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Romeo M. Landicho Vs. William C.

Limqueco/Edgar Peñalosa, et al. Vs. William C.


Limqueco; G.R. No. 194554/G.R. No. 194556;
December 7, 2016
DECISION

MENDOZA, J.:

These are consolidated petitions[1] for review on certiorari under Rule 45 of the Rules of Court
seeking to review the June 28, 2010 Decision[2] and November 23, 2010 Resolution[3] of the
Court of Appeals (CA) in CA-G.R. SP No. 75482, which reversed and set aside the January 15,
2003 Decision[4] of the Department of Agrarian Reform Adjudication Board (DARAB) in DARAB
Case Nos. 10392, 10392-A, 10392-A-1, 10392-A-2 and 10392-A-3.

The January 15, 2003 DARAB Decision affirmed the March 5, 2001 Decision[5] of the Provincial
Agrarian Reform Adjudicator in Region IV, Lucena City (PARAD) in DARAB Case Nos. R-0408-
004-00, R-0408-015-00, R-0408-016-00, R-0408-017-00, R-0408-018-00, R-0408-019-00, R-
0408-020-00, and R-0408-021-00.

The DARAB and PARAD earlier ordered respondent William C. Limqueco (respondent) to
immediately surrender to the petitioners[6] their respective owner’s copies of the Certificate of
Land Ownership Award (CLOA) Nos. 00125976, 00125977, 00125978, 00125979, 00125980,
00122648, 00122649, 00122650, 00122659 or, in case of failure, ordering the Registry of
Deeds (RD) of Quezon Province to cancel the aforementioned CLOAs and for the Department
of Agrarian Reform (DAR) Provincial Office to issue new owner’s duplicate CLOAs to
petitioners.

The Antecedents

Sometime in the year 2000, petitioners Felipe Peñalosa, represented by Joel Peñalosa and
Edgar Peñalosa, Darwin P. Landicho, Juris P. Landicho, and Ivy P. Landicho each filed petitions
before the PARAD against respondent and Yang Chin Hai (Hai), his Taiwanese investor-
partner. Petitioner Romeo Landicho (Romeo Landicho) was impleaded via third-party complaint
in the said cases. The petitions sought the nullification of the contracts of sale in favor of
respondent and the return to the petitioners of their respective owner’s duplicate copies of the
CLOAs issued by the DAR back in 1992 or, in the alternative, the cancellation of the CLOAs and
the issuance of the RD of new certificates in petitioners’ names.

The CLOAs and Transfer Certificates of Title (TCTs) covered five (5) parcels of land located in
Mabang Parang, Lucban, Quezon, which originally formed part of a bigger landholding with an
area of 177,763 square meters, previously covered by Original Certificate of Title (OCT) No. P-
29365 or Free Patent No. 593794 and registered in the name of spouses Romeo and
Evangeline Landicho (Spouses Landicho). By virtue of a Voluntary Land Transfer, the land
covered by OCT No. P-29365 was placed under the coverage of the Comprehensive Agrarian
Reform Program (CARP) in 1992. As a consequence, Spouses Landicho were able to retain
five (5) hectares of said landholding, while the remaining portion was subdivided among the
petitioners, to wit:

BENEFICIARY CLOA NO. TCT NO. AREA(sq. m.) LOCATION

Juris P. Landicho 00125976 T-4006 29,345 Mahabang

Parang

Darwin P. 00125977 T-4007 21,393 Mahabang


Landicho

Parang

Ivy P. Landicho 00125978 T-4008 27,592 Mahabang

Parang

Felipe L. Peñalosa 00125979 T-4009 24,717 Mahabang


Parang

Edgar L. Peñalosa 001259801 T-4010 24,716 Mahabang

Parang

TOTAL LAND AREA = 127,763

Petitioner Felipe Peñalosa averred that respondent was able to obtain physical possession of
his CLOA as well as his TCT to the property and that he came to know that respondent and
Romeo Landicho entered into a contract of sale of his property and as a result thereof,
respondent was able to take hold of the copy of the TCT to his land.

Petitioners Edgar Peñalosa, Darwin P. Landicho, Juris P. Landicho, and Ivy P. Landicho, on the
other hand, contended that sometime in June 1994, they were asked by respondent and Romeo
Landicho to sign certain documents which turned out to be contracts of sale and lease involving
their properties covered by the CLOAs; that by reason of such sale, the owner’s duplicate
copies of their TCTs were delivered to respondent; and that in affixing their signatures, they did
not receive any consideration and the legal implications of the said contracts were not explained
to them.

Petitioners Darwin Landicho, Juris Landicho and Ivy Landicho further stated that they had
entrusted their owner’s duplicate copies of their TCTs and the CLOAs to their father, Romeo
Landicho. In June 1994, however, they came to know that respondent and their father entered
into a contract of sale and/or lease involving their properties and by virtue thereof, the TCTs
were given to respondent.

Hence, the petitioners claimed that the transfers of lands covered by their individual CLOAs by
Romeo Landicho to respondent were made in violation of Republic Act (R.A.) No. 6657 or the
Comprehensive Agrarian Reform Law of 1988 (CARL), which prohibited the sale, transfer or
conveyance of land for a period of ten (10) years;[7] and that their consent to such transactions
was vitiated by fraud, undue influence and mistake. For said reason, they filed the cases before
the PARAD to recover their lands.
Respondent opposed the petitions. He asserted that he was a purchaser in good faith and for
value and that the PARAD had no jurisdiction over the subject petitions because no agrarian
dispute was involved.

In its March 5, 2001 Decision,[8] the PARAD ruled in favor of the petitioners. On the procedural
aspect, it held that it had jurisdiction as the cases involved an agrarian dispute or the “rights and
obligations of persons, whether natural or juridical, engaged in the management, cultivation and
use of all agricultural lands covered by the CARP and other agrarian laws.” It further declared
that respondent was already estopped from questioning the jurisdiction over the subject matter
because his motion to dismiss was filed seven (7) months after he had submitted his answer.
On the merits, the PARAD ordered respondent to surrender the subject CLOAs and TCTs over
the properties. The dispositive portion of the PARAD decision reads:

WHEREFORE, judgment is hereby rendered in favor of the petitioners as follows:

A ORDERING respondent, Atty. William Limqueco to immediately surrender and deliver to petitioners
their respective owner’s copies of CLOA No. 00125976 (T-4006); CLOA No. 00125977 (T-4007);
CLOA No. 00125978 (T-4008); CLOA No. 00125979 (T-4009); CLOA No. 00125980 (T-4010); CLOA
No. 00122648 (T-3747); CLOA No. 00122649 (T-3749); CLOA No. 00122650 (T-3748) and CLOA No.
00122659 (T-3785), within five (5) days from receipt of this decision;

B. In the event respondent Limqueco refuses or fails to surrender subject CLOAs/titles to petitioner
within the aforesaid 5-day period, ORDERING, the Register of Deeds of Quezon Province to cancel the
subject owner’s copies of said CLOAs/titles as lost and therefore, null and void and without legal effect,
and further ORDERING the DAR Provincial Office, Talipan, Pagbilao, Quezon, in coordination with the
Register of Deeds of Quezon Province to cause immediate issuance of new owner’s duplicate
CLOAs/titles to petitioners which new CLOAs/titles shall immediately be released to the latter, and be
accorded full faith, value and credit.

C. ORDERING respondent William L. Limqueco and Yang Chin Hai to pay jointly and severally each of
the petitioners in the eight (8) petitions herein the amount of P20,000.00 as for compensatory damages,
P50,000.00 as for exemplary damages and P50,000.00 as for attorney’s fees.

D. Ordering defendant Atty. Romeo Landicho to pay petitioners Felipe Peñalosa and Edgar Peñalosa the
amount of P20,000.00 each as for compensatory damages, P50,000.00 as for exemplary damages and
P50,000.00 each as for attorney’s fees.
E. DISMISSING the counter-claims of respondents in the herein petitions, and

F. DISMISSING the third-party complaints/cross-claims and the counter-claim in DARAB CASE NOS.
R-0408-00 and DARAB CASE NO. R-0408-015-00.

SO ORDERED.[9]

Aggrieved, respondent and Hai appealed before the DARAB. In its January 15, 2003
Decision,[10] the DARAB affirmed in toto the decision of the PARAD, disposing as follows:

WHEREFORE, premises considered, the decision of the Adjudicator a quo dated March 5, 2001 is
hereby AFFIRMED and the appeal is hereby DISMISSED for lack of merit.

SO ORDERED.[11]

Undaunted, respondent and Hai appealed[12] to the CA via a petition for review under Rule 43 of
the Rules of Court. They averred that the DARAB gravely erred in ruling that it had jurisdiction
over the cases despite the absence of an agrarian issue. This appeal was, however, dismissed
due to the failure of Hai to sign the certification of non-forum shopping. Respondent moved for
reconsideration and prayed for the admittance of his amended petition with him as the sole
petitioner. In a resolution, dated May 26, 2013, the CA granted the same.[13]

Ruling of the CA

In its June 28, 2010 Decision,[14] the CA ruled that the DAR Secretary, and not the
PARAD/DARAB, had jurisdiction to hear the subject petitions in the absence of an agrarian
dispute. Thus, the petition was granted by the CA, to wit:

ACCORDINGLY, the petition is GRANTED. The Decision dated January 15, 2003 of the Department
of Agrarian Reform Adjudication Board (DRAB) in DARAB Case Nos. 10392, 10392-A, 10392-A-1,
10392-A-2 and 10392-A-3 and the Decision dated March 5, 2001 of the Department of Agrarian Reform
Provincial Adjudication Board (PARAD) in Region IV, Lucena City, in DARAB Case Nos, R-048-004-
00, R-048-015-00, R-0408-016-00 R-0408-017-00, R-0408-018-00, R-0408-019-00, R-0408-020-00, and
R-0408-021-00, are SET ASIDE. DARAB Case Nos. 10392, 10392-A, 10392-A-1, 10392-A-2 and
10392-A-3 as well as DARAB Case Nos. R-048-004-00, R-048-015-00, R-0408-016-00, R-0408-017-00,
R-0408-018-00, R-0408-019-00, R-0408-020-00, and R-0408-021-00 are DISMISSED. This is without
prejudice to the re-filing of the petitions in these aforementioned cases following DAR Administrative
Order No. 6, Series of 2000, within (30) days from the finality of this Decision.

SO ORDERED.[15]

The petitioners separately moved for reconsideration. Nevertheless, in a Resolution,[16] dated


November 23, 2010, the motions for reconsideration were denied.

Hence, these petitions.

ISSUES
1. The Court of Appeals seriously erred in admitting Atty. Limqueco’s amended
petition for review despite dismissal of the original petition for review on the ground
of Atty. Limqueco’s violation of the rule against forum shopping disregarding the
settled rule that a violation of the rule against forum shopping is not curable by mere
amendment under para. 2, Section 5, Rule 7 of the 1997 Rules of Civil Procedure in
relation to Supreme Court Adm. Circular No. 04-94.

2. The Court of Appeals seriously erred in not holding that respondent’s remedy of
appeal by petition for review under Rule 43 is procedurally improper because the
correct remedy is a special civil action for certiorari under Rule 65 in view of
respondent’s assertion that the DARAB/PARAD lacked jurisdiction over the cases
decided a quo.

3. The Court of Appeals erred in setting aside the herein DARAB Decision, which
affirmed in totothe PARAD Decision, disregarding that, by settled jurisprudence, the
DARAB has exclusive jurisdiction, to the exclusion of the DAR Secretary, to try and
decide any agrarian dispute or “any incident involving the implementation of the
Comprehensive Agrarian Reform Program (CARP)” such as the herein petitions a
quo which seek the principal relief of getting back the owners’ copies of petitioners
certificates of land ownership award (CLOAs) in the illegal possession of respondent
Limqueco.

4. The Court of Appeals erred in invoking the case of Heirs of the Late Herman Rey
Santos et.al. v. Court of Appeals (327 SCRA 293) because, unlike in said Santos
Case which involves conflicting ownership claims over a parcel of land sold at
auction sale, the DARAB Petitions do not involve any conflicting ownership claims as
therein petitioners are farmers-beneficiaries, and admittedly CLOA-registered
owners to the exclusion of respondent Limqueco who admittedly is but the illegal
possessor of the owners’ copies of CLOAs and has no title or claim whatsoever over
said CLOAs.

5. The Court of Appeals seriously erred in suggesting to the parties to refer their
petitions to the DAR Secretary supposedly pursuant to DAR AO No. 6, Series of
2000, ignoring and/or negligently not knowing that said DAR AO NO. 6, Series of
2000 had long been repealed by DAR AO No. 3, Series of 2003 issued by the DAR
Secretary on January 15, 2003 and, hence, the said suggestion is incorrect, invalid
and misleading.

6. The Court of Appeals erred in not holding that respondent’s amended petition for
review (Annex “N” hereof) filed under Rule 43 suffers from the procedural infirmity
of non-exhaustion of administrative remedy by way of a motion for reconsideration
of the subject DARAB Decision in view of the settled ruling that the non-exhaustion
doctrine is mandatory specially if it applies to decisions of quasi-judicial bodies like
DARAB.[17]

7. The Court of Appeals erred in not holding that respondent is in estoppel to question
the jurisdiction of both the PARAD and the DARAB in view of his filing of answer
with counter-claims to petitioners’ petitions below and his subsequent filing of a
third-party complaint against respondent Romeo Landicho.

8. The Court of Appeals seriously erred in ignoring petitioners’ request for clarification
as to which petition the subject Decision dated June 28, 2010 (Annex “A” hereof)
pertains, i.e., the original petition for review dated February 11, 2003 (Annex “K”
hereof) or the amended petition for review dated March 3, 2003 (Annex “N” hereof)
considering that both the notice of decision (Annex “A-1”) and the Decision itself
(Annex “A”) in CA-G.R. SP No. 75482 are similarly captioned with Atty. William
Limqueco (Limqueco) and Yang Chin Hai (Hai) still indicated as the two (2)
petitioners.[18]

Position of Respondent
In his Comment,[19] respondent countered that (1) the PARAD and DARAB had no jurisdiction
over the petitions considering that the petitioners expressly admitted the non-existence of an
agrarian relationship – a requirement in agrarian cases following the ruling of the Court in
the Santos case;[20] (2) that the petition for review under Rule 43 filed before the CA was the
proper remedy because the requirement of non-existence of an appeal in order for a petition
for certiorari under Rule 65 to prosper was wanting; (3) that he was not estopped in questioning
the DARAB’s jurisdiction as the same could be raised at any stage of the proceedings, even on
appeal; (4) that the failure to file a motion for reconsideration before appealing to the CA was of
no moment as it was not a mandatory requirement under Rule 43; (5) that the CA did not err in
denying petitioners’ motion for clarification asking whether the CA decision pertained to the
original petition or the amended one because both raised the same principal issues; and (6) that
the CA correctly held that the claims could be properly ventilated under the jurisdiction of the
DAR Secretary.

Position of Petitioners

In their consolidated replies,[21] the petitioners averred (1) that the absence of tenancy
relationship did not deprive the DARAB and PARAD of their jurisdiction, citing Heirs of Jose M.
Cervantes v. Miranda[22] where the Court held that “if the issues between the parties are
intertwined with the resolution of an issue within the exclusive jurisdiction of the DARAB, such
dispute must be addressed and resolved by the DARAB;” (2) that the proper remedy from the
decision of the DARAB should have been a petition for certiorari Rule 65 instead of Rule 43 as
held in Fortich v. Corona;[23] (3) that the CA erred in giving due course to the petition despite
respondent’s failure to file a motion for reconsideration with the DARAB following the doctrine of
exhaustion of administrative remedies; (4) that the CA erred in admitting the amended petition
for review despite the rule that non-compliance with the requirements of certification of non-
forum shopping could not be cured by mere amendment; and (5) that the decision of the CA
resolved the earlier-dismissed original petition instead of the amended petition as shown in its
caption and body.

The primordial issue in this case is whether the CA correctly ruled that PARAD and DARAB had
no jurisdiction over the subject matter of the cases filed by the petitioners.

The Court’s Ruling


Procedural Matters
Petitioners attempt to question the ruling of the CA on two (2) procedural fronts. First, they claim
that respondent’s recourse to the CA via Rule 43 was improper because the correct remedy
should have been a special civil action for certiorari under Rule 65 in view of respondent’s
assertion that the DARAB or PARAD lacked jurisdiction over the cases. Second, it was an error
on the part of the CA to have admitted respondent’s amended petition for review for it
disregarded the settled rule that a violation of the rule against forum shopping is not curable by
mere amendment under paragraph 2, Section 5, Rule 7 of the 1997 Rules of Civil Procedure in
relation to Supreme Court Administrative Circular No. 04-94.

Respondent impugns the jurisdiction of the DARAB and PARAD over the cases filed by the
petitioners. In other words, the question posed before the CA pertained to jurisdiction over the
subject matter of a case. In Sevilleno v. Carilo[24] the Court has reiterated that such kind of
question is a pure question of law.[25] Thus, considering that Section 3, Rule 43 of the Rules of
Court permits appeal whether the questions involved are of fact, of law or both, [26]respondent’s
resort via Rule 43 was certainly proper.

As regards the admission by the CA of the amended petition despite Hai’s non-compliance with
the rule on certification of non-forum shopping, petitioners must be reminded that in Altres v.
Empleo,[27] the Court has categorically stated that when the certification against forum shopping
was not signed by all the plaintiffs or petitioners in a case, the effect would be that only those
who did not sign would be dropped as parties in the case.

Accordingly, the failure of respondent’s co-appellant to affix her signature should not prejudice
his rights. As far as respondent is concerned, he complied with the rules on certification of non-
forum shopping to the extent of correcting the apparent lack of Hai’s signature by asking the CA
to admit the amended petition with him as the sole petitioner.

On Jurisdiction

The CA was of the view that the claims of the petitioners should have been filed with the DAR
Secretary following DAR Administrative Order No. 6, Series of 2000, which provides:

SECTION 2. Cases Covered — These Rules shall govern cases falling within the exclusive jurisdiction of
the DAR Secretary which shall include the following:

(a) xxx
(q) Such other matters not mentioned above but strictly involving the administrative implementation of
RA 6657 and other agrarian laws, rules and regulations as determined by the Secretary. (Emphasis
supplied).[28]

First, DAR Administrative Order No. 6, Series of 2000 has already been repealed by DAR
Administrative Order No. 3, Series of 2003. Section 38, Rule VII of DAR Administrative Order
No. 3, Series of 2003 expressly provides “this order modifies or repeals DAR-A0-6-2000 and all
other issuances or portions thereof that are inconsistent herewith.” Section 3, Rule I of the same
administrative order recognizes that the DARAB and the PARAD have exclusive original
jurisdiction, among others, over the annulment or cancellation of lease contracts or
deeds of sale or their amendments involving lands under the administration and
disposition of the DAR or Land Bank of the Philippines[29] and those cases involving the
sale, alienation, pre-emption and redemption of agricultural lands under the coverage of
the CARL or other agrarian laws.[30]

On this score alone, it is clear that the CA erred in ruling that the DAR Secretary had jurisdiction
over the case.

Further, R.A. No. 6657 vests with the DAR the primary jurisdiction to determine and adjudicate
agrarian reform matters including those involving the implementation of agrarian reform except
those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR).[31]

To strengthen and expand the functions of the DAR,[32] the DARAB was created by then
President Corazon Aquino through Executive Order (E.O.) No. 129-A.[33]

When the petitions were filed in the year 2000, the proceedings before the PARAD and the
DARAB were governed by the DARAB New Rules of Procedures, which were adopted and
promulgated on May 30, 1994, and came into effect on June 21, 1994 after publication (1994
DARAB Rules). The 1994 DARAB Rules identified the cases over which the DARAB shall have
jurisdiction, to wit:

RULE II
JURISDICTION OF THE ADJUDICATION BOARD
SECTION 1. Primary and Exclusive Original and Appellate Jurisdiction. The Board shall have primary
and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian
disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under
Republic Act No. 6657, Executive Order Nos. 228, and 129-A, Republic Act No. 3844 as amended by
Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing rules
and regulations. Specifically, such jurisdiction shall include but not be limited to cases involving the
following:

a) The rights and obligations of persons, whether natural or juridical, engaged in the management,
cultivation and use of all agricultural lands covered by the CARP and other agrarian laws;

b) The valuation of land, and the preliminary determination and payment of just compensation, fixing and
collection of lease rentals, disturbance compensation, amortization payments, and similar disputes
concerning the functions of the Land Bank of the Philippines (LBP);

c) The annulment or cancellation of lease contracts or deeds of sale or their amendments involving
lands under the administration and disposition of the DAR or LBP;

d) Those case arising from, or connected with membership or representation in compact farms, farmers
cooperatives and other registered farmers associations or organizations, related to lands covered by the
CARP and other agrarian laws;

e) Those involving the sale, alienation, mortgage, foreclosure, pre-emption and redemption of agricultural
lands under the coverage of the CARP or other agrarian laws;

f) Those involving the issuance, correction and cancellation of Certificates of Land Ownership
Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration
Authority;

g) Those cases previously falling under the original and exclusive jurisdiction of the defunct Court of
Agrarian Relations under Section 12 of Presidential No. 946, except sub-paragraph (Q) thereof and
Presidential Decree No. 815.

It is understood that the aforementioned cases, complaints or petitions were filed with the DARAB after
August 29, 1987.
Matters involving strictly the administrative implementation of Republic Act No. 6657, otherwise known
as the Comprehensive Agrarian Reform Law (CARP) of 1988 and other agrarian laws as enunciated by
pertinent rules shall be the exclusive prerogative of and cognizable by the Secretary of the DAR.

h) And such other agrarian cases, disputes, matters or concerns referred to it by the Secretary of the DAR.

SECTION 2. Jurisdiction of the Regional and Provincial Adjudicator. The RARAD and the PARAD
shall have concurrent original jurisdiction with the Board to hear, determine and adjudicate all agrarian
cases and disputes, and incidents in connection therewith, arising within their assigned territorial
jurisdiction. (Emphases supplied.)

Specifically, the PARAD and the DARAB have primary and exclusive jurisdiction, both original
and appellate, to determine and adjudicate all agrarian disputes involving the implementation of
the CARP under R.A. No. 6657, as amended by R.A. No. 9700, E.O. Nos. 228, 229, and 129-A,
R.A. No. 3844, as amended by R.A. No. 6389, P.D. No. 27 and other agrarian laws and their
Implementing Rules and Regulations.[34]

The question here boils down to whether this case falls under the DARAB’s jurisdiction as
contemplated under the CARL and the 1994 DARAB Rules. Consequently, the question as to
what an agrarian dispute is and whether sufficient allegations were indeed made in the
petitioners’ complaints showing to establish an agrarian dispute must first be resolved.

Agrarian Dispute

Section 3(d) of the CARL defines an agrarian dispute as:

xxx, any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship, or
otherwise, over lands devoted to agriculture, including disputes concerning farmworkers’ associations or
representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or
conditions of such tenurial arrangements.

In this case, the petitions filed before the PARAD asking for the nullification of the contracts of
sale and recovery of the CLOAs did not contain any allegation of tenurial relations constitutive of
an agrarian dispute as the parties were not subjects of a landowner and tenant relationship, or
an allegation that they were lessors and lessees of each other as reinforced by the categorical
admission of the parties in their pleadings that no such contract exists.[35]These circumstances,
however, do not mean that the controversy is no longer agrarian in nature.

The second sentence of Section 3(d) of the CARL clearly provides that an agrarian dispute also
includes “any controversy relating to compensation of lands acquired under the CARP law and
other terms and conditions of transfer of ownership from landowner to farmworkers, tenants,
and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation
of farm operator and beneficiary, landowner and tenant, or lessor and lessee.”

Here, the controversy pertains to respondent’s act of selling to a third person the lands acquired
by the petitioners under the CARP. Hence, the case is still an agrarian dispute and within the
jurisdiction of the DARAB and PARAD.

Allegations in the complaints

In order for the DARAB and PARAD to exercise jurisdiction over such controversies, sufficient
allegations establishing the existence of an agrarian dispute must be made in the complaint
following the rule that the jurisdiction of a tribunal, including a quasi-judicial officer or
government agency, over the nature and subject matter of a petition or complaint is determined
by the material allegations therein and the character of the relief prayed for, irrespective of
whether the petitioner or complainant is entitled to any or all such reliefs.

In the case at bench, the subject properties, which originally formed part originally of Romeo
Landicho’s property covered by OCT No. P-29365, were subjected to voluntary land transfer,
thereby placing it under the coverage of the CARL. The petitioners became the beneficiaries of
the subdivided properties by operation of Section 6 and Section 22 of the CARL, [36] commonly
referred to as the retention limits of a landowner, who in this case was Romeo Landicho.

The petitioners made the following allegations m their complaints/petitions:[37]

(8) Sometime in June 1994, petitioner was asked by respondent (now petitioner) Limqueco and Romeo
Landicho to sign certain documents which turned out to be contracts of sale and lease involving
petitioner’s aforesaid property covered by TCT No. T-4007. Having utmost trust in confidence in his
father and respondent Limqueco that they were supposedly protecting petitioner’s interest, petitioner
without examining said contracts which are undated and which do not indicate the names of the buyer or
the lessee, had affixed his signature to said contracts of sales and lease of TCT No. T-4007. Respondent
Limqueco and Romeo Landicho did not furnish or give petitioner a copy of said contract which are being
used by respondent Limqueco with DAR to harass petitioner.

(9) In affixing his signature as aforesaid, petitioner did not receive any consideration and was not told the
legal implications of said contracts. He came to learn later that by reason of said contracts, the owner’s
copy of petitioner’s TCT No. T-4007 was delivered by his father Romeo Landicho to respondent
Limqueco who, by his own admission, has custody and physical possession of said title up to the present.

(10) Petitioner learned thereafter that the contracts involving the sale and/or lease of his TCT No. T-4007,
which is a CLOA title, are null and void as they are prohibited and violates R.A. No. 6657 because under
the express restriction incorporated in the CLOA title, the parcel of land subject thereof “shall not be sold
transferred or conveyed except through hereditary succession, or to the Government, or to the Land Bank
of the Philippines, or to the other qualified beneficiaries for a period often (10) years. x x x x:”

(11) Petitioner should not be penalized by way of cancellation of his TCT No. T-4007 because he acted in
good faith and is not guilty of any fraud considering that his consent to the contracts of sale was vitiated
by fraud, undue influence and mistake when he affixed his signature thereto and hence he should be
protected under Articles 1412(2) and 1416 of the New Civil Code and other pertinent provisions of law.[38]

xxx

These allegations plainly show that the petitioners are invoking their rights as beneficiaries of
the CARL; that they consider the conveyance of their properties as having been made in
violation of the terms and conditions of the CARL; and that all of the transfers should be nullified
because they were procured through fraud, undue influence and mistake. All these constitute an
agrarian dispute in the context of a controversy relating to terms and conditions of transfer of
ownership from landowner to agrarian reform beneficiaries. This is because the main contention
of the parties was clearly couched on the alleged denial by the respondent of their established
rights as beneficiaries over the subject properties under agrarian reform laws.

Accordingly, it is undeniable that the DARAB and PARAD have jurisdiction over this
controversy. It was, therefore, an error on the part of the CA to have overturned the rulings of
the concerned quasi-judicial bodies on the ground that they had no jurisdiction over the
controversy.

Question on Vitiation of Consent


Settled is the rule that this Court is not a trier of facts. In that regard, the Court notes that the CA
failed to pass upon the question on whether fraud, undue influence and mistake occasioned the
procurement by respondent of the titles to the properties and whether there was indeed a
violation of the CARL.

As there were none, the Court finds it necessary to remand this case to the CA for the proper
review of the substantive issues as raised by the parties concerning the legality of the transfer of
the properties to the respondent.

WHEREFORE, the petition is PARTIALLY GRANTED. The June 28, 2010 Decision and
November 23, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 75482 are
hereby REVERSED and SET ASIDE. The case is REMANDED to the Court of Appeals to
determine the merits of the alleged violation of the CARP Law as well as the allegations of fraud
in respondent’s procurement of the CLOAs and titles over the subject properties.

SO ORDERED.

Heirs of Pacifico Gonzales Vs. Juanito De Leon,


et al.; G.R. No. 210428; December 7, 2016
DECISION

PEREZ, J.:

Petitioners Heirs of Pacifico Gonzales seek a review of the Decision[1] dated 26 July 2013 of the
Court of Appeals (CA) in CA-G.R. SP No. 123466, which affirmed the Decision[2] dated 2
December 2011 of the Office of the President (OP) that the subject property is within the ambit
of the Comprehensive Agrarian Reform Program (CARP) of the government.

Antecedents

Subject of the controversy is a parcel of land located at Sitio Guinting, Brgy. Casile, Cabuyao,
Laguna covered by four (4) separate Transfer Certificates of Title (TCT) Nos. T-68211, T-28288,
T-434931 and T-68212 of the Registry of Deeds of Calamba, Laguna with a total combined area
of 49.8 hectares, registered under the name of Pacifico Gonzales, petitioners’ predecessor-in-
interest.

It appears that, based on the records provided by the Department of Agrarian Reform (DAR)-
Provincial Agrarian Reform Office (PARO), the subject properties have Notices of Coverage
under Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform
Law, dated 13 February 1995 and 18 October 2000, respectively.

On 19 April 2001, the Department of Environmental and Natural Resources (DENR) issued
Inspection Report[3]declaring the subject properties exempt from CARP coverage on the
following grounds:

1. The land is more than 18% in slope;

2. It is not irrigated;

3. 70% of the land is not cultivated;

4. It is not planted to rice and corn;

5. That other appropriate government agencies had already been consulted, their
approval sought and was granted.

Inspecting Officer Errol C. Africano of the DENR-Community Environment and Natural


Resources Office (CENRO) in Los Baños, Laguna then later executed a Certification subscribed
on 12 January 2012[4] affirming the fact that he officially prepared and submitted the said
Inspection Report.

The Municipal Planning and Development Coordinator (MPDC) of Cabuyao, Laguna issued a
Certification dated 18 July 2002 classifying the subject properties as a municipal park. This
property was earlier zoned as a municipal park based on Municipal Ordinance No. 110-54,
Series of 1979, approved by the Housing and Land Use Regulatory Board (HLURB) on 24 June
1980 under Board Resolution No. 38-2, Series of 1980, long before the Notice of Coverage was
issued by the DAR on 13 February 1995 and 18 October 2000.
On 30 July 2002, the Municipal Agrarian Reform Office (MARO)Region IV, through Job A.
Candanido, issued a Certification[5] certifying that the properties of the petitioners are not
covered by the Operation Land Transfer (OLT) pursuant to Presidential Decree No. 27.

