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WONG V. CARPIO 203 SCRA 118 FACTS: Giger sold a parcel of land through a pacto de recto sale to Mercado.

Mercado only began to harvest the coconut fruits but he never placed anyone over the land to watch it. Neither did he reside in the land nor was there any hut constructed thereon to show possession. Thereafter, Wong inspected the land to see if whether there was anyone claiming the land. After finding there was none, he bought the land from Giger. He placed workers on the land, constructed a farmhouse, and fenced the boundaries. He couldn't register the sale due to some technicalities. HELD: Possession is acquired through the material occupation of the thing or the exercise of a right, or by the fact that it is subject of our will, or by the proper acts and legal formalities acquiring such rights and that the execution of the public instrument is equivalent to the delivery of the thing unless there is stipulation to the contrary. If however, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and tenancy of the thing and make use of it herself, because such enjoyment and tenancy are opposed by another, then delivery has not been effected. Possession was passed to Mercado by virtue of the first pacto de recto sale. There was an impediment in passing possession to Wong by virtue of the later sale and this was the possession exercised by Mercado. Further, the action for forcible entry was called for. The act of entering the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property and this is all that is necessary. Furthermore, there should be payment of rentals from the time the presumption of good faith ceased or the receipt of summons by Wong. Possession in good faith ceases from the moment defects in the title are made known to the possessors.

IGNACIO WONG, petitioner, vs.HON. LUCAS D. CARPIO, as Presiding Judge, Court of First Instance of Davao del Sur, Branch V and MANUEL MERCADO, respondents. G.R. No. L-50264 October 21, 1991 CASE DOCTRINES Constructive delivery; general rule; exceptions General Rule: the execution of a sale thru a public instrument shall be equivalent to the delivery of the thing. Exception/s: 1. unless there is stipulation to the contrary or 2. If, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it herself, because such tenancy and enjoyment are opposed by another, then delivery has not been effected. Possession; when acquired It should be stressed that "possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities for acquiring such right. Conflict of possession; rule 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: 1. the present possessor shall be preferred; if there are two possessions, 2. the one longer in possession, 3. if the dates of possession are the same, the one who presents a title; and 4. if these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings (Art. 538, Civil Code). FACTS: Petition for review on certiorari. Manuel Mercado acquired his rights to possess the land in litigation from William Giger by virtue of a deed of sale with right to repurchase executed in 1972 for a consideration of P3,500.00. Then, in 1973, William

Giger again asked an additional amount of P2,500.00 from plaintiff and so he required William Giger to sign a new deed of Pacto de Retro at Davao City before Notary Public Gregorio C. Batiller. In 1972, Mercado began harvesting only the coconut fruits and he paid the taxes on the land for Mr. Giger. He went periodically to the land to make copra but he never placed any person on the land in litigation to watch it, he did not reside in it nor possess any portion of it. He knew that Wongs laborers occupied the land but he did not do anything to stop them. Instead he was happy that there were people and a hut on the land in suit. Before July, 1976, Ignacio Wong went to the land in litigation to find out if there were other people residing there or claiming it besides the owner and he found none. In 1976, Ignacio Wong bought the parcel of land from William Giger and his wife Cecilia Valenzuela. After the execution of the Deed of Sale, Ignacio Wong the TCT in the name of William Giger was delivered to him. Mr. Wong declared the land in suit for taxation purposes in his name. He tried to register the pacto de retro sale with the Register of Deeds by paying the registration fee but due to some technicalities, the pacto de retro sale could not be registered. The defendant Wong placed laborers on the land in suit, built a small farm house after making some clearings and fenced the boundaries. He also placed signboards. Mercado subsequently filed a complaint for forcible entry. MTC decision: dismissed the complaint. It found that herein petitioner (defendant Ignacio Wong) had prior, actual and continuous physical possession of the disputed property and dismissed both the complaint and the counter-claim. CFI decision: reversed the MTC. CA decision: found that the issue was purely question of law and left for the SC to decide. Petitioners contentions: 1. that the private respondent has not established prior possession, argues that private respondent's periodic visit to the lot to gather coconuts may have been consented to and allowed or tolerated by the owner thereof for the purposes of paying an obligation that may be due to the person gathering said nuts and 2. that a person who enters a property to gather coconut fruits and convert the same to copras may only be a hired laborer who enters the premises every harvest season to comply with the contract of labor with the true owner of the property. ISSUE: WON Mercado had prior possession by virtue of a public document. RULING: It should be stressed that "possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co., Inc. vs. Villareal, 135 SCRA 15 [1985]); and that the execution of a sale thru a public instrument shall be equivalent to the delivery of the thing, unless there is stipulation to the contrary. If, however, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it herself, because such tenancy and enjoyment are opposed by another, then delivery has not been effected . (Paras, Civil Code of the Philippines, Vol. II, 1989 Ed., p. 400). Applying the above pronouncements on the instant case, it is clear that possession passed from vendor William Giger to private respondent Manuel Mercado by virtue of the first sale a retro, and accordingly, the later sale a retro in favor of petitioner failed to pass the possession of the property because there is an impediment the possession exercised by private respondent. 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 possessions, the one longer in possession, if the dates of possession are the same, the one who presents a title; and if these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings (Art. 538, Civil Code).

ISSUE 2: WON the case for forcible entry was proper. As to petitioner's query that "Is the entry of petitioner to the property characterized by force, intimidation, threat, strategy, or stealth in order to show that private respondent has had possession so that the case is within the jurisdiction of the inferior court?". The same is answered in the affirmative. The act of entering the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property, and this is all that is necessary. Under the rule, entering upon the premises by strategy or stealth is equally as obnoxious as entering by force. The foundation of the action is really the forcible exclusion of the original possessor by a person who has entered without right. The words "by force, intimidation, threat, strategy, or stealth" include every situation or condition under which one person can wrongfully enter upon real property and exclude another who has had prior possession therefrom. If a trespasser enters upon land in open daylight, under the very eyes of person already clothed with lawful possession, but without the consent of the latter, and there plants himself and excludes such prior possessor from the property, the action of forcible entry and detainer can unquestionably be maintained, even though no force is used by the trespasser other than such as is necessarily implied from the mere acts of planting himself on the ground and excluding the other party. (Tolentino, Civil Code of the Philippines, Vol. II, 1983 Ed., pp. 243-244; Drilon vs. Gaurana, 149 SCRA 342 [1987]). HELD: affirmed the decision of the CFI. /adsum

G.R. No. L-39044 January 3, 1985 MANOTOK REALTY, INC., petitioner, vs. THE HON. COURT OF APPEALS and FELIPE CARILLO, respondents.

GUTIERREZ, JR., J.: In this petition for review, the petitioner asks that we reverse the decision of the Court of Appeals, now the Intermediate Appellate Court, which declared respondent Felipe Carillo a builder in good faith with the right to remain in the questioned premises, free of rent, until reimbursed by the petitioner for the necessary and useful expenses introduced on the land. The dispositive portion of the Court of Appeals' decision reads: WHEREFORE, the appealed judgment is hereby modified in the sense that the appellant being a builder in good faith is entitled to the right of retention of the lot introduced thereon, and he is not hable to pay rentals for the occupation thereof pending payment of the indemnity for such improvements. In all other respects, the appealed judgment is affirmed, without pronouncement as to costs. The background facts of the case are found in the decision of the respondent court as follows: There is no dispute that herein appellee is the registered owner of a parcel of land covered by Tax Declaration Nos. 2455 and 2456 issued by the City Assessor's Office of Manila with a total assessed value of P3,059,180.00 and by TCT 55125 (Exh. A) and TCT No. 76130 of the Register of Deeds of the City of Manila. It acquired the

aforementioned property from the Testate Estate of Clara Tambunting de Legarda, being the highest bidder in a sale conducted by the Probate Court (Exhs. C-7 & C-7-A). After having acquired said property, the appellee subdivided it, but could not take possession thereof because the whole area is occupied by several houses among which is the one belonging to the herein appellant Felipe Carillo, Lot 143, Block 2 of the subdivision plan (Exh. A-4 Carillo). Demands to vacate and to surrender possession of the property were made by the appellee verbally and by publication (Exhs. D, D-1 & D-2) and by circulars served to the appellant. In spite of such demands, the appellant continued to occupy the disputed lot and refused to surrender possession thereof to the appellee. On the other hand, appellant's evidence tends to show that he acquired the lot in dispute from a certain Delfin Dayrit on September 25, 1962, pursuant to a deed of assignment (Exh. 1-Carillo); that Dayrit in turn had acquired the property from the late Carla Tambunting by virtue of a Contract of Sale on Installment Basis (EXIL 2-Carillo); that Dayrit had religiously paid the monthly installments as they fell due, his last payment being on May 25, 1954, in the sum of P200.00, then leaving an unpaid balance of Pl,306.00 when the said parcel was conveyed to defendant Carino, for which receipts were duly issued (Exhs. 3-Carillo to 24-Carillo); that Dayrit could not continue paying the succeeding installments as they fen due because Vicente Legarda, the surviving spouse of Clara Tambunting, refused to receive any payment for the same and that it was only lately, more specifically on September 25, 1962, when Dayrit conveyed the lot to appellant Carillo. After the petitioner failed in its attempts to take possession of the lot, it filed the reivindicatory action against the respondent. The trial court decided the case in favor of the petitioner. The dispositive portion of its decision reads: In Civil Case No. 64578: (1) Ordering defendant Felipe Carino to vacate and/or surrender possession to plaintiff Manotok Realty Inc. of the parcel of land subject matter of the complaint described in paragraph 2 thereof; (2) To pay plaintiff the sum of P75.50 per month from January 21, 1961 up to the time he actually surrenders possession of the said parcel to the plaintiff; and (3) To pay plaintiff the sum of Pl,000.00 as attorney's fees and to pay costs. On August 15, 1984, we required the parties to show whether or not the disputed lot falls within the area expropriated under P.D. No. 1669 and P.D. No. 1670. It appears that the expropriated portion of the Tambunting Estate is the area located at the east side adjacent to the Chinese Cemetery. The lot is on the unexpropriated and mainly commercial portion on the west side, across from Rizal Avenue. In this petition, the petitioner maintains that the appellate court erred in considering the respondent a possessor and builder in good faith. It argues that at the time of the execution of the deed of assignment in favor of the respondent, the land was already registered in its name; and that if the respondent were really acting in good faith, he should have verified from the Register of Deeds of Manila who was the registered owner of the land in question.

