidation, strategy and stealth thereby ousting petitioners and their trustee, Ramon.

Despite repeated demands, respondent, asserting his rights as registered owner of the property, refused to
vacate the premises and surrender its possession to petitioners.

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Petitioners filed an action for forcible entry3 in the Municipal Trial Court (MTC) of Dasmariñas, Cavite on
November 23, 1995. Respondent filed an answer with compulsory counterclaim dated December 8, 1995. After
the issues were joined, the MTC required the submission of the parties’ position papers at a preliminary
conference on March 11, 1996. Respondent failed to comply.

On June 17, 1996, the MTC ruled:

WHEREFORE, in view of the foregoing, the [respondent] and other persons claiming right under him are
hereby ordered to surrender physical possession of Lot No. 6853-D in favor of the [petitioners] and to pay the
sum of TWENTY-FIVE THOUSAND (P25,000.00) PESOS as attorney’s fees.

SO ORDERED.4

On appeal,5 the Regional Trial Court (RTC) of Imus, Cavite rendered a decision affirming the MTC decision in
toto.6

Respondent elevated his case to the Court of Appeals (CA)7 which rendered the assailed decision on March
18, 1997:

WHEREFORE, the Petition is GRANTED; the Decision dated October 25, 1996 of the [RTC] of Imus, Cavite in
Civil Case No. 052-96 and the Decision of the [MTC] of Dasmariñas, Cavite in Civil Case No. 182 are SET
ASIDE; and Civil Case No. 182 for Forcible Entry and Damages is hereby ordered DISMISSED. No
pronouncement as to costs.

SO ORDERED.8

In a resolution dated August 20, 1997, the CA denied petitioners’ motion for reconsideration for lack of merit.

Before us now come petitioners who claim that the appellate court erred in finding that respondent had prior
physical possession of the subject property.lawphil.net

"In an action for forcible entry, the plaintiff must prove that he was in prior possession of the land or building
and that he was deprived thereof by means of force, intimidation, threat, strategy or stealth."9 The plaintiff,
however, cannot prevail where it appears that, as between himself and the defendant, the latter had
possession antedating his own.10 We are generally precluded in a Rule 45 petition from reviewing factual
evidence tracing the events prior to the first act of spoliation.11 However, the conflicting factual findings of the
MTC and RTC on one hand, and the CA on the other, require us to make an exception.

We overrule petitioners’ contentions.

The Civil Code states that possession is the holding of a thing or the enjoyment of a right. 12 In the grammatical
sense, to possess means to have, to actually and physically occupy a thing, with or without right. 13 "Possession
always includes the idea of occupation x x x. It is not necessary that the person in possession should himself
be the occupant. The occupancy can be held by another in his name."14 Without occupancy, there is no
possession.15

Two things are paramount in possession.16 First, there must be occupancy, apprehension or taking. Second,
there must be intent to possess (animus possidendi).17

Here, petitioners failed to establish that they had prior physical possession to justify a ruling in their favor in the
complaint for forcible entry against respondent.

In the decision in Civil Case No. 741-93 (a case for specific performance and damages against Javier, the
alleged vendor of the lot in question) upon which petitioners based their right to possess in the first place, the
trial court categorically stated:

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The [petitioners were never placed] in possession of the subject property on which [was] planned to be
[site of] a piggery, nor [were they] given a clearance or certification from the Municipal Agrarian Reform
Officer.18(emphasis ours)

The claim that the lot was turned over to petitioners in 1992 was self-serving in the face of this factual finding.
On the other hand, the tax declarations and receipts in the name of respondent in 1994 and 1995 established
the possession of respondent.19 The payment of real estate tax is one of the most persuasive and positive
indications showing the will of a person to possess in concepto de dueño or with claim of ownership.20

"[P]ossession in the eyes of the law does not mean that a man has to have his feet on every square meter of
the ground before he is deemed in possession."21 In this case, Ramon, as respondent’s son, was named
caretaker when respondent left for the United States in 1983.22 Due to the eventual loss of trust and confidence
in Ramon, however, respondent transferred the administration of the land to his other son, Oscar, in January
1995 until his return in May 1995.23 In other words, the subject land was in the possession of the respondent’s
sons during the contested period.

Petitioners cite an alleged document (Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag ng

Pagtalikod sa Karapatan) dated March 10, 1995 executed by them and Ramon to prove a turn over of
possession. They also seek to prove their exercise of rights over the land through alleged frequent visits and
the designation of Ramon as their own trustee as declared in a joint affidavit attached to their position paper
filed with the MTC. These instruments, however, fail to convince us of petitioners’ actual occupancy of the
subject land. First, petitioners themselves acknowledged that Ramon and his wife occupied part of the land as
tenants of respondent. Second, Ramon, a mere tenant, had no authority to sign such document dated March
10, 1995 waiving all rights to the land. Third, there was no clear proof in the records of the appointment of
Ramon as petitioners’ trustee save their self-serving statements to this effect. Finally, at the time
the Kusangloob na Pagsasauli document was executed, the caretaker of the land was no longer Ramon but
Oscar.24

Most important, the title of the land in question (TCT No. T-118375) remained in the name of respondent.25 "As
the registered owner, petitioner had a right to the possession of the property, which is one of the attributes of
ownership."26 The Civil Code states:

Art. 538. Possession as a fact cannot be recognized at the same time in two different personalities except in
the cases of co-possession. Should a question arise regarding the fact of possession, the present possessor
shall be preferred; if there are two possessors, the one longer in possession; if the dates of the possession are
the same, the one who presents a title; and if all these conditions are equal, the thing shall be placed in judicial
deposit pending determination of its possession or ownership through proper proceedings.

In view of the evidence establishing respondent’s continuing possession of the subject property, petitioners’
allegation that respondent deprived them of actual possession by means of force, intimidation and threat was
clearly untenable. In Gaza v. Lim, we held that:

Where a dispute over possession arises between two persons, the person first having actual possession is the
one who is entitled to maintain the action granted by law; otherwise, a mere usurper without any right whatever,
might enter upon the property of another and, by allowing himself to be ordered off, could acquire the right to
maintain the action of forcible entry and detainer, however momentary his intrusion might have been. 27

WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals dated March 18, 1997 in
CA-G.R. SP No. 42604 is AFFIRMED.

Costs against petitioners.

SO ORDERED.

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 PNB v. De Jesus, G.R. No. 149295, September 23, 2003

[G.R. No. 149295. September 23, 2003]

PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS, represented by his Attorney-in-
Fact, CHRISTIAN DE JESUS, respondent.

DECISION
VITUG, J.:

Petitioner Philippine National Bank disputes the decision handed down by the Court of Appeals
promulgated on 23 March 2001 in CA-G.R. CV No. 56001, entitled Generoso De Jesus, represented by his
Attorney-in-Fact, Christian De Jesus, versus Philippine National Bank. The assailed decision has affirmed the
judgment rendered by the Regional Trial Court, Branch 44, of Mamburao, Occidental Mindoro, declaring
respondent Generoso de Jesus as being the true and lawful owner of the 124-square-meter portion of the land
covered by Transfer Certificate of Title (TCT) No. T-17197 and ordering petitioner bank to vacate the premises,
to deliver possession thereof to respondent, and to remove the improvement thereon.
It would appear that on 10 June 1995, respondent filed a complaint against petitioner before the Regional
Trial Court of Occidental Mindoro for recovery of ownership and possession, with damages, over the
questioned property. In his complaint, respondent stated that he had acquired a parcel of land situated in
Mamburao, Occidental Mindoro, with an area of 1,144 square meters covered by TCT No. T-17197, and that
on 26 March 1993, he had caused a verification survey of the property and discovered that the northern portion
of the lot was being encroached upon by a building of petitioner to the extent of 124 square meters. Despite
two letters of demand sent by respondent, petitioner failed and refused to vacate the area.
Petitioner, in its answer, asserted that when it acquired the lot and the building sometime in 1981 from
then Mayor Bienvenido Ignacio, the encroachment already was in existence and to remedy the situation, Mayor
Ignacio offered to sell the area in question (which then also belonged to Ignacio) to petitioner at P100.00 per
square meter which offer the latter claimed to have accepted. The sale, however, did not materialize when,
without the knowledge and consent of petitioner, Mayor Ignacio later mortgaged the lot to the Development
Bank of the Philippines.
The trial court decided the case in favor of respondent declaring him to be the rightful owner of the
disputed 124-square-meter portion of the lot and ordering petitioner to surrender possession of the property to
respondent and to cause, at its expense, the removal of any improvement thereon.
The Court of Appeals, on appeal, sustained the trial court but it ordered to be deleted the award to
respondent of attorneys fees, as well as moral and exemplary damages, and litigation expenses.
Petitioner went to this Court, via a petition for review, after the appellate court had denied the banks
motion for reconsideration, here now contending that -

1. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN ADJUDGING PNB A BUILDER IN BAD FAITH
OVER THE ENCROACHED PROPERTY IN QUESTION;

2. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOT APPLYING IN FAVOR OF PNB THE
PROVISION OF ARTICLE 448 OF THE CIVIL CODE AND THE RULING IN TECNOGAS PHILIPPINES
MANUFACTURING CORP. VS. COURT OF APPEALS, G.R. No. 108894, February 10, 1997, 268 SCRA 7. [1]

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The Regional Trial Court and the Court of Appeals have both rejected the idea that petitioner can be
considered a builder in good faith. In the context that such term is used in particular reference to Article 448, et
seq., of the Civil Code, a builder in good faith is one who, not being the owner of the land, builds on that land
believing himself to be its owner and unaware of any defect in his title or mode of acquisition.
The various provisions of the Civil Code, pertinent to the subject, read:

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

Article 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or
sown without right to indemnity.