On 24 September 2002, the petitioners filed a complaint for Ejectment against the respondents
before the Municipal Trial Court (MTC) of Cabuyao, Laguna docketed as Civil Case No. 940.

Meanwhile, on 13 August 2003, the late Luningning Gonzales filed an Application for
Exemption/Clearance[6]pursuant to DAR Administrative No 04, Series of 2003. In support of the
application, the petitioners submitted the following documents:

1. Sworn Application for Exemption of Clearance pursuant to DAR Administrative No. 04,
Series of2003;

2. Special Power of Attorney executed by the petitioners appointing Roger Banzuela as


their attorney-in-fact to represent them in their Application for Exemption of Clearance
with DAR;

3. Certified true copies of the TCTs of the subject landholdings;

4. Copies of Tax Declarations covering the applied properties;

5. MPDC Certification dated July 18, 2002, that the subject properties were zoned as
municipal park based on Municipal Ordinance No. 110-54, Series of 1979, approved
by the HLURB on June 25, 1980 under Board Resolution No. 38-2, Series of 1980;

6. National Irrigation Administrative (NIA), Region IV Certification dated December 6,


2001, that the subject properties are not irrigable lands and not covered by an
irrigation project with funding commitment;

7. MARO Certification issued on July 30, 2002 that the subject property is not covered by
Operation Land Transfer pursuant to Presidential Decree No. 27;

8. Affidavit of Undertaking executed on July 8, 2003 by Roger Banzuela relative to the


payment of disturbance compensation, posting of billboard and tenancy;

9. Lot plan and vicinity map of the applied properties; and


10. Affidavit of Undertaking dated June 9, 2005 executed by Luningning Gonzales (widow
of the late Pacifico Gonzales), which states, among others, that the landowners are
willing to pay disturbance compensation in the form of a relocation site for occupants
within the applied properties.

On 2 August 2006, the MTC of Cabuyao, Laguna rendered a decision in favor of the late
Luningning Gonzales in Civil Case No. 940, thus:

WHEREFORE, judgment is rendered in favor of plaintiff and against [respondents]. Accordingly,


[respondents] and all persons claiming rights under them are ordered:

1. to vacate the subject premises and peacefully surrender possession thereof to plaintiff;

2. to pay plaintiff the amount of P43,000.00 as reasonable monthly rental from September 7,
2002 until they completely vacate the subject premises; [and]

3. to pay plaintiff the sum of P400,000.00 as attorney’s fees and litigation related expenses
and the cost of the suit.[7]

The MTC held that the evidence presented by the respondents failed to prove the essential
requisites of tenancy relationship between plaintiff and respondents, because: (1) the MPDC
classified the subject parcels of land as a municipal park; (2) there is no evidence of (a)
plaintiff’s consent to the tenancy relationship, and (b) defendants’ status as farmers-
beneficiaries; (3) the DENR Inspection Report and the Affidavit of Inspection Officer Errol C.
Africano proved that the subject property is outside CARP coverage; and (4) defendants failed
to prove (a) actual cultivation of the subject properties, and (b) harvest-sharing with the
landowners.

On 11 September 2006, the respondents appealed to the Regional Trial Court (RTC) of Biñan,
Laguna, assailing the MTC’s assumption of jurisdiction over the complaint, maintaining the
existence of a tenancy relationship and their status as bonafide tenants and farmer-
beneficiaries. On 17 May 2007, the RTC rendered a decision[8] affirming intoto the decision of
the MTC.
Aggrieved, respondents herein filed a Petiton for Review under Rule 42 with the CA assailing
the MTC Decision and the RTC Order. Finding said petition not meritorious, the CA affirmed the
17 May 2007 Decision and 30 October 2008 Order of the RTC in Civil Case No. B-7066.[9]

Respondents went up to this Honorable Court, which denied the petition for failure to sufficiently
show any reversible error in the assailed judgment to warrant the exercise of the Court’s
discretionary appellate jurisdiction.[10]

Rulings of the DAR

In his Order dated 19 September 2006, then DAR OIC-Secretary Nasser C. Pangandaman
(OIC-Secretary Pangandaman) acted on the application of the late Luningning Gonzales and
ruled as follows:

The Director of Special Concerns Staffs, Department of Agrarian Reform, in a letter dated 13 April 2005
requested for the early resolution of the instant application and the conduct of an ocular inspection of the
applied properties. The said request was based on the letter of the Samahang ng Farmer Beneficiaries ng
Sitio Guintang, Casile, Cabuyao, Laguna addressed to the Special Concerns Staffs Office. These farmers
are allegedly occupants and tillers of the subject landholdings.

On 19 May 2005, the Center for Land Use Policy, Planning and Implementation (CLUPPI) Inspection
Team conducted an ocular inspection on the subject properties and found the following:

 The applied properties are contiguous, and with dominantly rolling to steep topography
and located at the boundary of Cabuyao, Laguna and Tagaytay, Cavite;

 The land uses of the landholdings are residential and agricultural with approximately 70
families therein. The agricultural areas are planted with pineapple, coconuts and bananas;

 No irrigation system nor irrigable lands is seen within the applied properties and the
adjacent or surrounding areas;

 Accessible to any type of land transportation and 25 to 30 kilometers away from the town
proper of Cabuyao, Laguna; and
 The residential houses are built with lumber materials and others are made up of mixture
concrete and lumber materials. There exist an ongoing construction of residential houses
in the area by the occupants.

Based on the records provided by the DAR Provincial Agrarian Reform Office the applied properties
have Notices of Coverage under Republic Act (R.A.) No. 6657 dated 13 February 1995 and 18 October
2000, respectively.

Department of Justice (DOJ) Opinion No. 44, Series of 1990, which states that lands already re-classified
for commercial, industrial or residential use duly approved by the HLURB prior to the effectivity of R.A.
No. 6657 on 15 June 1998, no longer need any conversion clearance. A proper interpretation of the said
DOJ Opinion includes re-classification for “some other urban purposes.”

In this case, the subject landholdings were re-classified as municipal park as certified by the MPDC of
Cabuyao, Laguna, ratified by the HLURB prior to the effectivity of R.A. No. 5567 on 15 June 1988.
Since a municipal park is a re-classification which falls under the term “some other urban purpose” it
necessarily follows that the same is not within the ambit of the Comprehensive Agrarian Reform
Program.

WHEREFORE, in the light of the foregoing premises, the instant Application for Exemption Clearance
pursuant to DAR Administrative Order No. 4, Series of 2003 based on DOJ Opinion No. 44, Series of
1990 is hereby APPROVED, subject to the following conditions:

 Disturbance compensation shall be paid to affected tenants, farmworkers, or bonafide


occupants, if any, in such amount or kind as may be mutually agreed and approved by the
DAR within sixty (60) days from the date of receipt by the applicants of this Order, proof
of such payment to be furnished the CLUPPI Secretariat within five (5) days from the
expiration of the aforementioned 60-day period;

 The applicants shall allow duly authorized representatives of the DAR free and
unhampered access to the subject properties for the purpose of monitoring compliance
with the terms and conditions hereof; and

 The DAR reserves the right to cancel or withdraw this Order for misrepresentation of facts
integral to its issuance and/or for violation of the law and applicable rules and regulations
in land use exemption.
ACCORDINGLY, the Notices of Coverage dated 13 February 1995 and 18 October 2000, respectively,
are hereby LIFTED.[11]

The respondents, however, moved for reconsideration of the said Order. On 19 June 2007, the
same OIC-Secretary Pangandaman issued an Order granting said motion for reconsideration
under the following reasons:

On 07 March 2007, the CLUPPI Committee-B in its 40th Meeting deliberated the said Motion for
Reconsideration taking into account the Ocular Inspection Report, the issues raised by the [respondents
and Comments of the [petitioners] on the Motion for Reconsideration. The Committee recommended to
grant the Motion for Reconsideration based on the ground that the Supreme Court’s Decision in G.R.
Nos. 112526 and 118838, in the case of Sta. Rosa Realty Development Corporation (SRRDC) vs.
Amante, et.al., was adopted and applicable to the instant case.

The Amended Decision pages 24 and 25 stated that SRRDC cites the case of Natalia Realty, Inc vs. DAR,
wherein it was ruled that lands not devoted to agricultural activity and not classified as mineral or forest
by the DENR and its predecessor agencies, and not classified in town plans and zoning ordinances as
approved by the HLURB and its preceding competent authorities prior to the enactment of R.A. No. 6657
on June 15, 1988, are outside the coverage of the CARP. Said ruling, however, finds no application in the
present case. As previously stated, the Municipal Ordinance No. 110-54 of the Municipality of Cabuyao
did not provide for any retroactive application nor did it convert existing agricultural lands into
residential, commercial, industrial, or institutional. Consequently, the subejct property remains
agricultural in nature and therefore within the coverage of the CARP.

Accordingly, the 16 May 2005 Supreme Court Decision became final and executory on 4 September
2006. Said Decision annulled the classification of landholdings in Barangay Casile Cabuyao, Laguna
prior to 15 June 1998 and declared the same as still agricultural.

WHEREFORE, premises considered, the Motion for Reconsideration of the DAR Order dated 19
September 2006 filed by Juanito De Leon, et. al., is hereby GRANTED and the DAR Order dated 19
September 2006 is hereby REVOKED. The Notices of Coverage dated 13 February 1995 and 18 October
2000 are hereby upheld.”[12](Underlining supplied)

Ruling of the Office of the President


Petitioners made a timely appeal[13] to the OP on 27 September 2007 as well as submitted the
required Draft Decision.[14] On 2 December 2011, the OP rendered a Decision[15] affirming the
DAR’s appealed Order of 19 June 2007. The OP held that:

The proceedings before the regular courts being cited by appellants (herein petitioners) do not bind the
DAR in the disposition of the instant case. In fact, a more recent Certification from the DENR dated 5
January 2005, is a matter of record, stating that on the basis of a series of surveys conducted on 7, 8, 9,
10, 15 and 16 December 2004, the topographical condition of the subject properties fall below the
eighteen percent (18%) slope. The DAR, referring to the aforecited case of SRRDC vs. Amante (supra),
went on to explain in the 19 June 2006 Order, that:

Accordingly, the 16 May 2005 Supreme Court Decision became final and executory on 04 September
2006. Said Court Decision annulled the classification of landholdings in Barangay Casile, Cabuyao,
Laguna prior to 15 June 1988 and declared the same as still agricultural.[16]

A timely Motion for Reconsideration was filed by the petitioners, but was also denied by the OP
in its Resolution[17]dated 27 January 2012.

Hence, petitioners appealed[18] to the CA by Petition for Review under Rule 43 of the 1997 Rules
of Civil Procedure the above OP ruling. The CA required the respondents to file their comment
thereto but never did so the case was declared submitted for decision.[19]

Ruling of the Court of Appeals

On 26 July 2013, the CA rendered its questioned Decision, which affirmed the decision of the
OP, holding that at the time Barangay Casile was classified into a municipal park it was already
agricultural,[20] and since Municipal Ordinance No. 110-54 dated 3 November 1979 did not
provide for the retroactivity of Barangay Casile’s classification, the enactment of said ordinance
should not affect the nature of the land. Thus, Barangay Casile remains an agricultural area. It
continued to declare that since the subejct parcels of land are all situated in Barangay Casile,
accordingly, they are agricultural lands. Thus, the subject parcels of land are covered under the
CARP.

Petitioners’ Motion for Reconsideration was denied. Hence, this appeal by Petition for Review
on Certiorari.
The Issues

Essentially, the petitioners relied on issues summarized as follows:

I. Whether or not the subject properties are agricultural.

II. Whether or not there is a tenancy relationship between the petitioners and the respondents which
would entitle the latter as “qualified beneficiaries” relative to the Department of Agrarian Reform’s
inclusion of the subject properties under the coverage of the Comprehensive Agrarian Reform Program.

Ruling

We find merit in the petition.

On the first issue, the petitioners contend that in the CA Decision, its discussion on the
determination of whether or not the subject parcels of land is agricultural failed to touch on the
arguments they have been pointing out all along.

Petitioners stressed that the land is more than 18% in slope, it is not irrigated, 70% thereof is
not cultivated, and is not planted to rice and corn, as clearly stated in the 19 April 2001
Inspection Report issued by the DENR through its Community Environmental and Natural
Resources Office. Accordingly, the findings of the Inspecting Officer, Mr. Errol C. Africano
(Inspecting Officer Africano), affirmed that the subject land is not an agricultural land; hence, by
express provision of law, excluded from the coverage of the Comprehensive Agrarian Reform
Law. Section 10 thereof states that:

Sec 10. Exemptions and Exclusions. — Lands actually, directly and exclusively used and found to be
necessary for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding grounds,
watersheds, and mangroves, national defense, school sites and campuses including experimental farm
stations operated by public or private schools for educational purposes, seeds and seedlings research and
pilot production centers, church sites and convents appurtenant thereto, mosque sites and Islamic centers
appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually
worked by the inmates, government and private research and quarantine centers and all lands with
eighteen percent (18%) slope and over, except those already developed shall be exempt from the
coverage of the Act. (Emphasis and underlining supplied)
In Luz Farms v. Hon. Secretary of the Dep’t. of Agrarian Reform,[21] this Court had ruled that
agricultural lands are only those which are arable and suitable.

Bearing this in mind, the assertion of petitioners that the subject land may not be considered
agricultural at all since it is not arable and suitable for agriculture cannot be disregarded. After
all, the findings of DENR Inspecting Officer Africano that the subject land is not irrigated, 70%
thereof is not cultivated, and is not planted to rice and corn, remain unrefuted.

The OP based its 2 December 2011 Decision on a “more recent Certification from the DENR
dated 5 January 2005, is a matter of record, stating that on the basis of a series of surveys
conducted on 7 8 9 10 15 and 16 December 2004, the topographical condition of the subject
properties fall below the eighteen percent (18%) slope.” However, petitioners argue that this
alleged certification was never presented. The 19 June 2007 Order of the DAR did not utilize
any such alleged certification from the DENR certification dated 5 January 2005. It cannot be
gainsaid that it would be unfair to use evidence against the petitioners which was never shown
or presented to them.

Furthermore, in a Certification[22] dated 6 December 2001, Regional Irrigation Manager Baltazar


H. Usis of the National Irrigation Administration Office of the Regional Irrigation Manager Region
IV, Pila, Laguna, certified that the subject property has been found to be NOT IRRIGABLE
LANDS and not covered by any irrigation project with funding commitment.

The Court is not inclined to set aside the credible evidence presented by the petitioners where
the veracity of such reports have been attested to by the concerned government agencies, or
the same were not disputed, invalidated or struck down as being issued beyond or outside the
authority of the concerned officials.

Petitioners convincingly argued as well that the subject landholding is not agricultural for said
property was earlier zoned as a municipal park based on Municipal Ordinance No. 110-54,
Series of 1979, approved by the HLURB on 25 June 1980 under Board Resolution No. 38-2,
Series of 1980. Undoubtedly, this re-classification cannot just be overturned by a simple
statement from then OIC-Secretary Pangandaman, sans any viable evidence, that the subject
Ordinance “did not provide for any retroactive application,” thereby resulting in the inconclusive
or baseless declaration that “the subject property remains agricultural in nature and therefore
within the coverage of the CARP.”
This Court, in Heirs of Luis A. Luna, et.al. v. Afable, et.al.,[23] identified the two conditions that
must concur in order for land to be considered as not agricultural, and therefore outside the
ambit of the CARP, to wit:

1. the land has been classified in town plans and zoning ordinances as residential,
commercial or industrial; and

2. the town plan and zoning ordinance embodying the land classification has been
approved by the HLURB or its predecessor agency prior to 15 June 1988.[24]

There is no doubt that, measured using the said standard as provided in the Heirs of Luna, et
al. case, Municipal Ordinance No. 110-54, Series of 1979, approved by the HLURB on 25 June
1980 under Board Resolution No. 38-2, Series of 1980, clearly established that the subject
property of petitioners is outside the CARP coverage. The act of the local legislative body of
Cabuyao, Laguna cannot just be ignored. In the said decision, the Court further clarified that:

It is undeniable that local governments have the power to reclassify agricultural into non-agricultural
lands. Section 3 of RA No. 2264 (The Local Autonomy Act of 1959) specifically empowers municipal
and/or city councils to adopt zoning and subdivision ordinances or regulations in consultation with the
National Planning Commission. By virtue of a zoning ordinance, the local legislature may arrange,
prescribe, define, and apportion the land within its political jurisdiction into specific uses based not only
on the present, but also on the future projection of needs. It may, therefore, be reasonably presumed that
when city and municipal boards and councils approved an ordinance delineating an area or district in their
cities or municipalities as residential, commercial, or industrial zone pursuant to the power granted to
them under Section 3 of the Local Autonomy Act of 1959, they were, at the same time, reclassifying any
agricultural lands within the zone for non-agricultural use; hence, ensuring the implementation of and
compliance with their zoning ordinances.

The regulation by local legislatures of land use in their respective territorial jurisdiction through zoning
and reclassification is an exercise of police power. The power to establish zones for industrial,
commercial and residential uses is derived from the police power itself and is exercised for the protection
and benefit of the residents of a locality. Ordinance No. 21 of the Sangguniang Bayan of Calapan was
issued pursuant to Section 3 of the Local Autonomy Act of 1959 and is, consequently, a valid exercise of
police power by the local government of Calapan.
The second requirement – that a zoning ordinance, in order to validly reclassify land, must have been
approved by the HLURB prior to 15 June 1988 – is the result of Letter of Instructions No. 729, dated 9
August 1978. According to this issuance, local governments are required to submit their existing land use
plans, zoning ordinances, enforcement systems and procedures to the Ministry of Human Settlements –
one of the precursor agencies of the HLURB – for review and ratification.[25]

The CA posits that Municipal Ordinance No. 110-54 dated 3 November 1979, which was
approved by the HLURB on 25 June 1980 under Board Resolution No. 38-2, Series of 1980,
that classified Barangay Casile into a municipal park had no retroactive application,[26] citing the
case of Sta. Rosa Realty Development Corp. v. Amante.[27] However, the ruling of the Court
in KASAMAKA-Canlubang, Inc. v. Laguna Estate Development Corporation,[28] where the
petitioner therein argued that the municipal zoning ordinances classifying the disputed lands to
non-agricultural did not change the nature and character of said lands from being agricultural,
much less affect the legal relationship of the farmers and workers of the Canlubang Sugar
Estate then existing prior to the granting of the order of conversion and the passage of the
municipal zoning ordinances, squarely contravenes such stand. As held therein:

In the case at bar, however, no such arrangement exists. Apart from a mere statement that the lands in
dispute was once part of the vast portion of the Canlubang Sugar Estate, wherein a large number of
farmworkers tilled the land, petitioner did not present any supporting evidence that will show an
indication of a leasehold arrangement.

xxxx

Had petitioner presented substantial eyidence proving the existence of an agricultural tenancy
arrangement, We could have given probative value to petitioner’s argument that municipal ordinances
cannot affect nor discontinue legal rights and relationships previously acquired over the lands herein.[29]

Incidentally, on the matter of the existence of any agricultural tenancy arrangement, it must be
emphasized that the ejectment case filed against herein respondents put the matter to rest. To
reiterate, it was established therein that no proof was ever presented to show the existence of
such tenancy relationship between petitioners and respondents.

This being so, the respondents have no vested right over the property of petitioners before,
during or after the issuance of the above Ordinance. As held in the case of Heirs of Dr. Deleste,
et. al. v. Land Bank of the Phils., et.al.,[30] the Court decreed that:
Verily, vested rights which have already accrued cannot just be taken away by the expedience of issuing a
local zoning ordinance reclassifying an agricultural land into a residential/commercial area x x x.

xxxx

This, however, raises the issue of whether vested rights have actually accrued in the instant case. In this
respect, We reckon that under PD 27, tenant-farmers of rice and corn lands were “deemed owners” of the
land they till as of October 21, 1972. This policy, intended to emancipate the tenant-farmers from the
bondage of the soil, is given effect by the following provision of the law:

The tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of a portion
constituting a family size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated.
(Emphasis in the original)

It should be clarified that even if under PD 27, tenant-farmers are “deemed owners” as of October 21,
1972, this is not to be construed as automatically vesting upon these tenant-farmers absolute ownership
over the land they were tilling. Certain requirements must also be complied with, such as payment of just
compensation, before full ownership is vested upon the tenant-farmers. This was elucidated by the Court
in Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform:

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and
declared that he shall “be deemed the owner” of a portion of land consisting of a family-sized farm except
that no title to the land owned by him was to be actually issued to him unless and until he had become a
full-pledged member of a duly recognized farmers cooperative. It was understood, however, that full
payment of the just compensation also had to be made first, conformably to the constitutional
requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land they
acquired by virtue of Presidential Decree No. 27.

it was obviously referring to lands already validly acquired under the said decree, after proof of
full-fledged membership in the farmers cooperatives and full payment of just compensation. Hence,
it was also perfectly proper for the Order to also provide in its Section 2 that the “lease rentals paid to the
landowner by the farmer-beneficiary after October 21, 1972 (pending transfer of ownership after full
payment of just compensation), shall be considered as advance payment for the land.”

The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the DAR of the
compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. No outright change of ownership is contemplated either. (Emphasis in the original)

Prior to compliance with the prescribed requirements, tenant farmers have, at most, an inchoate right over
the land they were tilling. In recognition of this, a CLT is issued to a tenant-farmer to serve as a
provisional title of ownership over the landholding while the lot owner is awaiting full payment of [just
compensation] or for as long as the [tenant-farmer] is an amortizing owner. “This certificate proves
inchoate ownership of an agricultural land primarily devoted to rice and corn production. It is issued in
order for the tenant-farmer to acquire the land” he was tilling.

Concomitantly, with respect to the LBP and the government, tenant-farmers cannot be considered as full
owners of the land they are tilling unless they have fully paid the amortizations due them. This is because
it is only upon such full payment of the amortizations that EPs may be issued in their favor.

In Del Castillo v. Orciga, We explained that land transfer under PD 27 is effected in two (2) stages. The
first stage is the issuance of a CLT to a farmer-beneficiary as soon as the DAR transfers the landholding
to the farmer-beneficiary in recognition that said person is its deemed owner. And the second stage is the
issuance of an EP as proof of full ownership of the landholding upon full payment of the annual
amortizations or lease rentals by the farmer-beneficiary.

In the case at bar, the CLTs were issued in 1984. Therefore, for all intents and purposes, it was only in
1984 that private respondents, as farmer-beneficiaries, were recognized to have an inchoate right over the
subject property prior to compliance with the prescribed requirements. Considering that the local zoning
ordinance was enacted in 1975, and subsequently approved by the HSRC in 1978, private respondents
still had no vested rights to speak of during this period, as it was only in 1984 that private respondents
were issued the CLTs and were deemed owners.

The same holds true even if EPs and OCTs were issued in 2001, since reclassification had taken place
twenty-six (26) years prior to their issuance. Undeniably, no vested rights accrued prior to reclassification
and its approval. Consequently, the subject property, particularly Lot No. 1407, is outside the coverage of
the agrarian reform program.[31] Emphasis omitted)
Applying the same to the instant case, when the subject landholding of petitioners was
reclassified as a municipal park in 1979, the respondents, as claimed by the petitioners,
“had nothing yet.”[32] To be clear, they have no accrued vested rights therein prior to
reclassification of the subject properties and even after approval thereof.

Moreover, petitioners’ subject landholdings are not the same property which is involved in
the Sta. Rosa Dev’t. Corp.case wherein the Court declared the property involved therein as
agricultural for the following reasons:

Before Barangay Casile was classified into a municipal park by the local government of Cabuyao, Laguna
in November 1979, it was part of a vast property popularly known as the Canlubang Sugar Estate.
SRRDC claimed that in May 1979, “the late Miguel Yulo allowed the employees of the Yulo group of
companies to cultivate a maximum area of one hectare each subject to the condition that they should not
plant crops being grown by the Canlubang Sugar Estate, like coconuts and coffee, to avoid confusion as
to ownership of crops. (Rollo, G.R. No. 11383, Memorandum to Respondents, p. 625). The consolidation
and subdivision plan surveyed for SRRDC on March 10-15, 1984 (Exhibit “5”, Folder of Exhibits) also
show that the subject property is already agricultural at the time the municipality of Cabuyao enacted the
zoning ordinance, and such ordinance should not affect the nature of the land. More so since the
municipality of Cabuyao did not even take any step to utiliize the property as a park.”[33](Italics omitted)

However, no similar evidence was presented in the case at bar. No evidence that petitioners (or
their predecessors-in-interest) ever allowed any of the respondents to plant crops on the subject
parcels of land; and no similar consolidation and subdivision plans were submitted. Even
assuming the properties involved in the present case were part of the Canlubang Sugar Estate
before, it does not mean they were similarly planted with crops or sugar, much less that
herein respondents were the one planting therein. In fact, not a portion of these properties were
planted with sugar considering the sloping configuration of the land.[34]

In Holy Trinity Realty & Development Corporation v. Dela Cruz, et. al.,[35] the Court had the
occasion to rule that “(v)erily, the basic condition for land to be placed under the coverage of
Republic Act No. 6657 is that it must either be primarily devoted to or be suitable for
agriculture. Perforce, land that is not devoted to agricultural activity is outside the coverage of
Republic Act No. 6657.”

Sec. 3 (c) of R.A. No. 6657 (The Comprehensive Agrarian Reform Act), provides that:
(c) Agricultural Land refers to land devoted to agricultural activity as defined in this Act and not
classified as mineral, forest, residential, commercial or industrial land.

Also, Sec. 3 (b) of said law defines “agricultural activity” as “the cultivation of the soil, planting of
crops, growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of such
farm products, and other farm activities and practices performed by a farmer in conjunction with
such farming operations done by person whether natural or juridical.

Further, Section 4 thereof states that:

Sec. 4. Scope. — The Comprehensive Agrarian Reform Law of 1989 shall cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands, as provided in
Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain suitable
for agriculture.

More specifically the following lands are covered by the Comprehensive Agrarian Reform Program:

(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No
reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval
of this Act until Congress, taking into account ecological, developmental and equity considerations,
shall have determined by law, the specific limits of the public domain.

(b) All lands of the public domain in excess of the specific limits as determined by Congress in the
preceding paragraph;

(c) All other lands owned by the Government devoted to or suitable for agriculture; and

(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products
raised or that can be raised thereon. (Emphasis and underlining supplied)

Indeed, under the facts and the law obtaining herein, the above landholdings of petitioners are
not agricultural lands, have not been devoted into any agricultural activity, and the defendants
have not given proof of any tenancy relationship in their favor over the same.
As to the second issue, since the subject land is clearly not agricultural, the herein respondents’
claim that they are tenants, or at least, tillers of the subject land, as already disccused, should
not be given credence at all.

Section 22 expressly provides who are the qualified beneficiaries of lands covered by the
CARP:

Sec. 22. Qualified Beneficiaries. — The lands covered by the CARP shall be distributed as much as
possible to landless residents of the same barangay, or in the absence thereof, landless residents of the
same municipality in the following order of priority:

(a) agricultural lessees and share tenants;


(b) regular farmworkers;
(c) seasonal farmworkers;
(d) other farmworkers;
(e) actual tillers or occupants of public lands;
(f) collectives or cooperatives of the above beneficiaries; and
(g) others directly working on the land.

Again, and even on the basis of the above parameters, the respondents failed to discharge the
burden of proving that they are tenants or at least farmers/farmworkers or actual tillers directly
working on the subject property.

In Quintos v. Dept. of Agrarian Reform Adjudication Board, et al.,[36] where the Court reversed
and set aside the Decision and Resolution of the Court of Appeals, it stated that:

The burden of proof rests on the one claiming to be a tenant to prove his affirmative allegation by
substantial evidence. His failure to show in a satisfactory manner the facts upon which he bases his
claim would put the opposite party under no obligation to prove his exception or defense. The rule
applies to civil and administrative cases.[37] (Emphasis and underlining supplied)

In the Decision of the OP dated 2 December 2011, which was practically just a verbatim
reproduction of the Order dated 19 June 2007 of the then OIC-Secretary Pangandaman, it partly
reads as follows:

Based on the PARO’s Report, there are thirty-six (36) identified potential beneficiaries.
It bears stressing that the alleged PARO Report was never presented to the petitioners nor
a copy thereof was furnished to them. The petitioners were, likewise, not heard on this
matter. No evidence was shown or presented by PARO as the basis of such Report. In any
case, the declaration was even tentative and uncertain. The alleged “PARO Report” as
quoted, did not categorically say that there were 36 beneficiaries. It merely stated there were 36
“potential beneficiaries,” clearly signifying uncertainty and indefiniteness.[38]

The OP maintained in its 27 January 2012 Resolution that “tenancy relations is not material
under the CARP” and therefore, the alleged failure of the respondents to establish the existence
of a tenancy relationship is, likewise, immaterial. This statement is clearly contrary to law and
jurisprudence. Instead, this is even an admission of the absence of such relationship, which is a
pre-requisite to any grant of entitlement in favor of the respondents under R.A. No. 6657.