We agree. A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. (Caram v. Laureta, 103 SCRA 7, Art. 526, Civil Code). One who acquires real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should put a reasonable man upon his guard, and then claims that he acted in good faith under the belief that there was no defect in the title of the vendor. (See Leung Yee v. FL Strong Machinery Co., 37 Phil. 644). The records show that when Dayrit executed the deed of' assignment in favor of the respondent, the disputed lot was already registered and titled in the name of the petitioner. Such an act of registration served as a constructive notice to the whole world and the title issued in favor of petitioner made his ownership conclusive upon and against all persons including Dayrit and. herein respondent, although no personal notice was served on either of the latter. (See Garcia v. Bello, 13 SCRA 769; Demontano v. Court of Appeals, 81 SCRA 286). Therefore, the presumption of good faith in favor of the respondent cannot apply because as far as the law is concerned, he had notice of the ownership by the petitioner over said lot. It is also unthinkable that in the big Tambunting Estate beset with one of the most serious squatter problems in Metro Manila, any tenant or prospective buyer would be unaware that the petitioner acquired the estate as highest bidder at the sale ordered by the probate court. Furthermore, the respondent did not even bother to inquire about the certificate of title covering the lot in question to verify who was the real owner thereof, despite the fact that his transferor, Dayrit, never showed him any title thereto; a circumstance which should have put him upon such inquiry or investigation. His failure to exercise that measure of precaution which was reasonably required of a prudent man in order to acquaint him with the defects in the title of his vendor precludes him from claiming possession in good faith. We agree with the following observations of Justice Guillermo S. Santos in his separate concurring and dissenting opinion: The issue now is whether appellant may be considered as a possessor in good faith of the property in question. Article 256 of the Civil Code defines a possessor in good faith as one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. In this case, it was shown that under the contract of sale on installment basis, Delfin Dayrit had only paid a total of P4,917.30, leaving an unpaid balance of P3,860.20 as of August 9, 1954 (Dec. RA p. 43). The said contract specifically provides that ". . . if for some reason or other the purchaser cannot pay a certain installment on the date agreed upon, it is hereby agreed that said purchaser will be given a maximum limit of two months' grace in which to pay his arrears, after which the property will revert to the original owner hereof: the Clara Tambunting Subdivision, No. 50 Reina Regente St., Binondo, Manila, P.I." The subsequent installment after August 9, 1954, not having been paid, the property, therefore, reverted to Clara Tambunting and therefore formed part of her estate, which was subsequently acquired by appellee. Thus, when appellant purchased the parcel of land in question from Dayrit on August 25, 1962 or eight (8) years after the defaultthe latter had no more right over the same. It was incumbent on appellant to inquire into the title of his vendor over the property. Had appellant demanded from his vendor, Dayrit, the certificate of his ownership of the property subject of the negotiation, he would have learned that the latter had no right, much less, title over the same because of his default in the payment of the monthly installments. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in good faith under the behef that there was no defect in the title of the vendor (Leung Yee v. Strong Machinery Co., 37 Phil. 644). Consequently, appellant cannot be deemed a possessor in good faith and is not,

therefore, entitled to reimbursement for the improvements he had introduced in the property in question. No installments and rentals have been paid for the lot since 1954 or for more than thirty (30) years. While Dayrit transferred to Carillo whatever rights he may have had to the lot and its improvements on September 25, 1962, the claim for back rentals was from March 20, 1959 while the trial court ordered payment as of January 21, 1961 or twenty four (24) years ago. Considering the facts, applicable law, and equities of this case, the decision of the trial court appears to be correct and is, therefore, reinstated. WHEREFORE, the questioned decision of the Court of Appeals is hereby SET ASIDE and another one is entered AFFIRMING in toto the decision of the Court of First Instance of Manila in Civil Case No. 64578. SO ORDERED. Teehankee (Chairman), Melencio-Herrera, Plana, Relova and De la Fuente, JJ., concur. Alampay, J., took no part.

G.R. No. 80638 April 26, 1989 GABRIEL ELANE, petitioner, vs. COURT OF APPEALS and INOCENCIO V. CHUA, respondents. Mario 0. Leyco for petitioner. Perfecto R. Bautista for private respondent. REGALADO, J.: The decision promulgated on September 30,1987 by respondent Court of Appeals in CA-G.R. SP No. 1 2 09536, which reversed the decision of the Regional Trial Court and, correlatively, the Municipal Trial 3 Court of Olongapo City, is assailed in this petition for review on certiorari. Private respondent Inocencio V. Chua filed an action for forcible entry in the then City Court of Olongapo City for the eviction of petitioner Gabriel Elane from a portion of a parcel of land designated as Block V, LC Project No. 14, Olongapo City, BF Map LC 2427, which was the subject of a permit to occupy issued to private respondent by the Bureau of Forestry on August 16, 1961. Private respondent alleges that on February 15, 1980, while visiting the property, he discovered that petitioner was constructing a semiconcrete building on a portion thereof, without his knowledge and consent. The order made by private 4 respondent upon petitioner to desist therefrom was ignored by the latter. When his demand letter of 5 March 1, 1980 to stop said construction was refused, private respondent filed an action for forcible entry. In his answer, petitioner Elane claims that he was granted a permit by the Bureau of Forest Development over a parcel of land located at Upper Kalaklan, with an area of 360 square meters, more or less,

designated as Block V, LC Project No. 14, Olongapo City, BF Map LC 2427, as allegedly evidenced by a certification from the said bureau dated April 10, 1979; that he has been in possession and occupation of that parcel of land continuously and uninterruptedly since 1970, having originally erected a hut thereon which was later replaced by a bungalow; and that the land has been declared for taxation in his name and 6 the real property taxes thereon paid by him for the years 1970 to 1979. On February 14,1984, the Municipal Trial Court of Olongapo City rendered a decision dismissing the complaint and which, on appeal, was affirmed in toto by the Regional Trial Court of Olongapo City. Thereafter, herein private respondent elevated the case on a petition for review to respondent court which reversed the decisions of the two courts a quo and rendered judgment ordering therein respondent Elane to remove or demolish the residential house or building that he constructed on that part of the land in question, to vacate and return possession of said parcel of land to therein petitioner Chua and to pay said 7 petitioner P5,000.00 by way of attorney's fees, with the costs of suit. A motion for reconsideration was 8 denied on November 3, 1987. In the present appeal, petitioner contends that the respondent court (1) gravely abused its discretion in giving due course to the petition for review notwithstanding the fact that the decision sought to be reviewed had already become final and executory; and (2) gravely erred in holding that "the instant petition must be resolved on the all important issue of priority of possession instead of the issue as to who 9 is the legal possessor of the lot subject of the litigation." Concordant with the claim of private respondent, the respondent court found the following relevant facts established by the evidence of record: On August 16, 1961, Ordinary Residence Permit No. 1675 was issued by the Bureau of Forestry authorizing the petitioner to occupy four hectares of public forest land situated in Sitio Upper Kalaklan, Olongapo, Zambales (Exhibit A), on which he constructed a warehouse and a gasoline station pursuant to permits issued to him by the said bureau (Exhibits C, C-1, 1 and J), which on February 10, 1970 were declared for purposes of taxation in his name (Exhibits E and E-1) and taxes due thereon were paid (Exhibits F-4 and F-5). On January 19,1977, the parcel of land in question, designated as Block V, LC Project No. 14, Olongapo City, BF Map LC 2427, containing an area of 42,086 square meters, covered by the sketch (Exhibit G), having been declared alienable and disposable, the petitioner filed an application with the Bureau of Lands to purchase it under Miscellaneous Sales Application No. (111-4) 9019 (Exhibit M). On March 1, 1980, the petitioner wrote to the respondent advising him to stop construction of the building that he was putting up within the parcel of land in question (Exhibit H). On March 6, 1980, the respondent having refused to desist from constructing the building that he was putting up, the petitioner filed the instant complaint for forcible entry in the 10 then City Court of Olongapo. We initially take up the first error imputed by petitioner which, although the records do not show that the same was raised in the petition for review in respondent court, deserves a corresponding resolution since it indirectly attributes a jurisdictional defect. Petitioner claims that a copy of the decision of the Regional Trial Court of Olongapo City was sent by registered mail to the counsel of private respondent at his given address. However, the envelope was supposedly returned to the court when counsel for private respondent allegedly failed to claim the same

after a second notice was made on July 10, 1985. Petitioner then contends that, pursuant to Section 3, Rule 13 of the Rules of Court, the decision of the regional trial court became final on July 15, 1985, private respondent not having seasonably filed either a motion for reconsideration or a notice of appeal. We are not persuaded by this argument belatedly raised by petitioner. It is incumbent upon a party who relies upon constructive service under Section 5 of Rule 13 of the Rules to prove that the first notice of the registered letter was sent and delivered to the addressee, as the presumption that official duty has 12 been regularly performed does not apply to such a situation. Here, the assertions in the Petition of the facts stated in the next preceding paragraph are unsubstantiated. In the absence of such proof in the record, the disputable presumption of completeness of service does not arise.

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Furthermore, not only has petitioner failed in such requisite proof, but, as earlier stated, the records do not show that such issue was raised or proved by him in the respondent court when the petition for review was filed with and was pending therein. The principle of estoppel by laches, which is in the interest of a sound administration of the laws, consequently bars this objection from being raised by petitioner for the 13 first time and at this late stage. It is next alleged that respondent court gravely erred in adjudicating the case on the basis of priority of physical possession instead of legal possession. As already adumbrated, respondent court held that private respondent was granted a residence permit over a lot with an area of 42,086 square meters by the Bureau of Forestry on August 16, 1961, and a permit to construct a warehouse and gasoline station thereon by the then municipal government of 14 Olongapo on October 1, 1963. This residence permit, which was renewable every year, was not renewed after June 30,1969 because it was stopped by then Vice-President Fernando Lopez, although 15 private respondent continued to pay rental fees for the land until 1973. Upon application by private respondent, the said lot was declared alienable and disposable public land and released by the Bureau of Forest Development to the Bureau of Lands in March, 1973. Thereafter, he filed a Miscellaneous Sales 16 Application with the Bureau of Lands on January 19, 1977 for the purchase of the said lot. It likewise appears that private respondent declared the warehouse and gasoline stallion for taxation purposes and 17 paid taxes thereon in 1970 and 1971. On the other hand, petitioner claims that he entered into and took possession of the contested lot in 1970 pursuant to a permit granted to him by the Bureau of Forest Development, as supposedly evidenced by a 18 certification from the latter dated April 10, 1979, and a building permit and sanitary/plumbing permit 19 issued for the construction of his house thereon. This is an egregious inaccuracy as aptly observed by respondent court, thus: Said permits (Annexes A, B and C to answer) were not actually introduced in evidence by the respondent Elane in support of his allegations and defenses They may not, therefore, be considered at all as evidence. Besides, the certification (Annex A to answer) do (sic) not attest to the issuance of any permit to occupy the parcel of land in question in favor of the respondent Elane. It merely certified to the fact that the parcel of land in question was found to be Alienable and Disposable Land. And the building and sanitary/plumbing permits (Annexes B and C to answer) could not have established his possession of the parcel of land since 1970 because aside from the fact that they bear no date of actual issuance, they were accomplished by the applicant whose residence certificate appears to have been issued only on January 5, 1979. How then can it be correctly concluded that based upon such certification and permits (Annexes A, B and C to answer), the respondent Elane had entered into and had taken possession of the parcel of land in question since 1970? Moreover, the survey of the parcel of land in question was prepared for the respondent Elane only on February 25, 1979 (Exhibit 6). His miscellaneous sales application was