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

A builder in good faith can, under the foregoing provisions, compel the landowner to make a choice
between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the
land. The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that
the accessory follows the principal and not the other way around. [2] Even as the option lies with the landowner,
the grant to him, nevertheless, is preclusive. He much choose one. He cannot, for instance, compel the owner
of the building to instead remove it from the land.[3] In order, however, that the builder can invoke that accruing
benefit and enjoy his corresponding right to demand that a choice be made by the landowner, he should be
able to prove good faith on his part.
Good faith, here understood, is an intangible and abstract quality with no technical meaning or statutory
definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of
design to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of
his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty
of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. [4] The
essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior claim, and
absence of intention to overreach another.[5] Applied to possession, one is considered in good faith if he is not
aware that there exists in his title or mode of acquisition any flaw which invalidates it.[6]
Given the findings of both the trial court and the appellate court, it should be evident enough that petitioner
would fall much too short from its claim of good faith. Evidently, petitioner was quite aware, and indeed
advised, prior to its acquisition of the land and building from Ignacio that a part of the building sold to it stood on
the land not covered by the land conveyed to it.
Equally significant is the fact that the building, constructed on the land by Ignacio, has in actuality been
part of the property transferred to petitioner. Article 448, of the Civil Code refers to a piece of land whose
ownership is claimed by two or more parties, one of whom has built some works (or sown or planted
something) and not to a case where the owner of the land is the builder, sower, or planter who then later
loses ownership of the land by sale or otherwise for, elsewise stated, where the true owner himself is
the builder of works on his own land, the issue of good faith or bad faith is entirely irrelevant. [7]
In fine, petitioner is not in a valid position to invoke the provisions of Article 448 of the Civil Code. The
Court commiserates with petitioner in its present predicament; upon the other hand, respondent, too, is entitled
to his rights under the law, particularly after having long been deprived of the enjoyment of his
property. Nevertheless, the Court expresses hope that the parties will still be able to come up with an
arrangement that can be mutually suitable and acceptable to them.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56001 is AFFIRMED. No costs.

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SO ORDERED.

 Parilla v. Pilar, G.R. No. 167680, November 30, 2006

THIRD DIVISION

SAMUEL PARILLA, CHINITA PARILLA and G.R. No. 167680

DEODATO PARILLA,
Petitioners, Present:

QUISUMBING, Chairperson,
CARPIO,
- versus - CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

DR. PROSPERO PILAR,

Respondent. Promulgated:

November 30, 2006

x - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - -- - - - - - - - - - x

DECISION

CARPIO MORALES, J.:

Assailed via Petition for Review on Certiorari is the Court of Appeals Decision[1] of January 19, 2005 reversing
that of the Regional Trial Court (RTC) of Vigan City, Branch 20[2] which affirmed the Decision[3] of February 3,
2003 of the Municipal Trial Court (MTC) of Bantay, Ilocos Sur.
Petitioner-spouses Samuel and Chinita Parilla and their co-petitioner-son Deodato Parilla, as dealers[4] of
Pilipinas Shell Petroleum Corporation (Pilipinas Shell), have been in possession of a parcel of land (the
property) located at the poblacion of Bantay, Ilocos Sur which was leased to it by respondent Dr. Prospero Pilar
under a 10-year Lease Agreement[5] entered into in 1990.

When the lease contract between Pilipinas Shell and respondent expired in 2000, petitioners remained
in possession of the property on which they built improvements consisting of a billiard hall and a restaurant,
maintained a sari-sari store managed by Leonardo Dagdag, Josefina Dagdag and Edwin Pugal, and allowed
Flor Pelayo, Freddie Bringas and Edwin Pugal to use a portion thereof as parking lot.[6]

Despite demands to vacate, petitioners[7] and the other occupants[8] remained in the property.

Hence, respondent who has been residing in the United States,[9] through his attorney-in-fact Marivic Paz
Padre, filed on February 4, 2002 a complaint for ejectment before the Bantay MTC with prayer for the issuance
of a writ of preliminary injunction with damages[10] against petitioners and the other occupants of the property.

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After trial, the MTC, by Decision of February 3, 2003, ordered herein petitioners and their co-defendants and all
persons claiming rights under them to vacate the property and to pay the plaintiff-herein respondent the amount
of P50,000.00 as reasonable compensation for the use of the property and P10,000.00 as attorneys fees and
to pay the cost of suit.And it ordered the plaintiff-herein respondent to reimburse defendants Samuel Parilla,
Chinita Parilla and Deodato Parilla the amount of Two Million Pesos (P2,000,000.00) representing the value of
the improvements introduced on the property.

Respondent appealed to the RTC of Vigan City that portion of the trial courts decision ordering him to
reimburse petitioners the amount of Two Million Pesos. The RTC affirmed the MTC Decision, however.[11]

On respondents petition for review, the Court of Appeals set aside the questioned order for respondent to
reimburse petitioners Two Million Pesos.[12] In setting aside the questioned order, the appellate court, applying
Article 546 of the New Civil Code which provides:

ART. 546. Necessary expenses shall be refunded to every possessor; but only
the possessor in good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the
same right of retention, the person who has defeated him in the possession having
the option of refunding the amount of the expenses or of paying the increase in value
which the thing may have acquired by reason thereof[,]

held that [herein petitioners] tolerated occupancy . . . could not be interpreted to mean . . . that they are builders
or possessors in good faith[13] and that for one to be a builder in good faith, it is assumed that he claims title to
the property which is not the case of petitioners.

Hence, the present petition which faults the appellate court to have erred

. . . WHEN IT SET ASIDE THE DECISIONS OF THE TRIAL COURTS WHICH ORDERED
THE RESPONDENT TO REIMBURSE PETITIONERS THE AMOUNT OF TWO MILLION
(P2,000,000.00) PESOS FOR THE SUBSTANTIAL IMPROVEMENTS INTRODUCED BY
THEM ON THE SUBJECT PREMISES.

II

. . . IN NOT HOLDING THAT PETITIONERS ARE BUILDERS IN GOOD FAITH OF THE

SUBSTANTIAL IMPROVEMENTS THEY HAD INTRODUCED ON THE PREMISES, HENCE,
THEY ARE ENTITLED TO REIMBURSEMENT OF SUCH IMPROVEMENTS.

III

. . . IN NOT HOLDING THAT THE BUILDING WHICH PETITIONERS ERECTED ON THE

PREMISES WAS WORTH, AND THAT THE PETITIONERS ACTUALLY SPENT, THE
AMOUNT OF TWO MILLION (P2,000,000.00) PESOS.

IV

. . . IN NOT HOLDING THAT PETITIONERS HAVE THE RIGHT OF RETENTION OF THE

PREMISES UNTIL THEY ARE REIMBURSED OF THE SAID AMOUNT ADJUDGED IN
THEIR FAVOR BY THE COURTS A QUO.[14]

Petitioners, proffering that neither respondent nor his agents or representatives performed any act to prevent
them from introducing the improvements,[15] contend that the appellate court should have applied Article 453 of
the New Civil Code which provides that [i]f there was bad faith not only on the part of the person who built,

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planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and
the other shall be the same as though both had acted in good faith.[16]

Petitioners thus conclude that being builders in good faith, until they are reimbursed of the Two Million
Peso-value of the improvements they had introduced on the property, they have the right of retention or
occupancy thereof pursuant to Article 448, in relation to Article 546, of the New Civil Code, [17] otherwise,
respondent would be unjustly enriched at their expense.

The petition fails in light of the following discussions.

The evidence shows that in 1960, a lease contract over the property was forged between Shell Company of the
Philippines Limited and respondents predecessors-in-interest. In 1990, the lease contract was renewed by
Pilipinas Shell and respondent.

Petitioners, being dealers of Pilipinas Shells petroleum products, were allowed to occupy the
property. Petitioners are thus considered agents[18] of Pilipinas Shell. The factual milieu of the instant case calls
then for the application of the provisions on lease under the New Civil Code.

The right of the lessor upon the termination of a lease contract with respect to useful improvements introduced
on the leased property by a lessee is covered by Article 1678 which reads:

Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the
use for which the lease is intended, without altering the form or substance of the property
leased, the lessor upon the termination of the lease shall pay the lessee one-half of the
value of the improvements at that time. Should the lessor refuse to reimburse said amount,
the lessee may remove the improvements, even though the principal thing may suffer damage
thereby. He shall not, however, cause any more impairment upon the property leased than is
necessary.

x x x x (Emphasis supplied)

The foregoing provision is a modification of the old Code under which the lessee had no right at all to be
reimbursed for the improvements introduced on the leased property, he being entitled merely to the rights of a
usufructuary right of removal and set-off, but not of reimbursement.[19]

The modification introduced in the above-quoted paragraph of Article 1678 on partial reimbursement was
intended to prevent unjust enrichment of the lessor which now has to pay one-half of the value of the
improvements at the time the lease terminates because the lessee has already enjoyed the same, whereas the
lessor could enjoy them indefinitely thereafter.[20]

As the law on lease under the New Civil Code has specific rules concerning useful improvements introduced by
a lessee on the property leased, it is erroneous on the part of petitioners to urge this Court to apply Article 448,
in relation to Article 546, regarding their claim for reimbursement and to invoke the right of retention before
reimbursement is made. Article 448 and Article 546 read:

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

ART. 546. Necessary expenses shall be refunded to every possessor; but only
the possessor in good faith may retain the thing until he has been reimbursed therefor.

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Useful expenses shall be refunded only to the possessor in good faith with the
same right of retention, the person who has defeated him in the possession having
the option of refunding the amount of the expenses or of paying the increase in value
which the thing may have acquired by reason thereof.

Jurisprudence is replete with cases[21] which categorically declare that Article 448 covers only cases in which
the builders, sowers or planters believe themselves to be owners of the land or, at least, have a claim of title
thereto, but not when the interest is merely

that of a holder, such as a mere tenant, agent or usufructuary. A tenant cannot be said to be a builder in good
faith as he has no pretension to be owner.[22]
In a plethora of cases,[23] this Court has held that Articles 448 of the Civil Code, in relation to
Article 546 of the same Code, which allows full reimbursement of useful improvements and
retention of the premises until reimbursement is made, applies only to a possessor in good
faith, i.e., one who builds on land with the belief that he is the owner thereof. It does not apply
where ones only interest is that of a lessee under a rental contract; otherwise, it would always
be in the power of the tenant to improve his landlord out of his property. [24] (Underscoring
supplied)

Sia v. Court of Appeals,[25] which cites Cabangis v. Court of Appeals,[26] exhaustively explains the
applicability of Article 1678 on disputes relating to useful improvements introduced by a lessee on leased
premises, viz:

xxxx

Second. Petitioner stubbornly insists that he may not be ejected from private respondent's
land because he has the right, under Articles 448 and 546 of the New Civil Code, to retain
possession of the leased premises until he is paid the full fair market value of the building
constructed thereon by his parents. Petitioner is wrong, of course. The Regional Trial Court
and the Court of Appeals correctly held that it is Article 1678 of the New Civil Code that
governs petitioner's right vis-a-vis the improvements built by his parents on private
respondent's land.

In the 1991 case of Cabangis v. Court of Appeals where the subject of the lease contract was
also a parcel of land and the lessee's father constructed a family residential house thereon,
and the lessee subsequently demanded indemnity for the improvements built on the lessor's
land based on Articles 448 and 546 of the New Civil Code, we pointed out that reliance on
said legal provisions was misplaced.