Nevertheless, the records of the case is bereft of any substantial evidence to support the
respondents’ claim that they are farmers/tillers of the subject property. The mere presence of
pineapple, coconuts, and bananas within the areas, as averred by DAR, citing the non-
existent CLUPPI Inspection Report, does not necessarily establish that respondents are
farmworkers or actual tillers therein. DA.R also made mention of the attendance of backyard
hog raising within the subject property. As pointed out earlier, in the Luz Farms case, the Court
held that “[i]t is evident from the foregoing discussion that Section II of R.A. No. 6657 which
includes “private agricultural lands devoted to commercial livestock poultry and swine raising” in
the definition of of “commercial farms” is invalid.”[39]

Moreover, in the earlier ejectment suit filed by the petitioners against the respondents, the MTC
of Cabuyao, Laguna, after trial and after conducting an ocular inspection of the subject land,
ordered the eviction of the respondents. As declared by the lower court, which was affirmed all
the way up to this Court, “there was no tenancy relationshipbetween the parties” and this is
due to the following findings:

(1) x x x

(2) The consent of the plaintiff to the alleged tenancy relationship with the defendants was not
sufficiently established in the instant case. There is no showing that the defendants are farmer-
beneficiaries as declared by DAR as the proper certification was not issued by the said office x x x;
(3) x x x x

(4) The defendants have not shown that they have personally cultivated the land allegedly under
their management. They have not submitted affidavits or other evidences attesting to such fact x x
x;

(5) The defendants have not sufficiently shown that there is sharing of harvest between them and
the plaintiff. It is essential that together with the other requisites of tenancy relationship, the
agricultural tenant must prove that he transmitted the landowner’s share of the harvest. They have
not submitted their affidavits attesting to such fact”. (Emphasis supplied. Annex “Y” of the Petition)

As discussed earlier, this finding was affirmed by both the RTC and the CA. In the RTC
Decision, the court held:

The court a quo granted the complaint for ejectment and denied the defense of the defendants for
the defendants failed to prove that the property is an agricultural land and the presence of tenancy
relationship to this case, which the court finds to be in order especially so that the evidence for the
plaintiff as enumerated by the court a quo in its decision’s number 1 to 5, page 3 proved it otherwise. [40] x
xx

While in the CA Decision dated 12 November 2009 in CA-G.R. SP No. 106951, the said court
discussed the herein respondents’ failed evidence on tenancy, as follows:

Indeed, the foregoing case presents a dearth of evidence to prove petitioners’ contention of tenancy. In a
vain attempt to prove their claim, they proffered in evidence, the Sinumpaang Salaysay of a certain Pedro
de Sagun, the purported caretaker of the subject properties entrusted with the receipt of tax payments
from petitioners. This piece of evidence does not constitute proof of tenancy as payment of taxes is not
among the above-stated essential requisites. At best, it only proves petitioners’ payment of their share in
land taxes, nothing more. Moreover,petitioners’ status as farmer-beneficiaries remains a contentious
issue. For while there appears on record petitioners Applications to Purchase and Farmer’s Undertaking
relative to the subject properties, there is nothing to indicate the approval of said application. As aptly
observed by the MTC, the record fails to establish petitioners’ status as farmer-beneficiaries.
Certainly these pieces of evidence cannot sustain a finding of tenancy. Further, neither is there any
proof of the elemental act of cultivation, consent of the landowner and harvest-sharing. We reiterate
that to establish a tenancy relationship, concrete and independent evidence, aside from self-serving
statements, is needed to prove personal cultivation, sharing of harvests, or consent of the landowner, and
the lone fact of one’s working on another’s landholding does not raise the presumption of agricultural
tenancy. No such evidence exists in this case.[41] (Emphasis and underlining supplied)

The aggrieved respondents sought relief from the Court by way of a Petition for Review
on Certiorari which, however, was denied for failure of the herein respondents to sufficiently
show any reversible error in the assailed judgment to warrant the exercise of the Court’s
discretionary appellate jurisdiction.[42]

To recall, in the Holy Trinity case, the Court stressed that:

It is not difficult to see why Republic Act No. 6657 requires agricultural activity in order to classify land
as agricultural. The spirit of agrarian reform laws is not to distribute lands per se, but to enable the
landless to own land for cultivation. This is why the basic qualification laid down for the intended
beneficiary is to show the willingness, aptitude and ability to cultivate and make the land as
productive as possible. This requirement conforms with the policy direction set in the 1987 Constitution
to the effect that agrarian reform laws shall be founded on the right of the landless farmers and
farmworkers to own, directly or collectively, the lands they till.[43] (Emphasis and underlining supplied)

Thus, it would be the height of inequity and injustice if the petitioners herein be unjustly deprived
of the subject properties when factual findings establish that the same are not agricultural and,
therefore, beyond the ambit of R.A. No. 6657. After all, distributing the subject land to
unqualified beneficiaries such as herein respondents will unjustly enrich them at petitioners’
damage. The Court emphasized in Loria v. Muñoz, Jr.[44] that:

The principle of unjust enrichment has two conditions. First, a person must have been benefited without a
real or valid basis or justification. Second, the benefit was derived at another person’s expense or
damage.[45]

Indeed, and based thereon, the petitioners will end up suffering more and being unjustly
deprived of their property with nary any rhyme nor reason, much to their damage and prejudice.

The Court in Gelos v. Court of Appeals,[46] quoting Justice Alicia Sempio-Diy, enunciates that “[it
has been declared that] the duty of the court to protect the weak and the underprivileged should
not be carried out to such an extent as deny justice to the landowner whenever truth and justice
happen to be on his side.”
By the same token, the Court in Land Bank of the Philippines v. Court of Appeals, Pedro L. Yap,
et. al.,[47] asserts that:

As eloquently stated by Justice Isagani Cruz:

[S]ocial justice or any justice for that matter is for the deserving, whether he be a millionaire in his
mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are called upon to tilt the
balance in favor of the poor, to whom the Constitution fittingly extends its sympathy and compassion. But
never is it justified to prefer the poor simply because they are poor, or to reject the rich simply because
they are rich, for justice must always be served, for poor and rich alike, according to the mandate of the
law.

Suffice it to say, the taking of the subject property by blatantly ignoring the facts and the law that
are clearly not supportive of the cause of the respondents would be tantamount to an
oppressive and unlawful act of the state against herein petitioners.

WHEREFORE, in light of the foregoing, the Court hereby GRANTS the instant petition
and REVERSED and SET ASIDE the Decision dated 26 July 2013 of the Court of Appeals,
including the Decision dated 2 December 2011 rendered by the Office of the President and the
19 June 2007 Order issued by the Department of Agrarian Reform. In turn, the Court
thus REINSTATES the 19 September 2006 Order of the Department of Agrarian Reform.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Reyes and Jardeleza, JJ., concur.

December 16, 2016

NOTICE OF JUDGMENT

Sirs / Mesdames:
Please take notice that on December 7, 2016 a Decision, copy attached hereto, was rendered
by the Supreme Court in the above-entitled case, the original of which was received by this
Office on December 16, 2016 at 11:00 a.m.

Very truly yours,

(SGD) WILFREDO V. LAPITAN


Division Clerk of Court

Angelina De Guzman, et al. Vs. Gloria A.


Chico; G.R. No. 195445; December 7, 2016
DECISION

JARDELEZA, J.:

Before us is a petition for review[1] under Rule 45 of the Rules of Court. Petitioners seek the
review of the January 31, 2011 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No.
114103 for being contrary to law and jurisprudence. The CA affirmed the Order [3] of the Regional
Trial Court (RTC), Branch 59, Makati City in LRC Case No. M-5188 dated January 19, 2010
which denied the petitioners’ Urgent Motion to Cite Petitioner in Contempt and to Nullify
Proceedings, and the Order[4] of the RTC dated April 19, 2010 which denied petitioners’ Motion
for Reconsideration.

The Facts

The subject of this case is a property situated at 7-A 32 A. Bonifacio Street, Bangkal, Makati
City, previously registered under the name of petitioners, and covered by Transfer Certificate of
Title (TCT) No. 164900.[5]

On May 24, 2006, the property was sold at a public auction of tax delinquent properties
conducted by the City Government of Makati City pursuant to Sections 254 to 260 of the Local
Government Code. Respondent was the winning bidder at the public auction, and the City
Government of Makati executed a Certificate of Sale in her favor on even date.[6]
Petitioners failed to redeem the property within the one-year period. Thus, on July 12, 2007,
respondent filed with the RTC of Makati City an application for new certificate of title under
Section 75[7] in relation to Section 107[8] of Presidential Decree (PD) No. 1529 or the Property
Registration Decree (LRC Case No. M-4992).[9] On December 28, 2007, after hearing, the RTC
ordered that the title over the property be consolidated and transferred in the name of
respondent. The Register of Deeds of Makati consequently cancelled TCT No. 164900 and
issued a new one, TCT No. T-224923, in favor of respondent.[10] Afterwards, in the same court,
respondent moved for the issuance of a writ of possession. The motion was, however, denied
by the court for failure to set the motion for hearing.[11]

On January 14, 2009, respondent, once again, filed (for the same property), an Ex
Parte Petition for the Issuance of a Writ of Possession[12] (LRC Case No. M-5188) with the RTC
of Makati City. This ex parte petition was raffled to Branch 59 (court a quo).[13]

On April 1, 2009, the court a quo issued an Order[14] granting respondent’s ex parte petition and
ordered the issuance of a writ of possession in her favor. The writ was subsequently issued on
August 7, 2009.[15]

On August 28, 2009, petitioners filed an urgent motion to cite respondent in contempt, and to
nullify the proceedings on the ground that LRC Case No. M-5188 contained a defective/false
verification/certification of non-forum shopping.[16]

On September 11, 2009, respondent filed her comment/opposition. She alleged that petitioner’s
objection to the certification against forum shopping was deemed waived for failure to timely
object thereto. She also claimed that forum shopping does not exist.[17]

On January 19, 2010, the court a quo issued an Order[18] denying petitioners’ motion. It ruled that
the ex parte petition for the issuance of a writ of possession filed by respondent in LRC Case
No. M-5188, although denominated as a petition, is not an initiatory pleading, and, thus, does
not require a certificate of non-forum shopping. Thus, in the same Order, the court a quo ruled
that petitioners’ motion to present respondent and her counsel as witnesses is without
merit.[19] Petitioner filed a motion for reconsideration, but it was denied in an Order[20] dated Apri1
19, 2010.

Aggrieved, petitioners filed a special civil action for certiorari before the CA to annul the January
19, 2010 and April 19, 2010 Orders of the court a quo. They averred that it acted with grave
abuse of discretion in issuing the assailed orders.[21] Petitioners further alleged that the tax
auction sale proceeding is governed by Sections 246 to 270 of the Local Government Code,
and not by Act No. 3135[22] as relied upon by respondent.[23]

On January 31, 2011, the CA rendered a Decision dismissing the petition and affirming the
challenged Orders of the court a quo, to wit:

WHEREFORE, the instant petition is DISMISSED for lack of merit. The challenged orders dated
January 19, 2010 and April 19, 2010 are hereby AFFIRMED.[24]

The CA ruled that there is no forum shopping. Prior to the filing of the ex parte petition in LRC
Case No. M-5188, RTC Branch 62 has already denied respondent’s motion for issuance of a
writ of possession in LRC Case No. M-4992. The CA added that there can be no forum
shopping because the issuance of a writ of possession is a ministerial function and is summary
in nature, thus, it cannot be said to be a judgment on the merits but simply an incident in the
transfer of title.[25]

The CA also said that a certificate of non-forum shopping is required only in complaints or other
initiatory pleadings. A petition or motion for issuance of a writ of possession is not a complaint or
initiatory pleading which requires a verification and certificate of non-forum shopping.[26]

Lastly, the CA rejected petitioners’ argument that the tax auction sale proceeding is governed by
Sections 246 to 270 of the Local Government Code, and not by Act No. 3135. It explained that
the issue was raised by petitioners for the first time on appeal, and the decision finding the
respondent as the lawful and registered owner of the property by virtue of the public auction has
long become final and executory and beyond the ambit of judicial review.[27]

Petitioners appealed the Decision of the CA to this Court by way of a petition for review
on certiorari.

Petitioners’ Arguments

Petitioners aver that the CA committed reversible error in:


(a) Ruling that because of Section 7 of Act No. 3135, a certification of non-forum shopping was
unnecessary in the ex parte petition, and thus it was unnecessary to examine respondent Chico and
her counsel on said certification; and

(b) Not ruling conformably with Article 433 of the Civil Code and the cases of Factor v. Martel,
Jr.,[28] Serra Serra v. Court of Appeals,[29] and Maglente v. Baltazar-Padilla[30] that:

(i) The certification of non-forum shopping was required in the ex-parte petition;

(ii) All proceedings in LRC Case No. M-5188 should have been in the nature of an accion
reivindicatoria; and

(iii) Consequently, said proceedings were void, being summary and in the nature of proceedings
for an ex parte motion.[31]

Respondent’s Arguments

In her Comment,[32] respondent insists that a certification of non-forum shopping is not necessary
in this case because an ex parte petition for the issuance of a writ of possession is not an
action, complaint, or an initiatory pleading. She avers that although denominated as a petition,
the ex parte petition is actually in the nature of a motion, whose office is not to initiate new
litigation, but to bring a material but incidental matter arising in the progress of the case, in this
case, the registration proceedings.[33] Respondent also denies committing forum shopping, and
instead posits that it is petitioners who are guilty of forum shopping. Respondent notes that in
this petition, petitioners’ arguments center on the alleged nullity of the writ of possession itself
which is likewise subject of another petition before the Court of Appeals docketed as CA-G.R
SP No. 110654.[34]

Respondent likewise argues that Article 433 of the New Civil Code has no application to a buyer
of property in a tax delinquency sale. Respondent contends that the cases petitioner cited do
not involve actions pertaining to tax delinquency sales, and that they could not, in fact, identify a
particular provision of law or jurisprudence saying that a buyer in a tax delinquency sale has to
file an independent action to be able to take possession of the property he bought in a tax
delinquency sale.[35]

The Court’s Ruling

We deny the petition.

No certificate against forum shopping


is required in a petition or motion for
issuance of a writ of possession.

We affirm the ruling of the CA that a certificate against forum shopping is not a requirement in
an ex parte petition for the issuance of a writ of possession. An ex parte petition for the issuance
of writ of possession is not a complaint or other initiatory pleading as contemplated in Section
5,[36] Rule 7 of the 1997 Rules of Civil Procedure.[37]

The non-initiatory nature of an ex parte motion or petition for the issuance of a writ of
possession is best explained in Arquiza v. Court of Appeals.[38] In that case we ruled that the ex
parte petition for the issuance of a writ of possession filed by the respondent is not an initiatory
pleading. Although the private respondent denominated its pleading as a petition, it is,
nonetheless, a motion. What distinguishes a motion from a petition or other pleading is not its
form or the title given by the party executing it, but rather its purpose.[39] A petition for the
issuance of a writ of possession does not aim to initiate new litigation, but rather issues as an
incident or consequence of the original registration or cadastral proceedings. As such, the
requirement for a forum shopping certification is dispelled.[40]

We also cannot subscribe to petitioners’ narrow view that only cases covered by foreclosure
sales under Act No. 3135 are excused from the requirement of a certificate against forum
shopping.

Based on jurisprudence, a writ of possession may be issued in the following instances: (a) land
registration proceedings under Section 17 of Act No. 496, otherwise known as The Land
Registration Act; (b) judicial foreclosure, provided the debtor is in possession of the mortgaged
realty and no third person, not a party to the foreclosure suit, had intervened; (c) extrajudicial
foreclosure of a real estate mortgage under Section 7 of Act No. 3135, as amended by Act No.
4118; and (d) in execution sales.[41]
We note that there is no law or jurisprudence which provides that the petition for the issuance of
a writ of possession depends on the nature of the proceeding in which it is filed. Thus, we find
no logical reason for petitioners’ contention that only cases covered by Act No. 3135 are exempt
from the requirement of a certificate against forum shopping. As explained in the previous
paragraphs, by its very nature, a writ of possession is a mere incident in the transfer of title. It is
an incident of ownership, and not a separate judgment. It would thus be absurd to require that a
petition for the issuance of this writ to be accompanied by a certification against forum shopping.

The issuance of a writ of possession is


warranted.

Petitioners cite the rulings in Factor v. Martel, Jr., Serra Serra v. Court of Appeals, and Maglente
v. Baltazar-Padillato justify their position that respondent availed of the wrong remedy when she
filed an ex parte petition for issuance of a writ of possession. Petitioners contend that this is a
departure from the proper procedure which required the filing of an appropriate case for accion
reivindicatoria.

Respondent, on the other hand, argues that the cases petitioner cited do not involve actions
pertaining to tax delinquency sales. Respondent adds that petitioners could not, in fact, identify
a particular provision of law or jurisprudence saying that a buyer in a tax delinquency sale has to
file an independent action to be able to take possession of the property he brought in a tax
delinquency sale.

We agree with respondent.

Factor involves the issuance of a writ of possession pursuant to an original action for
registration; Serra Serra involves a petition for reconstitution; while Maglente involves an action
for interpleader. These rulings cannot apply in this case. For one, none of them contemplate the
present situation where the action is between, on the one hand, the previous registered owner
of the parcel of land; and on the other, the buyer in a tax delinquency sale. Second, none of
these cases involves the right of a purchaser in a tax delinquency sale for the issuance of a writ
of possession after the redemption period.

Contrary therefore, to petitioners’ contentions, the CA did not err in upholding the writ of
possession in this case. InSt. Raphael Montessori School, Inc. v. Bank of the Philippine
Islands,[42] an action involving the application of Act No. 3135, this Court recognized that the writ
of possession was warranted not merely on the basis of the law, but ultimately on the right to
possess as an incident of ownership. The right to possess a property merely follows the right of
ownership, and it would be illogical to hold that a person having ownership of a parcel of land is
barred from seeking possession.[43] Precisely, the basis for the grant of the writ of possession in
this case is respondent’s ownership of the property by virtue of a tax delinquency sale in her
favor, and by virtue of her absolute right of ownership arising from the expiration of the period
within which to redeem the property.[44]

In Cloma v. Court of Appeals,[45] the City of Pasay sold the property of Spouses Cloma at public
auction for tax delinquency. Private respondent Nocom was declared the winning bidder of the
sale, for which he was issued a certificate of sale. The spouses failed to redeem the property
within the prescribed period, and a final deed of sale was issued in favor of Nocom. Thus,
Nocom filed a petition invoking Section 75 of PD No. 1529 (as in this case), [46]which was
granted. Accordingly, Nocom applied for a writ of possession over the property, and was
eventually granted by the trial court. The spouses argued that the trial court cannot issue the
writ of possession. This Court rejected this argument, citing Section 2 of PD No. 1529. This
Court said:

Section 2 of PD 1529 also clearly rejects the thesis of petitioners that the trial court cannot issue a writ of
possession to effectuate the result of a tax sale, thus:

“Sec 2. Nature of registration of proceedings; jurisdiction of courts. — x x x Courts of First Instance shall
have exclusive jurisdiction over all applications for original registration of title, to land, including
improvements and interests therein, and over all petitions filed after original registration of title, with
power to hear and determine all questions arising upon such applications or petitions. x x x” (Emphasis
in the original.)[47]

More, respondent’s ownership over the property is affirmed by the final and executory judgment
in LRC Case No. M-4992.[48] To be clear, a writ of possession is defined as a writ of
execution employed to enforce a judgment to recover the possession of land, commanding the
sheriff to enter the land and give its possession to the person entitled under the judgment.[49]

In the same vein, we note the finding of the court a quo in granting the ex parte petition for the
issuance of writ of possession of respondent, thus:
Facts of the case reveal that the Regional Trial Court of Makati City, Branch 62, rendered a Decision
under LRC Case No. M-4992 which granted Chico’s Petition for Application for a New Certificate of
Title under Sec. 75 in relation to Sec. 107 of the Property Registration Decree. Said Decision became
final and executory on 27 February 2008.

Sec. 6, Rule 135 of the Rules of Court succinctly provides that when by law jurisdiction is conferred on a
court or judicial officer, all ancilliary writs, processes and other means necessary to carry it into effect
may be employed by such court or officer, and if the procedure to be followed in the exercise of such
jurisdiction is not specifically pointed out by law or by these rules, any suitable process or mode of
proceeding may be adopted which appears conformable to the spirit of said law or rules.[50]

The reason for the premature issuance of the writ of possession in Republic (Department of
Transportation and Communication [DOTC]) v. City of Mandaluyong[51] does not obtain in this
case. In Republic, the Metro Rail Transit Corporation failed to pay the real property taxes due to
the City of Mandaluyong, hence a public auction was conducted. For lack of bidders, the real
properties were forfeited in favor of the city. The period for the redemption of the real properties
expired, thus a final deed of sale was issued in the city’s favor. By virtue of this final deed of
sale, the city filed an ex parte petition for the issuance of a writ of possession, which the
regional trial court granted. The DOTC questioned the propriety of the issuance of the writ of
possession. While this Court held that a writ of possession is a mere incident in the transfer of
title, and which may arise from ownership by virtue of a tax delinquency sale, we nonetheless
ruled that the issuance of the writ was premature. The reason being, there was still a pending
issue on whether the auction sale should proceed, in the first place.[52]

This impediment does not exist in this case precisely because title has already been
consolidated, and a new certificate of title has already been issued in the name of respondent in
LRC Case No. M-4992. More, unlike in Republic, records of this case already established that
the Decision in LRC Case No. M-4992 has long become final and executory, as evidenced by
the Entry of Judgment issued on March 3, 2008.[53] Hence, the issuance of a writ of possession
is warranted. As the trial court ruled, “[a]ll things considered, the petitioner is now the lawful
registered owner of the subject property and by virtue of law, is entitled to the issuance of a
Transfer Certificate of Title in her name.”[54]

Finally, petitioners cannot attack the validity of the proceedings in LRC Case No. M-4992.
Having become final and executory, the judgment in LRC Case No. M-4992 can only be nullified
in a petition for annulment of judgment, which petitioner did not do. The general rule is that a
final and executory judgment can no longer be disturbed, altered, or modified in any respect,
and that nothing further can be done but to execute it. A final and executory decision may,
however, be invalidated via a petition for relief or a petition to annul the same under Rules 38 or
47, respectively, of the Rules of Court.[55]

WHEREFORE, the petition is DENIED. The Decision dated January 31, 2011 of the Court of
Appeals in CA-G.R. SP No. 114103 is hereby AFFIRMED.

SO ORDERED.

Republic of the Philippines Vs. The Estate of


Virginia Santos; G.R. No. 218345; December 7,
2016
DECISION

MENDOZA, J.:

This is a Petition for Review on Certiorari seeking to reverse and set aside the May 22, 2015
Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 100999, which affirmed the April 5,
2013 Amended Order[2] of the Metropolitan Trial Court, Branch 74, Taguig City (MeTC) in LRC
Case No. 326, a land registration case under Section 14 of Presidential Decree (P.D.) No. 1529.

The Antecedents

On October 9, 2006, the Application for Land Registration[3] of a parcel of land identified as Lot
No. 10839-C (subject land) located at P. Burgos St., Sta. Ana, Taguig City, with an area of
3,942 square meters and an assessed value of P82,400.00, was filed by respondent Estate of
Virginia Santos (respondent estate), through its administrator, Pacifico Santos (Pacifico). The
subject land was a subdivision of Lot No. 10839 described under survey Plan Csd-00-000352
(Subdivision Plan of Lot No. 10839, MCadm 590-D, Taguig Cadastral Mapping).

Together with its application for registration, respondent estate submitted the following
documents: (1) Letters of Administration[4] showing that Pacifico was appointed as the
administrator of the estate of Virginia Santos (Virginia); (2) Oath of Office of Pacifico;[5] (3)
Subdivision Plan[6] of Lot No. 10839, MCadm 590-D, Taguig Cadastral Mapping (Csd-00-
000352) with the annotation that the survey was inside L.C. Map No. 2623 Proj. No. 27-B
classified as alienable/disposable by the Bureau of Forest Development on January 03, 1968;
(4) Technical Description of Lot No. 10839-C, Csd-00-000352;[7] (5) Certification in Lieu of
Surveyor’s/Geodetic Engineer’s Certificate[8] issued by the Land Survey Records Section,
Department of Environment and Natural Resources (DENR), National Capital Region; (6) Tax
Declaration (T.D.) No. FL-013-01057;[9] and (7) Extrajudicial Settlement of Estate by Sole Heir of
the Late Alejandro Santos,[10] dated March 27, 1975.

Respondent estate alleged that the late Virginia was the only child and heir of Alejandro Santos
(Alejandro), who was the owner of the subject land during his lifetime. It further asserted that on
March 27, 1975, or after Alejandro’s death, Virginia executed an Extrajudicial Settlement of
Estate by Sole Heir of the Late Alejandro Santos (Extrajudicial Settlement) and appropriated the
subject land for herself. Respondent estate further alleged that Virginia, by her and through her
predecessor-in-interest, had been in open, continuous, exclusive, and adverse possession of
the property in the concept of owner for more than thirty (30) years.[11]

On October 9, 2006, the MeTC issued a notice of hearing setting the case for initial hearing on
February 7, 2007.[12]

On April 30, 2007, petitioner Republic of the Philippines (Republic), through the Office of the
Solicitor General (OSG), filed its Opposition[13] to the Application, raising the following grounds:
that neither the applicant nor the predecessors-in-interest of Virginia had been in open,
continuous, exclusive, and notorious possession and occupation of the subject land for a period
of not less than thirty (30) years; that the tax declarations and/or tax payment receipts attached
to the application did not constitute competent and sufficient evidence of a bona fideacquisition
of the land applied for; that the claim of ownership in fee simple on the basis of a Spanish title or
grant could no longer be availed of by the applicant; and that the subject land was a portion of
the public domain belonging to the Republic and not subject to private appropriation.

On July 12, 2007, the Land Registration Authority (LRA) submitted its Report[14] stating that the
subject property, as plotted, did not appear to overlap with any previously plotted decreed
properties and that it was not in a position to verify whether or not the aforesaid land was
already covered by a land patent and previously approved isolated surveys.

Thereafter, trial ensued.


To support its allegation of possession and occupation, respondent estate presented Romualdo
B. Flores (Romualdo) who testified that Virginia owned the subject land; that he had been tilling
the land since 1970; that his father, Sixto Cuevas Flores (Sixto), tilled the land for Alejandro
even before the Japanese occupation in 1941; and that he knew this for a fact as he was
already nine (9) years old and attained the age of reason at that time. Respondent estate also
offered in evidence several tax declarations covering Lot No. 10839, the earliest of which was
T.D. No. 6532 issued on August 19, 1949.[15]

The MeTC Ruling

In its August 31, 2011 Decision[16] the MeTC denied respondent estate’s application for
registration of the subject land. It opined that respondent estate failed to present sufficient
evidence to establish its claim of possession and ownership over the subject land. The MeTC
reasoned that mere casual cultivation of portions of the subject land did not constitute sufficient
basis for a claim of ownership. It did not give much weight either to the tax declarations offered
in evidence as it stated that these documents were mere indication of claim of ownership and
not ownership itself. [17]

The MeTC added that respondent estate failed to prove the alienable and disposable character
of the subject land. It opined that the certification at the dorsal portion of the survey plan was not
the kind of evidence contemplated in an application for original registration of title to land. The
decretal portion of the decision, thus, reads:

WHEREFORE, all premises considered, the instant application for registration of land filed by the Estate
of Virginia Santos represented by Pacifico S. Santos, is hereby denied.

SO ORDERED.[18]

On September 16, 2011, respondent estate filed its Motion for Reconsideration (With Alternative
Motion for New Trial).[19] On February 24, 2012, the MeTC granted the motion and allowed
respondent estate to present further evidence in support of its application. In granting the
motion, the MeTC explained that respondent committed mistake or excusable negligence which
ordinary prudence could not have guarded against xxx.”[20]

Respondent estate presented, among others, Felino Flores (Felino), who, through his judicial
affidavit,[21] testified that he had been tilling the subject land for Virginia and her estate since
1979; that before him, his father, Romualdo, tilled the land from 1969 until he took over in 1979;
that before his father, his grandfather, Sixto, tilled the land even before the Second World War;
and that such claim was an accepted fact in their family history.

On April 5, 2013, the MeTC issued the Order[22] granting the subject application. In completely
reversing itself, the trial court stated that the tax declarations submitted by respondent estate
and the certification appearing at the dorsal portion of the survey plan of Lot No. 10839,
showing that the land was disposable and alienable, were already sufficient to establish
respondent estate’s claim over the property as well as the alienable and disposable character of
the subject land.

On the same day, the MeTC issued the Amended Order[23] correcting the dispositive portion of
the earlier order where the area of the subject property was omitted:

WHEREFORE, all premises considered, this Court hereby confirms the title of applicant ESTATE OF
VIRGINA M. SANTOS, represented herein by the duly appointed administrator, PACIFICO M.
SANTOS, Filipino, of legal age, married to Priscilla Santos and a resident of No. 93 P. Mariano Street,
Ususan, Taguig City over the subject parcel of land designated as Lot 10839-C, as shown on subdivision
plan Csd-00-000352, being a portion of Lot 10839, MCadm-590-D, Taguig Cadastral Mapping, situated
at Barangay Sta. Ana, Taguig City, Metro Manila consisting of Three Thousand Nine Hundred Forty
Two (3,942) Square Meters, more or less and hereby order the registration thereof in its name.

After finality of this Decision and upon payment of the corresponding taxes due on the said lot, let an
Order for the issuance of decree of registration be issued.

SO ORDERED.[24] [Emphasis and underscoring in the original]

Aggrieved, the Republic, through the OSG, elevated an appeal to the CA.[25]

The CA Ruling

In its assailed Decision, dated May 22, 2015, the CA dismissed the Republic’s appeal and
affirmed the Amended Order, dated August 5, 2013 of the MeTC. The appellate court noted that
the cadastral survey in this case was the same cadastral survey in the case of Natividad Sta.
Ana Victoria vs. Republic[26] (Sta. Ana Victoria), wherein the Court granted the application for
registration of property. The CA concluded that it could not take a view contrary to the ruling in
the aforesaid case. It also concurred with the trial court that the DENR certification at the dorsal
portion of the subdivision plan of Lot No. 10839 was sufficient evidence to prove the character
of Lot No. 10839-C as alienable and disposable.

The appellate court further ratiocinated that the alleged discrepancies in the area of the property
applied for could be explained by the fact that the subject land was a subdivision of Lot No.
10839. It also found that respondent estate was able to prove its open, continuous, exclusive,
and notorious possession in the concept of owner. Relying again on Sta. Ana Victoria, the CA
held that a tax declaration issued in 1949 could be accepted as proof of open, continuous,
exclusive, and notorious possession and occupation in the concept of an owner. The dispositive
portion of the said decision states:

WHEREFORE, the appeal is DISMISSED. The Amended Order dated April 5, 2013 of the Regional
Trial Court (sic), Branch 74, Taguig City in LRC Case No. 326, is AFFIRMED.

SO ORDERED.[27]

Hence, this petition, anchored on the following

GROUNDS

THE COURT OF APPEALS GRAVELY ERRED IN TAKING “JUDICIAL NOTICE” OF A


“CADASTRAL SURVEY” SUBMITTED IN A DIFFERENT CASE ENTITLED “STA.
ANA VICTORIA VS. REPUBLIC” TO PROVE, DURING THE APPEAL PROCEEDINGS, THE
DATE WHEN THE SUBJECT LAND WAS FIRST DECLARED ALIENABLE AND
DISPOSABLE.

II

THE COURT OF APPEALS GRAVELY ERRED IN GRANTING THE SUBJECT


APPLICATION FOR LAND REGISTRATION DESPITE THE EXISTENCE OF DOUBT IN
THE TOTAL AREA OF THE PARCEL OF LAND BEING APPLIED FOR REGISTRATION.