filed in the Bureau of Lands only on March 26, 1979 (Exhibit 7). The lot and residential building constructed thereon were declared for purposes of taxation only on October 18, 1979 and April 1, 1981 (Exhibits 4-A and 5). The realty taxes due for 1970-73, 1974-78 and 1979 (Exhibit 8) and those due for the succeeding years were paid only on April 14, 1980, May 8, 1981 and March 16, 1982 (Exhibits 8-1 to 8-5). Respondent Elane's 20 possession based on those documents cannot, therefore retroact as of 1970. Under these circumstances, We are convinced that private respondent has priority of possession over petitioner whose entry into the subject lot may be reckoned only as of 1979. There is no merit in the suggestion that petitioner was authorized by the Bureau of Forest Development to occupy the land by virtue of an alleged permit issued by said bureau. A cursory examination of said document readily shows that it is a mere certification that the lot claimed by petitioner is part of the alienable and disposable land of the public domain. Nowhere is it stated therein that petitioner is allowed to take possession of the subject lot. Furthermore, it is uncontroverted that private respondent was issued a residence permit way back in 1961 which entitled him to possession of the disputed land starting in the same year. Petitioner, however, submits that the expiration of private respondent's permit in 1969, and its nonrenewal, deprived the latter of his possessory right over and the corresponding right to eject petitioner from the subject lot. Petitioner argues that by reason of the expiration of said permit, the right of possession over the land reverted to the Bureau of Lands thereby vesting in said entity the sole right to institute any forcible entry case over the land in question. We likewise reject this submission. The respondent court expressly observed that while private respondent's permit to occupy the land may have expired in 1969, he remained in physical possession thereof. Since the decisive issue is priority of possession and private respondent had been in actual and continuous possession of the land since August 16, 1961, his material possession must be protected in this ejectment case until a competent court in an appropriate case determines which of the contending parties has the better right of 21 possession. As tersely emphasized by respondent court, and correctly so, "it is of no moment that petitioner's right to occupy said parcel of land by reason of the permit issued to him by the Bureau of Forestry has already expired. For, it is not whether he has a legal right to possess it that is in issue; it is whether he is in actual 22 physical possession of it that is decisive in the instant case for forcible entry." In sum, private respondent was in earlier possession of the contested lot; his sales application preceded that of petitioner; his warehouse and gasoline station already existed long before petitioner took possession of the parcel of land in question; and he has been paying taxes and rental fees thereon since 1968. As provided by the Civil Code Art. 538. Possession as a fact cannot be recognized at the same time in two different personalities except in the case 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; ... Having been in prior continuous possession, private respondent is preferentially entitled to occupy the land. Petitioner's intrusion upon the disputed premises can properly be categorized as one effected through stealth. Where forcible entry was thus made clandestinely, the one-year prescriptive period should be counted from the time private respondent demanded that the deforciant desist from such dispossession 23 when the former learned thereof. The records reflect that such discovery and prohibition took place on February 15, 1980, reiterated thereafter in the demand letter of March 1, 1980, both to no avail.

Consequently, the one-year period had not expired on March 6, 1980 when private respondent filed the ejectment suit with the then City Court of Olongapo City. WHEREFORE, the judgment appealed from is hereby AFFIRMED in toto, without pronouncement as to costs. SO ORDERED. Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

G.R. Nos. 85962-63 August 3, 1992 ROSARIO GACOS, ARNULFO PRIETO, and RENITA PRIETO, petitioners, vs. COURT OF APPEALS, SOLOMON BRIONES, LEONOR BRIONES and TEODULFO MENDONES, respondents. Redentor Guyala for petitioners. Romero B. Fortes for private respondents.

MEDIALDEA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals dated October 11, 1985 which affirmed the decision of the then Court of First Instance of Sorsogon, Branch II, now Regional Trial Court of Sorsogon, declaring the Brioneses, plaintiffs in Civil Case No. 1008, as the owners and entitled to the possession of the 1,292-square meter portion of the land in litigation, and the Gabitos, defendants in Civil Case No. 1049, as the owners and entitled to the possession of Lot No. 2452 of the Irosin Cadastral tax mapping containing an area of 84 square meters. The controversy which gave rise to the two (2) consolidated cases jointly heard and tried by the then Court of First Instance of Sorsogon involved a parcel of land reportedly containing an area of 2,242 square meters which formed part of the 6,584 square meter unregistered land owned by Eladio Gacos. After the parcel of land was inherited by Patrona Gacos, one of the three (3) daughters of Eladio Gacos, the same was successively sold in 1948 to Marcial Olaybal, then sold by the latter to Rosario Gacos in 1950, then sold by the latter to Arnulfo Prieto in 1973. The facts, as found by the appellate court, are as follows: Eladio Gacos owned a 6,584 square meter unregistered land located in San Pedro district, Irosin, Sorsogon. During the time he was ill sometime in 1935 or 1936, he verbally adjudicated to his three (3) daughters, namely, Petrona, Fortunata and Lucia, their respective inheritance shares by dividing the property lines from east to west and assigned the northernmost portion to Fortunata, the middle portion to Lucia, and the southernmost portion to Petrona. Upon adjudication of their respective shares, Petrona immediately took possession and occupied her 1/3 share of the land while her two sisters took possession of their shares only upon the death of their father in 1937.

Sometime in 1948, or before the land was formally partitioned, Petrona offered to sell to her nephew-inlaw, Marcial Olaybal, son-in-law of her sister Fortunata G. Cambal, a part of her share which was pointed and indicated to him. The transaction was consummated in a document written in Spanish dated March 13, 1948 captioned "Escritura de Venta Absoluta" describing therein the land inherited by Petrona as containing an area of 2,720 square meters. He immediately took possession of the land, measured it and declared the same in his name under Tax Declaration No. 5487 (Exh. "A"-1008) issued to him during the general revision in April, 1948 indicating therein an area of 866 square meters. On January 16, 1949, Petrona Gacos died. She was survived by her four (4) minor children, namely: Leonora, Solomon, Constantino and Benjamin, all surnamed Briones, who were left to the care and custody of her sister Lucia but were later brought to Manila where they grew up. Petrona Gacos was married to Constantino Briones, Sr. who predeceased her. Before her death, Petrona Gacos, then afflicted with tuberculosis, instructed her sister Lucia, who administered the remaining portion of her property, to sell the small area on the east for her funeral expenses and novena. After her death, Lucia Gacos, following the wish of her sister, sold on February 22, 1949 to Teodolfo Mendones the said portion of land on the east containing an area of 84 square meters in a document of sale captioned "Documents de Compra Absoluta" (Exh. "5"-1049) expressly stating therein that the proceeds were to be spent for said funeral expenses and novena. Teodolfa Mendones took possession of the land and declared the same in his name under Tax Declaration No. 6307 (Exh. "V-1"-1008; Exh. "20-A"-1049), later revised by Tax Declaration No. 6307 (Exh. "V"-1008; Exh. "20"-1049). On May 14, 1950, Lucia Gacos on her own behalf and in representation of the deceased Petrona Gacos, and Jose Cambal, in behalf of his deceased mother, Fortunata Gacos, executed an "Agreement of Partition of Real Property" (Exh. "3"-1008; Exh. "C"-1049) formally confirming what was apportioned to them by their father as their respective shares in the 6,854 square meter land, to wit: Petrona, 2,242 square meters; Lucia, 2,148 square meters; and Fortunata, 2,194 square meters. On or about the month of December, 1950, Marcial Olaybal offered to sell to Encarnacion Gacos the parcel of land he bought in 1948 from Petrona Gacos but when the sale was consummated in a "Deed of Absolute Sale" dated December 30, 1950, the name Rosario Gacos, sister of Encarnacion, appeared as the vendee (Exh. "2"-1008; Exh. "B"-1049). The property sold was described therein as containing an area of 2,025 square meters (a 1,159 square meter difference in area from what he declared in the Tax Declaration No. 5487) and bounded as follows: on the North, formerly of late Eladio Gacos, now Lucia Gacos and Rosario Gacos; on the East, national road Juban-Irosin-Bulan; on the South, irrigation canal; and on the West, heirs of Petrona Gacos. Rosario Gacos took possession of the land and registered the deed of absolute sale with the Office of the Register of Deeds of Sorsogon and declared the same in her name under Tax Declaration No. 7047 (Exh. "22"-1008; Exh. "V"-1049). Seventeen years later, or on April 4, 1967, Rosario Gacos executed a document captioned "Ratification of Ownership of Realty" (Exh. "H"-1008; Exh. "10"-1049) consolidating into one parcel of land for taxation purposes the four (4) small adjoining parcels of land, namely: (1) the 866 square meter parcel of land covered by Tax Declaration No. 7047 acquired from Marcial Olaybal; (2) the 351 square meter parcel of land bought from Lucia Gacos on July 6, 1950 and the 534 square meter parcel of land acquired from Lucia Gacos on January 19, 1951, both parcels covered by Tax Declaration No. 7865; and (3) the 1,200 square meter parcel of land covered by Tax Declaration No. 4150 bought from Cornelio Galit; and (4) the 2,246 square meter parcel of land covered by Tax Declaration No. 4152 bought from Rogelio Galit. In lieu of the three (3) separate tax declarations, she was issued Tax Declaration No. 8179-A (Exh. "17"-1008; Exh. "O"-1049) which was later revised by Tax Declaration No. 11024 covering the total area, as reported in four (4) tax declarations, of 5,187 square meters.