"The reliance by the respondent Court of Appeals on Articles 448 and 546 of the Civil Code of
the Philippines is misplaced. These provisions have no application to a contract of lease
which is the subject matter of this controversy. Instead, Article 1678 of the Civil Code applies.
...

xxxx

On the other hand, Article 448 governs the right of accession while Article 546 pertains to
effects of possession. The very language of these two provisions clearly manifest their
inapplicability to lease contracts. . . .

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xxxx

Thus, the improvements that the private respondent's father had introduced in the leased
premises were done at his own risk as lessee. The right to indemnity equivalent to one-half of
the value of the said improvements the house, the filling materials, and the hollow block fence
or wall is governed, as earlier adverted to, by the provisions of Art. 1678, first paragraph of the
Civil Code above quoted. But this right to indemnity exists only if the lessor opts to appropriate
the improvements (Alburo v. Villanueva, supra, note 10 at 279-280; Valencia v. Ayala de
Roxas, supra, note 10 at 46). The refusal of the lessor to pay the lessee one-half of the value
of the useful improvements gives rise to the right of removal. On this score, the commentary
of Justice Paras is enlightening.

'Note that under the 1st paragraph of Art. 1678, the law on the right of REMOVAL
says that 'should the lessor refuse to reimburse said amount, the lessee may
remove the improvements, even though the principal thing may suffer thereby.'
While the phrase 'even though' implies that Art. 1678 always applies regardless of
whether or not the improvements can be removed without injury to the leased
premises, it is believed that application of the Article cannot always be done. The
rule is evidently intended for cases where a true accession takes place as when
part of the land leased is, say, converted into a fishpond; and certainly not where as
easily removable

thing (such as a wooden fence) has been introduced. There is no doubt that in a
case involving such a detachable fence, the lessee can take the same away with
him when the lease expires (5 E. Paras, Civil Code of the Philippines Annotated
345 [11th ed., 1986]).'

xxxx

Clearly, it is Article 1678 of the New Civil Code which applies to the present case.

Petitioners claim for reimbursement of the alleged entire value of the improvements does not thus lie under
Article 1678. Not even for one-half of such alleged value, there being no substantial evidence, e.g., receipts or
other documentary evidence detailing costs of construction. Besides, by petitioners admission, of the structures
they originally built the billiard hall, restaurant, sari-sari store and a parking lot, only the bodega-like sari-
sari store and the parking lot now exist.[27]

At all events, under Article 1678, it is the lessor who is given the option, upon termination of the lease contract,
either to appropriate the useful improvements by paying one-half of their value at that time, or to allow the
lessee to remove the improvements. This option solely belongs to the lessor as the law is explicit that [s]hould
the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the
principal thing may suffer damage thereby. It appears that the lessor has opted not to reimburse.

WHEREFORE, the petition is DENIED. The Court of Appeals Decision of January 19, 2005 is AFFIRMED in
light of the foregoing discussions.

Costs against petitioners.

SO ORDERED.

 Cequeña v. Bolante, G.R. No. 137944, April 6, 2000

Page 10 of 31
 Page 11 of 31

THIRD DIVISION

[G.R. No. 137944. April 6, 2000]

FERNANDA MENDOZA CEQUENA and RUPERTA MENDOZA LIRIO, petitioners, vs. HONORATA
MENDOZA BOLANTE, respondent. J lexj

DECISION

PANGANIBAN, J.:

Tax receipts and declarations are prima facie proofs of ownership or possession of the property for which such
taxes have been paid. Coupled with proof of actual possession of the property, they may become the basis of a
claim for ownership. By acquisitive prescription, possession in the concept of owner -- public, adverse, peaceful
and uninterrupted -- may be converted to ownership. On the other hand, mere possession and occupation of
land cannot ripen into ownership.

The Case

Before us is a Petition for Review on Certiorari of the March 19, 1999 Decision[1] of the Court of Appeals[2] (CA)
in CA-GR CV No. 43423. The assailed Decision disposed as follows:[3]

"WHEREFORE, for all the foregoing, the decision of the trial court appealed from
is REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered declaring x x x
Honorata Mendoza Bolante the rightful owner and possessor of the parcel of land which is the
subject of this appeal." Lexj uris

The Facts

The Petition herein refers to a parcel of land situated in Barangay Bangad, Binangonan, Province of Rizal,
having an area of 1,728 square meters and covered by Tax Declaration No. 26-0027.

The undisputed antecedents of this case are narrated by the Court of Appeals as follows: [4]

"The facts not disputed revealed that prior to 1954, the land was originally declared for
taxation purposes in the name of Sinforoso Mendoza, father of [respondent] and married to
Eduarda Apiado. Sinforoso died in 1930. [Petitioners] were the daughters of Margarito
Mendoza. On the basis of an affidavit, the tax declaration in the name of Sinforoso Mendoza
of the contested lot was cancelled and subsequently declared in the name of Margarito
Mendoza. Margarito and Sinforoso are brothers. [Respondent] is the present occupant of the
land. Earlier, on October 15, 1975, [respondent] and Miguel Mendoza, another brother of
[petitioners], during the cadastral survey had a dispute on [the] ownership of the land. Juri
smis

"During the pre-trial conference, parties stipulated the following facts:

1) The land subject of the case was formerly declared for taxation purposes in the name of
Sinforoso Mendoza prior to 1954 but is now declared in the name of Margarito Mendoza.

2) The parties agree[d] as to the identity of the land subject of instant case.

Page 11 of 31
 Page 12 of 31

3) [Petitioners] are the daughters of Margarito Mendoza while the [respondent] is the only
daughter of Sinforoso Mendoza.

'4) Margarito Mendoza and Sinforoso Mendoza [were] brothers, now deceased.

5) During the cadastral survey of the property on October 15, 1979 there was already a
dispute between Honorata M. Bolante and Miguel Mendoza, brother of [petitioners].

6) [Respondent was] occupying the property in question.

The only issue involved [was] who [was] the lawful owner and possessor of
the land subject of the case.

"After trial, the court a quo rendered its judgment in favor of [petitioners], the dispositive
portion of which reads as follows:

Wherefore, in view of the foregoing considerations, judgment is hereby

rendered for the [petitioners] and against the [respondent]:

1. Declaring that the parcel of land situated in Bangad, Binangonan, Rizal covered by tax
declaration no. 26-0027 in the name of Margarito Mendoza belong to his heirs, the
[petitioners] herein;

2. Ordering [respondent] to vacate the property subject of the case and deliver possession
thereof to the heirs of Margarito Mendoza. Jjj uris

3. Ordering the [respondent] to indemnify the [petitioners] in the sum of P10,000.00, as actual
damages.

4. Ordering the [respondent] to pay the costs."

Ruling of the Court of Appeals

The Court of Appeals reversed the trial court because the genuineness and the due execution of the affidavit
allegedly signed by the respondent and her mother had not been sufficiently established. The notary public or
anyone else who had witnessed the execution of the affidavit was not presented. No expert testimony or
competent witness ever attested to the genuineness of the questioned signatures.

The CA further ruled that the affidavit was insufficient to overcome the denial of respondent and her mother.
The former testified that the latter, never having attended school, could neither read nor write. Respondent also
said that she had never been called "Leonor," which was how she was referred to in the affidavit.

Moreover, the appellate court held that the probative value of petitioners tax receipts and declarations paled in
comparison with respondents proof of ownership of the disputed parcel. Actual, physical, exclusive and
continuous possession by respondent since 1985 indeed gave her a better title under Article 538 of the Civil
Code. lex

Hence, this Petition.[5]

Issues

Insisting that they are the rightful owners of the disputed land, the petitioners allege that the CA committed
these reversible errors:[6]

Page 12 of 31
 Page 13 of 31

"1. xxx [I]n not considering the affidavit as an exception to the general rule that an affidavit is
classified as hearsay evidence, unless the affiant is placed on the witness stand; and Jksm

"2. xxx [I]n holding that respondent has been in actual and physical possession, coupled with
xxx exclusive and continuous possession of the land since 1985, which are evidence of the
best kind of circumstance proving the claim of the title of ownership and enjoys the
presumption of preferred possessor."

The Court's Ruling

The Petition has no merit.

First Issue: Admissibility of the Affidavit

Petitioners dispute the CA's ruling that the affidavit was not the best evidence of their father's ownership of the
disputed land, because the "affiant was not placed on the witness stand." They contend that it was
unnecessary to present a witness to establish the authenticity of the affidavit because it was a declaration
against respondent's interest and was an ancient document. As a declaration against interest, it was an
exception to the hearsay rule. As a necessary and trustworthy document, it was admissible in evidence. And
because it was executed on March 24, 1953, it was a self-authenticating ancient document. Chief

We quote below the pertinent portion of the appellate court's ruling:[7]

"While it is true that the affidavit was signed and subscribed before a notary public, the
general rule is that affidavits are classified as hearsay evidence, unless affiants are placed on
the witness stand (People's Bank and Trust Company vs. Leonidas, 207 SCRA 164).
Affidavits are not considered the best evidence, if affiants are available as witnesses (Vallarta
vs. Court of Appeals, 163 SCRA 587). The due execution of the affidavit was not sufficiently
established. The notary public or others who saw that the document was signed or at least
[could] confirm its recitals [were] not presented. There was no expert testimony or competent
witness who attested to the genuineness of the questioned signatures. Worse, [respondent]
denied the genuineness of her signature and that of her mother xxx. [Respondent] testified
that her mother was an illiterate and as far as she knew her mother could not write because
she had not attended school (p. 7, ibid). Her testimony was corroborated by Ma. Sales
Bolante Basa, who said the [respondent's] mother was illiterate."

The petitioners allegations are untenable. Before a private document offered as authentic can be received in
evidence, its due execution and authenticity must be proved first.[8] And before a document is admitted as an
exception to the hearsay rule under the Dead Man's Statute, the offeror must show (a) that the declarant is
dead, insane or unable to testify; (b) that the declaration concerns a fact cognizable by the declarant; (c) that at
the time the declaration was made, he was aware that the same was contrary to his interest; and (d) that
circumstances render improbable the existence of any motive to falsify.[9]Esmsc

In this case, one of the affiants happens to be the respondent, who is still alive and who testified that the
signature in the affidavit was not hers. A declaration against interest is not admissible if the declarant is
available to testify as a witness.[10] Such declarant should be confronted with the statement against interest as a
prior inconsistent statement.

The affidavit cannot be considered an ancient document either. An ancient document is one that is (1) more
than 30 years old, (2) found in the proper custody, and (3) unblemished by any alteration or by any
circumstance of suspicion.[11] It must on its face appear to be genuine. The petitioners herein failed, however, to
explain how the purported signature of Eduarda Apiado could have been affixed to the subject affidavit if,
according to the witness, she was an illiterate woman who never had any formal schooling. This circumstance
casts suspicion on its authenticity.