III
THE COURT OF APPEALS GRAVELY ERRED IN RELYING ON THE STA. ANA
VICTORIA CASE AND IN UTTERLY DISREGARDING THAT THERE IS ABSENCE OF
EVIDENCE TO PROVE POSSESSION AND OCCUPATION BY RESPONDENT OR ITS
PREDECESSORS-IN-INTEREST SINCE JUNE 12, 1945, OR EARLIER.[28]

The Republic argues, first, that the CA gravely erred in its over-reliance on Sta. Ana Victoria. It
posits that although the CA could take judicial notice of Sta. Ana Victoria, it could not hastily rule
that the subject land was also alienable and disposable based merely on the allegation that the
subject property and the property registered in the said case belonged to the same cadastral
survey. Second, the Republic asserts that respondent estate failed to establish its open,
exclusive, continuous and notorious possession and occupation under a bona fide claim of
ownership over the subject land since June 12, 1945, or earlier. It contends that the tax
declarations submitted by respondent estate were considered not proofs of ownership.
Moreover, the earliest tax declaration submitted by respondent estate was for the year 1949,
short of the required possession under the law. Lastly, the Republic insists that respondent
estate’s witnesses merely gave shady statements on the supposed ownership of Virginia and
Alejandro, without showing any manifestation of acts of dominion over the property.

In its Comment,[29] respondent estate countered that judicial decisions of this Court, including the
findings of facts which were integral parts thereof, formed part of the legal system which all
other courts were bound to follow and be familiar with. It asserted that since the subject land
emanated from the same cadastral survey declared as alienable and disposable in Sta. Ana
Victoria, the subject property must likewise be declared as alienable and disposable. It further
advanced that the contents of the certification at the dorsal portion of the survey plan and the
technical description of the property enjoyed the presumption of their accuracy.

With regard to possession and occupation, respondent estate averred that its witnesses testified
on the identity of the property, the crops planted thereon, and the three generations of tenancy
agreement involving the subject land. It claimed that these testimonies were further
supplemented by the tax declarations it presented, which showed that Virginia and her
predecessor-in-interest were in possession of the subject land for more than fifty (50) years.

In its Reply,[30] the Republic reiterated its position that respondent estate failed to adduce
sufficient evidence of possession and occupation on or before June 12, 1945; and that the
appellate court erred in concluding that the subject land was declared alienable and disposable
based merely on the facts sustained in Sta. Ana Victoria.
The Court’s Ruling

Essentially, the Court is asked to resolve the issue of whether the CA erred in granting
respondent estate’s application for registration despite its failure to comply with the
requirements for original registration of title to/and under Section 14 of P.D. No. 1529.

The petition is meritorious.

At the onset, the Court notes that there was some confusion as to what law on which the
application for registration of the subject land was based. As per examination of respondent
estate’s application, it would seem that the basis for their application was Section 14(2) of P.D.
No. 1529 considering its allegation of possession and occupation in the concept of owner for
more than thirty (30) years. The MeTC, and later the appellate court, however, granted the
application under Section 14(1) of the same law making reference to June 12, 1945, or prior
thereto, as the earliest date of possession and occupation. Thus, the Court deems it proper to
discuss respondent estate’s application for registration of title to the subject property vis-a-vis
the provisions of Section 14(1) and (2) of P.D. No. 1529.

Respondent Estate Failed to Comply with the


Requirements under Section 14(1) of
P.D. No. 1529

In Republic of the Philippines vs. Cortez,[31] the Court explained that applicants for original
registration of title to land must first establish compliance with the provisions of either Section
14(1) or Section 14(2) of P.D. No. 1529. Section 14(1) provides that:

Sec. 14. Who may apply. The following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through their duly authorized
representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of alienable and disposable lands of the public
domain under a bona fide claim of ownership since June 12, 1945, or earlier.
Under Section 14(1), applicants for registration of title must sufficiently establish the following:
first, that the land or property forms part of the disposable and alienable lands of the public
domain; second, that the applicant and his predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of the same; and third, that it is
under a bona fide claim of ownership since June 12, 1945, or earlier.

The first requisite of Section 14(1) only entails that the property sought to be registered be
alienable and disposable at the time of the filing of the application for registration.[32]

In this case, to prove that the subject land formed part of the alienable and disposable lands of
the public domain, respondent estate relied on the annotation on the subdivision plan of Lot No.
10839 and on the certification issued by Rodelina M. De Villa, Forester II of the Forest
Management Services (FMS) of the DENR, which both stated that the subject land was verified
to be “within the alienable and disposable land under Project No. 27-B, Taguig Cadastral
Mapping as per LC Map No. 2623.”[33]

These pieces of evidence, however, would not suffice. The present rule is that to prove the
alienability and disposability of the land sought to be registered, an application for original
registration must be accompanied by (1) a City Environment and Natural Resources Office
(CENRO) or Provincial Environment and Natural Resources Officer (PENRO) Certification; and
(2) a copy of the original classification approved by the DENR Secretary and certified as a true
copy by the legal custodian of the official records.[34] Clearly, the annotation on the subdivision
plan and the certification from the FMS fall short of these requirements.[35]

The judicial notice by the appellate court of the cadastral survey submitted in Sta. Ana
Victoria will not cure respondent estate’s shortcomings.

In Spouses Latip vs. Chua,[36] it was ruled that a court cannot take judicial notice of any fact
which, in part, was dependent on the existence or non-existence of a fact of which the court has
no constructive knowledge.[37]

In this case, in concluding that the subject land formed part of the alienable and disposable
lands of the public domain, the CA, in effect, assumed and took judicial notice that it was
located within L.C. Map No. 2623. This is, however, erroneous considering that the CA had no
constructive knowledge as to the location of the subject land and the technical boundaries of
L.C. Map No. 2623. Furthermore, the CA erred in assuming the identity and location of the
subject land because such matter was still under dispute. In fact, the Republic relentlessly
raised this issue even during the trial arguing that the identity of the land in question was
doubtful. This position was further reiterated by the Republic in its Reply when it argued that
respondent estate failed to prove that the subject property was actually covered by the same
cadastral survey submitted in Sta. Ana Victoria.

Accordingly, the CA erred in taking judicial notice of the identity and location of subject land. Its
declaration that the subject land was alienable and disposable based merely on the declaration
in Sta. Ana Victoria was erroneous.

Proof of Possession

Aside from the alienable and disposable character of the land sought to be registered, the
applicant must also prove that he/she and/or his/her predecessors-in-interest have been in
open, continuous, exclusive, and notorious possession and occupation of the land under a bona
fide claim of ownership since June 12, 1945, or earlier. Possession is open when it is patent,
visible, apparent, notorious, and not clandestine. It is continuous when uninterrupted, unbroken
and not intermittent or occasional. It is exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own use and benefit. And it is
notorious when it is so conspicuous that it is generally known and talked of by the public or the
people in the neighborhood.[38]Respondent estate in this case also failed to prove this
requirement.

Respondent estate presented several tax declarations in the name of Virginia and Alejandro.
The earliest of these tax declarations, however, dates back to 1949 only, short of the
requirement that possession and occupation under a bona fide claim of ownership should be
since June 12, 1945 or earlier.

Respondent also offered the testimonies of Romualdo and Felino to prove that Virginia’s
predecessor-in-interest had been in possession and occupation under a bona fide claim of
ownership since June 12, 1945. Romualdo testified as follows:

Atty. Valdez
Q. At the time you started to farm the property, please describe the condition thereof?

A. It was being farmed and planted to rice, sir.

Q. Who planted it with rice?

A. My father, Sixto Cuevas Flores, sir.

Q. Since when did your father start tilling the land?

A. He started tilling the land even before the Japanese time in 1942?

Q. How do you know?

A. I have already reached the age of reason at the time being nine (9) years old in 1941, sir.[39]

It needs to be pointed out, however, that in Republic vs. Remman Enterprises, Inc.[40] (Remman),
the Court held that for purposes of land registration under Section 14(1) of P.D. No. 1529, proof
of specific acts of ownership must be presented to substantiate the claim of open, continuous,
exclusive, and notorious possession and occupation of the land subject of the application.
“Applicants for land registration cannot just offer general statements which are mere
conclusions of law rather than factual evidence of possession. Actual possession consists in the
manifestation of acts of dominion over it of such nature as a party would actually exercise over
his own property.”[41]

In a plethora of cases, the Court has repeatedly held that unsubstantiated claims of cultivation
of land do not suffice to prove open, continuous, exclusive, and notorious possession and
occupation of the public land applied for in the concept of an owner. In Remman, the Court
denied the application for original registration of title to land located in Taguig City as the
testimony of the applicant’s witness lacked specifics as to the nature of the alleged cultivation. It
was observed that:
Although Cerquena testified that the respondent and its predecessors-in-interest cultivated the subject
properties, by planting different crops thereon, his testimony is bereft of any specificity as to the nature of
such cultivation as to warrant the conclusion that they have been indeed in possession and occupation of
the subject properties in the manner required by law. There was no showing as to the number of crops that
are planted in the subject properties or to the volume of the produce harvested from the crops supposedly
planted thereon.[42] (Underscoring supplied)

In Aranda vs. Republic of the Philippines,[43] the Court held that mere statements regarding
cultivation of land would not establish possession in the concept of an owner, stating that:

X x x And even assuming that Lucio actually planted rice and corn on the land, such statement is not
sufficient to establish possession in the concept of owner as contemplated by law. Mere casual cultivation
of the land does not amount to exclusive and notorious possession that would give rise to ownership.
Specific acts of dominion must be clearly shown by the applicant.[44] (Underscoring supplied)

In Republic vs. Candy Maker, Inc.,[45] the Court did not give credit to the unsupported claim of the
respondent-applicant’s predecessor-in-interest that he and his father cultivated the property
applied for since 1937 by planting palay during the rainy season and vegetables during the dry
season. The Court emphasized the importance of showing specific acts of dominion by the
applicant or his predecessors-in-interest, to wit:

Fourth. When he testified on October 5, 2001, Antonio Cruz declared that he was “74 years old.” He must
have been born in 1927, and was thus merely 10 years old in 1937. It is incredible that, at that age, he was
already cultivating the property with his father. Moreover, no evidence was presented to prove how many
cavans of palay were planted on the property, as well as the extent of such cultivation, in order to support
the claim of possession with a bona fide claim of ownership. (Underscoring supplied)

Similarly in this case, assuming the veracity of the claim that Alejandro and/or Virginia cultivated
the subject land through Romualdo and Sixto, the Court finds that the same could only be
considered as a mere casual cultivation because his testimony was bereft of any specificity to
warrant the conclusion that Alejandro and/or Virginia had been indeed in possession and
occupation of the subject land. Romualdo’s statements failed to show the nature of the
cultivation and the volume of crops planted and harvested on the property. Respondent estate,
therefore, failed to satisfy the requisite exclusivity and notoriety of the possession and
occupation of the property because exclusive dominion and conspicuous possession over the
subject land were not established.
Felino’s testimony during the new trial of this case was likewise insufficient to prove the required
possession and occupation since June 12, 1945 or earlier. Felino’s pertinent testimony in his
judicial affidavit was as follows:

Atty. Valdez

Q. Since when did you start tilling the property?

A. In 1979 at the age of 17.

Q. Before you, who cultivated the property, if any?

A. Romualdo Flores, my father then as tenant of the owner.

Q. Since when did Romualdo cultivate or till the property?

A. Since 1969.

Q. As tenant, up to when did your father till the property?

A. Up to 1979 when I took over.

Q. In 1969 when Romualdo took over, who was cultivating or tilling the property, if any?

A. Sixto Flores, his father and my grandfather.

Q. Since when did Sixto start to cultivate the property?


A. Before the Second World War.

Q. How do you know when you were born only in 1962?

A. It is an accepted fact in our family history. I heard my parents and grandparents talk about it very,
very often. Everyone assumes it to be true. Besides during the days of my grandfather Sixto, there
was not much source of livelihood of the people but the farm. Many people worked or derived
their income from the farms.

Clearly, Felino failed to convincingly show that he had personal knowledge of the ownership or
possession over Lot No. 10839-C on or before June 12, 1945 having been born only in 1962.
He also talked of how his father and grandfather cultivated the land based on their family stories
which were not substantiated. Hence, the above testimony of Felino does not deserve any credit
for being hearsay.

From all the foregoing, the subject land cannot be registered in the name of Virginia and/or her
estate under Section 14(1) of P.D. No. 1529 for respondent estates failure to prove its alienable
and disposable character, and its possession and occupation from June 12, 1945 or earlier.

Respondent Failed to Comply with the


Requirements under Section 14(2) of
P.D. No. 1529

The subject land cannot also be registered under Section 14(2) of P.D. No. 1529, which states:

Those who have acquired ownership of private lands by prescription under the provision of existing
(2)
laws.

In Heirs of Mario Malabanan vs. Republic[46] (Malabanan), the Court explained that when Section
14(2) of P.D. No. 1529 stated that persons “who have acquired ownership over private lands by
prescription under the provisions of existing laws,” it unmistakably referred to the Civil Code as
a valid basis for the registration of lands. The Civil Code is the only existing law that specifically
allows the acquisition of private lands by prescription, including patrimonial property belonging
to the State.
Section 14(2) explicitly refers to the principles on prescription, as set forth in the Civil Code. In
this regard, the Civil Code makes it clear that patrimonial property of the State may be acquired
by private persons through prescription. This is brought about by Article 1113, which provides
that all things which are within the commerce of man are susceptible to prescription, and that
property of the State or any of its subdivisions not patrimonial in character shall not be the
object of prescription.[47]

This does not necessarily mean, however, that when a piece of land is declared alienable and
disposable, it can already be acquired by prescription. In Malabanan, this Court ruled that
declaration of alienability and disposability was not enough — there must be an express
declaration that the public dominion property was no longer intended for public service or the
development of the national wealth or that the property had been converted into patrimonial,
thus:

(2) In complying with Section 14(2) of the Property Registration Decree, consider that under the Civil
Code, prescription is recognized as a mode of acquiring ownership of patrimonial property. However,
public domain lands become only patrimonial property not only with a declaration that these are alienable
or disposable. There must also be an express government manifestation that the property is already
patrimonial or no longer retained for public service or the development of national wealth, under Article
422 of the Civil Code. And only when the property has become patrimonial can the prescriptive period for
the acquisition of property of the public dominion begin to run.[48](Underscoring supplied)

In this case, and as already stated, respondent estate merely relied on the annotation on the
subdivision plan of Lot No. 10839 and on the certification issued by FMS-DENR which certified
the subject land to be “within the alienable and disposable land under Project No. 27-B, Taguig
Cadastral Mapping as per LC Map No. 2623.” No certification or any competent evidence,
however, was ever presented to the effect that the subject land, or even the lands covered by
L.C. Map No. 2623, were no longer intended for public service or for the development of the
national wealth pursuant to Article 422 of the Civil Code. The classification of the subject
property as alienable and disposable land of the public domain does not change its status as
property of the public dominion under Article 420(2) of the Civil Code. Thus, it is insusceptible to
acquisition by prescription. Hence, respondent estate failed to prove that acquisitive prescription
had begun to run against the State, much less that it had acquired title to the subject property by
virtue thereof.
In fine, respondent failed to satisfy all the requisites for registration of title to land under either
Sections 14(1) or (2) of P.D. No. 1529. Respondent’s application for original registration of
imperfect title over Lot No. 10839-C must be denied.

Without Prejudice

This denial, however, is without prejudice. As the FMS-DENR certified the subject land to be
“within the alienable and disposable land under Project No. 27-B, Taguig Cadastral Mapping as
per LC Map No. 2623,” the respondent must be given the opportunity to present the required
evidence. This is but fair and reasonable because a property within an alienable and disposable
land must be deemed to be of the same status and condition. As earlier stated, however, the
respondent must prove that the subject property was actually covered by the same cadastral
survey and that they and their predecessors in interest were in possession and ownership since
June 12, 1945 or earlier.

WHEREFORE, the petition is GRANTED. The May 22, 2015 Decision of the Court of Appeals in
CA-G.R. CV No. 100999 is hereby REVERSED and SET ASIDE.

The Application for Registration of the Estate of Virginia Santos in LRC Case No. 326
is DENIED, without prejudice.

SO ORDERED.

Presidential Decree No. 1271 Committee, the


Secretary of Justice, in his capacity as Chair of
the Committee, et al. Vs. Gloria Rodriguez De
Guzman, represented by her Attorney-in-Fact,
Lorenzo Ma. G. Aguilar/Gloria Rodriguez De
Guzman, represented by her Attorney-in-Fact,
Lorenzo Ma. G. Aguilar Vs. Presidential Decree
No. 1271 Committee, the Secretary of Justice, in
his capacity as Chair of the Committee, et al.;
G.R. No. 187291/G.R. No. 187334; December
5, 2016
DECISION

LEONEN, J.:

Land registration cases that only resolve the propriety of the results of a resurvey of Baguio City
properties do not bar a subsequent declaration of the nullity of the titles on account of Republic
v. Marcos[1] and Presidential Decree No. 1271.

These consolidated cases concern the validation of certain properties under Presidential Decree
No. 1271, which declared null and void all orders and decisions decreeing lands within the
Baguio Townsite Reservation in favor of private parties by virtue of the reopening of Civil
Reservation Case No. 1, G.L.R.O. Rec. No. 211.

These Petitions for Review assail the Amended Decision[2] dated March 26, 2009 of the Court of
Appeals, which validated several transfer certificates of title that had been disallowed validation
by the Baguio Validation Committee.

The Baguio Validation Committee, the Secretary of Justice (in his capacity as Chair of the
Committee), the Solicitor General (in his capacity as a member of the Committee), and
Benedicto Ulep (in his capacity as the Administrator of the Land Registration Authority) jointly
filed the first Petition docketed as G.R. No. 187291.[3] Gloria Rodriguez de Guzman filed the
second Petition, which was docketed as G.R. No. 187334.[4]

On February 11, 1903, Act No. 636[5] was enacted to provide for the allotment of property as a
government reservation in Baguio, Benguet:

SECTION 1. Pending the plotting of a town site at Baguio and the setting aside of a tract of land as a
military reservation, the following described tract of land shall be reserved for Government purposes,
exempt from settlement and claim: That parcel or tract of land in the form of a circle with its center in the
house occupied by Mateo Cariño at Baguio, and with a radius of one kilometer; and also a strip of land
one and one-half kilometers wide on the easterly side, and one kilometer wide on the westerly side of the
Government road as now located, beginning at a point ‘on the Government road due east of the civil
sanitarium, and extending southeasterly along said road for a distance of four kilometers: Provided, That
nothing in this section shall apply to private lands held under lawful title within the above-described area.

The Governor of the Province of Benguet was tasked to prevent any person from settling on
public lands within the allotted area until they are opened up for sale and settlement by later
legislation.[6] However, the reservation did not apply to private lands held under lawful title within
the allotted area.[7]

On April 12, 1912 the Director of Lands filed a case before the Court of First Instance of
Benguet for the settlement and adjudication of claims to private lands in the Baguio Townsite
Reservation. The case was docketed as Civil Reservation Case No. 1, G.L.R.O. Rec. No. 211.[8]

On November 13, 1922, the Court of First Instance of Benguet decreed as public properties all
lands, buildings, and real rights within the Baguio Townsite Reservation, with the exception of
areas inside established reservations and lands adjudicated to private claimants named in these
reservations.[9] All other private claims not pursued in the Civil Reservation Case No. 1, G.L.R.O
Rec. No. 211 were barred forever.[10]

Later, several interested parties filed a Petition before the Court of First Instance of Baguio and
Benguet to reopen Civil Reservation Case No. 1, G.L.R.O Rec. No. 211. These parties invoked
Republic Act No. 931, which authorized the reopening of cadastral cases up to December 31,
1968 involving lands previously declared public by the court.[11]

The Court of First Instance of Baguio and Benguet granted the Petition to reopen Civil
Reservation Case No. 1, G.L.R.O Rec. No. 211. Parcels of land located within the Baguio
Townsite Reservation were then awarded to private parties.[12] These parcels of land were
transferred to third parties who had since secured titles to the lands.[13]

The Republic of the Philippines questioned the reopening of Civil Reservation Case No. 1,
G.L.R.O Rec. No. 211 in court. On July 31, 1973, this Court in Republic v. Marcos [14] held that
all titles issued as a result of the reopening of Civil Reservation Case No. 1, G.L.R.O Rec. No.
211 were null and void.[15] This Court found that Civil Reservation Case No. 1, G.L.R.O Rec. No.
211 was not a cadastral proceeding as contemplated under Act No. 931, and the lands in
question could not be registered, as they were part of a duly established military camp or
reservation.[16]
As several parcels of land had already been transferred to third parties, Former President
Ferdinand Marcos issued Presidential Decree No. 1271 on December 22, 1977 to provide for
those who acted in good faith, mistakenly relied on the indefeasibility of Torrens certificates of
titles, and introduced substantial improvements on the lands covered by the certificates.[17]

Presidential Decree No. 1271 reiterated the nullity of the titles issued in relation to the reopening
of the Civil Reservation Case No. 1, G.L.R.O Rec. No. 211. However, it provided that innocent
third parties could have their properties validated upon compliance with the following conditions:

Section 1. All orders and decisions issued by the Court of First Instance of Baguio and Benguet in
connection with the proceedings for the reopening of Civil Reservation Case No. 1, GLRO Record No.
211, covering lands within the Baguio Townsite Reservation, and decreeing such lands in favor of private
individuals or entities, are hereby declared null and void and without force and effect; PROVIDED,
HOWEVER, that all certificates of titles issued on or before July 31, 1973 shall be considered valid and
the lands covered by them shall be deemed to have been conveyed in fee simple to the registered owners
upon a showing of, and compliance with, the following conditions:

1. The lands covered by the titles are not within any government, public or quasi-public
reservation, forest, military or otherwise, as certified by appropriating government
agencies;

2. Payment by the present title holder to the Republic of the Philippines of an amount
equivalent to fifteen per centum (15%) of the assessed value of the land whose title is
voided as of revision period 1973 (P.D. 76), the amount payable as follows: Within ninety
(90) days of the effectivity of this Decree, the holders of the titles affected shall manifest
their desire, to avail of the benefits of this provision and shall pay ten per centum (10%) of
the above amount and the balance in two equal installments, the first installment to be paid
within the first year of the effectivity of this Decree and the second installment within a
year thereafter.

The governing body tasked to implement the provisions of Presidential Decree No. 1271 is the
Presidential Decree No. 1271 Committee (Baguio Validation Committee). It is composed of the
Secretary of Justice as Chair and the Solicitor General and the Director of the Land
Management Bureau as members.[18]
Among the titles issued under Civil Reservation Case No. 1, G.L.R.O Rec. No. 211 were
Original Certificates of Title Nos. 123 and 128.[19]

In December 1967, before this Court’s ruling in Marcos, Gloria Rodriguez De Guzman
(Rodriguez) acquired the properties derived from Original Certificates of Title Nos. 123 and 128.
The Register of Deeds of Baguio issued a total of nine (9) Transfer Certificates of Title to
Rodriguez, as follows:

(a) Transfer Certificates of Title Nos. T-12826 and T-12827, for the properties covered by
Original Certificate of Title No. 123;[20]

(b) Transfer Certificates of Title Nos. T-12828, T-12829, T-12830, T-12831, and T-12832, for
the properties covered by Original Certificate of Title No. 128;[21]and

(c) Transfer Certificates of Title Nos. T-12824 and T-12825.[22]

Original Certificates of Title Nos. 123 and 128, being among the titles issued under the
reopening of Civil Reservation Case No. 1, G.L.R.O Rec. No. 211, was declared null and void
in Marcos and by Presidential Decree No. 1271.[23]

Consequently, on February 5, 1987, Rodriguez filed separate applications for validation for
seven (7) of her titles: T-12826, T-12827, T-12828, T-12829, T-12830, T-12831, and T-
12832.[24] The applications for validation were docketed thus:

Original Certificate of Transfer Certificate of Title in Application for Validation


Title Rodriguez’s name

OCT No. 123 T-12826 VA(B) No. 6590

T-12827 VA(B) No. 6591

OCT No. 128 T-12828 VA(B) No. 6592


T-12829 VA(B) No. 4758

T-12830 VA(B) No. 6593

T-12831 VA(B) No. 6594

T-12832 VA(B) No. 6595[25]

On September 24, 1991, pending her applications for validation, Rodriguez filed before the
Regional Trial Court of Baguio City a Petition seeking to correct the caption of Resurvey
Subdivision Plan (LRC) No. RS-288-D and the technical descriptions of TCT Nos. T-12828, T-
12829, T-12830, T-12831, and T-12832 to conform to the resurvey plan.[26] This was docketed
as LRC Case No. 445-R.[27]

The Office of the Solicitor General opposed the Petition and alleged that there was an increase
in the area of the subdivided lots covered by the Transfer Certificates of Title.[28] On July 23,
1996, the Regional Trial Court granted Rodriguez’s Petition on the basis of Sections 48[29] and
108[30] of Presidential Decree No. 1529, otherwise known as the Property Registration Decree:

The opposition filed by the Office of the Solicitor General challenging the validity of the subject titles is
in effect an attempt to reopen the decree of registration which Section 108 of PD 1529 categorically
disallows. Moreover, the opposition of the Solicitor General is a collateral attack against a certificate of
title which is also disallowed under Section 48 of P.D. 1529, which provides:

“SEC. 48. Certificate not subject to collateral attack. – A certificate of title shall not be subject to
collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance
with law.”

Thus, in Magay vs. Estiandanan, 69 SCRA 456, the Supreme Court held:

“It is well-settled that a Torrens title cannot be collaterally attacked. The issue on the validity of the title
can only be raised in an action expressly instituted for that purpose.” (citing Legarda and Prieto vs.
Saleeby, 31 Phil. 590; Director of Lands vs. Gan Tan, 89 Phil. 184; Hederson vs. Garrido, 90 Phil. 624;
Samonte, et al., vs. Sambilon, et al., 107 Phil. 189).
Moreover, petitioner should be accorded presumption that the Commissioner of Land Registration had
complied with his official duties in accordance with law. The competence of the Commissioner of Land
Registration to approve and disapprove survey plans, including consolidation and subdivision surveys has
not been refuted and challenged. Before a consolidation or subdivision survey is conducted by geodetic
engineer or before the survey is approved by competent authority, there must be proof that the party in
whose behalf the survey is to be conducted is the owner of the property or has valid authority to grant
permission for the survey. In the instant case, it is presumed that before the Commissioner of Land
Registration approved the consolidation and subdivision survey as plan (LRC) RS-288-D, there was
sufficient and existing proof submitted by petitioner of her ownership of the land.[31]

On January 10, 2002, a certain Corazon Delizo and Consuelo Delizo requested the Land
Registration Authority to investigate Rodriguez’s Transfer Certificates of Title Nos. T-12826 and
T-12827 for being issued irregularly.[32]The Land Registration Authority docketed the request as
Task Force Titulong Malinis (TM) No. 02-001.[33]

On September 26, 2002, Rodriguez’s applications for validation of Transfer Certificates of Title
Nos. T-12828, T-12829, T-12830, T-12831, and T-12832 were forwarded to the Baguio
validation Committee by the Community Environment and Natural Resources Office of the
Department of Environment and Natural Resources.[34]

On September 27, 2002, the Land Registration Authority Task Force Titulong Malinis found that
there was an expansion of the land area covered by Rodriguez’s Transfer Certificates of Title
Nos. T-12826 and T-12827.[35] It likewise discovered that the mother title was cancelled through a
letter from Rodriguez seeking the issuance of new Transfer Certificates of Title under
subdivision plan (LRC) Ps-281-D.[36]

In May 2003, the Office of the Solicitor General received a copy of the opposition filed by
Corazon Delizo and the Heirs of Dr. Federico Q. Delizo.[37]

On March 3, 2004, the Legal Services of the Department of Environment and Natural
Resources recommended to the Baguio Validation Committee the validation of Rodriguez’s
Transfer Certificates of Title Nos. T-12826, T-12827, T-12828, T-12829, T-12830, T-12831, and
T-12832.[38] The Land Management Bureau of the Department, as member of the Baguio
Validation Committee, adopted this endorsement and recommended the approval of Transfer
Certificates of Title Nos. T-12828 to T-12832.[39] In the letter dated May 25, 2004, the Land
Management Bureau endorsed the five (5) applications and resolutions covering Transfer
Certificates of Title Nos. T-12828 to T-12832 to the remaining members of the Baguio Validation
Committee: the Office of the Solicitor General and the Department of Justice.[40]

On September 7, 2004, the Register of Deeds of Baguio wrote the Office of the Solicitor
General stating that Rodriguez’s nine (9) titles, Transfer Certificates of Title Nos. T-12824 to T-
12832, ought to be cancelled and denied validation.[41] The letter reads:

The following documents militate against the approval of Ms. De Guzman’s application:

a) LRC Consulta No. 1889 – which held that plan (LRC) RS-281, though admittedly approved by the
Land Registration. Authority on August 30, 1967 is nonetheless a plan with increased or expanded area
and therefore the approval thereof is unwarranted and irregular (Republic vs. Heirs of Abrille, 71 SCRA
57);

b) Report of Deputy Public Land Inspector Teofilo M. Olimpo that TCT Nos. T-12826 and T[-]12827,
when plotted on the projection or control map of the DENR disclosed that 4.9 hectares, more or less, falls
within the Municipality of Bogon, Benguet and 10 hectares, more or less, falls within Baguio City. They
also overlap [with] TSA-5192-D of Cesar U. Lorenzo, TSI-V-1895 of A.G. de los Santos and TSI-V-5183
of Alberto Selga;

c) LRC Circular No. 167 dated February 19, 1968 directing the registration of any instrument affecting or
involving lands covered by plans with expanded or increased areas be withheld or suspended;

d) LRC Task Force Titulong Malinis Report No. 02-001 dated September 27, 2002 which stated that plan
(LRC) R[S]-281-D is non-existent and not among the records on file in LRA; (LRC) RS-281-D refers to
the survey plan of T-12827;

e) Undated Report of Atty. Adelina A. Tabangin which shows that T-12824 to T-12832 have expanded in
areas;

f) Order of Cancellation dated January 23, 2004 canceling Psd-Car-010458 covered by TCT No. T-12828;

g) Order dated July 17, 2002 in Regional Trial Court, Branch 60, First Judicial Region, Baguio City, LRC
Case No. 445-R denying the execution of a decision issued on July 23, 1996 in the aforecited cases;
h) Order dated October 24, 2002 and February 6, 2003, Regional Trial Court, Branch 3, First Judicial
Region, Baguio City, Civil Case No. 5312-R, dismissing the petition filed by Ms. Gloria de Guzman for
the confirmation of her title and ownership covering TCT No. 12827;

i) City [C]ouncil Resolution Numbered 091, Series of 2001 – directing the City Legal Officer to course
the filing of appropriate proceedings for the cancellation and/or nullification of falsified, fake or spurious
certificates of title; and

j) False Statement or Misrepresentation in her application when she stated that she acquired the lots by
“purchase” the truth of the matter is that only T-9463 with an area of 1,000 square meters, T-12067 with
an area of 501 square meters and T-11946 with an area of 10,300 square meters were purchased by Ms.
De Guzman from the original owners, the expanded area totaling 660,563 square meters was not included
in the aforementioned purchase, it was acquired by virtue of re-survey plan which is non-existent and
whose approval is unwarranted and irregular as per LRA report (par. D) and Consulta (par. A); this is a
ground for her denial of her application for validation as per paragraph 10 of her application;