On October 24, 1973, or six (6) years after the four parcels of land were consolidated into one tax declaration, Rosario Gacos sold the contiguous land covered by said Tax Declaration No. 11024 to her nephew, Arnulfo Prieto, son of her sister Encarnacion Gacos and Roque Prieto. Arnulfo Prieto took possession of the said land and declared the same in his name under Tax Declaration No. 9177 which was later canceled by Tax Declaration No. 9330. On March 14, 1975, Arnulfo Prieto entered into a 15-year lease contract with his sister Vivencia Prieto allowing her to use the land for her own purposes (Exh. "7"-1008; Exh "G"-1049). A ricemill was constructed thereon by Vivencia Prieto. On August 1, 1975, the children of Petrona Gacos, namely, Leonora, Solomon, Constantino, Jr. and Benjamin, all surnamed Briones executed a "Deed of Extra-judicial Settlement" (Exh. "D"-1008) adjudicating onto themselves the 1/3 undivided portion of the 2,242 square meters of their mother's share of inheritance from Eladio Gacos after Leonora G. Briones was informed in 1972 by her aunt, Lucia, that a portion of the land had been sold to Encarnacion Gacos although Rosario Gacos appeared in the deed of sale as the vendee, and that a ricemill had been constructed on the land. In the same document, they constituted and appointed their cousin, Jesus G. Gabito, as their attorney-in-fact to do for and in their behalf whatever necessary anent the said land in Irosin, Sorsogon. CIVIL CASE NO. 1008 On September 1, 1975, Solomon, Leonora, Constantino and Benjamin, all surnamed Briones, legitimate heirs of the late Petrona Gacos, filed a complaint before the then CFI of Sorsogon, docketed as Civil Case No. 1008, seeking to recover the 1,352 square meter land situated in San Pedro District, Irosin, Sorsogon from the defendants Rosario Gacos and Arnulfo Prieto, which they alleged to be the remnant of a 2,242 square meter land inherited by their mother Petrona Gacos from her father Eladio Gacos after Petrona sold a portion therefrom consisting of 866 square meters to Marcial Olaybal. Plaintiffs Brioneses alleged, among others, that the remnant of the land which they inherited by operation of law from their mother, Petrona Gacos, who died in 1949, were administered by their aunt, Lucia Gacos, in the concept of negotiorum gestio as they were then minors and were taken to Manila where they grew up; that when Lucia Gacos died in 1971, Rosario Gacos came into the possession of the land in question and then executed a document captioned "Ratification of Ownership" for the purpose of having the said land declared in her name for taxation purposes and filed the same with the Office of the Provincial Assessor of Sorsogon in 1967; that without lawful authority, Rosario Gacos sold the land to Arnulfo Prieto in or about 1973, who despite demands made, refused to return the same to the Brioneses. Defendants Rosario Gacos and Arnulfo Prieto admitted in their answer that Petrona Gacos inherited the land from her father Eladio Gacos but contended that what Petrona Gacos sold to Marcial Olaybal on March 13, 1948 was not a portion of the land but the whole share of Petrona Gacos consisting of 2,780 square meters as per document of sale (Escritura de Venta Absoluta), thus, there is no remnant consisting of 1,352 square meters to speak of. Defendants also contended that considering that plaintiffs are no longer owners of the land in dispute since 1948, they are therefore total strangers to the same and have no legal right to intervene in the execution of the said "Ratification of Ownership" by Rosario Gacos; that because of the continued and undisturbed possession for 27 years of the land in dispute by Arnulfo Prieto and that of his predecessorsin-interest Rosario Gacos, whatever rights plaintiffs may now have over this land have already been long barred by acquisitive prescription. At the pre-trial hearing held on November 5, 1975, plaintiffs and defendants stipulated, among others, that both parties will secure the services of a licensed geodetic engineer, sharing the fees pro-rata, the same to be taxed as costs against the losing parties.

Pursuant to the pre-trial order of November 5, 1975, the court commissioned Geodetic Engineer Carlos S. Borromeo to relocate and survey the inheritance share of Petrona Gacos. On December 29, 1975, Geodetic Engineer Borromeo submitted his report to the trial court which, in brief, stated that the property claimed by the plaintiffs is designated in the survey as Lot No. 1724 with an area of 1248 sq. meters (Brioneses) and Lot No. 2452 of Irosin Cadm-462-D with an area of 83 sq. meters (Mendones) or a total area of 1321 square meters, bounded on the North by the property of Rosario Gacos, part of Lot 1724, and a proposed roadwidening; on the East by National Road, proposed roadwidening, and Lot No. 2053 (PC Barracks); on the South by Irrigation Canal beyond said Irrigation by Lot No. 1720 (Magdalena Baswel); and on the West by Lot No. 1514 (Encarnacion Gacos). CIVIL CASE NO. 1049 Sometime on June 1, 1976 spouses Arnulfo Prieto and Renita Chua Prieto filed a complaint with the then CFI of Sorsogon, docketed as Civil Case No. 1049, seeking to recover from Teodolfo Mendones and Visitacion Borrega and spouses Jesus and Merced Gabitos the 84-square meter portion of hereditary share of Petrona Gacos which, according to plaintiffs, such hereditary share was entirely sold by Petrona Gacos to their predecessor-in-interest, Marcial Olaybal, sometime in 1950. Plaintiffs claimed that the eastern portion of the said hereditary share was fraudulently and without authority sold by Lucia Gacos to Teodolfo Mendones who thereafter sold it to spouses Jesus and Merced Gabitos; that spouses Gabitos hurriedly constructed a residential house thereon blocking from public view the Prieto Ricemill and damaging their business. In their answer, defendants Mendones and Gabitos denied that Petrona Gacos sold the entire area of her hereditary share to Marcial Olaybal, alleging, that Marcial Olaybal did not, and could not have legally sold to Rosario Gacos, alleged predecessor-in-interest of the plaintiffs, the entire hereditary estate because what was sold was only 866 square meters of the total area of 2,242 square meters; that the Mendoneses acquired the 84-square meter portion in good faith and for value on February 22, 1949 as evidenced by a document of sale executed by Lucia Gacos with the conformity of Petrona Gacos' brothers and sister pursuant to the instruction of late Petrona Gacos during her illness; that having lawfully acquired the lot, the Mendoneses have, the right to legally sell the same to the other defendants, the Gabitos, who acquired it in good faith, for value and under color of title; that the Gabitos, as rightful owners by virtue of purchase, are entitled to the exercise of their right of dominion over the said lot by building a residential house thereon. At the pre-trial conference on August 4, 1976 in Civil Case No. 1049, plaintiffs Prietos and defendants Mendones and Gabito entered into a stipulation of facts and, among others, simplified the issues into the following: (1) whether the sale executed by Petrona Gacos in favor of Marcial Olaybal an March 13, 1948 really reflected the true intent of the parties; and (2) whether acquisitive prescription lies in favor of the defendants spouses Mendones and spouses Gabito. After joint trial, as the two cases are related to each other, the then CFI of Sorsogon rendered its decision (pp. 90-124, Record on Appeal, p. 89, Rollo) in favor of plaintiffs Brioneses in Civil Case No. 1008 and in favor of defendants Mendones and Gabitos in Civil Case No. 1049, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered: IN CIVIL CASE NO. 1008 (a) Declaring the Brioneses the owners of the 1,292-square meter portion of the land in litigation as described in paragraph 3 of the Complaint and reflected in the sketch plan (Exhs. "B" & "B-2"), and entitled to the possession thereof; (b)

(c) Requiring the parties to engage the services of a geodetic engineer to survey the land, defining and segregating the 1,292 square meters unsold portion of land from the property measuring 866 square meters sold to the Prietos. IN CIVIL CASE NO. 1049 (a) Declaring the Gabitos the owners and entitled to the possession of the land in question and designated as Lot No. 2452 of the Irosin Cadastral tax mapping; (b) Ordering the plaintiffs to desist from disturbing the Gabitos' possession. With costs against the Prietos in both cases. SO ORDERED. (pp. 49-50, Rollo) Dissatisfied, the Prietos appealed to the Court of Appeals assailing principally, among others, the findings of the trial court that Petrona Gacos sold only 866 square meters out of her hereditary share to Marcial Olaybal on March 13, 1948, and that the portion sold by Lucia Gacos to Teodolfo Mendones on February 22, 1949, described later as Lot No. 2452, could be a part of the unsold portion of Petrona Gacos' share. On October 11, 1985, the Court of Appeals promulgated its decision affirming the decision of the lower court (pp. 49-63, Rollo). The motion for reconsideration was denied on November 22, 1988 (pp. 6567, Rollo). Hence, the instant petition for review. In disputing the findings of the appellate court, petitioners argued that the contract of sale "Escritura de Venta Absoluta" dated March 18, 1948 from Petrona Gacos to Marcial Olaybal clearly indicates that the property conveyed is not a portion of her hereditary share but her entire share in the inheritance of her father Eladio Gacos, thus the following description of the land in the said deed of sale: . . . la parcela de terreno urbano que a mi me pertenece en herencia de nuestro difunto padre, Eladio Gacos, situado en la distrito de San Pedro, Irosin, Sorsogon, de 2,780 m.c. o sea VEINTISIETE AREAS, lindado al Norte y Oeste, con el terreno del difunto Eladio Gacos; correspondiente a los demas herederos mencionados arriba, con la viuda del difunto Severo Gacos, Sra. Angela viuda de Gacos, al este, la Carretera Nacional de Irosin Juban y Bulan, y al Sur, un canal de regadio al otro lado de los citados herederos. La mejora permanentes 10 ponos de coco fructiferos. Los limites visibles, son la carretera nacional y estacas de arboles visibles. . . . (p. 440, Records) Petitioners contended that in delineating the boundaries of the property sold, as in the cases of Smith Bell and Co. v. Director of Lands, 50 Phil. 879 (1924); Buiser v. Cabrera, 81 Phil. 699 (1948), and Sta. Ana v. Hernandez, G.R. No. L-16394, December 17, 1966, 18 SCRA 973 (1966), the boundaries indicated in the deed of sale (Escritura de Venta Absoluta) as enclosing the land and indicating its limit put its identification beyond doubt and not the area mentioned in its description (pp. 18-19, Rollo). The argument would have merit if, as in the cases cited, the boundaries of the land claimed by petitioners to have been sold to them in its entirety were certain and definite. This is not true in the instant case where the boundaries given in the "Escritura de Venta Absoluta" dated Match 13, 1948 between Petrona Gacos and Marcial Olaybal do not coincide with the boundaries described in the "Deed of Absolute Sale" dated December 30, 1950 when Marcial Olaybal sold the same land to Rosario Gacos. The said boundaries of the land claimed do not even coincide with the boundaries of the hereditary share of