Page 13 of 31
 Page 14 of 31

Not all notarized documents are exempted from the rule on authentication. Thus, an affidavit does not
automatically become a public document just because it contains a notarial jurat. Furthermore, the affidavit in
question does not state how the ownership of the subject land was transferred from Sinforoso Mendoza to
Margarito Mendoza. By itself, an affidavit is not a mode of acquiring ownership.

Second Issue: Preference of PossessionEsmmis

The CA ruled that the respondent was the preferred possessor under Article 538 of the Civil Code because she
was in notorious, actual, exclusive and continuous possession of the land since 1985. Petitioners dispute this
ruling. They contend that she came into possession through force and violence, contrary to Article 536 of the
Civil Code.

We concede that despite their dispossession in 1985, the petitioners did not lose legal possession because
possession cannot be acquired through force or violence.[12] To all intents and purposes, a possessor, even if
physically ousted, is still deemed the legal possessor.[13] Indeed, anyone who can prove prior possession,
regardless of its character, may recover such possession.[14]

However, possession by the petitioners does not prevail over that of the respondent. Possession by the former
before 1985 was not exclusive, as the latter also acquired it before 1985. The records show that the petitioners
father and brother, as well as the respondent and her mother were simultaneously in adverse possession of the
land. Es-mso

Before 1985, the subject land was occupied and cultivated by the respondent's father (Sinforoso), who was the
brother of petitioners' father (Margarito), as evidenced by Tax Declaration No. 26425.[15] When Sinforoso died
in 1930, Margarito took possession of the land and cultivated it with his son Miguel. At the same time,
respondent and her mother continued residing on the lot.

When respondent came of age in 1948, she paid realty taxes for the years 1932-1948.[16] Margarito declared
the lot for taxation in his name in 1953[17] and paid its realty taxes beginning 1952.[18] When he died, Miguel
continued cultivating the land. As found by the CA, the respondent and her mother were living on the land,
which was being tilled by Miguel until 1985 when he was physically ousted by the respondent. [19]

Based on Article 538 of the Civil Code, the respondent is the preferred possessor because, benefiting from her
father's tax declaration of the subject lot since 1926, she has been in possession thereof for a longer period.
On the other hand, petitioners' father acquired joint possession only in 1952. Ms-esm

Third Issue: Possession of Better Right

Finally, the petitioners challenge the CA ruling that "actual and physical coupled with the exclusive and
continuous possession [by respondent] of the land since 1985" proved her ownership of the disputed land. The
respondent argues that she was legally presumed to possess the subject land with a just title since she
possessed it in the concept of owner. Under Article 541 of the Code, she could not be obliged to show or prove
such title.

The respondent's contention is untenable. The presumption in Article 541 of the Civil Code is merely
disputable; it prevails until the contrary is proven.[20] That is, one who is disturbed in one's possession shall,
under this provision, be restored thereto by the means established by law.[21] Article 538 settles only the
question of possession, and possession is different from ownership. Ownership in this case should be
established in one of the ways provided by law. E-xsm

To settle the issue of ownership, we need to determine who between the claimants has proven acquisitive
prescription.[22]

Ownership of immovable property is acquired by ordinary prescription through possession for ten
years.[23] Being the sole heir of her father, respondent showed through his tax receipt that she had been in

Page 14 of 31
 Page 15 of 31

possession of the land for more than ten years since 1932. When her father died in 1930, she continued to
reside there with her mother. When she got married, she and her husband engaged in kaingin inside the
disputed lot for their livelihood.[24]

Respondent's possession was not disturbed until 1953 when the petitioners' father claimed the land. But by
then, her possession, which was in the concept of owner -- public, peaceful, and uninterrupted[25] -- had already
ripened into ownership. Furthermore she herself, after her father's demise, declared and paid realty taxes for
the disputed land. Tax receipts and declarations of ownership for taxation, when coupled with proof of actual
possession of the property, can be the basis of a claim for ownership through prescription.[26]Ky-le

In contrast, the petitioners, despite thirty-two years of farming the subject land, did not acquire ownership. It is
settled that ownership cannot be acquired by mere occupation.[27] Unless coupled with the element of hostility
toward the true owner,[28] occupation and use, however long, will not confer title by prescription or adverse
possession. Moreover, the petitioners cannot claim that their possession was public, peaceful and
uninterrupted. Although their father and brother arguably acquired ownership through extraordinary prescription
because of their adverse possession for thirty-two years (1953-1985),[29] this supposed ownership cannot
extend to the entire disputed lot, but must be limited to the portion that they actually farmed.

We cannot sustain the petitioners' contention that their ownership of the disputed land was established before
the trial court through the series of tax declarations and receipts issued in the name of Margarito Mendoza.
Such documents prove that the holder has a claim of title over the property. Aside from manifesting a sincere
desire to obtain title thereto, they announce the holder's adverse claim against the state and other interested
parties.[30]Ky-calr

However, tax declarations and receipts are not conclusive evidence of ownership.[31] At most, they constitute
mere prima facie proof of ownership or possession of the property for which taxes have been paid.[32] In the
absence of actual public and adverse possession, the declaration of the land for tax purposes does not prove
ownership.[33] In sum, the petitioners' claim of ownership of the whole parcel has no legal basis.

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs against
petitioners.

SO ORDERED.

 Heirs of Pedro Laurora et. al. v. Sterling Technopark III et al., G.R. No. 146815, April 9, 2003

THIRD DIVISION

[G.R. No. 146815. April 9, 2003]

HEIRS OF PEDRO LAURORA and LEONORA LAURORA, petitioners, vs. STERLING TECHNOPARK III and
S.P. PROPERTIES, INC., respondents.

DECISION
PANGANIBAN, J.:

Page 15 of 31
 Page 16 of 31

The owners of a property have no authority to use force and violence to eject alleged usurpers who were
in prior physical possession of it. They must file the appropriate action in court and should not take the law into
their own hands.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the June 27,
2000 Decision[2] and the January 22, 2001 Resolution[3] of the Court of Appeals[4] (CA) in CA-GR SP No.
54667. The dispositive part of the Decision reads:

WHEREFORE, the [P]etition is GRANTED and the RTC [D]ecision dated 06 May 1999 and the RTC [O]rder
dated 03 August 1999 are hereby REVERSED and SET ASIDE, and corollarily, the MCTC [D]ecision is
AFFIRMED. [5]

The assailed Resolution denied petitoners Motion for Reconsideration.

The Facts

The factual antecedents are summarized by the CA as follows:

In a [C]omplaint for Forcible Entry with Damages filed on 27 September 1997 before the Fifth Municipal Circuit
Trial Court of Carmona and Gen. Mariano Alvarez, plaintiffs therein, x x x Pedro Laurora and Leonora Laurora
[herein petitioners] alleged that they [were] the owners of Lot 1315-G, SWD-40763 of the Yaptinchay Estate
with an area of 39,771 sq. meters and located in Carmona, Cavite. Pedro Laurora planted trees and has
possessed the land up to the present.On 15 September 1997, [respondents] Sterling Technopark III and S.P.
Properties, Inc. x x x through their Engr. Bernie Gatchalian bulldozed and uprooted the trees and plants, and
with the use of armed men and by means of threats and intimidation, succeeded in forcibly ejecting
[petitioners]. As a result of their dispossession, [petitioners] suffered actual damages in the amount of
P3,000,000.00 and P10,000.00 as attorneys fees.

In their [A]nswer to the [C]omplaint, [respondents] averred that [petitioners were] not the owners of the land
because they disposed of it sometime in 1976 as shown by legal documents. On 02 April 1969, the Land
Authority issued an order of award in favor of [petitioners], approving the application of Pedro Laurora to buy
the subject Lot 1315-G from the government. On 01 March 1974, [petitioners] requested the Department of
Agrarian Reform for the transfer of the lot to Juan Manaig. Favorably acted upon, the DAR issued a permit to
transfer dated 03 June 1975 through its Regional Director Benjamin R. Estrellado. On 03 July 1975, Juan
Manaig, as transferee and buyer, paid the required amount of P10,643.65 under Official Receipt No. 8304707
to the government as full payment for the transfer of said lot to him. On 26 March 1976, the [petitioners] as
sellers and witnessed by their sons, Efren Laurora and Dominador Laurora, executed a Kasulatan ng
Paglilipatan ng Lupa transferring the land to Juan Manaig as buyer. On 11 June 1976, the [petitioners] again
witnessed by their sons, Efren and Dominador, executed a Kasulatan ng Bilihang Tuluyan or Deed of Sale
wherein they sold Lot 1315-G including all improvements therein, in favor of Juan Manaig. The Deed of
Absolute Sale was approved by the Department of Agrarian Reform on 14 June 1976 in DAR Approval of
Transfer of Rights signed by DAR Regional Director, Benjamin R. Estrellado. After the approval of the sale from
the [petitioners] to Juan Manaig, the latter paid its real estate taxes. The tax declarations of the land in the
name of its previous owners, Yaptinchays, were cancelled and transferred in the name of [petitioner] Pedro
Laurora as owner-transferee. Thereupon, the heirs of the late JUAN MANAIG sold the land to Golden Mile
Resources Development Corporation which likewise sold it to [respondent] S. P. Properties, Inc.

After summary proceedings in the MCTC, x x x, a judgment was rendered dismissing the complaint. The case
was elevated to the Regional Trial Court. In due course, the said court rendered a decision reversing the MCTC
judgment. x x x[6]

Page 16 of 31
 Page 17 of 31

Ruling of the Court of Appeals

The CA reversed the Regional Trial Court (RTC) and reinstated the Order of dismissal issued by the
Municipal Circuit Trial Court (MCTC). It held that there was no evidence to support the claim of petitioners to
the prior physical possession of the property. The evidence allegedly showed that they had already sold the
land with the approval of the Department of Agrarian Reform (DAR). Accordingly, their subsequent entry into
and possession of the land constituted plain usurpation, which could not be the source of any right to occupy
it. Being planters in bad faith, they had no right to be reimbursed for improvements on the land, in accordance
with Article 449 of the New Civil Code.
Hence, this Petition.[7]

The Issue

In their Memorandum,[8] petitioners raise this sole issue for our consideration:

x x x [W]hether [p]rivate [r]espondent[s] ha[ve] a valid and legal right to forcibly eject petitioners from the
premises despite their resistance and objection, through the use of arm[ed] men and by bulldozing, cutting, and
destroying trees and plants planted by petitioners, without court order, to the damage and prejudice of the
latter.[9]

The Courts Ruling

The Petition is meritorious.