In view of the foregoing, and in order to maintain the integrity of the Torrens system, may we respectfully
urge your Honor to please initiate immediately the filing of a petition to cancel TCT Nos. T-12824, T-
12825, T-12826, T-12827, T-12828, T-12829, T-12830, T-12831, and T-12832, all in the name of Gloria
de Guzman and/or Alfonso V. Dacanay.[42]

On February 10, 2006, the Office of the Solicitor General transmitted Rodriguez’s applications
for validation to the Secretary of Justice as Chair of the Baguio Validation Committee. He
recommended that all nine (9) titles be denied validation because of the false statement that the
excess area of 660,554 square meters included in the Transfer Certificates of Title after the
subdivision of the mother titles were purchased when, in fact, the excess area was acquired
only through a resurvey of the subdivision plan.[43]

On August 31, 2006, the Baguio Validation Committee disapproved Rodriguez’s applications for
validation on account of the expanded areas above the original size covered by the mother
titles:[44]

Title/s Subject of Mother Title Original Area of Resulting Area Excess Area
Applications for the Lot Covered After Subdivision
Validation By the Mother of the Mother Title
Title

TCT Nos. T-12824 T-9463 1,000 sq.m. 4,482 sq.m. 3,482 sq.m.
and T-12825

TCT Nos. T-12826 T-12067 510 sq.m. 156,296 sq.m. 155,786 sq.m.
and T-12827

TCT Nos. T-12828 T-11946 10,300 sq.m. 511,586 sq.m. 501,286 sq.m.
to T-12832

TOTAL 11,810 sq.m. 672,364 sq.m. 660,554 sq.m.[45]

The Secretary of Justice, thus, referred the Baguio Validation Committee’s Resolution to the
Land Registration Authority Administrator.[46]

On September 11, 2006, the Land Registration Authority Administrator directed the cancellation
and the expunging of the invalidated titles.[47] It referred the Baguio Validation Committee’s
Resolution to the Office of the Solicitor General for guidance as to the proper steps to be taken
for the cancellation of the titles.[48]

Rodriguez filed before the Court of Appeals a Petition for Certiorari with application for a
temporary restraining order and preliminary injunction to question the Baguio Validation
Committee’s Resolution.[49]

In the Decision[50] dated October 18, 2007, the Court of Appeals dismissed Rodriguez’s Petition
for Certiorari. It found that the Baguio Validation Committee did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction in denying Rodriguez’s applications for
validation of Transfer Certificates of Title Nos. T-12826 to T-12832.[51] However, on Transfer
Certificates of Title Nos. T-12824 and T-12825, it found that Rodriguez did not apply for the
validation of these properties and, thus, the Baguio Validation Committee could not have acted
on these properties.[52]

On the applications for validation of Transfer Certificates of Title Nos. T-12826 to T-12832, the
Court of Appeals premised its ruling on the false statement made in Rodriguez’s application that
the properties were acquired by purchase, when actually, the expanded areas were acquired
through a resurvey of the properties.[53] A false statement in an application for validation is a valid
ground for the disapproval of an application under the Implementing Rules and Regulations of
Presidential Decree No. 1271. This is also a stipulation in Rodriguez’ own applications, which
were signed under oath.[54]

Likewise, the Court of Appeals held that contrary to Rodriguez’s claims, the Baguio Validation
Committee’s jurisdiction is not limited to determining whether the conditions provided for under
Presidential Decree No. 1271 are met. Rather, its jurisdiction extends to ascertaining whether
statements in the application are truthful and reliable.[55] The Court of Appeals also accorded
weight to the argument of the Office of the Solicitor General that the provisions of Presidential
Decree No. 1271 extend only to lands originally and judicially decreed in favor of applicants in
Civil Reservation Case No. 1, G.L.R.O Rec. No. 211.[56] Thus, expanded areas of the lots
covered by Rodriguez’s titles, which were only included within the title as a result of the
subdivision of the lots covered by the mother titles, cannot be validated.[57]

The Court of Appeals found that the Baguio Validation Committee is not precluded from taking
into consideration the letter of the Register of Deeds, contrary to the claims of Rodriguez. The
letter deserved evidentiary weight, given that it complied with the Baguio Validation Committee’s
request premised on its power to call upon any agency of government for assistance in the
performance of its tasks.[58] In any case, the Court of Appeals found that the Baguio Validation
Committee’s Resolution was likewise based on: (1) the Land Registration Authority’s Report
dated September 27, 2002, prepared by Task Force Titulong Malinis; (2) the request of the
Chief Legal Officer of the Cordillera Administrative Region to the Office of the Solicitor General
for the reversion or the cancellation of Rodriguez’s titles on the ground of its expansion from the
mother titles; and (3) the Office of the Solicitor General’s opposition to the Petition in LRC Case
No. 445-R before the Regional Trial Court of Baguio for the correction of the resurvey
subdivision plan and the correction of technical descriptions.[59] Moreover, the Court of Appeals
held that Rodriguez’s Transfer Certificates of Title are not indefeasible since Presidential
Decree No. 1271 explicitly declared Rodriguez’s Transfer Certificates of Title as null and void. [60]

The Court of Appeals held that there is no conclusiveness of judgment in LRC Case No. 455-R
as the Regional Trial Court did not determine if there was a fraudulent expansion of the lands
covered by Rodriguez’s Transfer Certificates of Title, as opposed to their applications for
validation.[61]
The Court of Appeals likewise did not consider Rodriguez’s contention that her applications for
Transfer Certificates of Title Nos. T-12826 and T-12827 were not transmitted from the Land
Management Bureau to the Office of the Solicitor General, unlike that of Transfer Certificates of
Title Nos. T-12828 to T-12832.[62] The Court of Appeals ruled that Rodriguez’ submission of her
application already started the process for determining whether it should be granted or
denied.[63] Since the Office of the Solicitor General vehemently opposed its validation after
consideration of the evidence, the Baguio Validation Committee did not gravely abuse its
discretion in denying Rodriguez’s applications.[64]

The dispositive portion of the October 18, 2007 Decision of the Court of Appeals reads:

WHEREFORE, the petition is partly GRANTED. The assailed resolution dated August 31, 2006 issued
by the Presidential Decree No. 1271 Committee is AFFIRMED with MODIFICATION that the
disapproval of validation of petitioner’s TCT Nos. T-12824 and T-12825 is SET ASIDEfor lack of merit.
The writ of preliminary injunction issued by this Court on January 5, 2007 is accordingly DISSOLVED.

SO ORDERED.[65] (Emphasis in the original)

Rodriguez filed a Motion for Partial Reconsideration and a Supplemental Motion for Partial
Reconsideration praying for the reversal of the Decision insofar as it found that no grave abuse
of discretion was committed by the Baguio Validation Committee when it denied her applications
for validation for Transfer Certificates of Title Nos. T-12826, T-12827, T-12828, T-12829, T-
12830, T-12831, and T-12832.[66]

On June 26, 2008, Rodriguez filed an Omnibus Motion for Leave of Court to Present Additional
Evidence and to Set Case for Oral Arguments.[67] The Baguio Validation Committee filed an
Opposition.[68] After a hearing, the parties filed their respective memoranda.[69]

In the Amended Decision[70] dated March 26, 2009 the Court of Appeals partially granted
Rodriguez’s Motion for Partial Reconsideration. It still disallowed the validation of Rodriguez’s
applications for Transfer Certificates of Title Nos. T-12826 and T-12827, but allowed the
validation of Rodriguez’s applications for Transfer Certificates of Title Nos. T-12828, T-12829,
T-12830, T-12831, and T-12832.[71]

The Court of Appeals found that Transfer Certificate of Title No. T-12828 was acquired in a
legitimate manner as it retained its original area of 10,300 square meters.[72] It noted that
Transfer Certificate of Title No. 12828 was originally covered by Transfer Certificate of Title No.
T-10121, which then became Transfer Certificate of Title No. T-11946 when it was issued to
Rodriguez.[73]When Rodriguez obtained five (5) untitled parcels of land adjacent to Transfer
Certificate of Title No. T-11946, Resurvey Subdivision Plan (LRC) No. RS-288-D described the
entire property as Lot 3-A, and the five (5) properties as Lots 3-A-1, 3-A-2, 3-A-3, 3-A-4, 3-A-
5.[74] Transfer Certificate of Title No. T-11946 became Lot 3-A-1 covered by Transfer Certificate
of Title No. T-12828, which retained its original area of 10,300 square meters even after the
correction of the technical descriptions in LRC Case No. 445-R.[75]

Moreover, the Court of Appeals changed its position as to the applicability ofres judicata by
conclusiveness of judgment to the validation of Transfer Certificates of Title Nos. T-12828 to T-
12832.[76] It found that LRC Case No. 445-R had the same parties, subject, and issue as the
proceedings before the Baguio Validation Committee for the validation of Rodriguez’s Transfer
Certificates of Title.[77] It held that the Regional Trial Court did resolve the issue of whether there
was a fraudulent expansion of the areas covered by the Transfer Certificates of Title.[78] The
judgment of the Regional Trial Court in LRC Case No. 445-R was a judgment on the merits that
became final and executory and has, in fact, been executed.[79]

The Court of Appeals likewise held that Republic v. Heirs of Abrille[80] did not apply as there was
no allegation or proof that the government agencies concerned were not provided notice of the
proceedings for the approval of Resurvey Subdivision Plan (LRC) No. RS-288-D.[81] The Court of
Appeals found that what properly applies is Republic v. Court of Appeals,[82] where the prolonged
inaction by the Republic caused it to be barred by laches.[83] The Court of Appeals faulted the
Office of the Solicitor General for its failure to appeal the Decision in LRC Case No. 445-R, or
otherwise file a separate suit for the cancellation of the Transfer Certificates of Title.[84]

However, as LRC Case No. 445-R does not cover Transfer Certificates of Title Nos. T-12826
and T-12827, the Court of Appeals found that the doctrine of conclusiveness of judgment and
estoppel by laches cannot apply to it.[85] The presumption of validity cannot apply to these titles
since Presidential Decree No. 1271 declared all properties acquired under Civil Reservation
Case No. 1, G.L.R.O Rec. No. 211 as null and void, and the mother title of these Transfer
Certificates of Title—Original Certificate of Title No. 123—was one of these properties.[86]

The dispositive portion of the Court of Appeals’ March 26, 2009 Amended Decision reads:
WHEREFORE, the instant Motion for Partial Reconsideration andSupplemental Motion for Partial
Reconsideration are PARTLY GRANTED. The Decision of this Court dated October 18, 2007,
affirming respondent Committee’s disapproval of [Rodriguez’s] application for validation of TCT Nos. T-
12826 and T-12827, and setting aside the disapproval by respondent Committee of [Rodriguez]’s
applications for validation of TCT Nos. T-12824 and T-12825 isREITERATED. The assailed Resolution
dated August 31, 2006 issued by the Presidential Decree No. 1271 Committee, insofar as it disapproved
petitioner’s applications for validation of TCT N s. T-12828, T-12829, T-12831, and T12832
is REVERSED and SET ASIDE for lack of merit. In lieu thereof, a new judgment is hereby rendered
approving or granting the subject applications for validation of TCT Nos. T-12828, T-12829, T-12830, T-
12831, and T-12832.

Accordingly, the writ of preliminary injunction issued by this Court on January 5, 2007 is hereby made
permanent insofar as TCT Nos. T-12824, T-12825, T-12828 T-12829, T-12830, T-12831, and T-12832
are concerned.

SO ORDERED.[87] (Emphasis in the original)

On May 15, 2009, the Baguio Validation Committee filed a Petition for Review on
Certiorari[88] seeking to reverse the ruling of the Court of Appeals. This was docketed as G.R.
No. 187291.

The Baguio Validation Committee argues that the only properties allowed to be validated under
Presidential Decree No. 1271 are titles originally decreed in favor of the applicants in the Civil
Reservation Case No. 1, G.L.R.O Rec. No. 211.[89] As the expanded portions of the lots covered
by Rodriguez’s titles were not secured through a judicial decree in the Civil Reservation Case
No. 1, G.L.R.O Rec. No. 211 but through the subdivision of the lots covered by their mother
titles, they cannot be validated under Presidential Decree No. 1271.[90] It further claims that to
allow the validation of the titles will allow the perpetuation of fraud.[91] It emphasizes that Section
11, paragraph 2 of the Rules and Regulations to Implement the Provisions of Presidential
Decree No. 1271 provides that a false statement or representation in the application or
document is a ground for its disapproval.[92] Since Rodriguez’s application contained false
statements when it declared that the expanded areas were obtained through purchase instead
of subdivision, it posits that her applications must be disapproved.[93]

The Baguio Validation Committee likewise argues that the principle of conclusiveness of
judgment is inapplicable in this case as there is no identity of issues in the case before the
Baguio Validation Committee and LRC Case No. 445-R.[94] It asserts that the issue before the
Baguio Validation Committee was whether the titles should be validated under the provisions of
Presidential Decree No. 1271,[95] while the issue in LRC Case No. 445-R was whether Rodriguez
is entitled to the correction of the caption in the resurvey plan and the technical descriptions in
the Transfer Certificates of Title.[96] It claims that LRC Case No. 445-R did not rule on whether
there was a fraudulent expansion of the areas covered by the titles as the Regional Trial Court
found that the Office of the Solicitor General’s opposition was a collateral attack against a
Transfer Certificate of Title, which was not allowed under Section 48 of Presidential Decree No.
1529.[97] Furthermore, it insists that the Transfer Certificates of Title, which were derived only
from Resurvey Subdivision Plan (LRC) No. RS-288-D, are null and void as they were not
registered and titled through a proceeding for a registration of land title under the Land
Registration Law.[98] As such, the notices to the concerned agencies in the resurvey proceedings
were irrelevant.[99]

Rodriguez filed a Comment[100] to the Petition. She argues that the Court of Appeals did not err in
validating Transfer Certificates of Title Nos. T-12828 to T-12832 as the validity of these titles
was an issue already determined in LRC Case No. 445-R.[101] Since the Regional Trial Court
found that there is a presumption that the Commissioner of Land Registration complied with his
official duties and since his competence is not refuted, the Commissioner’s approval of the
subdivision survey plan showed that there was sufficient and existing proof that Rodriguez
owned the land.[102] Rodriguez contends that this finding of fact was not questioned by the Baguio
Validation Committee. Since LRC Case No. 445-R already attained finality and its judgment has
been executed, res judicata by conclusiveness of judgment applies.[103]

Rodriguez further claims that LRC Case No. 445-R tackled the issue of fraudulent
expansion.[104] The Regional Trial Court found that Rodriguez showed compliance with all
jurisdictional requirements, consisting of notices to the Office of the Solicitor General, the
Director of Lands, the Administrator of the Land Registration Authority, the Public Prosecutor of
Baguio City, and the public.[105] Likewise, she argues that Heirs of Abrille, as cited by the Baguio
Validation Committee, does not apply since, unlike this case, the notices in all concerned
agencies were not given there.[106] Additionally, Heirs of Abrilleinvolves property that is not
alienable and disposable. On the other hand, Rodriguez claims that her properties are not within
government, public, or quasi-public reservation, forest, or military land.[107]

Rodriguez claims that what properly applies is Republic v. Court of Appeals,[108] where this Court
held that the Republic cannot correct and recover the alleged increase in the party’s parcel of
land as it is barred by laches.[109] In this case, LRC Case No. 445-R was resolved by the
Regional Trial Court on July 23, 1996. The Office of the Solicitor General did not file any appeal
or separate suit for the annulment or cancellation of the titles.[110] Only after 10 years did it
indirectly question the validity of the titles by rejecting Rodriguez’s applications for
validation.[111] Rodriguez claims that the Republic should be estopped and barred by laches,
especially since it was given notice and actively participated in LRC Case No. 445-R.[112]

The Baguio Validation Committee filed a Reply.[113] Thereafter, the parties filed their
memoranda.[114]

Meanwhile, on May 15, 2009, Rodriguez filed before this Court her Petition for Review on
Certiorari[115] questioning the Court of Appeals’ disapproval of her application for validation for
Transfer Certificates of Title Nos. T-12826 and T-12827. The Petition was docketed as G.R. No.
187334.

Rodriguez emphasizes that the applications for Transfer Certificates of Title Nos. T-12826 and
T-12827 were not transmitted by the Land Management Bureau to the Office of the Solicitor
General and the Secretary of Justice.[116] It is as if there was no application, which the Baguio
Validation Committee can consider for approval.[117] Rodriguez asserts that since the applications
for Transfer Certificates of Title Nos. T-12826 and T-12827 present an identical situation as that
of Transfer Certificates of Title Nos. T-12824 and T-12825 (which was ruled to have had no
applications for validation), and applying the doctrine of the law of the case, it must be decided
in the same manner as the decision in the latter.[118]

In its Comment, the Baguio Validation Committee argues that Transfer Certificates of Title Nos.
T-12826 and T-12827 and Transfer Certificates of Title Nos. T-12824 and T-12825 are not
similarly situated. It contends that Transfer Certificates of Title Nos. T-12824 and T-12825 had
no applications for validation to begin with. This is in contrast to Transfer Certificates of Title
Nos. T-12826 and T-12827, which had applications for validation docketed as VA(B) Nos. 6590
and 6591.[119] The Baguio Validation Committee denied Rodriguez’s claim that it had no
jurisdiction to act on these applications as all of Rodriguez’s applications were transmitted.[120] In
any case, the filing of the applications before the Land Management Bureau already started the
process of determining whether the properties could be validated, given that the Director of the
Land Management Bureau was a member of the Baguio Validation Committee.[121]
In her Reply, she reiterates that as the applications for validation for Transfer Certificates of Title
Nos. 12826 and T-12827 were not transmitted, the Baguio Validation Committee had no
opportunity to review it. Thus, they stand in the same footing as Transfer Certificates of Title
Nos. 12824 and T-12825, which was found by the Court of Appeals as improperly denied
validation by the Baguio Validation Committee.[122]

Thus, the issues for resolution are:

First, on Transfer Certificates of Title Nos. T-12826 and T-12827, whether the doctrine of law of
the case applies;

Second, as to Transfer Certificates of Title Nos. T-12828, T-12829, T-12830, T-12831, and T-
12832, whether these Transfer Certificates of Title must be validated based on res judicata by
conclusiveness of judgment; and

Lastly, in all these instances, whether Rodriguez complied with all the requirements for
validation of nullified titles as provided by Presidential Decree No. 1271 and its Internal Rules
and Regulations.

All these titles have not been properly validated. The Court of Appeals’ Amended Decision
dated March 26, 2009 is only partially affirmed. The Petition docketed as G.R. No. 187291 is
granted, while the Petition docketed as G.R. No. 187334 is denied.

I
As both Petitions are petitions for review filed under Rule 45 of the Rules of Court, this
Court will no longer disturb the factual findings of the Court of Appeals. A Rule 45
petition should raise only questions of law. This Court is not a trier of facts. In Fuji
Television Network, Inc. v. Espiritu:[123]
When a decision of the Court of Appeals under a Rule 65 petition is brought to this court by way of a
petition for review under Rule 45, only questions of law may be decided upon. As held in Meralco
Industrial v. National Labor Relations Commission:

This Court is not a trier of facts. Well-settled is the rule that the jurisdiction of this Court in a petition for
review on certiorariunder Rule 45 of the Revised Rules of Court is limited to reviewing only errors of
law, not of fact, unless the factual findings complained of are completely devoid of support from the
evidence on record, or the assailed judgment is based on a gross misapprehension of facts. Besides,
factual findings of quasi-judicial agencies like the NLRC, when affirmed by the Court of Appeals, are
conclusive upon the parties and binding on this Court.[124]

Thus, this Court will no longer discuss the ruling of the Court of Appeals on Transfer Certificates
of Title Nos. T-12824 and T-12825 as the Court of Appeals found that Rodriguez did not file
before the Baguio Validation Committee applications of validation covering these
properties.[125] This finding of fact was not questioned by any of the parties. Likewise, there is no
showing of any such applications in the pleadings and supporting documents filed before this
Court. The Court of Appeals’ ruling on Transfer Certificates of Title Nos. T-12824 and T-12825
is, therefore, affirmed.

However, the decision in this case is without prejudice to the application ofMarcos and
Presidential Decree No. 1271 to these titles. Nothing in this decision, therefore, should be
construed as either an express or implied validation of these titles. All that we pronounce is that
these are not the valid subject of these actions, as it appears that no application for validation
has been filed.

Likewise, the findings of fact of the Court of Appeals on the expansion of the areas of Transfer
Certificates of Title Nos. T-12826, T-12827, T-12829, T-12830, T-12831, and T-12832 will no
longer be disturbed.

The factual findings are supported by the evidence on record. These factual findings are thus
conclusive upon the parties and binding on this Court. This Court will thus determine only the
questions of law raised in the petitions.

II
Rodriguez claims that the Land Management Bureau did not transmit the applications
for Transfer Certificates of Title Nos. T-12826 and T-12827 to the Office of the Solicitor
General and the Secretary of Justice.[126] She contends that Transfer Certificates of Title
Nos. T-12826 and T-12827 present an identical situation as that of Transfer Certificates
of Title Nos. T-12824 and T-12825, which were found not to correspond to any
application for validation that may be considered by the Baguio Validation Committee.
She insists that applying the law of the case, Transfer Certificates of Title Nos. T-12826
and T-12827 must then be ruled in the same manner.[127]
This contention is without merit.
The doctrine of the “law of the case” provides that questions of law previously determined by a
court will generally govern a case through all its subsequent stages where “the determination
has already been made on a prior appeal to a court of law resort.”[128] In People v. Olarte:[129]

Suffice it to say that our ruling in Case L-13027, rendered on the first appeal, constitutes the law of the
case, and, even if erroneous, it may no longer be disturbed or modified since it has become final long ago.
A subsequent reinterpretation of the law may be applied to new cases but certainly not to an old one
finally and conclusively determined.

‘Law of the case’ has been defined as the opinion delivered on a former appeal. More specifically, it
means that whatever is once irrevocably established as the controlling legal rule of decision between the
same parties in the same case continues to be the law of the case, whether correct on general principles or
not, so long as the facts on which such decision was predicated continue to be the facts of the case before
the court.

As a general rule a decision on a prior appeal of the same case is held to be the law of the case whether
that decision is right or wrong, the remedy of the party being to seek a rehearing.

….

It is thus clear that posterior changes in the doctrine of this Court can not retroactively be applied to
nullify a prior final ruling in the same proceeding where the prior adjudication was had whether the case
should be civil or criminal in nature.[130]

If an appellate court has determined a legal issue and has remanded it to the lower court for
further proceedings, another appeal in that same case should no longer differently determine
the legal issue previously passed upon.[131]Similar to res judicata, it is a refusal to reopen what
has already been decided.[132]

The law of the case does not apply to bar any ruling on Transfer Certificates of Title Nos. T-
12826 and T-12827.

First, there is no attempt to change any legal finding with regard to Transfer Certificates of Title
Nos. T-12824 and T-12825 that would warrant the calling for its application.
Second, the ruling of the Court of Appeals on Transfer Certificates of Title Nos. T-12824 and T-
12825 is not a ruling that can bind or limit this Court on another matter. The Supreme Court is
the final arbiter of all legal questions brought before it. This Court’s decision constitutes the final
disposition of the case. This Court’s judgment, when final, binds lower courts, not the other way
around. It is the lower courts that are bound by, and cannot alter or modify, doctrine.[133]

Third, the facts that constitute the controversy pertaining to Transfer Certificates of Title Nos. T-
12824 and T-12825 are different from those involving Transfer Certificates of Title Nos. T-12826
and T-12827. The ruling accorded to the former cannot apply to the latter.

Rodriguez did not file any application for the validation of the properties covered by Transfer
Certificates of Title Nos. T-12824 and T-12825 before the Baguio Validation Committee. Hence,
if these titles are governed by Marcosand the requirement of validation under Presidential
Decree No. 1271, these titles are void and are of no effect unless validated.

This is not the case for Transfer Certificates of Title Nos. T-12826 and T-12827. These titles
were given application numbers VA(B) No. 6590 and VA(B) No. 6591, respectively. Rodriguez
submitted applications for Transfer Certificates of Title Nos. T-12826 and T-12827 to the Baguio
Validation Committee for its evaluation and decision.

Rodriguez claims that the findings of fact of the Court of Appeals did not explicitly state that the
Land Management Bureau transmitted the applications to the other members of the Baguio
Validation Committee. Besides this statement, she presents no other evidence to support the
claim that the files pertaining to her applications were not before the Baguio Validation
Committee. However, her act of submitting the applications to the Baguio Validation Committee
is already an acknowledgment of the Committee’s jurisdiction to decide on the matter. In effect,
Rodriguez placed her applications within the Committee’s power.

Thus, the ruling on Transfer Certificates of Title Nos. T-12824 and T-12825 cannot apply to
Transfer Certificates of Title Nos. T-12826 and T-12827.

III
Transfer Certificates of Title Nos. T-12828 to T-12832 cannot be validated based on res
judicata by conclusiveness of judgment.
Res judicata means “a matter adjudged; a thing judicially acted upon or decided; a thing or
matter settled by judgment.”[134] Rule 39, Section 47 of the Rules of Court provides:
SECTION 47. Effect of Judgments or Final Orders. — The effect of a judgment or final order rendered
by a court or of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as
follows:

(a) In case of a judgment or final order against a specific thing, or in respect to the probate of a will, or
the administration of the estate of a deceased person, or in respect to the personal, political, or legal
condition or status of a particular person or his relationship to another, the judgment or final order
is conclusive upon the title to the thing, the will or administration, or the condition, status or
relationship of the person; however, the probate of a will or granting of letters of administration
shall only be prima facie evidence of the death of the testator or intestate;

(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to
any other matter that could have been raised in relation thereto, conclusive between the parties and
their successors in interest by title subsequent to the commencement of the action or special
proceeding, litigating for the same thing and under the same title and in the same capacity; and

(c) In any other litigation between . the same parties or their successors in interest, that only is deemed
to have been adjudged in a former judgment or final order which appears upon its face to have been
so. adjudged, or which was actually and necessarily included therein or necessary thereto.

Res judicata is premised on the principle that a party is barred from presenting evidence on a
fact or issue already judicially tried and decided.[135] In Philippine National Bank v. Barreto: [136]

It is considered that a judgment presents evidence of the facts of so high a nature that nothing which could
be proved by evidence aliundewould be sufficient to overcome it; and therefore it would be useless for a
party against whom it can be properly applied to adduce any such evidence, and accordingly he is
estopped or precluded by law from doing so.[137]

At some point, judgments need to become both final and conclusive. Beyond that point, parties
cannot be allowed to continue raising issues already resolved. Otherwise, there will be no end
to litigation.[138]

There are two concepts of res judicata: (i) res judicata by bar by prior judgment; and (ii) res
judicata by conclusiveness of judgment. Res judicata by bar by prior judgment is provided under
Rule 39, Section 47(a) and (b), while res judicata by conclusiveness of judgment is found in
Rule 39, Section 47(c).[139]
Res judicata by bar by prior judgment precludes the filing of a second case when it has the
same parties, same subject, and same cause of action, or otherwise prays for the same relief as
the first case. On the other hand, res judicata by conclusiveness of judgment precludes the
questioning of a fact or issue in a second case if the fact or issue has already been judicially
determined in the first case between the same parties:

There is “bar by prior judgment” when, as between the first case where the judgment was rendered and
the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action.
In this instance, the judgment in the first case constitutes an absolute bar to the second action. Otherwise
put, the judgment or decree of the court of competent jurisdiction on the merits concludes the litigation
between the parties, as well as their privies, and constitutes a bar to a new action or suit involving the
same cause of action before the same or any other tribunal.

But where there is identity of parties in the first and second cases, but no identity of causes of action, the
first judgment is conclusive only as to those matters actually and directly controverted and determined
and not as to matters merely involved therein. This is the concept of res judicata known as
“conclusiveness of judgment.” Stated differently, any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim, demand, purpose, or subject matter of the
two actions is the same.[140] (Citations omitted)

The elements of res judicata are: (1) the first judgment must be final; (2) the first judgment was
rendered by a court that has jurisdiction over the subject and the parties; (3) the disposition
must be a judgment on the merits; and (4) the parties, subject, and cause of action in the first
judgment are identical to that of the second case.[141] If, in the first judgment and in the second
case, the causes of action are different such that only the parties and the issues are the same,
there Is res judicata by conclusiveness of judgment.[142]

Nabus v. Court of Appeals[143] discusses res judicata by conclusiveness of judgment:

The doctrine states that a fact or question which was in issue in a former suit, and was there judicially
passed on and determined by a court of competent jurisdiction, is conclusively settled by the judgment
therein, as far as concerns the parties to that action and persons in privity with them, and cannot be again
litigated in any future action between such parties or their privies, in the same court or any other court of
concurrent jurisdiction on either the same or a different cause of action, while the judgment remains
unreversed or unvacated by proper authority. The only identities thus required for the operation of the
judgment as an estoppel, in contrast to the judgment as a bar, are identity of parties and identity of issues.

It has been held that in order that a judgment in one action can be conclusive as to a particular matter in
another . action between the same parties or their privies, it is essential that the issues be identical. If a
particular point or question is in issue in the second action, and the judgment will depend on the
determination of that particular point or question, a former judgment between the same. parties will be
final and conclusive in the second if that same point or question was in issue and adjudicated in the first
suit; but the adjudication of an issue in the first case is not conclusive of an entirely different and distinct
issue arising in the second. In order that this rule may be applied, it must clearly and positively appear,
either from the record itself or by the aid of competent extrinsic evidence that the precise point or
question in issue in the second suit was involved and decided in the first. And in determining whether a
given question was an issue in the prior action, it is proper to look behind the judgment to ascertain
whether the evidence necessary to sustain a judgment in the second action would have authorized a
judgment for the same party in the first action.[144](Citations omitted)

Therefore, the parties and issues in the two cases must be the same for res judicata by
conclusiveness of judgment to apply.