Petrona Gacos stated in "Agreement of Partition of Real Property." (Exh. "3"-1008; Exh. "C"-1049) executed on May 14, 1950. The boundaries described in the "Escritura de Venta Absoluta" are not only general but vague. Translated in English, it states that the subject property is bounded on the North and West by the land of the late Eladio Gacos and other heirs abovementioned, together with the widow of the late Severo Gacos, Mrs. Angela Vda. de Gacos, on the East by National Road Irosin-Juban-Bulan, and on the South, irrigation canal, and beyond the heirs abovementioned. Neither the statement concerning the area (2,750 square meters) in the "Escritura de Venta Absoluta" identifies with absolute certainty the land sold by Petrona Gacos to Marcial Olaybal as it does not coincide with the area (2,025 square meters) stated in the "Deed of Absolute Sale" between Marcial Olaybal and Rosario Gacos. The variance in the boundaries and the statement of the area (a difference of 1159 square meters) thus put to doubt the identity of the land sold by Petrona Gacos to Marcial Olaybal which was eventually transferred by the latter to Rosario Gacos. The rule thus enunciated in the cases cited by petitioners does not apply. Neither the exception to the rule that area prevails when the boundaries relied upon do not identify the land beyond doubt applies in the instant case. Recourse by the trial court therefore to other proofs other than the "Escritura de Venta Absoluta" which are closely related to and contemporaneous with Marcial Olaybal's acquisition of the land was warranted under the rules on interpretation of written agreements under Rule 130, Section 7 par. (a) in relation to Article 1371 of the Civil Code. On appeal by petitioners, all the evidence were meticulously re-examined and carefully analyzed by the Court of Appeals. It is thus apparent that the decision of the Court of Appeals resolved the basic issue of the comparative weight of the parties' respective proofs in substantiation of their conflicting claims of ownership and possession of the disputed land. Imperative considerations of sound policy, therefore, bar a review of the findings of the Court of Appeals by this Court. This Court has emphatically declared that it is not the function of the Supreme Court to analyze or weigh such evidence all over again, its jurisdiction being limited to reviewing errors of law that might have committed by the lower court (Morales vs. Court of Appeals, G.R. No. 91003, May 23, 1991, 197 SCRA 391 (1991); Banigued vs. Court of Appeals, G.R. No. L-47531, February 20, 1984, 127 SCRA 596 (1984). In the absence of showing that the findings complained of are totally devoid of support in the record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, as petitioners failed to do in the instant case, such findings must stand, for this Court is not expected or required to examine or contrast the oral argument and documentary evidence submitted by the parties (Santa Ana, Jr. vs. Hernandez, G.R. L-16394, December 17, 1966, 18 SCRA 970 (1966). Besides, We are not prepared to overturn the findings of the Court of Appeals that only a portion of the hereditary share of Petrona Gacos was sold to Marcial Olaybal on March 13, 1948 containing an area of 866 square meters. It correctly relied on Tax Declaration No. 5487 (Exh. "A"-1008) dated October 24, 1948 of Marcial Olaybal himself declaring in his name the disputed land with an area of 866 square meters as well as the "sketch plan" of the said land (Exh. "R"-1008) and the "field sheet" (Exh. "R-1"1008) specifying the area of 866 square meters in both documents, submitted by Marcial Olaybal to the assessor's office during the general revision in April, 1948. The Court of Appeals likewise correctly relied on his testimony during the trial on March 27, 1976 that he bought only 866 square meters of the land of Petrona Gacos which said Court correctly categorized as an admission of a party to a relevant fact under Section 22, Rule 130 of the Rules of Court. Considering that he even pointed and specifically identified the land he bought in the sketch plan made by Geodetic Engineer Carlos Borromeo (Exh. "B"-1008) by encircling the area sold to him with a red ballpen line (Exh. "B-1"-1008). It must be noted that the boundaries stated in the "Deed of Absolute Sale" dated December 30, 1950 between Marcial Olaybal and Rosario Gacos indicates the following: "NORTH, formerly Eladio Gacos,

now Lucia Gacos and Rosario Gacos; SOUTH, irrigation canal; EAST, National Road; WEST, Heirs of the late Petrona Gacos." The boundary on the west clearly indicates that Petrona Gacos did not sell her entire share to Marcial Olaybal in 1948; neither did Marcial Olaybal sell the entire hereditary share of Petrona Gacos to Rosario Gacos in 1950 for he cannot sell what he does not own. In support of their theory on the primacy of the area within the boundaries as indicated in the "Escritura de Venta Absoluta" over and above the area as may stated therein or elsewhere, petitioners also claimed that the sale of the disputed land in the instant case is a sale for a "lump sum" (a cuerpo cierto or par precio alzado), not at the rate per unit under Art. 1542 of the Civil Code where the vendor "shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract" (p. 23, Rollo). In Buiser vs. Cabrera, etc. 81 Phil. 669 (1948) involving the question whether, in describing the fourth parcel of land covered in the mortgage contract with description of its boundaries therein, the parties to the said contract of mortgage intended to include therein the entire lot of 4,008 square meters which Nemesio Cabrera had inherited from his father or only that portion of 500 square meters, as stated in the mortgage contract, on which his house was built, the Court rejected petitioner's contention that Article 1542 (formerly 1471) of the Civil Code applies to support his theory that in case of conflict between the boundaries and the area the former should prevail. In ruling that only that portion of 500 square meters is included in the mortgage contract on the basis of the findings that the boundaries relied upon do not identify the land beyond doubt, the Court applied instead the provisions found in Article 1372 (formerly Art. 1283) and Article 1378 (formerly Art. 1289) of the New Civil Code, thus: Art. 1372. However general the terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree. Art. 1378. When it is absolutely impossible to settle doubts by the rules established in the preceding articles, and the doubts refer to incidental circumstances of a gratuitous contract, the least transmission of rights and interests shall prevail. If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interest. The Court finds the abovequoted articles applicable in the instant case. It must be observed that the "Escritura de Venta Absoluta" was consummated in favor of a close relative, a nephew-in-law (Marcial Olaybal) of Petrona Gacos, he being married to the daughter of her sister Fortunata Gacos-Cambal. Thus, in accordance with Article 1378 of the Civil Code, said contract should be interpreted as "to effect the least possible transmission of rights or interests." Besides, Petrona Gacos could not have sold her entire hereditary share as she and her four (4) minor children were then staying in the disputed land with her sister Lucia. Petitioners then argued that their continued possession in good faith and in the concept of an owner with just title over the disputed property which includes that of their predecessors-in-interest, Rosario Gacos, for 27 years ripened into ownership by acquisitive prescription. Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be possession under claim of title (en concepto de dueno) or it must be adverse (Cuayong vs. Benedicto, 37 Phil. 783). Acts of possessory character performed by one who holds by mere tolerance of the owner are clearly not "en concepto de dueno," and such possessory acts, no matter how long so continued, do not start the running of the period of prescription (Manila Electric Company vs. IAC, G.R. No. 71393, June 28, 1989). Even under ordinary acquisitive prescription of immovables and other real rights through adverse possession of 10 years, the possession of petitioners' predecessors-in-interest of the unsold portion of 1,159 square meters cannot be characterized as adverse possession in good faith (Art. 1134, Civil Code; Negrete vs. CFI of Marinduque, L-31267, November 24, 1972, 48 SCRA 113). As found by the trial court

and the appellate court, as early as April 26, 1949, petitioners' predecessors-in-interest, Rosario Gacos, knew and recognized the sale on February 22, 1949 by Lucia Gacos to Teodolfo Mendones of the eastern portion (Lot No. 2452) of the hereditary estate of Petrona Gacos reportedly containing an area of 84 square meters. In the "Escritura de Venta con Pacto de Retro" dated April 26, 1949 (Exh. "BB"-1008; Exh. "26"-1049) between Lucia Gacos and Rosario Gacos involving the share of Lucia Gacos, Teodolfo Mendones is mentioned as the boundary owner on the south. In fact, Encarnacion Prieto, mother of petitioners, signed as a witness in the said pacto de retro sale, thus impliedly recognizing the ownership of the lot involved in Civil Case No. 1049. If the entire hereditary share of Petrona was sold on March 13, 1948, as asserted by petitioners, the eastern portion (Lot 2452) of her hereditary estate involved in Civil Case No. 1049 could not have been sold to Teodolfo Mendones on February 22, 1949. Petitioners never raised any objection on the exercise of Teodolfo Mendones of his dominical rights over the said eastern portion when the latter mortgaged the land as a collateral for a loan with the Rural Bank of Bulan, Inc. which was discharged and released on April 15, 1975. Earlier, or on July 7, 1972, Teadolfo Mendones even leased the 84 square meter land to Jesus Gabito (Exh. "W"-1008; Exh. "21"-1049) who, on May 21, 1975, bought the same from Teodolfo Mendones (Exh. "X"-1008; Exh. "22"-1049). For their part, the spouses Gabito constructed a residential house thereon and declared the land under Tax Declaration No. 7371 (Exh. "EE"-1008; Exh. "29"-1049). There was even a fence constructed by Marcial Olaybal separating the property he bought from that of Petrona Gacos (p. 7, Court of Appeal decision, pp. 49-63, Rollo). We take judicial notice of the road-widening project of the national highway (Juban-Irosin-Bulan National Road) of the then Department of Public Highways, now the DPWH, undertaken sometime in the 1970's which required a 15-meter road-right of way from the centerline of the road. This road-widening project had materially altered the areas of the disputed land thus substantially reducing the areas appertaining to two or all of the parties considering that a welcome rotonda was constructed leading to the three neighboring towns of Bulan, Bulusan and Matnog (Samar-Masbate route) and Juban (Sorsogon, Sorsogon route). In the same manner, developments in the configuration of disputed land, natural or man-made, like the expansion of the ditches into irrigation canals, and other improvements thereon had also materially altered the areas stated in the documents of sale mentioned in the instant case. Thus, the services of a duly licensed geodetic engineer which the trial court required the parties to engage is necessary to determine the actual metes and bounds of the disputed land to apportion the area, in accordance with the decision in the instant case. ACCORDINGLY, the decision of the Court of Appeals dated October 11, 1985 affirming that of the then Court of First Instance of Sorsogon, Branch 11, now Regional Trial Court of Sorsogon, dated December 4, 1979, is AFFIRMED. Costs against petitioners. SO ORDERED. Cruz, Grio-Aquino and Bellosillo, JJ., concur.