Main Issue:
Physical Possession of the Land

The only issue in forcible entry cases is the physical or material possession of real property --
possession de facto, not possession de jure.[10] Only prior physical possession, not title, is the issue. [11] If
ownership is raised in the pleadings, the court may pass upon such question, but only to determine the
question of possession.[12]
The ownership claim of respondents upon the land is based on the evidence they presented. Their
evidence, however, did not squarely address the issue of prior possession. Even if they succeed in proving that
they are the owners of the land,[13] the fact remains that they have not alleged or proved that they physically
possess it by virtue of such ownership. On the other hand, petitioners prior possession of the land was not
disputed by the CA, which merely described it as usurpation.[14]
We stress that the issue of ownership in ejectment cases is to be resolved only when it is intimately
intertwined with the issue of possession,[15] to such an extent that the question of who had prior possession
cannot be determined without ruling on the question of who the owner of the land is. [16] No such intertwinement
has been shown in the case before us. Since respondents claim of ownership is not being made in order to
prove prior possession, the ejectment court cannot intrude or dwell upon the issue of ownership. [17]
Notwithstanding the actual condition of the title to the property, a person in possession cannot be ejected
by force, violence or terror -- not even by the owners.[18] If such illegal manner of ejectment is employed, as it
was in the present case, the party who proves prior possession -- in this case, petitioners -- can recover
possession even from the owners themselves. [19]

Page 17 of 31
 Page 18 of 31

Granting arguendo that petitioners illegally entered into and occupied the property in question,
respondents had no right to take the law into their own hands and summarily or forcibly eject the occupants
therefrom.
Verily, even if petitioners were mere usurpers of the land owned by respondents, still they are entitled to
remain on it until they are lawfully ejected therefrom. Under appropriate circumstances, respondents may file,
other than an ejectment suit, an accion publiciana -- a plenary action intended to recover the better right to
possess;[20] or an accion reivindicatoria -- an action to recover ownership of real property.[21]
The availment of the aforementioned remedies is the legal alternative to prevent breaches of peace and
criminal disorder resulting from the use of force by claimants out to gain possession.[22] The rule of law does not
allow the mighty and the privileged to take the law into their own hands to enforce their alleged rights. They
should go to court and seek judicial vindication.
WHEREFORE, the Petition is GRANTED and the assailed Decision REVERSED and SET ASIDE. No
costs.
SO ORDERED.

 Carlos v. Republic of the Philippines, 468 SCRA 709

SECOND DIVISION

MARIA CARLOS, represented by G.R. No. 164823

TERESITA CARLOS VICTORIA,
Petitioner, Present:

Puno, J.
Chairman,
Austria-Martinez,
- versus - Callejo, Sr.,
Tinga, and
Chico-Nazario, JJ.

Promulgated:
REPUBLIC OF THE PHILIPPINES,
Respondent. August 31, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

Puno, J.:

This is a petition for review on certiorari to annul the decision of the Court of Appeals in CA-G.R. CV No. 76824
entitled Re: Application for Land Registration of a Parcel of Land in Taguig, Metro Manila, Maria Carlos
represented by Teresita Carlos Victoria, Applicant-Appellee vs. Republic of the Philippines through the Office of
the Solicitor General, Oppositor-Appellant.

Page 18 of 31
 Page 19 of 31

On December 19, 2001, petitioner Maria Carlos, represented by her daughter, Teresita Carlos Victoria, filed an
application for registration and confirmation of title over a parcel of land with an area of 3,975 square meters
located at Pusawan, Ususan, Taguig, Metro Manila, covered by Plan Psu-244418. Petitioner alleged, among
others, that she is the owner of said parcel of land which she openly, exclusively and notoriously possessed
and occupied since July 12, 1945 or earlier under a bona fide claim of ownership; that there is no mortgage or
encumbrance affecting said property, nor is it part of any military or naval reservation; that the property is being
used for industrial purposes; and that there are no tenants or lessees on the property. Petitioner further claimed
that she has been in possession of the subject land in the concept of an owner; that her possession has been
peaceful, public, uninterrupted and continuous since 1948 or earlier; and tacking her possession with that of
her predecessors-in-interest, petitioner has been in possession of the land for more than 50 years. [1]

The Republic of the Philippines, represented by the Director of Lands, filed an opposition to petitioners
application.[2]

During the initial hearing, however, only petitioner and her counsel appeared. They presented documentary
evidence to prove the jurisdictional
requirements.[3]

Petitioner later presented testimonial evidence consisting of the testimonies of her neighbors, Sergio Cruz and
Daniel Castillo, and Teresita Carlos Victoria herself.[4]

Sergio Cruz, 83 years old, a native of Ususan, Taguig, and neighbor of Maria Carlos, testified that the property
subject of the application was previously owned and possessed by Jose Carlos. He planted it with palay and
sold the harvest. Everyone in the community knew him as the owner of said parcel of land. He also paid the
taxes thereon. After the death of Jose Carlos in 1948, his daughter, Maria Carlos, inherited the property and
immediately took possession thereof. Her possession was peaceful, open, public, continuous, uninterrupted,
notorious, adverse and in the concept of an owner. When Maria Carlos died, her heirs took over the property.[5]

Cruzs testimony was corroborated by Daniel Castillo, 76 years old, Barangay Captain of Ususan, Taguig. [6]

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

Petitioner also presented in court the concerned officers of the Department of Environment and Natural
Resources (DENR) to establish that the land in question is alienable and disposable.

Elvira R. Reynaldo, Records Officer, DENR Lands Management Bureau, appeared to certify that their office
has no record of any kind of public land application/land patent covering the parcel of land situated at
Ususan, Taguig, Rizal, identified/described in Plan Psu-244418.[8]

Ulysses Sigaton, Land Management Inspector, DENR National Capital Region, stated that he conducted an
ocular inspection of the subject property and found that it is within the alienable and disposable area under
Project No. 27-B, LC Map No. 2623, certified by the Bureau of Forest Development on January 4, 1968. He
also noted that the land is being used for industrial purposes. It had several warehouses, four big water tanks
and is enclosed by a fence.[9]

The trial court granted the application in its decision dated October 24, 2002. It held:

Page 19 of 31
 Page 20 of 31

After considering the applicants evidence ex-parte which is based on factual and meritorious
grounds, and considering that the applicant acquired the property under registration through
inheritance from her father, Jose Carlos, and considering further that her possession thereof,
tacked with that of her predecessor-in-interest, is open, continuous, exclusive, notorious and
undisturbed, under claim of ownership since time immemorial up to the present time; and
considering further that the subject parcel of land is part of the disposable and alienable land
(Tsn, July 3, 2002, p.6) and considering further that the realty taxes due thereon have been
religiously paid (Exhs. HH, II, JJ, and JJ-1), and considering finally that the subject parcel of
land belong[s] to the applicant and that she possess[es] a perfect title thereto which may be
confirmed and registered in her name under the (P)roperty Registration Decree (P.D. 1529),
the herein application is hereby GRANTED.[10]

On appeal, the Court of Appeals reversed and set aside the decision of the trial court. It noted that:
In the instant case, the applicant at the time she filed her application for registration of title
was no longer in possession and occupation of the land in question since on October 16,
1996, the applicants mother and predecessor-in-interest sold the subject land to Ususan
Development Corporation. This was admitted by witness Teresita Carlos Victoria x x x

Clearly, as early as 1996, possession and occupation of the land in question pertains not to
the applicant but to Ususan Development Corporation, thus it can be said that the applicant
has no registrable title over the land in question.[11]

Hence, this petition.

We affirm the findings of the appellate court.

Applicants for confirmation of imperfect title must prove the following: (a) that the land forms part of the
disposable and alienable agricultural lands of the public domain; and (b) that they have been in open,
continuous, exclusive, and notorious possession and occupation of the same under a bona fide claim of
ownership either since time immemorial or since June 12, 1945.[12]

As found by the Court of Appeals, petitioner has met the first requirement but not the second.

The Court held in Republic vs. Alconaba[13] that the applicant must show that he is in actual possession of
the property at the time of the application, thus:
The law speaks of possession and occupation. Since these words are separated by the
conjunction []and[], the clear intention of the law is not to make one synonymous with the
other. Possession is broader than occupation because it includes constructive possession.
When, therefore, the law adds the word occupation, it seeks to delimit the all-encompassing
effect of constructive possession. Taken together with the words open, continuous, exclusive
and notorious, the word occupation serves to highlight the fact that for an applicant to qualify,
his possession must not be a mere fiction. Actual possession of a land consists in the
manifestation of acts of dominion over it of such a nature as a party would naturally exercise
over his own property.

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

4. That the VENDOR, by this Deed hereby transfer(s) possession of the property to the
VENDEE.[15]

This contradicts petitioners claim that she was in possession of the property at the time that she applied for
confirmation of title.

Page 20 of 31
 Page 21 of 31

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

We therefore find that the Court of Appeals did not err in denying the issuance of a certificate of title to
petitioner.

IN VIEW WHEREOF, the petition is DENIED.

SO ORDERED.

 Ortiz v. Cayanan, 92 SCRA 146, 1979

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-32974 July 30, 1979

BARTOLOME ORTIZ, petitioner,

vs.
HON. UNION C. KAYANAN, in his capacity as Judge of the Court of First Instance of Quezon, Branch
IV; ELEUTERIO ZAMORA, QUIRINO COMINTAN, VICENTE FERRO, AND GREGORIO
PAMISARAN, respondents.

Salonga, Ordoñ;ez, Yap, Sicat & Associates and Salvador, Ulgado & Carbon for petitioner.

Jose A. Cusi for private respondents.

ANTONIO, J.:1äwphï1.ñët

Petition for certiorari and Prohibition with Preliminary Injunction to nullify the Order of respondent Judge
directing the execution of the final judgment in Civil Case No. C-90, entitled "Bartolome Ortiz vs. Secretary of
Agriculture and Natural Resources, et al.," and the Writ of Execution issued to implement said Order, allegedly
for being inconsistent with the judgment sought to be enforced.

Civil Case No. C-90 was filed by Bartolome Ortiz who sought the review and/or annulment of the decision of
the Secretary of Agriculture and Natural Resources, giving preference to the sales applications of private
respondents Quirino Comintan and Eleuterio Zamora over Lot No. 5785, PLS-45, located at Barrio Cabuluan,
Calauag, Quezon.