The parties in the two cases are considered the same even when they are not identical if they
share substantially the same interest.[145] It is enough that there is privity between the party in the
first case and in the second case, as when a successor-in-interest or an heir participates in the
second case.[146]

There is identity of issues when a competent court has adjudicated the fact, matter, or right, or
when the fact, matter, or right was “necessarily involved in the determination of the
action[.]”[147] To determine whether an issue has been resolved in the first case, it must be
ascertained that the evidence needed to resolve the second case “would have authorized a
judgment for the same party in the first action.”[148] Thus, if the fact or matter litigated in the first
case is re-litigated in the second case, it is barred by res judicata by conclusiveness of
judgment.

In LRC Case No. 445-R, the Regional Trial Court granted Rodriguez’s Petition to correct the
caption of Resurvey Subdivision Plan (LRC) No. RS-288-D and the technical descriptions of the
properties in the Transfer Certificates of Title based on Section 108 of Presidential Decree No.
1529.[149] The trial court provided the following rationale:
The opposition filed by the Office of the Solicitor General challenging the validity of the subject titles is
in effect an attempt to reopen the decree of registration which Section 108 of PD 1529 categorically
disallows. Moreover, the opposition of the Solicitor General is a collateral attack against a certificate of
title which is also disallowed under Section 48 of P.D. 1529, which provides:

SEC. 48. Certificate not subject to collateral attack. – A certificate of title shall not be subject to collateral
attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law.

Thus, in Magay vs. Estiandanan, 69 SCRA 456, the Supreme Court held:

It is well-settled that a Torrens title cannot be collaterally attacked. The issue on the validity of the title
can only be raised in an action expressly instituted for that purpose. (citing Legarda and Prieto vs.
Saleeby, 31 Phil. 590; Director of Lands vs. Gan Tan, 89 Phil. 184; Hederson vs. Garrido, 90 Phil. 624;
Samonte, et al., vs. Sambilon, et al., 107 Phil. 189).

Moreover, petitioner should be accorded presumption that the Commissioner of Land Registration had
complied with his official duties in accordance with law. The competence of the Commissioner of Land
Registration to approve and disapprove survey plans, including consolidation and subdivision surveys has
not been refuted and challenged. Before a consolidation or subdivision survey is conducted by geodetic
engineer or before the survey is approved by competent authority, there must be proof that the party in
whose behalf the survey is to be conducted is the owner of the property or has valid authority to grant
permission for the survey. In the instant case, it is presumed that before the Commissioner of Land
Registration approved the consolidation and subdivision survey as plan (LRC) RS-288-D, there was
sufficient and existing proof submitted by petitioner of her ownership of the land.[150]

The Court of Appeals, acting on the Motion for Reconsideration and eventually reversing its
ruling, applied res judicata by conclusiveness of judgment. It declared the Baguio Validation
Committee barred from determining whether there was a fraudulent expansion of the areas
covered by the Transfer Certificates of Title.[151] The Court of Appeal found that the issue of
whether there was a fraudulent expansion had already been resolved; thus, the applications for
validation ‘may no longer dispute this finding.[152]

The Court of Appeals committed an error too obvious for this Court to neglect. Its conclusions
are not only contrary to the facts; they are also not in accord with existing doctrine.
The Regional Trial Court did not determine whether there was a fraudulent expansion of the
properties covered by the Transfer Certificates of Title. What the trial court stated was that no
collateral attack can be made on the Transfer Certificates of Title.[153]

Rather than substantially rule on the validity of the titles, the Regional Trial Court in LRC Case
No. 445-R held that the procedure could not accommodate the objections of the Solicitor
General.[154]

An attack is considered collateral when it incidentally questions the validity of the transfer
certificate of title in an action seeking a different relief.[155] This is opposed to a direct attack
through an action that seeks to annul or set aside the transfer certificate of title itself. [156]

Certainly, a collateral attack cannot be made on a transfer certificate of title to maintain the
“integrity and guaranteed legal indefeasibility of a Torrens title.” [157] Nonetheless, the issuance of
a transfer certificate of title does not mean it can no longer be questioned when it has been
acquired through fraud. The validity of a transfer certificate of title may still be put to issue,
provided it must be directly done through a court action seeking to annul or set it aside.

The Regional Trial Court’s denial of the Office of the Solicitor General’s opposition on the
ground that it is a collateral attack on the Transfer Certificates of Title is not a judgment on the
validity of the Transfer Certificate of Titles. It made no finding on the validity of the titles
based on Republic v. Marcos. It did not consider any evidence of fraud.

What the trial court found was that there was a presumption that the Commissioner of Land
Registration regularly performed his duties and was competent in approving the resurvey plan,
such that Rodriguez must have shown proof that she owned the properties. This presumption
could not have been overturned or proved otherwise in the same case as the trial court would
again delve into questioning the validity of the Transfer Certificates of Title. Thus, the Office of
the Solicitor General’s filing of an appeal questioning this presumption would have been a
fruitless exercise. It would just be deemed a collateral attack on the titles and would not have
been considered in the first place.

Since there is no judicial determination of fraud, res judicata by conclusiveness of judgment


cannot apply. The ruling in LRC Case No. 445-R cannot bar the issue of whether there was a
fraudulent expansion of the property covered by Transfer Certificates of Title Nos. T-12828, T-
12829, T-12830, T-12831, and T-12832. These Transfer Certificates of Title may still be
questioned in a direct action seeking its nullification.

It is, thus, of no moment that the judgment in LRC Case No. 445-R became final and executory
and has been executed. What may no longer be questioned is the correction of the caption of
the resurvey plan and the technical descriptions on the Transfer Certificates of Title, not the
validity of those Transfer Certificates of Title. The Office of the Solicitor General cannot be
faulted for no longer appealing the ruling of the Regional Trial Court. It is erroneous to declare
that the government is already barred by estoppel by laches in failing to appeal the case.

Filing a case to cancel these titles is no longer necessary in light of Marcos and Presidential
Decree No. 1271. Section 1 of Presidential Decree No. 1271 provides:

Section 1. All orders and decisions issued by the Court of First Instance of Baguio and Benguet in
connection with the proceedings for the reopening of Civil Reservation Case No. 1, GLRO Record No.
211, covering lands within the Baguio Townsite Reservation, and 1 decreeing such lands in favor of
private individuals or entities, are hereby declared null and void and without force and effect;
PROVIDED, HOWEVER, that all certificates of titles issued on or before July 31, 1973 shall be
considered valid and the lands covered by them shall be deemed to have been conveyed in fee simple to
the registered owners upon a showing of, and compliance with, the following conditions:

1. The lands covered by the titles are not within any government, public or quasi-public
reservation, forest, military or otherwise, as certified by appropriating government
agencies;

2. Payment by the present title holder to the Republic of the Philippines of an amount
equivalent to fifteen per centum (15%) of the assessed value of the land whose title is
voided as of revision period 1973 (P.D. 76), the amount payable as follows: Within ninety
(90) days of the effectivity of this Decree, the holders of the titles affected shall manifest
their desire to avail of the benefits of this provision and shall pay ten per centum (10%) of
the above amount and the balance in two equal installments, the first installment to be paid
within the first year of the effectivity of this Decree and the second installment within a
year thereafter.

Contrary to the rationalization of the Regional Trial Court in LRC Case No. 445-R, Section 1 of
Presidential Decree No. 1271 already declared null and void all certificates of titles issued on or
before July 31, 1973; this was in connection with the reopening of Civil Reservation Case No. 1,
G.L.R.O. Rec. No. 211. Thus, the Transfer Certificates of Title do not enjoy the presumption of
regularity accorded to all transfer certificates of titles. By law, they are considered invalid unless
validated by the Baguio Validation Committee.

Our courts should be more aware of the machinations used by unscrupulous parties to acquire
and title lands in Baguio City. As in this case, parties obtained more land through a resuryey of
property. They filed an action or proceeding to “correct” the technical descriptions or the
supporting survey plans. Trial courts become participants in this scheme by denying the
intervention or opposition of the Solicitor General and, as in LRC Case No. 445-R, make very
loose observations regarding the presumptions of validity of obviously defective titles already
declared null and void by Marcos and confirmed as such by Presidential Decree No. 1271.
Thereafter, in subsequent cases, as in these cases, the party who gains through a simple
resurvey of its property erroneously raises res judicata as a defense; thus the party secures its
spurious titles against any further legal questions.

These machinations brought about by the clearly erroneous application of doctrine should stop.
Otherwise, genuine property owners in Baguio City will forever be unsure of possible land
grabbing.

IV
We determine whether Rodriguez complied with all the requirements for validation as
provided by Presidential Decree No. 1271 and its Internal Rules and Regulations.
Transfer Certificates of Title Nos. T-12826, T-12827, T-12828, T-12829, T-12830, T-12831, and
T-12832 must be denied validation.

The Court of Appeals found that Transfer Certificate of Title No. T-12828 was acquired in a
legitimate manner as it retained its original area of 10,300 square meters.[158] The findings in the
Office of the Solicitor General’s letter dated February 10, 2006 to the Secretary of Justice are as
follows:

C. T-12828, T-123829 [sic], T-12830, T-12831 and T-12832

o) Original certificate of title No.: 0-128 (Annex “S”) in the name of Sapia Manis with an area of 45,005
sq. m. was subdivided into three (3) lots and sold on August 2, 1965:
1- Lot 3-A with an area of 10,200 was sold to Moises Esteban; TCT No. T-9331 (Annex “T”) was issued
to buyer;

2- Lot 3-B with an area of 30,705 was sold to Polito Licanio and TCT No. 93321 was issued to him;

3- Lot 3-C with an area of 4,000 was sold to Daniel Zarate with TCT No. T-9333 being issued to him;

p) TCT No. T-9331 (Annex “T”) with an area of 10,200 sq. m. was sold to Antonio Polito Licanio on
November 10, 1965; consequently, TCT No. T-10121 (Annex “U”) was issued to Mr. Licanio;

q) TCT No. T-10121 (Annex “U”) with an area of 10,300 sq. m. was sold to Gloria de Guzman and
Alfonso V. Dacanay on May 4, 1967; consequently TCT No. T-11946 (Annex “V”) was issued to the
buyers;

r) TCT NO. T-11946 (Annex “V”) with an area of 10,300 sq.m. was subdivided into five (5) lots by virtue
of a Letter-Request from Gloria de Guzman (Annex “W”) and 1st Indorsement (Annex “X”) and Reply-
Letter (Annex “I”) of LRC Commissioner Antonio H. Noblejas based [on] Resurvey Plan No. (LRC) RS-
288-D;

1- Lot 3-A-1 with an area of 10,300 sq. m. covered by TCT No. T-12828; (Annex “Y”)

2- Lot 3-A-2 with an area of 140,856 sq. m. covered by TCT No. T-12829; (Annex “C”)

3- Lot 3-A-3 with an area of 108,766 sq. m. covered by TCT No. T-12830; (Annex “AA”)

4- Lot 3-A-4 with an area of 137,106 sq.m. covered by TCT No. 12831; (Annex “BB”)

5- Lot 3-A-5 with an area of 114,558 sq.m. covered by TCT No. 12832; (Annex “CC”)

NOTE: From the original area of 10,300 sq. m. T-11946, Annex “V”) the area expanded to 511,586
sq. m. (T-12828 to T-12832, Annexes “Y”) to “CC”. The excess area of 501,286 sq. m. was not
purchased by Gloria de Guzman or Alfonso V. Dacanay from Polito Licanio nor from the City
Government of Baguio. This is contrary to Ms. De Guzman’s statement in paragraph 4 of her application
for validation of certificate of title wherein she stated that the titles were issued by virtue of
“PURCHASED”. This false statement or misrepresentation is a ground for denial for application for
validation as per paragraph 10 of the same.[159] (Emphasis in the original)
Transfer Certificate of Title No. 12828, just like Transfer Certificates of Title Nos. T-12826, T-
12827, T-12829, T-12830, and T-12831, was originally covered by Transfer Certificate of Title
No. T-11946. Transfer Certificate of Title No. T-11946 was issued to Rodriguez when she
acquired Transfer Certificate of Title No. T-10121.[160] When Rodriguez had the property
subdivided, Transfer Certificate of Title No. T-11946 was subdivided into five (5) properties, one
of which became Lot 3-A-1, covered by Transfer Certificate of Title No. T-12828.[161] This
property retained its original area of 10,300 square meters.[162]

However, the technical description of Transfer Certificate of Title No. T-12828 is different from
that of Transfer Certificate of Title No. T-11946.[163]

Moreover, since Transfer Certificate of Title No. T-12828 was issued on account of Resurvey
Plan (LRC) No. RS-288-D, which expanded the property covered by Transfer Certificate Title
No. T-11946, Transfer Certificate of Title No. T-12828 was acquired through fraud. Thus, it
cannot be validated.

As regards Transfer Certificates of Title Nos. T-12826, T-12827, T-12829, T-12830, T-12831,
and T-12832, we rule that as found by the Baguio Validation Committee and the Court of
Appeals, the statement made in Rodriguez’s applications that the properties were acquired by
purchase is false. The expanded areas were acquired only through a resurvey of the properties.
This is a valid ground to disallow the validation of the Transfer Certificates of Title.

Under the Implementing Rules and Regulations of Presidential Decree No. 1271:

Section 11. Approval or disapproval of the application. –

….

Any false statement or representation made by the applicant or in any document filed in connection
therewith shall also be a ground for the disapproval of the application.

In her application, Rodriguez made a stipulation under oath that any false statement is a ground
for denying her application, thus:

I understand that any false statement or misrepresentation made by me in the application or in any matter
required under the Decree of (sic) its implementing rules and regulations shall be a ground for the denial
of this application and shall subject me to the penalty of imprisonment for not less than six (6) months but
not more than six (6) years.[164]

The provisions of Presidential Decree No. 1271 extend only to lands originally and judicially
decreed to applicants on account of the reopening of Civil Reservation Case No. 1, G.L.R.O
Rec. No. 211:

Section 1. All orders and decisions issued by the Court of First Instance of Baguio and Benguet in
connection with the proceedings for the reopening of Civil Reservation Case No. 1, GLRO Record No.
211,covering lands within the Baguio Townsite Reservation, and decreeing such lands in favor of private
individuals or entities, are hereby declared null and void and without force and effect; PROVIDED,
HOWEVER, thatall certificates of titles issued on or before July 31, 1973 shall be considered valid and
the lands covered by them. shall be deemed to have been conveyed in fee simple to the registered owners
upon a showing of, and compliance with, the following conditions[.] (Emphasis supplied)

Expanded areas of the lots allegedly covered by Rodriguez’s titles, which were only included
with the titles as a result of the subdivision of the lots covered by the mother titles, cannot be
validated. Transfer Certificates of Title Nos. T-12826, T-12827, T-12828, T-12829, T-12830, T-
12831, and T-12832 must, thus, be denied validation.

WHEREFORE, this Court AFFIRMS with MODIFICATION the Amended Decision dated March
26, 2009 of the Court of Appeals in CA-G.R. SP No. 96704. The ruling of the Court of Appeals
as to Transfer Certificates of Title Nos. T-12824, T-12825, T-12826, and T-12827
is AFFIRMED, and the ruling as to Transfer Certificates of Title Nos. T-12828, T-12829, T-
12830, T-12831, and T-12832 is REVERSED.

The Petition docketed as G.R. No. 187334 is DENIED for having raised no reversible error
warranting the reversal of the ruling of the Court of Appeals as to Transfer Certificates of Title
Nos. T-12824 and T-12825.

The Petition docketed as G.R. 187291 is GRANTED in that Transfer Certificates of Title Nos. T-
12826, T-12827, T-12828, T-12829, T-12830, T-12831, and T-12832 are denied validation.

Let a copy of this Decision be furnished to the Office of the Court Administrator and all branches
of the Regional Trial Courts in Baguio City.
SO ORDERED.

Luz Anatolia E. Crispino, et al. Vs. Anatolia


Tansay; G.R. No. 184466; December 5, 2016
DECISION

LEONEN, J.:

The Court of Appeals’ power to receive evidence to resolve factual issues in cases falling within
its original and appellate jurisdiction is qualified by its internal rules. In an ordinary appeal, the
Court of Appeals may receive evidence when a motion for new trial is granted based on newly
discovered evidence.

This resolves the Petition for Review on Certiorari[1] assailing the Court of Appeals’
Decision[2] dated January 24, 2007 and Resolution[3] dated August 28, 2008 in CA-G.R. CV No.
54832.

This case originated from Civil Case No. CEB-14547 filed by respondent Anatolia Tansay
against petitioners Luz Anatolia E. Crispino, Caridad O. Echaves, and Zenaida Echaves before
the Regional Trial Court ofCebu City, for Revocation of Trust, Declaration of Nullity of Transfer
and Cancellation of Titles.[4]

Respondent Anatolia Tansay, now deceased, was twice widowed.[5] In 1947, Anatolia
established her residence in Oroquieta, Misamis Occidental.[6] There, she met 20-year old
Zenaida Capili who was then single.[7] Anatolia took in Zenaida and treated her as her own
child.[8]

Subsequently, Anatolia and Zenaida moved to Cebu City,[9] where Anatolia acquired a 3,107 sq.
m. parcel of land (Lot No. 1048)[10] known as the Tansay Compound.[11] Anatolia subdivided the
compound into three lots: (1) Lot No. 1048-A-1 with an area of 617 sq. m., (2) Lot No. 1048-A-2
with an area of 555 sq. m., and (3) Lot No. 1048-A-3 with an area of 1,845 sq. m.[12] In 1957,
Anatolia constructed her abode over a portion of Lot No. 1048-A-3.[13]
Zenaida eventually got married to Ben Ricaredo Echaves and had several children, among
whom are petitioners Luz Anatolia E. Crispino and Caridad C. Echaves.[14] Zenaida and her
family lived in Anatolia’s house.[15] Anatolia had a close relationship with the Echaves
family.[16] She was affectionately called “honey” by Zenaida and “nanay” by Zenaida’s
children.[17] Through Anatolia’s efforts and connections, Zenaida’s husband was able to find
employment.[18]She also paid or the education of Zenaida’s children.[19]

By virtue of two deeds of sale, Anatolia allegedly sold Lot No. 1048- A-1 in favor of Zenaida on
July 6, 1981 and tot No. 1048-A-3 in favor of Luz Anatolia and Caridad on July 11, 1989.[20]

In 1991, Zenaida returned from abroad and discovered that the titles of the lots were missing
from her room where she had left them.[21] Hence, she filed a petition before the Regional Trial
Court of Cebu City for reconstitution of the certificates of title, which was granted.[22]

Meanwhile, Anatolia filed Civil Case No. CEB-14547 entitled Revocation of Trust, Declaration of
Nullity of Transfer, and Cancellation of Title before the Regional Trial Court of Cebu City.[23]

Zenaida alleged that Anatolia sold Lot No. 1048-A-1 in her favor for P6,170.00.[24] One of
Zenaida’s daughters, Lourdes Behaves de Leon, testified that since 1975, her sisters, Luz
Anatolia and Caridad, deposited sums of money in Anatolia’s bank account for the purchase of
Lot No. 1048- A-3.[25] However, Anatolia merely turned over the sums she received to Zenaida
since she was not in need of money.[26]

Based on the evidence on record, the trial court found that Zenaida, Luz Anatolia, and Caridad
did not pay any monetary or other valuable consideration for the transfer of the properties in
their names.[27] Hence, the deeds of sale could not have been valid. In addition, the trial court
found that Anatolia never intended to sell the lots despite executing the deeds of sale. Rather,
she merely constituted Zenaida, Luz Anatolia, and Caridad as trustees of the properties.[28] The
trial court also questioned the validity of Zenaida’s Petition for Reconstitution of Titles
considering that Anatolia presented the Original Certificates of Title of the properties in court.[29]

On February 16, 1996, the Regional Trial Court rendered its Decision. The dispositive portion
reads:

WHEREFORE, in light of the foregoing, judgment is hereby rendered:


(1) Declaring plaintiff Anatolia Tansay as the lawful and rightful owner of Lot No. 1048-A-1 covered
by TCT No. 81406, and Lot No. 1048-A-3 covered by TCT No. 101693; and,

(2) Ordering the Register of Deeds of Ceb[u] City to cancel said TCT No. 1048-A-1 issued to
defendant Zenaida Echave[s], and TCT No. 10963, issued to the defendants Luz Anatolia Crispino
and Caridad Echave[s], and to reinstate plaintiff Anatolia Tansay’s title to said lots.

Cost against the defendants.[30]

Zenaida, Luz Anatolia, and Caridad appealed the Decision before the Court of Appeals.[31]

During the pendency of the appeal, Anatolia died on August 11, 2001 and was substituted by
her only known legal heir, Lilian Tan Yap.[32]

On August 16, 2001, Zenaida, Luz Anatolia, and Caridad filed an Urgent Motion to Remand
Records of the Case for the Re-Opening of Trial.[33] They anchored their motion on an Affidavit
allegedly executed by Anatolia after the Regional Trial Court had rendered its Decision, [34] which
reads:

CONFIRMATION OF PREVIOUS SALES


That I, ANATOLIA TANSAY, Filipino, of legal age, widow and a resident of Cebu City, hereby
declare and manifest, as follows:
1. That on July 6, 1981, I executed a deed of sale over Lot No. 1048-A-1 covered by TCT
No. 17556 of the Register of Deeds of Cebu City in favor of Zenaida Echave[s];

2. That on July 11, 1989, I executed a deed of sale over Lot No. 1048-A-3 covered by TCT
No. 81605 of [the] Register of Deeds of Cebu City in favor of Luz Anatolia E. Crispino
and Caridad C. Echave[s];

3. That by virtue of said sales, I paid the capital gains tax and other taxes due on the said
sales so that the titles could be transferred to the vendees in said sales;

4. That later on I filed in the Regional Trial Court of Cebu an action for revocation of trust,
declaration of nullity of transfer and for cancellation of titles against Zenaida Echave[s],
Luz Anatolia Crispino: and Caridad C. Echave[s];
5. That after proper reflection, I now realize that the filing of said case was a mistake and
that I hereby confirm and affirm the validity of said sales.

IN WITNESS WHEREOF, I have hereunto set my signature this 15th day of January, 1998 in Cebu City,
Philippines.

ANATOLIA TANSAY[35]

In their Urgent Motion to Remand Records of the Case for the Re Opening of Trial, Zenaida,
Luz Anatolia, and Caridad alleged:

1. That during the pendency of the appeal, the plaintiff-appellee, Anatolia Tansay died on
August 11, 2001;

2. That it was discovered that on January 15, 1998, she executed a document denominated as
confirmation of previous sales…

3. That in view of the discovery of this document confirming the previous sales of Lot Nos.
1048-A-1 and 1048-A-3 to defendants-appellants Zenaida C. Echave[s], Luz Anatolia E.
Crispino and Caridad C. Echave[s], it is necessary in e interest of substantial justice to
remand the records of the case to the trial court and re-open the trial of this case in order to
enable the herein defendants to present said document in evidence in order to avoid a
grave miscarriage of justice.

WHEREFORE, in view of all the foregoing, it is most respectfully prayed that the records of this case be
remanded to the lower court and that the trial of this case be ordered re-opened.[36]

The Court of Appeals, in a Resolution[37] dated July 25, 2006 denied the Urgent Motion to
Remand Records of the Case for the Re-Opening of Trial. The appellate court considered the
same as a motion for new trial based on newly discovered evidence under Rule 53 of the Rules
of Court[38] and ruled that the Confirmation of Previous Sales was “not the kind of newly
discovered evidence contemplated by the Rules that would warrant a [n]ew [t]rial.”[39] The
appellate court also noted that the petitioners-appellants failed to attach an affidavit of merit as
required by the rules and that the Confirmation of Previous Sales attached to the motion was
merely a photocopy.[40]
On January 24, 2007, the Court of Appeals rendered a Decision, which affirmed the Regional
Trial Court’s Decision in toto.[41] Zenaida, Luz Anatolia, and Caridad moved for
reconsideration.[42] They assailed, among others, the propriety of the Court of Appeals’
Resolution in treating their motion to remand as a motion for new trial. Their Motion for
Reconsideration was denied in a Resolution[43] dated August 28, 2008.

Petitioners Zenaida, Luz Anatolia, and Caridad come to this Court through a Petition for Review
on Certiorari seeking a ruling on the power of the Court of Appeals to receive evidence under
Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902.[44]

Respondent Anatolia, as substituted by Lilian Yap, filed her Comment[45] on December 2, 2008.
Petitioners filed their Reply[46] on March 19, 2009. On June 3, 2009, this Court gave due course
to the Petition and required the parties to submit their Memoranda.[47]

Petitioners argue that the Court of Appeals should have considered their Urgent Motion to
Remand Records of the Case for Re-Opening of Trial as a motion to receive further evidence
under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No.
7902.[48] According to the petitioners, the Court of Appeals has the authority and power to
“receive all kinds of evidence to resolve factual issues within its original and appellate
jurisdiction.”[49] However, the appellate court inadvertently treated their motion to remand as a
motion for new trial under Rule 53 of the Rules of Court.[50] Assuming that the Court of Appeals
was correct, petitioners contend that the Court of Appeals’ power to conduct new trials is not
limited to new trials based on newly discovered evidence.[51]

Petitioners pray that the Court of Appeals,’ Decision dated January 24, 2007 be vacated and
that the Court of Appeals be ordered to receive in evidence the affidavit denominated as
Confirmation of Previous Sales and render a new decision.[52]

Respondent alleges that it was unlikely for Anatolia to execute the affidavit because she
requested the early resolution of the appeal through two letters addressed to the appellate
court.[53] The first letter was dated March 27, 2001, while the second letter was dated July 20,
2001, a month before Anatolia died.[54] Respondent suspects the timing of petitioner’s motion to
remand since it was filed just a few days after Anatolia’s death.[55]

Respondent argues that the Petition for Review is not the proper remedy considering that
petitioners are not disputing the factual findings or the ratio decidendi of the Court of Appeals’
Decision dated January 24, 2007.[56]According to respondent, petitioners’ arguments are directed
against the Court of Appeals’ Resolution dated July 25, 2006, which denied the motion to
remand, which was an interlocutory order.[57] Respondent adds that since the Resolution was not
challenged through an appeal or a motion for reconsideration, the same had already become
final and could no longer be assailed on appeal.[58]

This case presents the following substantive issues: (1) whether the Court of Appeals erred in
treating petitioners’ motion to remand as a motion for new trial under Rule 53 of the Rules of
Court; and (2) whether the Court of Appeals’ power to grant new trials is limited to motions
based on newly discovered evidence.[59]

On the other hand, respondent raises the procedural issue of whether an interlocutory order
may be assailed in an appeal of the appellate court’s Decision.[60]

I
In determining the correct procedural remedy, aggrieved parties must first ascertain the
nature of the decision, order, or resolution they intend to challenge. [61]
A final judgment or order, from which an appeal may be taken, is one that finally disposes of the
case and leaves nothing more to be done by the court (e.g. an adjudication on the merits of the
case on the basis of the evidence).[62]In contrast, an interlocutory order is one that merely
resolves incidental matters[63] and does not finally dispose of the case.[64] When an interlocutory
order is issued, the court is still tasked with adjudicating on the merits of the case.[65]

The remedy against an interlocutory order is not appeal but a special civil action for certiorari
under Rule 65 of the Rules of Court.[66] The reason for the prohibition is to prevent multiple
appeals in a single action that would unnecessarily cause delay during trial.[67] In Rudecon v.
Singson:[68]

The rule is founded on considerations of orderly procedure, to forestall useless appeals and avoid undue
inconvenience to the appealing party by having to assail orders as they are promulgated by the court,
when all such orders may be contested in a single appeal.[69]

Faced with an interlocutory order, parties may instantly avail of the special civil action of
certiorari. This would entail compliance with the strict requirements under Rule 65 of the Rules
of Court. Aggrieved parties would have to prove that the order was issued without or in excess
of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction and
that there is neither appeal nor any plain, speedy, and adequate remedy in the ordinary course
of law.[70]

This notwithstanding, a special civil action for certiorari is not the only remedy that aggrieved
parties may take against an interlocutory order, since an interlocutory order may be appealed in
an appeal of the judgment itself.[71] InInvestments, Inc. v. Court of Appeals[72] it was held:

Unlike a “final” judgment or order, which is appealable, as above pointed out, an “interlocutory” order
may not be questioned on appeal except only as part of an appeal that may eventually’ be taken
from the final judgment rendered in the case.[73] (Emphasis supplied)

The Court of Appeals’ Resolution dated July 25, 2006, which denied petitioners’ motion to
remand, was an interlocutory order. It did not finally dispose of the case because the appellate
court still had to determine whether the deeds of sale executed by Anatolia were valid. Rather
than availing of the extraordinary remedy of certiorari under Rule 65, petitioners opted to wait for
the Court of Appeals to render its decision before challenging the July 25, 2006 Resolution.

Petitioners did not commit any procedural infirmity in assailing the interlocutory order in an
appeal of the Court of Appeals’ decision. Though petitioners could have filed a petition for
certiorari, they would have been burdened to prove that the Court of Appeals: committed grave
abuse of discretion in denying their motion to remand. Moreover, petitioners still had the option
to assail the July 25, 2006 Resolution in an appeal of the Court of Appeals’ final decision.

II
As regards the first substantive issue raised, this Court finds that the Court of Appeals
correctly treated petitioners’ motion to remand as a motion for new trial under Rule 53 of
the Rules of Court.
Essentially, petitioners sought the introduction of evidence pursuant to the Court of Appeals’
expanded power under Section 9 of Batas Pambansa Blg. 129, as amended.

Originally, Section 9, of Batas Pambansa Blg. 129, otherwise known as Judiciary


Reorganization Act, provides:

SECTION 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:


(1) Original jurisdiction to issue writs of mandamus, prohibition,certiorari, habeas corpus, and quo
warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction ,over actions for annulment of judgments of Regional Trial Courts;
and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards
of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards, or commissions,
except those falling within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the provisions of ,this Act, and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within
its original and appellate jurisdiction, including ‘the power to grant and conduct new trials or further
proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code of the
Philippines and by the Central Board of Assessment Appeals. (Emphasis supplied)

Subsequently, Republic Act No. 7902[74] amended Section 9 of Batas Pambansa Blg. 129:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition,certiorari, habeas corpus, and quo
warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgment of Regional Trial Courts;
and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions,
including the Securities and Exchange Commission, the Social Security Commission, the
Employees Compensation Commission and the Civil Service Commission, except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of
this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.