G.R. No. 108558. June 21, 2001] ANDREA TABUSO and RENATO BISMORTE, petitioners, vs. COURT OF APPEALS and the HEIRS OF ESTEBAN ABAD represented by Nemesio Abad and Ana Abad Paghubasan, Respondents. DECISION PANGANIBAN, J.:

It is settled that great weight, and even finality, is accorded to the factual conclusions of the Court of Appeals which affirm those of the trial courts. Only when it is clearly shown that such findings are whimsical, capricious, and arbitrary can they be overturned. Statement of the Case Before us is an appeal under Rule 45 of the Rules of Court, assailing the July 29, 1992 Decision [1 of the Court of Appeals [2 (CA) in CA-GR CV No. 26047 and its January 14, 1993 Resolution [3 denying reconsideration. The CA affirmed in toto the Decision of the Regional Trial Court, which had found abundant proof of appellees ownership of the land, as opposed to the scanty evidence offered by appellants. The dispositive portion of the assailed Decision reads as follows: WHEREFORE, [there being] no reversible error in the decision appealed from[,] the same is hereby affirmed in toto. Costs against appellants.[4 The Facts The undisputed facts of the case are summarized by the Court of Appeals as follows: This case involves declaration of ownership filed before the Regional Trial Court of Naval, Leyte, [in] Biliran, Leyte, of an unregistered parcel of land at Antipolo, Naval, Leyte with an area of 3,267 square meters. The plaintiffs evidence consists of the following: a) A tax declaration No. 3705 (Exh. A) in the name of Ignacio Montes for the year 1912. However, the land taxes thereon for the years 1944 to 1947 were paid only in 1981 (Exh. F and series). b) Plaintiff Andrea Tabuso claims to be the owner as successor in interest (granddaughter) of one Andrea Elaba, daughter of Maria Montes and Borja Elaba, Maria Montes appears to be a sister of Ignacio Montes, in whose name the tax declaration for the property in question was issued for the year 1912 (Exh. A). c) The property in question has been in the possession of the defendants (heirs of Esteban Abad), although the house standing thereon appears to have been constructed by Marcelo Tabuso, father of plaintiff Andrea Tabuso. On the other hand, evidence for the defendants tends to establish the following: a) The land in question originally owned by Maria Montes was donated to Isabel Elaba through an ancient document executed on September 24, 1923 (Exh. F). Isabel in turn sold the land to Esteban Abad on May 5, 1948 (Exh. 4). b) The original tax declaration in the name of Ignacio Montes (Exh. A) was superseded by Tax Declaration Nos. 6422 and 1450 both in the name of Isabel Elaba (Exh. 6-D; 6-E)[;] Declaration No. 1450 for the year 1948 was superseded by Tax Declaration No. 6959 for 1960 (Exh. 6-C) in the name of Esteban Abad; and the latter was superseded in 1969 by Tax Declaration No. 1661 (Exh. 6-B) in the name of Esteban Abad. In 1974 a new tax declaration No. 19 (Exh. 6-A) was issued in the name of Esteban Abad with Nemesio Abad and his co-heirs as administrators. The last tax declaration No. 22 (Exh. 6) for 1982 was in the name of Esteban Abad. The land taxes due thereon for the years 1947 to 1982 were paid by Isabel Elaba[,] Esteban Abad and Nemesio Abad (Exhs. 7 to 7-W).

c) The land in question is tenanted by one Valentin Poblete in accordance with a lease contract executed by defendant Nemesio [Abad], one of the heirs and co-owners of the land. On the basis of the foregoing evidence, the court dismissed the complaint and declared the defendant the lawful owners of the land in question.[5 The trial court [6 concluded that there was abundant proof of private respondents ownership of the lot in question as against the scanty evidence offered by petitioners. And even if the latter had built a house thereon, such action was only tolerated by private respondents, who had originally allowed one Marcelo Tabuso (father of Petitioner Andrea Tabuso), to construct a house on the same lot. Besides, Petitioner Tabuso is not a compulsory heir of Ignacio Montes, from whom she claims to have inherited the lot, subject of this litigation. In addition, the tax declaration in his name has long been revised. The trial court likewise gave credit to the testimony of Atty. Jose Gonzales, private respondents counsel who had been presented by petitioners as their own witness. He testified that the land in question, which was adjacent to the land he himself possessed, had been in the possession of Esteban Abads heirs, herein private respondents. The trial court also took note of the various tax declarations covering the property, indicating that it was owned by private Respondents. Ruling of the Court of Appeals The Court of Appeals upheld the findings of the trial court. It ruled as follows: The only issue presented to [u]s for resolution is the question of ownership. After a careful review of the records, [w]e agree with the trial court that the preponderance of evidence supports the claim of ownership of defendants-appellees. As regards the first assigned error, [the] trial court cannot be faulted for giving weight to the testimony of Atty. Jose Gonzales. He testified that the land in question had been in he possession of appellees; that he personally [knew] this as he own[ed] the land adjacent to the land in question at the northern point; that he inherited said land from his late father; and that he frequently visit[ed] his land and passe[d] by the land in question. Thus, he testified of his own personal knowledge regarding the fact of possession. Moreover, Atty. Gonzales, although a counsel for appellees, was presented by appellants ad their own witness; hence, they are bound by his testimony. As to the validity of the document of donation executed by appellants predecessor in interest, Maria Montes in 1923, or more than sixty (60) years ago, it is too late in the day to raise the question of the validity of said document. Appellants are barred by laches to raise the same. Moreover, the issue is being raised for the first time on appeal, which is not allowed. It also appears that since 1923 to the present, or for more than 60 years, appellees have been able to establish by the tax declarations in their name and that of their predecessors in interest that they have been in open, continuous, uninterrupted and adverse possession of the land in question. xxx Finally, the area of the land appears to be immaterial. Whether it is only 3,267 square meters as contained in the tax declaration, or 11,927 square meters, as found by the court-appointed commissioner, the important thing to consider is that appellants have not substantiated their claim by a preponderance of evidence adverse to the claim of ownership and possession of appellees.[7 Issues

In their Memorandum, [8 petitioners raise the following issues: I The findings and conclusion of the Honorable Court of Appeals that private respondents are in possession and owners of the land in dispute are contradicted by the evidence on record. II The Honorable Court of Appeals committed grave abuse of discretion amounting to lack of jurisdiction when it upheld the validity of the Deed of Donation dated September 23, 1923 which is [a] spurious document as it was executed by Maria Montes who was already dead as early as 1919. III The Honorable Court of Appeals gravely erred in holding private respondents as owners of the land notwithstanding the undisputed fact that they (private respondents) admitted the facts set forth by appellants[,] now petitioners in their appellants brief[,] as the former (private respondents[)] did not file their appellees brief[.] IV The Order of the respondent Court of Appeals to deliver the entire 11,927 sq. meters to private respondent is illegal and unsupported by evidence. V The Court of Appeals gravely erred in concluding that private respondents are the owners of the land merely on the basis of their tax declarations without evidence of actual physical possession.[9 In sum, the main issue that needs to be resolved in the case at bar is the ownership of the land in question. The other issues presented by petitioners are merely ancillary and will be discussed in conjunction with this main issue. The Courts Ruling The Petition is devoid of merit. Main Issue: Ownership of the Property After a careful examination of the issues involved, the evidence adduced, and the arguments or issues raised by both parties, this Court rules that the totality of the evidence presented leans heavily in favor of herein private Respondents. It is settled that great weight, and even finality, is given to the factual conclusions of the Court of Appeals which affirm those of the trial courts. Only where it is shown that such findings are whimsical, capricious, and arbitrary can they be overturned. [11 We agree with the findings of the Court of Appeals that for a period of more than 60 years, private respondents have been able to establish that they are the owners of the lot; and that for said period, they have been in open, continuous and uninterrupted possession of the same.

Both the trial and the appellate courts were likewise correct in giving weight to the testimony of Atty. Jose Gonzales. He testified that being, the owner of the adjacent land, he had personal knowledge of the simple fact that the land in question was owned by private respondents, who were in actual, open and continuous possession thereof. Significantly, while he was private respondents counsel, he was presented by petitioners themselves. Having done so, they are bound by his testimony, even if it is hostile. The only substantial argument of petitioners supporting their claim of ownership is their construction of a small house (barong-barong) on the property, as acknowledged in private respondents letter, which reads: Notice to Vacate Naval, Leyte September 24, 1981 To: Mr. & Mrs. Renato Bismorte Barangay Calumpang Naval, Leyte Greetings: You are advised to vacate the area/lot where your Barong-Barong House [was] temporarily constructed for we, the lawful owners, shall have to use it. You are given three (3) months grace period upon receipt thereof within which to transfer or completely vacate the area/lot. [Should there be f]ailure to comply [with] this notice or advise [,] an ejectment proceeding shall be instituted or filed against you before the proper court. Hence, compliance is hereby desired. (Signed) Mr. NEMESIO E. ABAD Co-Owner (Signed) ANA A. PAGHUBASAN Co-Owner (Signed) NESTORA DELA CUALA[12 Obviously, the claim of private respondents that they are the owners of the land is supported by the above letter, in which they were asking petitioners to vacate the property. Moreover, considering its size, which is 11,927 square meters as found by the court-appointed commissioner, the fact that petitioners house is only a barong-barong or make-shift shanty lends support to private respondents claim that the formers presence on the property was merely tolerated. It must be stressed that possession and ownership are distinct legal concepts. Ownership exists when a thing pertaining to one person is completely subjected to his will in a manner not prohibited by law and consistent with the rights of others. Ownership confers certain rights to the owner, one of which is the right to dispose of the thing by way of sale. xxx. On the other hand, possession is defined as the holding of a thing or the enjoyment of a right. Literally, to possess means to actually and physically occupy a thing with or without right. Possession may be had in one of two ways: possession in the concept of an owner and possession of a holder. Possessors in the concept of owners may be the owners themselves or those who claim to be so. On the other hand, those who possess as mere holders acknowledge in another a superior right which he believes to be ownership, whether his belief be right or wrong. [13 In this case, the evidence shows that the occupation of the property by petitioners is not in the concept of owners, because their stay is merely tolerated. This finding is bolstered by the fact that Petitioner Andrea

Tabuso is the daughter of Marcelo Tabuso, who was merely allowed by the previous owner, Esteban Abad, to construct a small house on the lot. As held in Caniza v. Court of Appeals, [14 an owners act of allowing another to occupy his house, rent-free[,] does not create a permanent and indefeasible right of possession in the latters favor. [15 Lastly, the claim of petitioners that private respondents are not in actual possession of the land is unsubstantiated. Besides, it is not necessary that the latter actually stay on the property in order to prove ownership of the same. As found by both the trial and the appellate courts, since the acquisition of the subject property by private respondents, they had religiously paid the taxes due thereon. Further, one of the co-owners executed a lease contract over it in favor of a tenant. These acts are clearly consistent with ownership. Deed of Donation Not Proven to Be Invalid Petitioners point out that the Deed of Donation executed by Maria Montes to Isabel Elaba, who in turn sold the lot to private respondents, is spurious since the Deed was executed on September 23, 1923; whereas the death certificate issued by the Holy Rosary Cathedral Parish of Naval, Leyte, shows that Maria Montes was buried on February 21, 1919. However, the Court of Appeals was correct in stating that petitioners were barred by laches from questioning the validity of the Deed. Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting [the] presumption that the party entitled to it either has abandoned it or declined to assert it. [16 It is too late for private respondents to raise this issue now, considering that the Deed of Donation was executed more than 60 years ago. Moreover, they are precluded from raising this argument, because it is being raised for the first time on appeal. [17 In addition, private respondents have not proven that the Maria Montes mentioned in the Death Certificate is the same Maria Montes who executed the Deed of Donation. The two have been shown to have different sets of parents, thus raising serious doubts on the identity of the person mentioned in the Death Certificate. Lastly, the Death Certificate was not marked in evidence, nor was it subjected to crossexamination. It is thus inadmissible in evidence. Size of Lot Immaterial To Private Respondents Claim of Ownership Lastly, petitioners argue that private respondents own only 3,267 square meters of the questioned lot. This is the area that appears on their Tax Declarations. On the other hand, the entire lot that was adjudicated measures 11,927 square meters. Petitioners contention deserves scant consideration, because they have not substantiated, by any means whatsoever, their claim to any part of the disputed land. Hence, they are not entitled to ownership thereof. Besides, what defines a piece of land is not the numerical data indicated as its area, but the boundaries or metes and bounds specified in its description as enclosing the land and indicating its limits. WHEREFORE , the petition is hereby DISMISSED and the assailed Decision and Resolution AFFIRMED. Costs against petitioners. SO ORDERED. Melo, (Chairman), Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