Page 21 of 31
 Page 22 of 31

The factual background of the case, as found by respondent Court, is as follows:têñ.£îhqwâ£

... The lot in controversy was formerly the subject of Homestead Application No. 122417 of
Martin Dolorico II, plaintiff's ward who died on August 20, 1931; that since then it was plaintiff
who continued the cultivation and possession of the property, without however filing any
application to acquire title thereon; that in the Homestead Application No. 122417, Martin
Dolorico II named his uncle, Martin Dolorico I as his heir and successor in interest, so that in
1951 Martin Dolorico I executed an affidavit relinquishing his rights over the property in favor
of defendants Quirino Comintan and Eleuterio Zamora, his grandson and son-in-law,
respectively, and requested the Director of Lands to cancel the homestead application; that on
the strength of the affidavit, Homestead Application No. 122417 was cancelled and thereafter,
defendants Comintan and Zamora filed their respective sales applications Nos. 8433 and
9258; that plaintiff filed his protest on November 26, 1951 alleging that he should be given
preference to purchase the lot inasmuch as he is the actual occupant and has been in
continuous possession of the same since 1931; and inspite of plaintiff's opposition, "Portion A"
of the property was sold at public auction wherein defendant Comintan was the only bidder;
that on June 8, 1957, investigation was conducted on plaintiff's protest by Assistant Public
Lands Inspector Serapion Bauzon who submitted his report to the Regional Land Officer, and
who in turn rendered a decision on April 9, 1958, dismissing plaintiff's claim and giving due
course to defendants' sales applications on the ground that the relinquishment of the
homestead rights of Martin Dolorico I in favor of Comintan and Zamora is proper, the former
having been designated as successor in interest of the original homestead applicant and that
because plaintiff failed to participate in the public auction, he is forever barred to claim the
property; that plaintiff filed a motion for reconsideration of this decision which was denied by
the Director of Lands in his order dated June 10, 1959; that, finally, on appeal to the Secretary
of Agriculture and Natural Resources, the decision rendered by the Regional Land Officer was
affirmed in toto. 1

On March 22, 1966, respondent Court rendered judgment in the afore-mentioned civil case, the dispositive
portion of which reads as follows:têñ.£îhqwâ£

IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby rendered awarding

Lot No. 5785-A of PLS-45, (Calauag Public Land Subdivision) one-half portion of the property
in litigation located at Bo. Cabuluan, Calauag, Quezon, in favor of defendant QUIRINO
COMINTAN, being the successful bidder in the public auction conducted by the bureau of
Lands on April 18, 1955, and hereby giving due course to the Sales Application No. 9258 of
defendant Eleuterio Zamora over the other half, Lot No. 5785-B of PLS-45, Calauag, without
prejudice to the right of plaintiff BARTOLOME ORTIZ to participate in the public bidding of the
same to be announced by the Bureau of Lands, Manila. However, should plaintiff Bartolome
Ortiz be not declared the successful bidder thereof, defendants Quirino Comintan and
Eleuterio Zamora are ordered to reimburse jointly said plaintiff the improvements he has
introduced on the whole property in the amount of THIRTEEN THOUSAND SIX HUNDRED
THIRTY-TWO (P13,632.00) PESOS, the latter having the right to retain the property until after
he has been fully paid therefor, without interest since he enjoys the fruits of the property in
question, with prejudice and with costs again the plaintiff.2

Plaintiff appealed the decision to the Court of Appeals.

Two (2) years after the rendition of the judgment by the court a quo, while the case was pending appeal and
upon petition of private respondents Quirino Comintan and Eleuterio Zamora, respondent Court appointed
respondent Vicente Ferro, Clerk of Court, as Receiver to collect tolls on a portion of the property used as a
diversion road. On August 19, 1969, the Court of Appeals issued a Resolution annulling the Order appointing
the Receiver. Subsequently, on February 19, 1970, the Appellate Court affirmed the decision of the trial court.
A petition for review on certiorari of the decision of the Court of Appeals was denied by this Court on April 6,
1970. At this point, private respondents filed a petition for appointment of a new receiver with the court a quo.
This petition was granted and the receiver was reappointed. Petitioner sought the annulment of this Order with

Page 22 of 31
 Page 23 of 31

the Court of Appeals, but said Court ruled that its decision had already become final and that the records of the
case were to be remanded to the trial court.

Not satisfied with such denial, petitioner filed a petitioner for certiorari, prohibition and mandamus with
preliminary injunction before this Court, 3 praying for the annulment of the Order reappointing the Receiver. On
July 13, 1970, the petition was dismissed by this Court on the ground of insufficient showing of grave abuse of
discretion.

II

The judgment having become final and executory private respondents filed a motion for the execution of the
same, praying as follows:têñ.£îhqwâ£

WHEREFORE, it is respectfully prayed of this Honorable Court to order the issuance of a writ
of execution in accordance with the judgment of this Honorable Court, confirmed by the Court
of Appeals and the Supreme Court, commanding any lawful officer to deliver to defendants
Comintan and Zamora the land subject of the decision in this case but allowing defendants to
file a bond in such amount as this Honorable Court may fix, in lieu of the P13,632.00 required
to be paid to plaintiff, conditioned that after the accounting of the tools collected by plaintiff,
there is still an amount due and payable to said plaintiff, then if such amount is not paid on
demand, including the legal interests, said bond shall be held answerable.

Ordering further the plaintiff to render an accounting of the tolls he collected from March of
1967 to December 31, 1968 and from September 1969 to March 31, 1970, and deliver said
tolls collected to the receiver and if judgment is already executed, then to Quirino Comintan
and Eleuterio Zamora; and,

Finally, to condemn plaintiff to pay moral damages for withholding the tools which belong to
your movant in an amount this Court may deem just in the premises.4

Acting upon the foregoing motion, respondent Judge issued an Order, dated September 23, 1970, stating,
among others, the following: têñ.£îhqwâ£

The records further disclosed that from March 1967 to December 31, 1968, piaintiff Bartolome
Ortiz collected tolls on a portion of the propertv in question wherein he has not introduced anv
improvement particularlv on Lot No. 5785-A; PLS-45 awarded to defendant Quirino Comintan,
thru which vehicular traffic was detoured or diverted, and again from September 1969 to
March 31, 1970, the plaintiff resumed the collection of tools on the same portion without
rendering any accounting on said tolls to the Receiver, who, was reappointed after submitting
the required bond and specifically authorized only to collect tolls leaving the harvesting of the
improvements to the plaintiff.

xxx xxx xxx

ln virtue of he findings of this Court as contained in the dispositive portion of its decision, the
defendants are jointly obligated to pay the plaintiff in the amount of P13,632.00 as reasonable
value of the improvements he introduced on the whole property in question, and that he has
the right of retention until fully paid. It can be gleaned from the motion of the defendants that if
plaintiff submits an accounting of the tolls he collected during the periods above alluded to,
their damages of about P25,000.00 can more than offset their obligation of P13,362.00 in
favor of the plaintiff, thereafter the possession of the land be delivered to the defendants since
the decision of the Supreme Court has already become final and executory, but in the
interregnum pending such accounting and recovery by the Receiver of the tolls collected by
the plaintiff, the defendants pray that they allowed to put up a bond in lieu of the said
P13,632.00 to answer for damages of the former, if any.

Page 23 of 31
 Page 24 of 31

On the other hand, plaintiff contends in his opposition, admitting that the decision of the
Supreme Court has become final and executory; (1) the offer of a bond in lieu of payment of
P13,632.00 does not, and cannot, satisfy the condition imposed in the decision of this Court
which was affirmed in toto; (2) the public sale of Portion "B" of the land has still to take place
as ordained before the decision could be executed; and, (3) that whatever sums plaintiff may
derive from the property cannot be set off against what is due him for the improvements he
made, for which he has to be reimbursed as ordered.

xxx xxx xxx

Let it be known that plaintiff does not dispute his having collected tolls during the periods from
March 1967 to December 31, 1968 and from September 1969 to March 31, 1970. The
Supreme Court affirmed the decision of this Court its findings that said tolls belong to the
defendant, considering that the same were collected on a portion of the land question where
the plaintiff did not introduce any improvement. The reimbursement to the plaintiff pertains
only to the value of the improvements, like coconut trees and other plants which he introduced
on the whole property. The tolls collected by the plaintiff on an unimproved portion naturally
belong to the defendants, following the doctrine on accretion. Further, the reappointment of a
Receiver by this Court was upheld by the Supreme Court when it denied the petition for
certiorari filed by the plaintiff, bolstering the legal claim of defendants over said tolls. Thus, the
decision of the Supreme Court rendered the decision of this Court retroactive from March 22,
1966 although pending accounting of the tolls collected by the plaintiff is justified and will not
prejudice anybody, but certainly would substantially satisfy the conditions imposed in the
decision. However, insofar as the one-half portion "B" of the property, the decision may be
executed only after public sale by the Bureau of Lands shall be accomplished.

WHEREFORE, finding the Motion for Execution filed by the defendants to be meritorious, the
same is granted; provided, however, that they put up a bond equal the adjudicated amount of
P13,632.00 accruing in favor of the plaintiff, from a reputable or recognized bonding or surety
company, conditioned that after an accounting of the tolls collected by the plaintiff should
there be found out any balance due and payable to him after reckoning said obligation of
P13,632.00 the bond shall be held answerable therefor.5

Accordingly, a Writ of Execution was issued after private respondent Quirino Comintan had filed the required
bond. The writ directed the Sheriff to enforce the decision of the Court, and stated, part in, the
following:têñ.£îhqwâ£

But should there be found any amount collectible after accounting and deducting the amount
of P3,632.00, you are hereby ordered that of the goods and chattels of Bartolome Ortiz of Bo.
Kabuluan, Calauag, Quezon, be caused to be made any excess in the above-metioned
amount together with your lawful fees and that you render same to defendant Quirino
Comintan. If sufficient personal property cannot be found thereof to satisfy this execution and
lawful fees thereon, then you are commanded that of the lands and buildings of the said
BARTOLOME ORTIZ you make the said excess amount in the manner required by the Rules
of Court, and make return of your proceedings within this Court within sixty (60) days from
date of service.

You are also ordered to cause Bartolome Ortiz to vacate the property within fifteen (15) days
after service thereof the defendant Quirino Comintan having filed the required bond in the
amount of THIRTEEN THOUSAND SIX HUNDRED THIRTY-TWO (P13,632.00) PESOS. 6

On October 12, 1970, petitioner filed a Motion for Reconsideration of the aforesaid Order and Writ of Execution,
alleging:têñ.£îhqwâ£

(a) That the respondent judge has no authority to place respondents in possession of the
property;

Page 24 of 31
 Page 25 of 31

(b) That the Supreme Court has never affirmed any decision of the trial court that tolls
collected from the diversionary road on the property, which is public land, belong to said
respondents;

(c) That to assess petitioner a P25,000.00 liability for damages is purely punitive imposition
without factual or legal justification.