The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and
perform any and all acts necessary to resolve factual issues raised in cases falling within its original
and appellate jurisdiction, including the power to grant and conduct new trials or further
proceedings. Trials or hearings in the Court of Appeals must be continuous and must be completed within
three (3) months, unless extended by the Chief Justice. (Emphasis supplied)

Clearly, the Court of Appeals, pursuant to its expanded jurisdiction under Section 9 or Batas
Pambansa Blg. 129, as amended, is empowered to receive evidence to resolve factual issues
raised in cases falling within its original and appellate jurisdiction. However, Section 9 of Batas
Pambansa Blg. 129, as amended, should be read and construed together with the Court of
Appeals’ internal rules.[75]

Thus, in Republic v. Mupas,[76] the Court held that the power of the Court of Appeals to receive
evidence is qualified by its internal rules:

Under Section 3, Rule 6 of the Internal ,Rules of the CA, the CA may receive evidence in the following
cases:

(a) In actions falling within its original jurisdiction, such as (1)certiorari, prohibition
and mandamus, (2) annulment of judgment or final order, (3) quo warranto, (4) habeas corpus,(5)
amparo, (6) habeas data, (7) anti money laundering, and (8) application for judicial authorization
under the Human Security Act of 2007;

(b) In appeals in civil cases where the Court grants a new trial on the ground of newly discovered
evidence, pursuant to Sec. 12, Rule 53 of the Rules of Court;

(c) In appeals in criminal cases where the Court grants a new trial on the ground of newly discovered
evidence, pursuant to Sec. 12, Rule 124 of the rules of Court; and

(d) In appeals involving claims for damages arising from provisional remedies. (Emphasis supplied)
This provision qualifies the CA’s power to receive evidence in the exercise of its original and appellate
jurisdiction under Section 9 of BP 129, as amended:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

….

The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence, and
perform any and all acts necessary to resolve factual issues raised in cases falling within its original and
appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. Trials
or hearings in the Court of Appeals must be continuous and must be completed within three (3) months,
unless extended by the Chief Justice.

Since Takenaka and Asahikosan filed an ordinary appeal pursuant to Rule 41 in relation to Rule 44 of the
Rules of Court, the CA could only have admitted newly discovered evidence. Contrary to Takenaka and
Asahikosan’s claim, the attachments to the motions are not newly discovered evidence. Newly discovered
evidence is evidence that could not, with reasonable diligence, have been discovered and produced at the
trial, and which, if presented, would probably alter the result.[77](Emphasis in the original, citations
omitted).

The Internal Rules of the Court of Appeals enumerates instances when the Court of Appeals
may receive evidence depending on the nature of the case filed.

In a special civil action for certiorari, which is an action falling within the Court of Appeals’
original jurisdiction, the Court of Appeals has “ample authority to make its own factual
determination”[78] and may receive evidence for this purpose. In Maralit v. Philippine National
Bank: [79]

In a special civil action for certiorari, the Court of Appeals has ample authority to receive new evidence
and perform any act necessary to resolve factual issues. Section 9 of Batas Pambansa Blg. 129, as
amended, states that, “The Court of Appeals shall have the power to try cases and conduct hearings,
receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling
within its original and appellate jurisdiction, including the power to grant and conduct new trials or
further proceedings.”[80] (Emphasis omitted)

Thus, the 2009 Internal Rules of the Court of Appeals[81] provide:


SECTION 3. Power of the Court to Receive Evidence. – The Court may receive evidence in the
following cases:

(a) In actions falling within its original jurisdiction, such as: (1) certiorari, prohibition and
mandamus under Rules 46 and 65 of the Rules of Court; (2) annulment of judgment or final
order; (3) quo warranto; (4) habeas corpus; (5) amparo; (6)habeas data; (7) anti-money
laundering and (8) application for judicial authorization under the Human Security Act of
2007. (Emphasis supplied)

As may be gleaned from above, in actions falling within the original jurisdiction of the Court of
Appeals, such as a special civil action for certiorari, the Court of Appeals’ power to receive
evidence is unqualified. This does not hold true with respect to appeals in civil cases, criminal
cases, as well as appeals involving claims for damages.

In this case, petitioners filed an ordinary appeal from the Regional Trial Court’s Decision dated
February 16, 1996. At the time the Court of Appeals ruled on petitioners’ motion to
remand,[82] the 2002 Internal Rules of the Court of Appeals[83] was in effect:

SECTION 3. Power of the Court to Receive Evidence. – The Court may receive evidence in the following
cases:

(a) In actions falling within its original jurisdiction, such as: (1)certiorari,
prohibition and mandamus under Rules 46 and 65 of the Rules of Court; (2) action for annulment
of judgment or final order under Rule 46 of the Rules of Court; (3) quowarranto under Rule 66 of
the Rules of Court; (4) habeas corpus under Sections 2 and 12, Rule 102 of the Rules of Court;

(b) In appeals in civil cases where the court grants a new trial on the ground of newly discovered
evidence pursuant to Sec. 3, Rule 53 of the Rules of Court;

(c) In appeals in criminal cases where the court grants a new trial on the ground of newly discovered
evidence pursuant to Section 12, Rule 124 of the Rules of Court; and

(d) In appeals involving claims for: damages arising from provisional remedies. (Emphasis supplied)
Although the Court of Appeals has the power to receive evidence pursuant to its expanded
powers under Section 9 of Batas Pambansa Blg. 129, this power is not without limit. The Court
of Appeals cannot simply accept additional evidence from the parties. If the interpretation were
otherwise, then there would be no end to litigation.

Hence, in appeals in civil cases, the Court of Appeals may only receive evidence when it grants
a new trial based on newly discovered evidence.

This notwithstanding, the Court of Appeals cannot accept any kind of evidence in a motion for
new trial. A motion for new trial under Rule 53 is limited to newly discovered evidence:

SECTION 1. Period for filing; ground. – At any time after the appeal from the lower court has been
perfected and before the Court of Appeals loses jurisdiction over the case, a party may file a motion for
new trial on the ground of newly discovered evidence which could not have been discovered prior to the
trial in the court below by the exercise of due diligence and which is of such character as would
probably change the result. The motion shall be accompanied by affidavits showing the facts constituting
the grounds therefor and the newly discovered evidence. (Emphasis supplied)

The document petitioners seek to present before the appellate court does not fall under the
concept of newly discovered evidence.

Newly discovered evidence has a specific meaning under the law. Under Rule 53 of the Rules
of Court, the following criteria must be satisfied for evidence to be considered newly discovered:
(a) the evidence could not have been discovered prior to the trial in the court below by exercise
of due diligence; and (2) it is of such character as would probably change the result.

The document denominated as Confirmation of Previous Sales was allegedly executed on


January 15, 1998, three years after the Regional Trial Court rendered its decision. [84] Hence, it
could not have been discovered by petitioners prior to trial by the exercise of due diligence.

However, the document is not of such character that would probably change the lower court’s
judgment. The nature of the deeds of sale executed would not have been affected even if the
Confirmation of Previous Sales was admitted in evidence since the validity of a contract is
determined by law and not by the stipulation of the parties. Furthermore, the Court of Appeals
can determine whether the deeds of sale were valid independent of said document. Thus, the
Court of Appeals correctly denied petitioners’ motion to have the Confirmation of Previous Sales
admitted in evidence.

WHEREFORE, the petition is DENIED. This Court hereby AFFIRMS the January 24, 2007
Decision and August 28, 2008 Resolution of the Court of Appeals in CA-G.R. CV No. 54832.

Carpio, (Chairperson), Brion, Del Castillo, and Mendoza, JJ., concur.

Nicanor Malabanan, et al. Vs. Heirs of Alfredo


Restrivera, et al.; G.R. No. 185312; December
1, 2016
DECISION

SERENO, C.J.:

This is a Petition for Review on Certiorari assailing the Court of Appeals (CA) Decision [1] in CA-
G.R. SP No. 97787, which affirmed the Department of Agrarian Reform Adjudication Board
(DARAB) Resolution dated 10 October 2006.[2] The latter reinstated the Decision[3]] issued by the
Regional Agrarian Reform Adjudication Board (RARAD), Region IV, in the Petition for
Cancellation of Certificates of Land Ownership Award (CLOAs), Declaration of Nullity of Sale,
Repossession and Reconveyance filed by respondents against petitioners. RARAD directed the
Cavite Provincial Agrarian Reform Officer (PARO), as well as the Register of Deeds (RD), to
recall the CLOAs and the Transfer Certificates of Title (TCTs) issued to petitioners over a
sequestered agricultural land previously owned by respondents’ father. In lieu thereof, RARAD
ordered the issuance of new certificates in favor of respondents. Petitioners argue, however,
that it had no jurisdiction over the petition.

ANTECEDENT FACTS

The disputed property is an 8.839-hectare agricultural land situated in Potrero, Bancal,


Carmona, Cavite. It used to be registered under the name of Alfredo Restrivera, as shown by
his Original Certificate of Title (OCT) No. 0-13.[4] In 1968, OCT No. 0-13 was cancelled by TCT
No. T-28631 under the name of Independent Realty Corporation (IRC). After the ouster of the
Marcos administration, the IRC voluntarily surrendered the land to the Philippine Commission
on Good Government (PCGG).[5]

The PCGG then transferred the above property to the Department of Agrarian Reform (DAR) for
distribution to qualified farmer-beneficiaries of the Comprehensive Agrarian Reform Program
(CARP) by virtue of the Memorandum of Agreement (MOA) on Sequestered Agricultural Lands
between the PCGG and the then Ministry of Agrarian Reform (MAR),[6] as well as Executive
Order (E.O.) No. 407, Series of 1990.[7]

In February 2002, DAR awarded the land to petitioners. Two collective CLOAs[8] were generated
and the RD eventually issued to them derivative TCT Nos. CLOA-2838[9] and CLOA-2839.[10]

Invoking their preferential right as farmer-beneficiaries under Section 22 of Republic Act No.
(R.A.) 6657,[11]respondents filed before the Adjudication Board for Region IV a Petition for
Cancellation of CLOA, Declaration of Nullity of Sale, Repossession and
Reconveyance[12] against petitioners, Charmaine Uy, the PARO of Cavite, and the RD of Cavite
in February 2003.

Respondents alleged that (1) Alfredo never transferred his title to the subject land to any entity;
(2) petitioners were perpetually disqualified from benefitting from CARP because they had sold
the subject land to Charmaine Uy in violation of Section 73(f) of R.A. 6657 and DAR
Memorandum Circular No. 19, Series of 1996;[13] (3) prior to the award, petitioners also executed
a waiver of their rights to the subject land in favor of other potential farmer-beneficiaries; and (4)
the land had a slope of 18% as shown in the DAR regional director’s Investigation Report [14]and
was, therefore, exempt from CARP coverage.

The Malabanans, the DAR-Legal Assistance Division, and Charmaine Uy filed separate
Answers[15] raising these substantially similar defenses: (1) no waiver of rights or sale of the
subject land had ever occurred; (2) respondents had no legal standing to file the petition,
because Restrivera was not the registered owner of the property; and (3) the petition was
premature because whether or not the land was exempt from CARP was an Agrarian Law
Implementation (ALI)[16] issue that needed to be resolved first by the DAR Secretary.

RULING OF RARAD

RARAD disposed of the petition as follows:


WHEREFORE, premises considered, judgment is hereby issued:

1. Declaring that the generation and the subsequent issuance of CLOA Nos. 00596619 and 00596620
registered under TCT No. CLOA 2838 and TCT 2839, respectively, covering the subject parcel of land
were in violation of petitioners’ preferential rights as farmer-beneficiaries under Section 22 of RA 6657
and under the Memorandum of Agreement (MOA) between DAR and the PCGG dated February 23,
1987;

2. Declaring further that the afore-cited CLOAs were issued over a property which is excluded/exempted
under Section 10 RA 6657 for having more than 18 degrees slope;

3. Declaring finally that the preceding paragraphs 1 and 2 hereof warrant the cancellation of CLOA and
the corresponding Transfer Certificate of Title derived therefrom registered in the name of private
respondents;

4. Directing the public respondents to recall the afore-cited CLOAs and generate new ones in the name of
the petitioners and submit the same to the Register of Deeds for the Province of Cavite;

5. Directing the Register of Deeds for the Province of Cavite to cause the cancellation of CLOAs and the
derivative Transfer Certificate of Title above-cited and upon receipt of the newly generated CLOA as
directed in paragraph 4 hereof to cause the registration of the same in place of the cancelled
TCT/CLOA.[17]

RARAD gave credence to the petitioners’ denial of the supposed waiver of their rights and the
sale of the subject land. Still, it sustained the claim of respondents as preferred beneficiaries
and ruled that they had legal standing to assail the award of the land, since they were Alfredo’s
compulsory heirs.

Moreover, RARAD dismissed petitioners’ theory that there were pending ALI issues that needed
to be resolved by the DAR Secretary. Instead, it ruled that the regional director’s Investigation
Report was a conclusive finding that the land was exempt from CARP coverage; and that the
issue of whether or not there was a violation of respondents’ preferential right was judicial in
nature.

Consequently, DAR’s legal counsel[18] filed a Motion for Reconsideration[19] on behalf of the
Malabanans, PARO, and the RD. Subsequently, he filed a Withdrawal of Appearance for Private
Respondents-Farmer Beneficiaries.[20]The Malabanans, without the assistance of counsel, filed a
Notice of Appeal within the reglementary 15-day period.[21]

Because of the pending Motion for Reconsideration, RARAD deferred its action on the Notice of
Appeal.[22] In the end, it denied the motion for lack of a new matter or substantial argument
supporting a reversal of its Decision.[23]

RULINGS OF DARAB

Upon Notice of Appeal[24] filed by DAR’s legal counsel, DARAB directed all parties to submit their
respective memorandums.[25]

In due course, DARAB rendered a Decision dated 28 April 2006,[26] with the following dispositive
portion:

WHEREFORE, the Board resolves to SET ASIDE the assailed decision dated August 27, 2003 and
immediatelyrefer this case to the Honorable Office of the DAR Secretary for its determination on
prejudicial issues concerning Agrarian Law Implementation (ALI).[27]

According to DARAB, the issues of whether the subject land was exempt from CARP coverage
and whether the respondents were the preferred beneficiaries were ALI issues that had yet to
be resolved by the DAR Secretary. It observed that the Investigation Report cited by
respondents was not the outcome of an application for exemption or exclusion under the “Rules
of Procedure for Agrarian Law Implementation (ALI) Cases.” In this light, there was no basis for
RARAD’s cancellation of the CLOAs and the derivative TCTs on the ground that the awarded
land was exempt from land distribution.

DARAB held that the adjudicator should have referred the petition to the DAR Secretary for the
determination of those pending prejudicial ALI issues.

Moreover, DARAB dismissed respondents’ argument that the appeal was dismissible because
both the Malabanans and DAR failed to perfect their appeals. Instead, DARAB allowed the
appeal in order to prevent a grave miscarriage of justice.

Upon Motion for Reconsideration[28] by respondents, however, DARAB issued a Resolution


dated 10 October 2006 disposing as follows:
WHEREFORE, premises considered, the decision of the Board dated April 28, 2006 is SET ASIDE.
A NEW DECISION is hereby rendered:

1. RECALLING and REINSTATING the Decision dated August 27, 2003 rendered by the Honorable
Adjudicator a quo; and

2. DECLARING the Decision dated August 27, 2003 and the Resolution dated November 18, 2003
rendered by the Honorable Adjudicator a quo final in view of the defective notices of appeal filed by both
public and private respondents-appellants.[29]

DARAB noted that the petition filed by respondents stemmed from their letter[30] to the DAR
Secretary requesting an inspection of the subject land. In turn, the Secretary issued a
Memorandum[31] indorsing their letter to the regional director and directing him to submit a
comprehensive report on result of the latter’s inspection. DARAB then ruled that the director’s
report was a determinative finding that the land was exempt from CARP, and that there were no
pending ALI questions that needed to be resolved by the DAR Secretary.

It was further held that petitioners were indeed disqualified from benefitting from the agrarian
reform program. Their waiver of their rights as farmer-beneficiaries supposedly showed that
they did not possess the requisite willingness, aptitude or ability to cultivate the subject land.
Therefore, the cancellation of their CLOAs and derivative TCTs was only proper.

DARAB reversed, as well, its earlier pronouncement that there was a compelling reason to relax
procedural rules in this case. It ruled that the RARAD Decision had already lapsed into finality
because of the failure of both the Malabanans and DAR to perfect their appeals.

RULING OF THE CA

After the DARAB’s denial of their Motion for Reconsideration,[32] petitioners filed a Petition for
Review under Rule 42 before the CA.[33]

The appellate court, however, found petitioners’ appeal unmeritorious. While conceding that the
legality of the transfer of the subject land to the IRC had yet to be determined before the proper
forum, the CA nonetheless ruled that respondents were entitled to the property, because it was
registered under their father’s name prior to its transfer to the IRC. For this reason, they had
legal personality to assail its award to petitioners.
The CA ruled further that the transfer by petitioners of their rights to the land was an additional
ground for the cancellation of their titles. Consequently, the DARAB properly affirmed the
RARAD Decision.

Lastly, the CA emphasized that only the last order or resolution completely disposing of the
case can be the subject of an appeal. It noted that the subject of petitioners’ appeal was only
the RARAD Decision; they did not file a new notice of appeal from the Resolution denying their
Motion for Reconsideration. The appellate court therefore ruled that the RARAD Decision had
long become final because of the failure of petitioners to perfect their appeal.

The dispositive portion of the CA Decision reads:

WHEREFORE, the petition for review is DENIED. The Resolution dated October 10, 2006 as well as
the Resolution dated January 10, 2007 respectively of DARAB are hereby AFFIRMED.[34]

On 11 November 2008, the CA denied petitioner’s Motion for Reconsideration.[35] Hence, this
Petition.

ISSUES

The essential issues to be resolved are as follows: (1) whether petitioners have the legal
personality to assail the distribution of the subject land under the agrarian reform program; and
(2) whether the agrarian adjudicator has jurisdiction over a petition for cancellation of title and
reconveyance of agricultural land sequestered by or surrendered to the PCGG.

COURT RULING

We GRANT the petition.

Before delving into the substantive issues, we first address the procedural issue of whether the
RARAD Decision has become final because of the failure of petitioners to perfect their appeal.

True, petitioners did not file a new notice of appeal after RARAD had disposed of DAR’s Motion
for Reconsideration. Contrary to respondents’ claim, however, RARAD did not dismiss the
petitioners’ notice of appeal for being premature. Its Order[36] states:
This treats of private respondents’ Notice of Appeal from the Decision dated August 27, 2003 which was
duly countered by petitioners with an Opposition on the ground that there is a pending motion for
reconsideration, hence, the notice of appeal is premature.

Finding that the notice of appeal is too early to be acted upon, the same is held in abeyance until the
motion for reconsideration shall have been disposed of.[37]

Additionally, while the Motion for Reconsideration was filed on behalf of both the Malabanans
and DAR, their common legal counsel subsequently withdrew his appearance for the
Malabanans. His withdrawal was in light of the letter[38] of the Malabanans informing him that
they were intending to pursue their appeal separately from DAR. Notably, too, petitioners filed
their Notice of Appeal after the Withdrawal of Appearance by their former legal counsel.

Suffice it to say that petitioners filed a timely Notice of Appeal. It did not lose validity merely
because RARAD deferred action on it during the pendency of DAR’s Motion for
Reconsideration.[39] Indeed, DARAB eventually accepted petitioners’ appeal. The findings of both
DARAB and the CA that petitioners failed to perfect their appeal are, therefore, wrong.

We now resolve the substantive issues.

Respondents have no legal standing


to assail the award of the subject
land to petitioners.

Fortich v. Corona[40] ordains that farmer-beneficiaries who are not approved awardees of CARP
have no legal standing to question the exclusion of an agricultural land from CARP coverage.
This pronouncement is anchored on the rule that any person seeking legal relief must have a
real or present substantial interest, as opposed to mere expectancy; or a future, contingent,
subordinate, or consequential interest in the matter under litigation.[41]

Simply put, the policy under the Constitution is that courts can only resolve actual controversies
involving rights that are legally demandable and enforceable; judicial power cannot be invoked
to settle mere academic issues or to render advisory opinions.[42]

In Samahang Magsasaka ng 53 Hektarya v. Mosquera,[43] a farmer’s association challenged the


exemption from land distribution of a 53-hectare property. On the issue of whether the individual
members of the Samahan were real parties in interest, we ruled that those farmer-members
could not be deemed to possess the legal personality to question the property’s exclusion from
CARP, unless two requirements are fulfilled: the actual approval by the DAR and the
consequent grant of CLOAs and award of the disputed land to those members. The generation
of CLOAs under their names was of no consequence; at best, they had a mere expectancy,
which was inadequate to vest them with the requisite interest in the subject matter of the
litigation.

In this case, respondents trace their alleged ownership of the disputed property to OCT No. 0-
13. Their claim that the property was illegally acquired by the IRC is unsubstantiated. The CA
correctly noted that the issue of whether the acquisition of the property by IRC was lawful or not
was still undetermined by the proper tribunal. Without question, however, the last known owner
of the land before it was surrendered to the PCGG was the IRC. In fact, the derivative titles
under question cancelled the latter’s title under TCT No. 28631, instead of OCT NO. 0-13. All
things considered, there is yet no sufficient basis to say that Alfredo Restrivera was the previous
owner of the land prior to its award to petitioners.

Respondents cannot rely solely on their father’s title to assert ownership over the subject land.
A title is merely evidence of ownership of the particular property described therein. Ownership is
not the same as a certificate of title.[44]

On the other hand, we cannot just disregard the existence of TCT No. 28631, which is under the
name of the IRC. A Torrens certificate is the best evidence of ownership of registered land and
serves as evidence of an indefeasible title to the property in favor of the person in whose name
it was issued.[45] In the absence of a definitive ruling that TCT No. 28631 was illegally procured,
we can only take the titles presented in evidence at their face value. At this point, respondents
cannot claim ownership of the land, or any interest therein that could have been the subject of
succession. Concomitantly, they have no legal standing to challenge the propriety of its
distribution under CARP by virtue of their interest as Alfredo’s compulsory heirs.

Neither can respondents claim to have any present substantive interest in the disputed property
as preferred beneficiaries under paragraph 2 of the MOA between DAR and the PCGG on
sequestered lands. The cited paragraph states:

[2.] The PCGG shall transfer to the Republic of the Philippines the titles to those agricultural lands
defined in paragraph 1 above that have been voluntarily turned over or surrendered to the PCGG
and whose titles can now be transferred to the Republic without the need of further adjudication by
the Sandiganbayan. These lands are to be distributed by MAR to qualified applicants/beneficiaries in
accordance with R.A. 3844 and other pertinent law, rules and regulations; provided that the preferential
rights over these lands of laborers, farmers, wage earners and employees of Independent Realty
Corporation and other registered owners of these lands at the time they were surrendered or
turned over voluntarily to PCGG, who have been occupying and/or working on said lands shall he
recognized and respected by all parties concerned.[46] (Emphases supplied)

The right recognized under the above paragraph is conditioned on possession of title and actual
occupation of property. In respondents’ case, the most they have established is that the land
used to be registered under Alfredo’s name.

On the other hand, Section 22 of R.A. 6657 reads:

SECTION 22. Qualified Beneficiaries. — The lands covered by the CARP shall be distributed as much as
possible to landless residents of the same barangay, or in the absence thereof, landless residents of the
same municipality in the following order of priority:

(a) agricultural lessees and share tenants;


(b) regular farm workers;
(c) seasonal farmworkers;
(d) other farmworkers;
(e) actual tillers or occupants of public lands;
(f) collectives or cooperatives of the above beneficiaries; and
(g) others directly working on the land.

Provided, however, That the children of landowners who are qualified under Section 6 of this Act
shall be given preference in the distribution of the land of their parents: and Provided, further, That
actual tenant-tillers in the landholdings shall not be ejected or removed therefrom.

Beneficiaries under Presidential Decree No. 27 who have culpably sold, disposed of, or abandoned their
land are disqualified to become beneficiaries under this Program.

A basic qualification of a beneficiary shall be his willingness, aptitude, and ability to cultivate and
make the land as productive as possible. The DAR shall adopt a system of monitoring the record or
performance of each beneficiary, so that any beneficiary guilty of negligence or misuse of the land
or any support extended to him shall forfeit his right to continue as such beneficiary. The DAR
shall submit periodic reports on the performance of the beneficiaries to the PARC.

If, due to the landowner’s retention rights or to the number of tenants, lessees, or workers on the land,
there is not enough land to accommodate any or some of them, they may be granted ownership of other
lands available for distribution under this Act, at the option of the beneficiaries.

Farmers already in place and those not accommodated in the distribution of privately-owned lands will be
given preferential rights in the distribution of lands from the public domain.( Emphases supplied)

The law, therefore, does not automatically vest preferential rights upon the children of
landowners.[47] To avail themselves of this right, claimants must show that: (1) their parents
owned the subject land; and (2) it has been determined in the proper proceeding that the
claimants are qualified beneficiaries of the agrarian reform program. Proof of these
circumstances, however, are utterly wanting in this case.

In sum, respondents failed to show any real or present substantial interest in the subject land.
Indeed, procedural rules can be relaxed in the interest of justice, but the present case does not
merit such leniency. The requirement that a party must have real interest in the case is not
simply procedural; it is essential to the administration of justice.[48] For these reasons, we set
aside the CA’s finding that respondents have the legal personality to assail the award of the
subject land to petitioners.

DARAB has no jurisdiction over the


petition filed by respondents.

It is settled that for DARAB to have jurisdiction over a case, there must be an agrarian dispute
or tenancy relationship existing between the parties.[49] There must be harmony between this
settled principle and the rules that apply to the petition for the cancellation of CLOAs filed by
respondents. The applicable set of rules is the 2003 DARAB Rules of Procedure, under which
Section 1,[50] Rule II, grants DARAB and its adjudicators jurisdiction over cases involving the
correction, partition, cancellation, secondary and subsequent issuances of CLOAs and
Emancipation Patents (EPs) which are registered with the Land Registration Authority.
It is not sufficient that the controversy involves the cancellation of a CLOA already registered
with the Land Registration Authority as in this case. For purposes of determining whether
DARAB has jurisdiction, the central consideration is the existence of an agrarian dispute.[51]

Section 3 (d) of R.A. 6657 defines agrarian dispute as follows:

(d) Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether leasehold,
tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning
farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or
seeking to arrange terms or conditions of such tenurial arrangements.

It includes any controversy relating to compensation of lands acquired under this Act and other terms and
conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee. (Emphases supplied)

In this case, respondents have not alleged any tenurial relationship with petitioners. Rather,
their petition is centered on their supposed preferential right as farmer-beneficiaries and the
suitability of the land for CARP coverage. These are matters falling under the primary and
exclusive jurisdiction of DAR, which is supposed to determine and adjudicate all matters
involving the implementation of agrarian reform.[52]

Section 2, Rule I of DAR Administrative Order No. 03, series of 2003,[53] defines, by
enumeration, ALI cases over which the regional director has primary jurisdiction. These cases
include, among others, those arising from or involving the classification and identification of
landholdings for CARP coverage (including protests of and petitions for lifting that coverage);
and the classification, identification, inclusion, exclusion, qualification, or disqualification of
potential/actual farmer-beneficiaries.

The proceedings in ALI cases are commenced by the filing of an initiatory pleading or petition
either before the DAR Regional Office (DARRO) or the DAR Municipal Office (DARMO),
depending on whether or not there has been a notice of CARP coverage.[54] After notice to all
parties concerned, investigation and ocular inspection shall be conducted. The investigating
officer may require the submission of position papers prior to the issuance of a decision.[55]
The question of whether the TCTs issued to petitioners should be cancelled hinges on whether
the landholding is exempt from CARP coverage, which remains undetermined up this
point.[56] As DARAB correctly pointed out in its Decision dated 28 April 2006, the investigation
conducted by the regional director does not measure up to the proceedings and outcome
described above. Hence, RARAD should not have acted on the petition. Under Section
5,[57] Rule II of the procedural rules on ALI cases, the petition should have been referred to the
office of the DAR Secretary for the determination of pending ALI issues; specifically, whether
the subject land was exempt from CARP coverage, and whether respondents were qualified
and preferred farmer-beneficiaries.

Relevant to this case, too, is DAR Administrative Order No. 09-97[58] as amended. This issuance
sets the guidelines for the recovery of lands turned over to DAR pursuant to E.O. 407,[59] but
those lands were later found to be outside the coverage of CARP. Under these guidelines, the
petition for reconveyance should be filed with the provincial, regional or national offices of
DAR.[60] Moreover, the Order of Reconveyance should be issued by the regional director,[61] which
can only be appealed to the DAR Secretary.[62]

Based on the above, we find that the Decision of RARAD was rendered without authority and
jurisdiction; hence, it is void.

WHEREFORE, premises considered, the Petition for Review on Certiorari is GRANTED. The
Court of Appeals Decision dated 20 June 2008 and Resolution dated 11 November 2008 in CA-
G.R. SP No. 97787 are REVERSEDand SET ASIDE.

The DARAB Decision dated 28 April 2006 is hereby AFFIRMED and REINSTATED. Moreover,
the Office of the Secretary of the Department of Agrarian Reform is directed to expedite the
resolution of this case.

SO ORDERED.

Rosalie Sy Ayson Vs. Fil-Estate Properties, Inc.,


et al./Fil-Estate Properties, Inc., et al. Vs.
Rosalie Sy Ayson; G.R. No. 223254/G.R. No.
223269; December 1, 2016
DECISION

PERLAS-BERNABE, J.:

Assailed in these consolidated petitions for review on certiorari[1] are the Decision[2] dated March
1, 2013 and the Resolution[3] dated February 22, 2016 of the Court of Appeals (CA) in CA-G.R.
CV. No. 03010, which affirmed with modification the Decision[4] dated March 1, 2004 and the
Order[5] dated February 6, 2009 of the Regional Trial Court of Kalibo, Aklan, Branch 9 (RTC) in
Civil Case No. 5627 and, accordingly, ordered Fil-Estate Properties, Inc. (Fil-Estate) and
Fairways & Bluewater Resort & Country Club, Inc. (Fairways) to pay Rosalie Sy Ayson
(Ayson), inter alia, the amount of US$40,000.00 or its Philippine Peso equivalent, representing
the value of the land subject of litigation.