DIZON V. SUNTAY 47 SCRA 160 FACTS: Suntay was the owner of a diamond ring. On a relevant date, she and Sison entered into a transaction wherein Sison would sell the diamond ring on a commission basis. Both parties knew each other for a long time and that there was already a prior transaction between the two wherein Sison sold on commission another piece of jewelry owned by Suntay. As days passed with no return of Sison, Suntay made demands. The ring could not be returned since it was pledged to Dizons pawnshop, without the consent of Suntay. Suntay insisted on the return of her ring and Sison then gave her the pawnshop ticket. Upon knowledge of the pledge, she filed a case of estafa against Sison as well as sent a written demand to Dizon for the return of the ring. Dizon refused to do so. HELD: One who has lost or has been unlawfully deprived of a movable may recover the same from the person in possession of the same and the only defense the latter may have is if he has acquired it in good faith at a public sale in which case the owner cannot obtain its return without reimbursing the price paid therefore. Suntay who was unlawfully deprived of the ring was entitled to recover it from Dizon who was found in possession of the same. In the present case, not only has the ownership and the origin of the ring misappropriated been unquestionably proven but also that Sison has fraudulently and in bad faith, disposed of and pledged them contrary to agreement, with no ownership, and to the prejudice of Suntay, who was thereby illegally deprived of said jewels. The owner has the right to recover. He is not estopped when his property has been unlawfully pledged by another.

G.R. No. L-30817: DOMINADOR DIZON vs LOURDES G. SUNTAY 29 September 1972 l Property Article 559 Right to Recover Personal Property- Estoppel

Suntay was the owner of a 3 carat diamond ring valued at P5.5k (in 1962). In June 1962, Suntay entered into an agency to sell with Clarita Sison. Unknown to Suntay, Sison pawned the ring to Dizon who owns a pawnshop. Time passed, and Sison failed to sell the ring nor was she able to return the ring to Suntay. Suntay later discovered that the ring was actually pawned. She demanded Dizon to return the ring. Dizon refused. Suntay filed for a replevin suit which she won. Dizon appealed and he lost. He claims that estoppels should be used against Dizon as she left the ring under the custody of Sison who then pawned it to her. ISSUE: Whether or not Suntay can still claim the ring. HELD: Yes. Suntay can under Article 559 of the Civil Code which provides: 'The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.' Dizon must bear the burden due to his misplaced confidence. Suntays right over the ring is superior to that of Dizon. Estoppel may not be used against Suntay. She is the rightful owner merely exercising her right to recover. Neither the promptings of equity nor the mandates of moral right and natural justice come to Dizons rescue. He is engaged in a business where presumably ordinary prudence would manifest itself to ascertain whether or not an individual who is offering jewelry by way of a pledge is entitled to do so. If no

such care be taken, perhaps because of the difficulty of resisting opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such jewelry should be recognized. CRUZ V. PAHATI 98 PHIL 788 FACTS: The car in dispute was originally owned by Northern Motors and was subsequently purchased by a Chinaman. This Chinaman then sold it to Belizo, who in turn sold the same to Cruz. Belizo was a secondhand car dealer. He offered to Cruz that he would sell the car to a prospective buyer and since the car registration was missing, Cruz issued an authorization letter to Belizo to obtain another certificate, at the insinuation of the latter. The car was also turned over to Belizo. The letter was then falsified by Belizo and converted into an absolute deed of sale. Because of this, he was able to secure a car registration in his name and was later able to sell the car to Balahan who then sold the car to Pahati. This prompted Cruz to file an action for replevin. HELD: One who has lost or has been unlawfully deprived of a movable may recover the same from the person in possession of the same and the only defense the latter may have is if he has acquired it in good faith at a public sale in which case the owner cannot obtain its return without reimbursing the price paid therefore. This is supplemented by the provision stating that where goods are sold by a person who is not the owner thereof, and who doesn't sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the sellers authority to sell. Cruz has a better right to the car in question than Bulahan or Pahati. He has the right to recover the car as he was unlawfully deprived of it due to the ingenious scheme employed by Belizo. This is the case even if Bulahan or Pahati acted in good faith.

DE GARCIA V. CA 37 SCRA 160 FACTS: Guevarra was the owner of a ladys diamond ring with white gold mounting, solitaire 2 -karat diamond as well as 4 brills. It was stolen from her house. On a relevant date, while she was talking to Garcia, an owner of a restaurant, she recognized the ring on the latters finger and asked how she acquired the same. Garcia averred that she bought it from her comadre. Guevarra made Garcia know that the ring was stolen from her place days before. It was ascertained the ring was indeed Guevarras but despite written demands, Garcia refused to return the ring. HELD: One who has lost or has been unlawfully deprived of a movable may recover the same from the person in possession of the same and the only defense the latter may have is if he has acquired it in good faith at a public sale in which case the owner cannot obtain its return without reimbursing the price paid therefore. Guevarra who was unlawfully deprived of the ring was entitled to recover it from de Garcia who was found in possession of the same. The only exception provided by law is when the possessor acquired the property through a public sale, in which case, the owner cannot recover without reimbursement.

June 6, 1967 G.R. No. L-22331 IN RE: PETITION FOR CONSOLIDATION OF TITLE IN THE VENDEES OF A HOUSE AND THE RIGHTS TO A LOT. MARIA BAUTISTA VDA. DE REYES, ET AL., vendees-petitioners-appellees. RODOLFO LANUZA, vendor, vs.

MARTIN DE LEON, intervenor-appellant. Erasmo R. Cruz and C. R. Pascual for intervenor-appellant. Augusto J. Salas for vendees-petitioners-appellees. Regala, J.: PETITION FOR CONSOLIDATION OF TITLE IN THE VENDEES OF A HOUSE AND THE RIGHTS TO A LOT. MARIA BAUTISTA VDA. DE REYES, ET AL., vendees-petitioners-appellees. RODOLFO LANUZA, vendor, vs. MARTIN DE LEON, intervenor-appellant. Erasmo R. Cruz and C. R. Pascual for intervenor-appellant. Augusto J. Salas for vendees-petitioners-appellees. REGALA, J.: Rodolfo Lanuza and his wife Belen were the owners of a two-story house built on a lot of the Maria Guizon Subdivision in Tondo, Manila, which the spouses leased from the Consolidated Asiatic Co. On January 12, 1961, Lanuza executed a document entitled "Deed of Sale with Right to Repurchase" whereby he conveyed to Maria Bautista Vda. de Reyes and Aurelia R. Navarro the house, together with the leasehold rights to the lot, a television set and a refrigerator in consideration of the sum of P3,000. The deed reads: DEED OF SALE WITH RIGHT TO REPURCHASE KNOW ALL MEN BY THESE PRESENTS: That I, RODOLFO LANUZA, Filipino, of legal age, married to Belen Geronimo, and residing at 783-D Interior 14 Maria Guizon, Gagalangin, Tondo, Manila, hereby declare that I am the true and absolute owner of a new two storey house of strong materials, constructed on a rented lot Lot No. 12 of the Maria Guizon Subdivision, owned by the Consolidated Asiatic Co. as evidenced by the attached Receipt No. 292, and the plan of the subdivision, owned by said company. That for and in consideration of the sum of THREE THOUSAND PESOS (P3,000.00) which I have received this day from Mrs. Maria Bautista Vda. de Reyes, Filipino, of legal age, widow; and Aurelia Reyes, married to Jose S. Navarro, Filipinos, of legal ages, and residing at 1112 Antipolo St., Tondo, Manila, I hereby SELL, CEDE, TRANSFER, AND CONVEY unto said Maria Bautista Vda. de Reyes, her heirs, succesors, administrators and assigns said house, including my right to the lot on which it was constructed, and also my television, and frigidaire "Kelvinator" of nine cubic feet in size, under the following conditions: I hereby reserve for myself, my heirs, successors, administrators, and assigns the right to repurchase the above mentioned properties for the same amount of P3,000.00, without interest, within the stipulated period of three (3) months from the date hereof. If I fail to pay said amount of P3,000.00, within the stipulated period of three months, my right to repurchase the said properties shall be forfeited and the ownership thereto shall automatically pass to Mrs. Maria Bautista Vda. de Reyes, her heirs, successors,