The foregoing Motion for Reconsideration was denied by respondent Judge per Order dated November 18,
1970. Saod Order states, in part:têñ.£îhqwâ£

It goes without saying that defendant Comintan is entitled to be placed in possession of lot
No. 5785-A of PLS-45 (Calauag Public Land Subdivision) and enjoyment of the tolls from
March, 1967 to March, 1968 and from September, 1969 to March 31, l970 which were
received by plaintiff Bartolome Ortiz, collected from the property by reason of the diversion
road where vehicular traffic was detoured. To defendant Comintan belongs the tolls thus
collected from a portion of the land awarded to him used as a diversionary road by the
doctrine of accretion and his right over the same is ipso jure, there being no need of any
action to possess said addition. It is so because as consistently maintained by the Supreme
Court, an applicant who has complied with all the terms and conditions which entitle him to a
patent for a particular tract of publlic land, acquires a vested right therein and is to be
regarded as equitable owner thereof so that even without a patent, a perfected homestead or
sales application is a property right in the fullest sense, unaffectcd by the fact that the
paramount title is still in the Government and no subsequent law can deprive him of that
vested right The question of the actual damages suffered by defendant Comintan by reason of
the unaccounted tolls received by plaintiff had already been fully discussed in the order of
September 23, 1970 and the Court is honestly convinced and believes it to be proper and
regular under the circumstances.

Incidentally, the Court stands to correct itself when in the same order, it directed the execution
of he decision with respect to the one-half portion "B" of the property only after the public sale
by the Bureau of Lands, the same being an oversight, it appearing that the Sales Application
of defendant Eleuterio Zamora had already been recognized and full confirmed by the
Supreme Court.

In view thereof, finding the motion filed by plaintiff to be without merit, the Court hereby denies
the same and the order of September 23, 1970 shall remain in full force subject to the
amendment that the execution of the decision with respect to the one-half portion "B" shall not
be conditioned to the public sale by the Bureau of Lands.

SO ORDERED.7

III

Petitioner thus filed the instant petition, contending that in having issued the Order and Writ of Execution,
respondent Court "acted without or in excess of jurisdiction, and/or with grave abuse of discretion, because the
said order and writ in effect vary the terms of the judgment they purportedly seek to enforce." He argued that
since said judgment declared the petitioner a possessor in good faith, he is entitled to the payment of the value
of the improvements introduced by him on the whole property, with right to retain the land until he has been
fully paid such value. He likewise averred that no payment for improvements has been made and, instead, a
bond therefor had been filed by defendants (private respondents), which, according to petitioner, is not the
payment envisaged in the decision which would entitle private respondents to the possession of the property.
Furthermore, with respect to portion "B", petitioner alleges that, under the decision, he has the right to retain
the same until after he has participated and lost in the public bidding of the land to be conducted by the Bureau
of Lands. It is claimed that it is only in the event that he loses in the bidding that he can be legally dispossessed
thereof.

Page 25 of 31
 Page 26 of 31

It is the position of petitioner that all the fruits of the property, including the tolls collected by him from the
passing vehicles, which according to the trial court amounts to P25,000.00, belongs to petitioner and not to
defendant/private respondent Quirino Comintan, in accordance with the decision itself, which decreed that the
fruits of the property shall be in lieu of interest on the amount to be paid to petitioner as reimbursement for
improvements. Any contrary opinion, in his view, would be tantamount to an amendment of a decision which
has long become final and executory and, therefore, cannot be lawfully done.

Petitioner, therefore, prayed that: (1) a Writ of Preliminary Injunction be issued enjoining the enforcement of the
Orders of September 23, 1970 and November 18, 1970, and the Writ of Execution issued thereto, or restoring
to petitioner the possession of the property if the private respondents had been placed in possession thereof;
(2) annulling said Orders as well as the Writ of Execution, dissolving the receivership established over the
property; and (3) ordering private respondents to account to petitioner all the fruits they may have gathered or
collected from the property in question from the time of petitioiier's illegal dispossession thereof.

On January 29, 1971, this Court issued the Writ of Preliminary Injunction. On January 30, 1971, private
respondents filed a Motion for Reconsideration and/or Modification of the Order dated January 29, 1971. This
was followed by a Supplemental Motion for Reconsideration and Manifestation on February 3, 1971. In the
latter motion, private respondents manifested that the amount of P14,040.96, representing the amount decreed
in the judgment as reimbursement to petitioner for the improvements, plus interest for six months, has already
been deposited by them in court, "with the understanding that said amount shall be turned over to the plaintiff
after the court a quo shall have determined the improvement on Lot 5785-A, and subsequently the remaining
balance of the deposit shall be delivered to the petitioner (plaintiff therein) in the event he loses the bid for Lot
5785-B in favor of private respondent Eleuterio Zamora."8 The deposit is evidenced by a certification made by
the Clerk of the Court a quo.9 Contending that said deposit was a faithful compliance with the judgment of the
trial court, private respondent Quirino Comintan prayed for the dissolution of the Writ of Injunction.

It appears that as a consequence of the deposit made by private respondents, the Deputy, Sheriff of Calauag,
Quezon ousted petitioner's representative from the land in question and put private respondents in possession
thereof. 10

On March 10, 1971, petitioner filed a "Comment on Respondents' 'Motion for Reconsideration' dated January
29, 1971' and 'Supplemental Motion for Reconsideration and Manifestation,'" contending that the tender of
deposit mentioned in the Suplemental Motion was not really and officially made, "inasmuch as the same
is not supported by any official receipt from the lower court, or from its clerk or cashier, as required by law;" that
said deposit does not constitute sufficient compliance with the judgment sought to be enforced, neither was it
legally and validly made because the requisites for consignation had not been complied with; that the tender of
legal interest for six months cannot substitute petitioner's enjoyment of the fruits of the property as long as the
judgment in Civil Case No. C-90 has not been implemented in the manner decreed therein; that contrary to the
allegations of private respondents, the value of the improvements on the whole property had been determined
by the lower court, and the segregation of the improvements for each lot should have been raised by them at
the opportune moment by asking for the modification of the decision before it became final and executory; and
that the tolls on the property constituted "civil fruits" to which the petitioner is entitled under the terms of the
decision.

IV

The issue decisive of the controvery is—after the rendition by the trial court of its judgment in Civil Case No. C-
90 on March 22, 1966 confirming the award of one-half of the property to Quirino Comintan—whether or not
petitioner is still entitled to retain for his own exclusive benefit all the fruits of the property, such as the tolls
collected by him from March 1967 to December 1968, and September 1969 to March 31, 1970, amounting to
about P25,000.00. In other words, petitioner contends that so long as the aforesaid amount of P13,632,00
decreed in the judgment representing the expenses for clearing the land and the value of the coconuts and fruit
trees planted by him remains unpaid, he can appropriate for his exclusive benefit all the fruits which he may
derive from the property, without any obligation to apply any portion thereof to the payment of the interest and
the principal of the debt.

We find this contention untenable.

Page 26 of 31
 Page 27 of 31

There is no question that a possessor in good faith is entitled to the fruits received before the possession is
legally interrupted. 11 Possession in good faith ceases or is legally interrupted from the moment defects in the
title are made known to the possessor, by extraneous evidence or by the filing of an action in court by the true
owner for the recovery of the property.12 Hence, all the fruits that the possessor may receive from the time he is
summoned in court, or when he answers the complaint, must be delivered and paid by him to the owner or
lawful possessor. 13

However, even after his good faith ceases, the possessor in fact can still retain the property, pursuant to Article
546 of the New Civil Code, until he has been fully reimbursed for all the necessary and useful expenses made
by him on the property. This right of retention has been considered as one of the conglomerate of measures
devised by the law for the protection of the possessor in good faith. Its object is to guarantee the
reimbursement of the expenses, such as those for the preservation of the property,14 or for the enhancement of
its utility or productivity.15 It permits the actual possessor to remain in possession while he has not been
reimbursed by the person who defeated him in the possession for those necessary expenses and useful
improvements made by him on the thing possessed. The principal characteristic of the right of retention is its
accessory character. It is accessory to a principal obligation. Considering that the right of the possessor to
receive the fruits terminates when his good faith ceases, it is necessary, in order that this right to retain may be
useful, to concede to the creditor the right to secure reimbursement from the fruits of the property by utilizing its
proceeds for the payment of the interest as well as the principal of the debt while he remains in possession.
This right of retention of the property by the creditor, according to Scaevola, in the light of the provisions of
Article 502 of the Spanish Civil Code,16 is considered not a coercive measure to oblige the debtor to pay,
depriving him temporarily of the enjoyment of the fruits of his property, but as a means of obtainitig
compensation for the debt. The right of retention in this case is analogous to a contract of antichresis and it cati
be considered as a means of extinguishing the obligation, inasmuch as the right to retain the thing lasts only for
the period necessary to enable the creditor to be reimbursed from the fruits for the necessary and useful
expenses. 17

According to Manresa, the right of retention is, therefore, analogous to that of a pledge, if the property retained
is a movable, and to that of antichresis, if the property held is immovable.18 This construction appears to be in
harmony with similar provisions of the civil law which employs the right of retention as a means or device by
which a creditor is able to obtain the payment of a debt. Thus, under Article 1731 of the New Civil Code, any
person who has performed work upon a movable has a right to retain it by way of pledge until he is paid.
Similarly, under Article 1914 of the same Code, the agent may retain in pledge the things which are the object
of the agency until the principal effects reimbursement of the funds advanced by the former for the execution of
the agency, or he is indemnified for all damages which he may have suffered as a consequence of the
execution of the agency, provided he is free from fault. To the same effect, the depositary, under Article 1994 of
the same Code, may retain the thing in pledge until the full payment of what may be due him by reason of the
deposit. The usufructuary, pursuant to Article 612 of the same Code, may retain the property until he is
reimbursed for the amount paid for taxes levied on the capital (Article 597) and tor extraordinary repairs (Article
594).

In all of these cases, the right of retention is used as a means of extinguishing the obligation. As amply
observed by Manresa: "El derecho de retencion, lo hemos dicho, es el derecho de prenda o el de anticresis
constituido por la ley con independencia de las partes." 19 In a pledge, if the thing pledged earns or produces
fruits, income, dividends or interests, the creditor shall compensate what he receives with those which are
owing him.20 In the same manner, in a contract of antichresis, the creditor acquires the right to receive the fruits
of an immovable of his debtor with the obligation to apply them to payment of the interest, if owing, and
thereafter to the principal of his credit. 21 The debtor can not reacquire enjoyment of the immovable until he has
actually paid what he owes the creditor. 22

Applying the afore-cited principles to the case at bar, petitioner cannot appropriate for his own exclusive benefit
the tolls which he collected from the property retained by him. It was his duty under the law, after deducting the
necessary expenses for his administration, to apply such amount collected to the payment of the interest, and
the balance to the payment of the obligation.