administrators, and assigns, without any Court intervention, and they can take possession of the same. IN WITNESS WHEREOF, we have signed this contract in the City of Manila, this 12th day of January, 1961. s/t RODOLFO LANUZA Vendors/t MARIA BAUTISTA VDA. DE REYESVendee s/t AURELIA REYES VendeeWITH MY MARITAL CONSENT: s/t JOSE S. NAVARRO When the original period of redemption expired, the parties extended it to July 12, 1961 by an annotation to this effect on the left margin of the instrument. Lanuza's wife, who did not sign the deed, this time signed her name below the annotation. It appears that after the execution of this instrument, Lanuza and his wife mortgaged the same house in favor of Martin de Leon to secure the payment of P2,720 within one year. This mortgage was executed on October 4, 1961 and recorded in the Office of the Register of Deeds of Manila on November 8, 1961 under the provisions of Act No. 3344. As the Lanuzas failed to pay their obligation, De Leon filed in the sheriff's office on October 5, 1962 a petition for the extra-judicial foreclosure of the mortgage. On the other hand, Reyes and Navarro followed suit by filing in the Court of First Instance of Manila a petition for the consolidation of ownership of the house on the ground that the period of redemption expired on July 12, 1961 without the vendees exercising their right of repurchase. The petition for consolidation of ownership was filed on October 19. On October 23, the house was sold to De Leon as the only bidder at the sheriffs sale. De Leon immediately took possession of the house, secured a discharge of the mortgage on the house in favor of a rural bank by paying P2,000 and, on October 29, intervened in court and asked for the dismissal of the petition filed by Reyes and Navarro on the ground that the unrecorded pacto de retro sale could not affect his rights as a third party. The parties1 thereafter entered into a stipulation of facts on which this opinion is mainly based and submitted the case for decision. In confirming the ownership of Reyes and Navarro in the house and the leasehold right to the lot, the court said: It is true that the original deed of sale with pacto de retro, dated January 12, 1961, was not signed by Belen Geronimo-Lanuza, wife of the vendor a retro, Rodolfo Lanuza, at the time of its execution. It appears, however, that on the occasion of the extension of the period for repurchase to July 12, 1961, Belen Geronimo-Lanuza signed giving her approval and conformity. This act, in effect, constitutes ratification or confirmation of the contract (Annex "A" Stipulation) by Belen Geronimo-Lanuza, which ratification validated the act of Rodolfo Lanuza from the moment of the execution of the said contract. In short, such ratification had the effect of purging the contract (Annex "A" Stipulation) of any defect which it might have had from the moment of its execution. (Article 1396, New Civil Code of the Philippines; Tang Ah Chan and Kwong Koon vs. Gonzales, 52 Phil. 180) Again, it is to be noted that while it is true that the original contract of sale with right to repurchase in favor of the petitioners (Annex "A" Stipulation) was not signed by Belen Geronimo-Lanuza, such failure to sign, to the mind of the Court, made the contract merely voidable, if at all, and, therefore, susceptible of ratification. Hence, the subsequent ratification of the said contract by Belen Geronimo-Lanuza validated the said contract even before the property in question was mortgaged in favor of the intervenor.

It is also contended by the intervenor that the contract of sale with right to repurchase should be interpreted as a mere equitable mortgage. Consequently, it is argued that the same cannot form the basis for a judicial petition for consolidation of title over the property in litigation. This argument is based on the fact that the vendors a retro continued in possession of the property after the execution of the deed of sale with pacto de retro. The mere fact, however, that the vendors a retro continued in the possession of the property in question cannot justify an outright declaration that the sale should be construed as an equitable mortgage and not a sale with right to repurchase. The terms of the deed of sale with right to repurchase (Annex "A" Stipulation) relied upon by the petitioners must be considered as merely an equitable mortgage for the reason that after the expiration of the period of repurchase of three months from January 12, 1961. Article 1602 of the New Civil Code provides: "ART. 1602. The contract shall be presumed to be in equitable mortgage, in any of the following cases; xxxxxxxxx "(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed 1JulZt. xxxxxxxxx In the present case, it appears, however, that no other instrument was executed between the parties extending the period of redemption. What was done was simply to annotate on the deed of sale with right to repurchase (Annex "A" Stipulation) that "the period to repurchase, extended as requested until July 12, 1961." Needless to say, the purchasers a retro, in the exercise of their freedom to make contracts, have the power to extend the period of repurchase. Such extension is valid and effective as it is not contrary to any provision of law. (Umale vs. Fernandez, 28 Phil. 89, 93) The deed of sale with right to repurchase (Annex "A" Stipulation) is embodied in a public document. Consequently, the same is sufficient for the purpose of transferring the rights of the vendors a retro over the property in question in favor of the petitioners. It is to be noted that the deed of sale with right to repurchase (Annex "A" Stipulation) was executed on January 12, 1961, which was very much ahead in point of time to the execution of the real estate mortgage on October 4, 1961, in favor of intervenor (Annex "B" Stipulation). It is obvious, therefore, that when the mortgagors, Rodolfo Lanuza and Belen Geronimo Lanuza, executed the real estate mortgage in favor of the intervenor, they were no longer the absolute owners of the property since the same had already been sold a retro to the petitioners. The spouses Lanuza, therefore, could no longer constitute a valid mortgage over the property inasmuch as they did not have any free disposition of the property mortgaged. (Article 2085, New Civil Code.) For a valid mortgage to exist, ownership of the property mortgaged is an essential requisite. A mortgage executed by one who is not the owner of the property mortgaged is without legal existence and the registration cannot validate. (Philippine National Bank vs. Rocha, 55 Phil. 497). The intervenor invokes the provisions of article 1544 of the New Civil Code for the reason that while the real estate mortgage in his favor (Annex "B" Stipulation) has been registered with the Register of Deeds of Manila under the provisions of Act No. 3344 on November 3, 1961, the deed of sale with right to repurchase (Annex "A" Stipulation) however, has not been duly registered. Article 1544 of the New Civil Code, however, refers to the sale of the same property to two or more vendees. This provision of law, therefore, is not applicable to the present case which does not involve sale of the same property to two or

more vendees. Furthermore, the mere registration of the property mortgaged in favor of the intervenor under Act No. 3344 does not prejudice the interests of the petitioners who have a better right over the property in question under the old principle of first in time, better in right. (Gallardo vs. Gallardo, C.B., 46 O.G. 5568) De Leon appealed directly to this Court, contending (1) that the sale in question is not only voidable but void ab initio for having been made by Lanuza without the consent of his wife; (2) that the pacto de retro sale is in reality an equitable mortgage and therefore can not be the basis of a petition for consolidation of ownership; and (3) that at any rate the sale, being unrecorded, cannot affect third parties. We are in accord with the trial court's ruling that a conveyance of real property of the conjugal partnership made by the husband without the consent of his wife is merely voidable. This is clear from article 173 of the Civil Code which gives the wife ten years within which to bring an action for annulment. As such it can be ratified as Lanuza's wife in effect did in this case when she gave her conformity to the extension of the period of redemption by signing the annotation on the margin of the deed. We may add that actions for the annulment of voidable contracts can be brought only by those who are bound under it, either principally or subsidiarily (art. 1397), so that if there was anyone who could have questioned the sale on this ground it was Lanuza's wife alone. We also agree with the lower court that between an unrecorded sale of a prior date and a recorded mortgage of a later date the former is preferred to the latter for the reason that if the original owner had parted with his ownership of the thing sold then he no longer had the ownership and free disposal of that thing so as to be able to mortgage it again. Registration of the mortgage under Act No. 3344 would, in such case, be of no moment since it is understood to be without prejudice to the better right of third parties.2 Nor would it avail the mortgagee any to assert that he is in actual possession of the property for the execution of the conveyance in a public instrument earlier was equivalent to the delivery of the thing sold to the vendee.3 But there is one aspect of this case which leads us to a different conclusion. It is a point which neither the parties nor the trial court appear to have sufficiently considered. We refer to the nature of the so-called "Deed of Sale with Right to Repurchase" and the claim that it is in reality an equitable mortgage. While De Leon raised the question below and again in this Court in his second assignment of error, he has not demonstrated his point; neither has he pursued the logical implication of his argument beyond stating that a petition for consolidation of ownership is an inappropriate remedy to enforce a mortgage. De Leon based his claim that the pacto de retro sale is actually an equitable mortgage on the fact that, first, the supposed vendors (the Lanuzas) remained in possession of the thing sold and, second, when the three-month period of redemption expired the parties extended it. These are circumstances which indeed indicate an equitable mortgage.4 But their relevance emerges only when they are seen in the perspective of other circumstances which indubitably show that what was intended was a mortgage and not a sale.These circumstances are: 1. The gross inadequacy of the price. In the discussion in the briefs of the parties as well as in the decision of the trial court, the fact has not been mentioned that for the price of P3,000, the supposed vendors "sold" not only their house, which they described as new and as being made of strong materials and which alone had an assessed value of P4,000, but also their leasehold right television set and refrigerator, "Kelvinator of nine cubic feet in size." indeed, the petition for consolidation of ownership is limited to the house and the leasehold right, while the stipulation of facts of the parties merely referred to the object of the sale as "the property in question." The failure to highlight this point, that is, the gross

inadequacy of the price paid, accounts for the error in determining the true agreement of the parties to the deed. 2. The non-transmission of ownership to the vendees. The Lanuzas, the supposed vendors did not really transfer their ownership of the properties in question to Reyes and Navarro. What was agreed was that ownership of the things supposedly sold would vest in the vendees only if the vendors failed to pay P3,000. In fact the emphasis is on the vendors payment of the amount rather than on the redemption of the things supposedly sold. Thus, the deed recites that If I (Lanuza) fail to pay said amount of P3,000.00 within the stipulated period of three months, my right to repurchase the said properties shall be forfeited and the ownership thereto automatically pass to Mrs. Maria Bautista Vda. de Reyes . . . without any Court intervention and they can take possession of the same NiBf7. This stipulation is contrary to the nature of a true pacto de retro sale under which a vendee acquires ownership of the thing sold immediately upon execution of the sale, subject only to the vendor's right of redemption.5 Indeed, what the parties established by this stipulation is an odious pactum commissorium which enables the mortgages to acquire ownership of the mortgaged properties without need of foreclosure proceedings. Needless to say, such a stipulation is a nullity, being contrary to the provisions of article 2088 of the Civil Code.6 Its insertion in the contract of the parties is an avowal of an intention to mortgage rather than to sell.7 3. The delay in the filing of the petition for consolidation. Still another point obviously overlooked in the consideration of this case is the fact that the period of redemption expired on July 12, 1961 and yet this action was not brought until October 19, 1962 and only after De Leon had asked on October 5, 1962 for the extra-judicial for closure of his mortgage. All the while, the Lanuzas remained in possession of the properties they were supposed to have sold and they remained in possession even long after they had lost their right of redemption. Under these circumstances we cannot but conclude that the deed in question is in reality a mortgage. This conclusion is of far-reaching consequence because it means not only that this action for consolidation of ownership is improper, as De Leon claims, but, what is more that between the unrecorded deed of Reyes and Navarro which we hold to be an equitable mortgage, and the registered mortgage of De Leon, the latter must be preferred. Preference of mortgage credits is determined by the priority of registration of the mortgages,8 following the maxim "Prior tempore potior jure" (He who is first in time is preferred in right.)9 Under article 2125 of the Civil Code, the equitable mortgage, while valid between Reyes and Navarro, on the one hand, and the Lanuzas, on the other, as the immediate parties thereto, cannot prevail over the registered mortgage of De Leon. Wherefore, the decision appealed from is reversed, hence, the petition for consolidation is dismissed. Costs against Reyes and Navarro. Concepcion, C.J., Dizon, Bengzon, J.P., Sanchez and Castro, JJ., concur. Reyes, J.B.L., and Zaldivar, JJ., reserved their votes. Makalintal, J., concurs in the result.