We hold, therefore, that the disputed tolls, after deducting petitioner's expenses for administration, belong to
Quirino Comintan, owner of the land through which the toll road passed, further considering that the same was

Page 27 of 31
 Page 28 of 31

on portions of the property on which petitioner had not introduced any improvement. The trial court itself
clarified this matter when it placed the toll road under receivership. The omission of any mention of the tolls in
the decision itself may be attributed to the fact that the tolls appear to have been collected after the rendition of
the judgment of the trial court.

The records further reveal that earnest efforts have been made by private respondents to have the judgment
executed in the most practicable manner. They deposited in court the amount of the judgment in the sum of
P13,632.00 in cash, subject only to the accounting of the tolls collected by the petitioner so that whatever is
due from him may be set off with the amount of reimbursement. This is just and proper under the
circumstances and, under the law, compensation or set off may take place, either totally or partially.
Considering that petitioner is the creditor with respect to the judgment obligation and the debtor with respect to
the tolls collected, Comintan being the owner thereof, the trial court's order for an accounting and
compensation is in accord with law. 23

With respect to the amount of reimbursement to be paid by Comintan, it appears that the dispositive portion of
the decision was lacking in specificity, as it merely provided that Comintan and Zamora are jointly liable
therefor. When two persons are liable under a contract or under a judgment, and no words appear in the
contract or judgment to make each liable for the entire obligation, the presumption is that their obligation is joint
or mancomunada, and each debtor is liable only for a proportionate part of the obligation. 24 The judgment debt
of P13,632.00 should, therefore, be pro-rated in equal shares to Comintan and Zamora.

Regarding Lot 5785-B, it appears that no public sale has yet been conducted by the Bureau of Lands and,
therefore, petitioner is entitled to remain in possession thereof. This is not disputed by respondent Eleuterio
Zamora. 25 After public sale is had and in the event that Ortiz is not declared the successful bidder, then he
should be reimbursed by respondent Zamora in the corresponding amount for the improvements on Lot 5785-
B.

WHEREFORE, in view hereof, the Order of respondent Court of November 18, 1970 is hereby modified to
conform to the foregoing judgment. The Writ of Preliminary Injunction, dated January 29, 1971, is hereby
dissolved. Without special pronouncement as to costs.

 Escritor Jr. v. IAC, 155 SCRA 577, 1987

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 71283 November 12, 1987

MIGUEL ESCRITOR, JR., ANGEL ESCRITOR, RAMON ESCRITOR, JUANA ESCRITOR, CONCORDIA
ESCRITOR, IRENE ESCRITOR, MATILDE ESCRITOR, MERCEDES ESCRITOR, HEIRS OF LUIS
ESCRITOR, represented by RUPERTO ESCRITOR, HEIRS OF PEDO ESCRITOR, represented by
SUSANA VILLAMENA, LINA ESCRITOR, WENDELINA ESCRITOR, ALFREDO ESCRITOR, SUSANA
ESCRITOR and CARMEN ESCRITOR, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and SIMEON ACUNA, respondents.

GANCAYCO, J.:

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This is a petition for review on certiorari seeking the reversal of the decision of the Intermediate Appellate Court
in AC-G.R. No. CV-01264-R entitled "Simeon Acuna vs. Miguel Escritor, Jr., et al," a case which originated
from the Court of First Instance of Quezon.

The record of the case discloses the following facts:

Lot No. 2749, located at Atimonan, Quezon, was the subject of cadastral proceedings in the Court of First
Instance of Quezon, Gumaca Branch, Miguel Escritor, as claimant, filed an answer thereto declaring his
ownership over the lot alleging that he acquired it by inheritance from his deceased father. 1 As required, a
notice of hearing was duly published, after which an order of general default was entered. 2 The lot having
become uncontested, only Miguel Escritor appeared in order to adduce his evidence of ownership.

On May 15, 1958, the Court rendered a decision in the abovementioned case, Cadastral Case No. 72,
adjudicating the lot with its improvements in favor of claimant Escritor and confirming his title
thereto. 3 Immediately thereafter, Escritor took possession of the property. On July 15, 1958, the Court, in an
Order, directed the Chief of the General Land Registration Office to issue the corresponding decree of
registration in favor of Escritor, the decision in Cadastral Case No. 72 having become final. 4

On August 2, 1958, Simeon S. Acuna, the herein respondent, filed a petition for review of the above-mentioned
decision contending that it was obtained by claimant Escritor through fraud and misrepresentation. 5 The
petition was granted on July 18, 1960 and a new hearing was set for September 13, 1960. 6 While the
proceedings were going on, claimant Escritor died. His heirs, the petitioners in this case, took possession of the
property.

On February 16, 1971 or thirteen years after the disputed decision was rendered, the Court adjudicated Lot No.
2749 in favor of respondent Acuna, ordering petitioners to vacate the land. 7 A writ of possession was later
issued and petitioners voluntarily gave up their possession. 8

More than four years later, or on October 13, 1975 respondent Acuna filed with the same Court in Civil Case
No. 1138-G, a complaint for recovery of damages against petitioners for the fruits of lot No. 2749 which was
allegedly possessed by the latter unlawfully for thirteen years. According to respondent Acuña, the registration
of the said lot was effectuated by the deceased claimant Escritor through fraud, malice, and misrepresentation.
The lower court, however, rendered a decision dismissing Acuña's complaint for damages, finding that though
petitioners enjoyed the fruits of the property, they were in good faith possessing under a just title, and the
cause of action, if there was any, has already prescribed. 9

On Appeal to the Intermediate Appellate Court, the judgment of the lower court was reversed in a decision
promulgated on October 31, 1984, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing considerations, the decision appealed from is hereby
REVERSED and set aside and another one entered herein, ordering the defendants-
appellees jointly and severally (a) to pay the plaintiff- appellant the sum of P10,725.00
representing the value of the fruits appellees received for the 13 years they have been in
unlawful possession of the land subject-matter; (b) to pay plaintiff-appellant the sum of
P3,000.00 for attorney's fees and expenses of litigation, and (c) to pay the costs.

Hence this petition.

The main issue that has to be resolved in this case is whether or not petitioners should be held liable for
damages.

Contrary to the finding of the trial court, the Intermediate Appellate Court made the pronouncement that
petitioners were possessors in bad faith from 1958 up to 1971 and should be held accountable for damages.
This conclusion was based on the statement of the cadastral court in its August 21, 1971 decision,
readjudicating Lot No. 2749 to respondent Simeon Acuna, that "Miguel Escritor forcibly took possession of the
land in May, 1958, and benefited from the coconut trees thereon. 10 The Intermediate Appellate Court

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observed that on the basis of the unimpeached conclusion of the cadastral court, it must be that the petitioners
have wrongfully entered possession of the land. 11 The Intermediate Appellate Court further explains that as
such possessors in bad faith, petitioners must reimburse respondent Acuna for the fruits of the land they had
received during their possession. 12

We cannot affirm the position of the Intermediate Appellate Court. It should be remembered that in the first
decision of the cadastral court dated May 15, 1958, Lot No. 2749 was adjudicated in favor of claimant Escritor,
petitioners' predecessor-in-interest. In this decision, the said court found to its satisfaction that claimant Escritor
acquired the land by inheritance from his father who in turn acquired it by purchase, and that his open, public,
continuous, adverse, exclusive and notorious possession dated back to the Filipino-Spanish Revolution. 13 It
must also be recalled that in its Order for the issuance of decrees dated July 15, 1958, the same Court
declared that the above-mentioned decision had become final. Significantly, nowhere during the entire
cadastral proceeding did anything come up to suggest that the land belonged to any person other than Escritor.

On the basis of the aforementioned favorable judgment which was rendered by a court of competent
jurisdiction, Escritor honestly believed that he is the legal owner of the land. With this well-grounded belief of
ownership, he continued in his possession of Lot No. 2749. This cannot be categorized as possession in bad
faith.

As defined in the law, a possessor in bad faith is one in possession of property knowing that his title thereto is
defective. 14 Here, there is no showing that Escritor knew of any flaw in his title. Nor was it proved that
petitioners were aware that the title of their predecessor had any defect.

Nevertheless, assuming that claimant Escritor was a possessor in bad faith, this should not prejudice his
successors-in-interest, petitioners herein, as the rule is that only personal knowledge of the flaw in one's title or
mode of acquisition can make him a possessor in bad faith, for bad faith is not transmissible from one person to
another, not even to an heir. 15 As Article 534 of the Civil Code explicitly provides, "one who succeeds by
hereditary title shall not suffer the consequences of the wrongful possession of the decedent, if it is not shown
that he was aware of the flaws affecting it; ..." The reason for this article is that bad faith is personal and
intransmissible. Its effects must, therefore, be suffered only by the person who acted in bad faith; his heir
should not be saddled with such consequences. 16

Under Article 527 of the Civil Code, good faith is always presumed, and upon him who alleges bad faith on the
part of a possessor rests the burden of proof. If no evidence is presented proving bad faith, like in this case, the
presumption of good faith remains.

Respondent Acuna, on the other hand, bases his complaint for damages on the alleged fraud on the part of the
petitioners' predecessor in having the land registered under his (the predecessor's) name. A review of the
record, however, does not indicate the existence of any such fraud. It was not proven in the cadastral court nor
was it shown in the trial court.

Lot No. 2749 was not awarded to Escritor on the basis of his machinations. What is clear is that in the hearing
of January 22, 1958, the Court permitted Escritor to adduce his evidence of ownership without opposing
evidence as the lot had become uncontested. 17 Respondent Acuna himself failed to appear in this hearing
because of a misunderstanding with a lawyer. 18There is no finding that such failure to appear was caused by
petitioners in this case. On the contrary, all the requirements of publication were followed. Notice of hearing
was duly published. Clearly then, the allegation of fraud is without basis.

Respondent having failed to prove fraud and bad faith on the part of petitioners, We sustain the trial court's
finding that petitioners were possessors in good faith and should, therefore, not be held liable for damages.

With the above pronouncement, the issue of prescription of cause of action which was also presented need not
be passed upon.

WHEREFORE, the petition is GRANTED and the decision appealed from is hereby REVERSED and SET
ASIDE and another decision is rendered dismissing the complaint. No pronouncement as to costs.

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SO ORDERED.

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