The Facts

The instant case arose from a Complaint[6] for recovery of possession and damages filed by
Ayson against Fil-Estate and Fairways before the RTC, alleging that she is the registered owner
of a 1,000-square meter parcel of land, more or less, located in Yapak, Malay, Aklan, i.e., the
northwestern area of Boracay Island, denominated as Lot No. 14-S and covered by Transfer
Certificate of Title (TCT) No. T-24562[7] (subject land). Sometime in June 1997, she discovered
that Fil-Estate and Fairways illegally entered into the subject land and included it in the
construction of its golf course without her prior consent and authorization. Despite receipt of a
Notice to Cease and Desist[8] from Ayson, Fil-Estate and Fairways continued their encroachment
and development of the subject land making it now a part of the entire golf course. Thus, she
was constrained to file the instant complaint.[9]

In their defense,[10] Fil-Estate and Fairways maintain that the subject land was formerly owned by
one Divina Marte Villanueva (Villanueva), with whom they entered into a Joint Venture
Agreement (JVA) for the development of the Fairways and Bluewater Resort Golf and Country
Club. Fil-Estate and Fairways explained that prior to the JVA, Villanueva sold portions of her
property to various buyers, including Ayson, with the caveat that such portions may be used in a
development project. In this light, Villanueva allegedly convinced her buyers to agree to a land
swap should such development push through. When the project commenced, the other buyers
readily agreed to said land swaps. Unfortunately, talks with Ayson stalled, prompting Fil-Estate
and Fairways to “exclude” development work on the subject land. Nevertheless, Fil-Estate and
Fairways commenced construction on the subject land, allegedly relying in good faith upon
Villanueva’s assurance that her other former buyers, e.g., Ayson, would eventually agree with
the land swap agreements. According to Fil-Estate and Fairways, Ayson only signified her
objection to the inclusion of the subject land in the development project when construction was
almost finished. Fit-Estate and Fairways further averred that they tried to remedy the situation
by negotiating with Ayson, but to no avail.[11]

The RTC Ruling

In a Decision[12] dated March 1, 2004, the RTC ruled in Ayson’s favor and, accordingly, ordered
Fil-Estate and Fairways to pay her the following amounts: (a) US$100,000.00 or its Philippine
Peso equivalent, representing the value of the subject land, plus P50,000.00 monthly rentals for
the use and occupancy of said land starting December 1997 until the aforesaid value has been
fully paid; (b) P900,000.00 as actual damages; (c) P1,000,000.00 as moral
damages; (d) P1,000,000.00 as exemplary damages; (e) P300,000.00 as attorney’s fees and
other litigation expenses; and (j) the costs of suit.[13]

The RTC found that contrary to Fil-Estate and Fairways’ assertions, Ayson never agreed to any
future land swapping arrangement with Villanueva, considering that Ayson already paid
Villanueva the amount of US$20,000.00 representing the purchase price of the subject land way
back April 1994 (albeit the Deed of Sale[14] was only executed on April 15, 1996), while the
construction of the golf course was only conceptualized sometime in early 1995. As such, it was
error for Fil-Estate and Fairways to merely rely on Villanueva’s assurance that she will be able
to convince her buyers to enter into a land swapping arrangement, especially considering that
the title to the same was already in Ayson’s name. In this regard, the RTC opined that Fil-Estate
and Fairways should have first secured permission from Ayson to enter into the subject land
before proceeding with the construction of the golf course. Thus, the RTC concluded that Fil-
Estate and Fairways did not exercise the ordinary diligence of a good father of a family before
entering into the subject land, which caused damage to Ayson for which they should be liable.
The foregoing notwithstanding, the RTC no longer ordered the return of the subject land to
Ayson, ratiocinating that its exclusion from Fil-Estate and Fairways’ development project at this
late stage would lead to major re-planning, re-routing, and relocation works, which in turn, would
massively prejudice the Fil-Estate and Fairways’ economic position, and affect its integrity and
reputation. Instead, the RTC ordered Fil-Estate and Fairways to pay Ayson the purported
reasonable acquisition cost multiplied by five, in view of the rapid increase of real estate
properties in Boracay Island for the past few years.[15]

Fil-Estate and Fairways moved for reconsideration,[16] which was, however, denied in an
Order[17] dated February 6, 2009. Aggrieved, they appealed[18] to the CA.

The CA Ruling

In a Decision[19] dated March 1, 2013, the CA affirmed the RTC ruling with modification reducing
the award of damages as follows: (a) US$40,000.00 or its Philippine Peso equivalent,
representing the value of the subject land, plus P1,000.00 monthly rentals for the use and
occupancy of said land starting December 1997 until the aforesaid value has been fully
paid; (b) P52,666.00 plus US$4,316.06 or its Philippine Peso equivalent as actual damages; (c)
P500,000.00 as moral damages; (d) P300,000.00 as exemplary damages; and (e) P200,000.00
as attorney’s fees and other litigation expenses.[20]

The CA held that despite recognizing Ayson as the registered owner of the subject land, Fil-
Estate and Fairways still entered into the same and included it in its golf course development
project without the former’s prior knowledge and consent. In this regard, it held that Fil-Estate
and Fairways should not have relied on Villanueva’s assurances that she would secure Ayson’s
acquiescence to a land swap arrangement, but instead, exercised due diligence and prudence
in taking steps to ensure that Ayson indeed agreed to the inclusion of her property in the golf
course development project. Further, the CA agreed with the RTC that the subject land should
no longer be returned to Ayson, and that Fil-Estate and Fairways should pay her its value
instead. However, absent any competent evidence on the valuation of the subject land, the CA
fixed its value at US$40,000.00, or the amount double its acquisition cost, and likewise reduced
the rent to P1,000.00 per month. In the same vein, the CA found it appropriate to reduce the
other awards of damages to Ayson in keeping with the evidence adduced in the case as well as
the prevailing circumstances.[21]

Dissatisfied, both parties separately moved for reconsideration[22] assailing the valuation of the
subject land as well as the other monetary awards. Fil-Estate and Fairways likewise assailed
the CA’s failure to expressly state in its Decision that upon full payment of the value of the
subject land, Ayson should surrender her title over the same and that a new title be issued in
their names.[23]
In a Resolution[24] dated February 22, 2016, the CA denied the parties’ respective motions,
holding that: (a) in pegging the value of the subject land, it took judicial notice of the rapid
increase and appreciation of the value of the real estate properties in Boracay Island for the
past years; (b) the amounts fixed representing the awards for damages are correct, fair, and
reasonable under the circumstances; and (c) there is no more necessity to expressly declare
that upon Fil-Estate and Fairways’ payment of the value of the subject land, Ayson should
surrender her title over the same and a new title must be issued in their names, as such is a
necessary consequence of its Decision.[25]

Hence, these consolidated petitions.

The Issues Before the Court

At the outset, the Court notes that the issues raised in the instant petition largely pertain only to
the propriety of the awards of moral damages, exemplary damages, and attorney’s fees in
Ayson’s favor and the corresponding amounts thereof, as well as the correctness of the
valuation of the subject land at US$40,000.00 and the monthly rental therefor. As such, the
Court shall limit its discussion on the foregoing and shall no longer delve on other matters not
raised before it.

Essentially, Fil-Estate and Fairways contend that there is no basis to award moral damages,
exemplary damages, and attorney’s fees to Ayson as they were in good faith in relying on
Villanueva’s assurances that Ayson will agree on the land swap arrangement before they
proceeded with the golf course development project. They likewise contend that Ayson never
objected to the construction on the subject land until after the golf course had been
completed.[26] As to the valuation of the subject land, Fil-Estate and Fairways argue that the CA’s
appraisal of the same at US$40,000.00 (or even that of the RTC at US$100,000.00) does not
have any basis as no Estate and Fairways insist that the value of the subject land is only
P100,000.00, as stated in the Deed of Sale[27] executed by Ayson and Villanueva.[28]

On the other hand, Ayson disputes the reduction of the amounts of moral damages, exemplary
damages, and attorney’s fees awarded to her, justifying the RTC’s higher awards as just,
proper, and equitable in light of Fil-Estate’s gross and utter bad faith in entering into her property
and making it a part of its golf course without her knowledge and consent.[29] In the same vein,
Ayson assails CA’s reduced valuation of the subject land as well as the monthly rent therefor,
maintaining that the RTC correctly took judicial notice of the rapid valuation of properties in
Boracay Island.[30]

The Court’s Ruling

The petition is partly meritorious.

I.

To recapitulate, both the RTC and the CA found that Ayson is the undisputed owner of the
subject land, as evidenced by TCT No. T-24562. Despite such knowledge, Fil-Estate and
Fairways nevertheless chose to rely on Villanueva’s empty assurances that she will be able to
convince Ayson to agree on a land swap arrangement; and thereafter, proceeded to enter the
subject land and introduce improvements thereon. The courts a quo further found that since
such acts were without Ayson’s knowledge and consent, she, thus: (a) suffered sleepless nights
and mental anguish knowing that the property she and her husband had invested for their future
retirement had been utilized by Fil-Estate and Fairways for their own sake; and (b) had to seek
legal remedies to vindicate her rights. Thus, both lower courts concluded that Fil-Estate and
Fairways’ acts were done in bad faith and resulted in injury to Ayson; hence, they are liable
for, inter alia, moral damages, exemplary damages, and attorney’s fees.

Verily, the finding of Fil-Estate and Fairways’ bad faith[31] as well as their liability for moral
damages,[32] exemplary damages,[33] and attorney’s fees,[34] are all factual matters which are not
within the ambit of the instant petition for review on certiorari under Rule 45 of the Rules of
Court. In this regard, it has long been settled that factual findings of the trial court, affirmed by
the CA, are final and conclusive and may not be reviewed on appeal,[35] save for certain
exceptions,[36] which Fil-Estate and Fairways failed to show in this case – at least regarding this
issue.

Relatedly, the CA correctly reduced the awards for moral damages, exemplary damages, and
attorney’s fees to P500,000.00, P300,000.00, and P200,000.00, respectively, in light of the
evidence adduced as well as the prevailing circumstances of the instant case. It must be
stressed that “[m]oral damages are not meant to be punitive but are designed to compensate
and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar harm unjustly caused
to a person.”[37]Similarly, exemplary damages are imposed “by way of example or correction for
the public good, in addition to the moral, temperate, liquidated or compensatory damages” and
are awarded “only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.”[38] Lastly, attorney’s fees should be reasonable in all cases where an award
thereof is warranted under the circumstances.[39]

In sum, Fil-Estate and Fairways’ liability for moral damages, exemplary damages, and attorney’s
fees, as well as the amounts thereof, must be upheld in light of the surrounding circumstances
of this case. In addition, a legal interest at the rate of six percent (6%) per annum should be
imposed on all monetary awards to Ayson from the time of the finality of this Decision until fully
paid.[40]

II.

Anent the valuation of the subject land, the RTC deemed the amount of US$100,000.00 or its
Philippine Peso equivalent as its reasonable value “considering the rapid increase or
appreciation of the value of real estate properties in Boracay Island for the past 10 years.”[41] On
the other hand, the CA pegged its value at US$40,000.00, or the amount double the purchase
price, “in consideration and after proper adjustment of the [RTC’s] valuation which took judicial
notice of the rapid increase and appreciation of the value of real estate properties in Boracay
Island for the past years and considering further that the property is located in the prime tourist
destination.”[42]

After a judicious perusal of the records, the Court views such valuations as grounded entirely on
speculation, surmises, or conjectures as there was no evidence presented by the parties
supporting the same. In fact, even the CA acknowledged the absence of any piece of evidence
that would provide a competent valuation of the subject land.[43] Undoubtedly, such valuations,
including the amount of monthly rentals that Fil-Estate and Fairways must pay Ayson for the use
of the subject land, must be struck down.

In the same vein, the Court likewise finds untenable Fil-Estate and Fairways’ assertion that the
valuation of the subject land is only P100,000.00, as stated in the Deed of Sale[44] executed by
Ayson and Villanueva in 1996.[45] At the most, the value stated in said Deed would only reflect
the market value of the subject land at the time of its execution and is in no way indicative of the
current market value of the said land, which is the amount that Fil-Estate and Fairways should
pay Ayson.[46]
In view of the foregoing circumstances, the Court finds it prudent to remand the case back to the
RTC for the determination of the current market value of the subject land, as well as the
reasonable amount of monthly rental. Once the current market value as well as the reasonable
rent has been reasonably ascertained, the same shall be subjected to the appropriate interest
rates.[47] Moreover, once the value of the subject land, monthly rentals, and applicable interests
have been fully paid, Ayson should execute the necessary documents to effectuate the transfer
of the property to Fil-Estate and Fairways.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated March 1, 2013 and the
Resolution dated February 22, 2016 of the Court of Appeals in CA-G.R. CV. No. 03010 are
hereby AFFIRMED with MODIFICATIONas follows:

(a) petitioners Fil-Estate Properties, Inc. and Fairways & Bluewater Resort & Country Club, Inc.
are ORDERED to jointly and solidarily pay Rosalie Sy Ayson the amounts of P52,666.00 and
US$4,316.06 or its Philippine Peso equivalent as actual damages, P500,000.00 as moral damages,
P300,000.00 as exemplary damages, and P200,000.00 as attorney’s fees and litigation expenses,
with legal interest at the rate of six percent (6%) per annum on all amounts due from finality of
judgment until fully paid;

(b) the issue of the proper valuation of Lot No. 14-S covered by Transfer Certificate of Title No. T-
24562 is REMANDED to the Regional Trial Court of Kalibo, Aklan, Branch 9 to determine its
current market value, reasonable monthly rental, and the applicable interest rate thereon to be
paid by Fil-Estate Properties, Inc. and Fairways & Bluewater Resort & Country Club, Inc.; and

(c) upon full payment of the ascertained current market value, monthly rental, and interests, Rosalie
Sy Ayson shall execute the necessary documents to effectuate the transfer of Lot No. 14-S
covered by Transfer Certificate of Title No. T-24562 to Fil-Estate Properties, Inc. and Fairways &
Bluewater Resort & Country Club, Inc.

Heirs of Andres Naya; Teresita B. Naya, Norma


N. Orbiso, Carmencita N. Fernan and Narciso P.
Naya Vs. Orlando P. Naya and Sps. Honesimo
C. Ruiz and Gloria S. Ruiz; G.R. No. 215759;
November 28, 2016
DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari[1] assailing the Decision[2] dated July 3, 2014 and
Resolution[3] dated October 28, 2014 of the Court of Appeals (CA) in CA-G.R. CEB CV No.
03679. The Decision denied petitioners’ appeal and affirmed the Orders of the Regional Trial
Court (RTC), Branch 7 of Cebu City dismissing Civil Case No. CEB-35305 for failure to state a
cause of action, while the Resolution denied petitioners’ motion for reconsideration.

The Facts

Petitioners filed a complaint for quieting of title, reconveyance of ownership, damages, and
attorney’s fees[4] before the RTC, Branch 7 of Cebu City against respondents involving a parcel
of land at V. Rama Ave., Cebu City. The property is denominated as Lot No. 6100-C-1 and has
an area of 576 square meters, more or less.[5]

Petitioners alleged that they, together with respondent Orlando P. Naya (Orlando), are the
legitimate and compulsory heirs of the late Spouses Andres and Gregoria Naya (Spouses Naya
collectively). The property was included in the estate of Andres. In 1968, his heirs executed an
extra judicial adjudication and settlement of estate where his surviving spouse, Gregoria, held
all his properties in trust in favor of the other heirs and on the condition that she will assume all
debts and pay all the obligations of the estate. Gregoria, however, failed to fulfill this condition.
Despite knowing all these, Orlando allegedly sold the property in 1965, under the name of his
parents, to one Alfonso Uy (Alfonso) by means of fraud and deceit. In 1971, after the title of the
property was transferred in the name of Alfonso, he then sold it to Orlando, who thereafter
managed to have the title of the property transferred in his name. Sometime in the early 1970s,
the heirs of Spouses Naya initiated intestate proceedings and/or judicial settlement of their
estate.[6]

In September 1974, Orlando sold the property to respondent Honesimo C. Ruiz (Honesimo).
The title, however, was transferred to Honesimo’s name only in 2007. Petitioners alleged that
they only learned of Orlando’s anomalous transactions in September 1974, prompting them to
cause the annotation of an adverse claim to Orlando’s title under Entry No. 4843-V-15-D.B.[7]

Petitioners alleged that with their consent, their co-petitioner, Teresita B. Naya (Teresita),
occupied the property from the time of death of Spouses Naya until the time of the filing of the
case. They stressed that Honesimo is not a buyer in good faith because he acquired the
property after the notice of adverse claim had already been annotated on Orlando’s title.
Petitioners also argued that it took Honesimo 33 years before causing the transfer of title in his
name.[8]

The RTC initially dismissed the complaint based on the motion to dismiss filed by Spouses
Honesimo C. Ruiz and Gloria S. Ruiz (Spouses Ruiz) on the ground that the RTC did not
acquire jurisdiction over their persons since the summons for them was served on their son.
Petitioners moved for reconsideration and filed a motion for leave to effect summons by
publication, which the RTC granted.[9]

In their Answer with Cross-Claim and Counter-Claims Ad Cautelam, Spouses Ruiz countered
that the property was already sold by the late Spouses Naya to Alfonso in 1965 and as such,
had already been excluded from the decedents’ estate since. They also rebutted petitioners’
allegations of fraud and deceit against Orlando in selling the property to Alfonso and
subsequently, to Honesimo. Spouses Ruiz argued that these general allegations of fraud and
deceit were mere conclusions of law which cannot defeat the presumption of genuineness and
due execution of the deeds of sale between the Spouses Naya and Alfonso, and between
Alfonso and Orlando.[10]

In its Order dated August 9, 2010, the RTC dismissed the complaint for failure to state a cause
of action and laches. The RTC ruled that the assailed transactions were conducted through the
deceit and fraudulent scheme of Orlando, yet, petitioners did not give details of the same, in
violation of Section 5,[11] Rule 8 of the Rules of Court. The RTC further ruled that time had turned
petitioners’ claim into a stale demand for instituting the complaint only in 2009, or 45 years after
the sale of the property to Alfonso in 1965.[12]

The CA denied the appeal and affirmed the findings of the RTC that the complaint does not
state a cause of action. The CA agreed that petitioners failed to allege with particularity the
fraud purportedly committed by Orlando, such that Spouses Naya were deceived into executing
the sale in favor of Alfonso. The CA noted that the allegations of fraud and deceit were
sweeping statements that did not give a clear picture as to how they were committed. These
allegations did not even state how the fraud was perpetuated or that the deeds of sale or the
signatures were forgeries.[13]

The Petition

Hence, this petition, where petitioners maintain that the case sufficiently avers grounds and
facts that constitute a cause of action for quieting of title. They insist that an allegation of fraud is
not a mandatory requirement in such action. Being in physical possession of the land from the
time of the death of Spouses Naya, petitioners likewise argue that their action for quieting of title
is imprescriptible.[14]

Petitioners also argue that respondents violated the omnibus motion rule when the defenses of
lack of cause of action and laches were only raised in their answer and not in the motion to
dismiss filed earlier.[15]

In their Comment,[16] Spouses Ruiz argue that the petition should be dismissed because
petitioners are guilty of forum shopping. Spouses Ruiz cite a Complaint for Quieting of title,
Declaration of Absolute Nullity of Deed of Sale, Transfer Certificate of Title No. 107-
2010001175, Tax Declaration, and Damages[17] filed by petitioners against respondents and
Spouses Romeo O. Jatico before the RTC, Branch 23 of Cebu City. Spouses Ruiz allege that
this complaint has the same facts and issues as the case at bar.[18]

Spouses Ruiz further argue that the CA correctly dismissed the complaint because the omnibus
motion rule did not apply to them prior to the service of summons by publication upon them.
Spouses Ruiz stress that the motion to dismiss they earlier filed was for the sole purpose of
assailing the jurisdiction of the RTC over their person. In other words, the RTC did not have
jurisdiction over their person when they filed the motion and so Section 8, Rule 15 of the Rules
of Court on the omnibus motion rule did not apply to them. It was only after the petitioners had
effected a valid extraterritorial service of summons that the RTC had acquired jurisdiction over
Spouses Ruiz. The first pleading they filed after the RTC acquired jurisdiction over them was
their Answer with Cross-Claim and Counterclaims Ad Cautelam, where they alleged affirmative
allegations.[19]
Finally, Spouses Ruiz maintain that the complaint miserably failed to state a cause of action
because petitioners simply made sweeping allegations of deceit and fraud. Spouses Ruiz also
argue that laches bars petitioners from questioning their title over the property.[20]

The Court’s Ruling

We grant the petition.

The complaint filed by petitioners is one for quieting of title, reconveyance of ownership,
damages, and attorney’s fees. To make out an action to quiet title, the initiatory pleading has
only to set forth allegations showing that (1) the plaintiff has title to real property or any interest
therein and (2) the defendant claims an interest therein adverse to the plaintiffs arising from an
instrument, record, claim, encumbrance, or proceeding which is apparently valid or effective but
is in truth and in fact invalid, ineffective, voidable, or unenforceable.[21] Thus, the averments in
petitioners’ complaint that: (1) they are the legitimate, compulsory heirs of Spouses Naya, the
former registered owners of the property; (2) the property is subject of intestate proceedings
before the RTC, Branch 19 of Cebu City; (3) they consented to the occupation of their co-
petitioner, Teresita, of the property since the time of death of Spouses Naya; (4) Orlando was
able to fraudulently transfer the property in his name; and (5) Spouses Ruiz subsequently
purchased the property at an allegedly void sale were sufficient to make out an action to quiet
title under Article 476[22] of the Civil Code.[23]

The action of petitioners is, at the same time, one for reconveyance. Petitioners seek to compel
Spouses Ruiz, as the registered owners, to transfer or reconvey the land to them on the ground
that petitioners are its rightful owners by succession and that the land was wrongfully registered
in the names of Spouses Ruiz.[24] The case would, in effect, challenge the efficacy of Spouses
Ruiz’ certificate of title under the theory that there had been no valid transfer or sale from the
petitioners’ predecessors in interest to the respondents of the rights or interests in the land, the
reason being that the transactions transferring such rights and interests were purportedly
carried out by means of fraud and deceit.[25]

In Mendizabel v. Apao,[26] where the case was one for annulment of titles, reconveyance and
damages, we were also confronted with an argument that the complaint must be dismissed
because the circumstances constituting the allegations of fraud or mistake were not stated with
particularity. We ruled against this argument, holding that in an action for reconveyance, all that
must be alleged in the complaint are two facts which, admitting them to be true, would entitle the
plaintiff to recover title to the disputed land, namely, (1) that the plaintiff was the owner .of the
land or possessed the land in the concept of owner, and (2) that the defendant had illegally
dispossessed him of the land. As already enumerated above, the allegations in petitioners’
complaint certainly measure up to the requisite statement of facts to constitute an action for
reconveyance based on an implied trust. Under Article 1456[27] of the Civil Code, if the
registration of the land is fraudulent, the person in whose name the land is registered holds it as
a mere trustee, and the real owner is entitled to file an action for reconveyance of the
property[28] On its face, therefore, the complaint states a cause of action and raises issues of fact
that can be properly settled only after a full-blown trial.[29]

We also note that petitioners allege that Teresita, a co-petitioner, is in possession of the
property from the time of death of Spouses Naya until the filing of the case. This is a question of
fact that must be also threshed out in a full-blown trial. If established, petitioners’ action will be
imprescriptible and hence, the defense of laches will not lie.

In the same vein, the ruling of the RTC and the CA that the action is barred by laches is
premature. In Heirs of Tomas Dolleton v. Fil-Estate Management Inc.,[30] we noted that the RTC
did not conduct a hearing to receive evidence proving that petitioners were guilty of laches. We
reiterated the well-settled rule that the elements of laches must be proven positively. Laches is
evidentiary in nature, a fact that cannot be established by mere allegations in the pleadings and
cannot be resolved in a motion to dismiss. We, thus, concluded that at such stage, the dismissal
of petitioners’ complaint on the ground of laches was premature because the issue must be
resolved at the trial of the case on the merits where both parties will be given ample opportunity
to prove their respective claims and defenses.[31]

Finally, we find it would be prudent as well that the question as to whether petitioners are guilty
of forum shopping be threshed out in a trial. Respondents argue that petitioners are guilty of
forum shopping because they also filed another case for quieting of title, declaration of absolute
nullity of deed of sale, transfer certificate of title, tax declaration, and damages before the RTC,
Branch 23 of Cebu City, docketed as Civil Case No. CEB-38883.[32]Respondents thusly pray that
the case be dismissed on this ground. Forum shopping, however, may or may not be deliberate,
intentional, or willful. The consequences in relation to the dismissal of the cases simultaneously
or successively filed vary as to whether forum shopping is deliberate, intentional, or willful. If the
forum shopping is not considered willful and deliberate, the subsequent case shall be dismissed
without prejudice, on the ground of either litis pendentia or res judicata. If the forum shopping is
willful and deliberate, both (or all, if there are more than two) actions shall be dismissed with
prejudice.[33] However, the question as to whether there was deliberate or willful intent to forum
shop is a question of fact, which the trial court is in the best position to determine.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated July 3,
2014 and its Resolution dated October 28, 2014 are SET ASIDE. This case is REMANDED to
the Regional Trial Court of Cebu City, Seventh Judicial Region, Branch 7 which is directed to try
and decide the case with deliberate speed.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Perez, and Reyes, JJ., concur.

Mandaue Realty & Resources Corporation and


Mandaue City Register of Deeds Vs. The Court
of Appeals and Bangko Sentral ng Pilipinas;
G.R. No. 185082; November 28, 2016
DECISION

JARDELEZA, J.:

This is a Petition for Certiorari and Mandamus[1] assailing the Resolutions dated July 25,
2008[2] and October 21, 2008[3] of the Court of Appeals (CA) in CA-G.R. CEB-CV No. 02009. The
assailed Resolutions denied the Motion to Dismiss Appeal[4] filed by Mandaue Realty and
Resources Corporation (MARRECO). MARRECO claimed that the appeal filed by the Bangko
Sentral ng Pilipinas (BSP) under Rule 41 of the Rules of Court was erroneous as the issues
involved pure questions of law which are the proper subjects of a petition for review
on certiorari under Rule 45.

Facts

On October 18, 2006, BSP filed a Complaint for Annulment of


Title/Reconveyance/Reinstatement of Title[5](Complaint) against MARRECO docketed
as Civil Case No. MAN-5524 before the Regional Trial Court (RTC) ofMandaue City,
Branch 56.[6]
BSP prayed that Transfer Certificate of Title (TCT) No. 54456[7] covering Lot 1-K-6-D-1 with an
area of forty thousand two hundred fifty seven square meters (40,257 sq.m.) in Barangays
Poblacion and Subangdaku, Mandaue, Cebu registered in the name of MARRECO be cancelled
and that TCT No. 46781[8] covering the same property and registered in the name of BSP be
reinstated.[9] In support of its prayer, BSP argued that the Order dated January 19, 2004[10] in
Civil Case No. MAN-3902 entitled Gotesco Properties, Inc. v. Bangko Sentral ng Pilipinas, et
al. rendered by RTC Branch 55, Mandaue City, nullifying BSP’s title to the property and
restoring the same to MARRECO, was null and void.[11]

The dispositive portion of the Order dated January 19, 2004 in Civil Case No. MAN-3902 reads:

WHEREFORE, judgment IS hereby rendered dismissing Gotesco’s original complaint and the
counterclaim of BSP for being moot and academic; and on the complaint-in-intervention, and annulling:

1. The Deed of Absolute Sale (Annex “B”, Marreco complaint) executed by Marreco in
favor of Gotesco;

2. The Deed of Real Estate Mortage executed by Ever Electrical and Manufacturing, Inc. and
Gotesco Properties, Inc. in favor of Orient Commercial Banking Corporation dated
January 13, 1998 over TCT No. 41450, Register of Deeds, Mandaue City (Annex “B”,
Gotesco Amended Complaint);

3. The Deed of Assignment executed by Orient Commercial Banking Corporation in favor of


Bangko Sentral ng Pilipinas dated January 9, 1998 in TCT No. 41450 (Annex ”E”,
Marreco Complaint);

4. The Certificate of Sale executed by Atty. Joseph Boholst in favor of Bangko Sentral ng
Pilipinas dated September 20, 1998 in TCT No. 41450 (Annex “C”, Gotesco Complaint);

5. The Affidavit of Consolidation executed by Bangko Sentral ng Pilipinas dated September


26, 2000, annotated in TCT No. 41450, Annex “F” (Marreco Complaint).

The Court further orders:


1. The cancellation of TCT No. 41450 issued in the name of Gotesco Properties, Inc. (Annex
“A”, Gotesco Complaint);

2. The restoration or reinstatement of TCT No. 40447 in the name of Mandaue Realty and
Resources Corporation (Annex “A”, Marreco Complaint) and cancelling annotations
under Entry Nos. 5184, 5185, 5186, and 5187, all inscribed on August 21, 1997 in the
Memorandum of Encumbrances thereof;

3. Gotesco Properties, Inc. to pay to Mandaue Realty and Resources Corporation the sum of
P1,000,000.00 for and as attorney[‘s] fees.

SO ORDERED.[12]

Instead of answering BSP’s Complaint, MARRECO filed a Motion to Dismiss[13] dated January
29, 2007 alleging, among others, that: (1) RTC Branch 56 has no jurisdiction because the
allegations in the Complaint seek the annulment of a final judgment rendered by a co-equal
court; (2) as the issue of ownership of the property was already settled in Civil Case No. MAN-
3902 and subsequently in CA-G.R. CV No. 81888 entitled Gotesco Properties, Inc. v. Bangko
Sentral and Pilipinas, et al. through the CA’s Resolution dated March 11, 2005,[14] BSP’s
complaint is already barred by res judicata; and (3) BSP is guilty of forum shopping.

In its Opposition to the Motion to Dismiss, BSP claimed, among others, that: (1) the Complaint
was one for annulment of title under Article 476 of the Civil Code which falls within the exclusive
jurisdiction of the RTC; (2) the CA’s Resolution in CA-G.R. CV No. 81888 is not applicable; and
(3) that BSP is not guilty of forum shopping.[15]

In its Reply, MARRECO pointed out BSP’s failure to deny the finality of the January 19, 2004
Order of RTC Branch 55 and March 11, 2005 Resolution of the CA and that BSP’s title was
obtained under a notice of lis pendens. It also reiterated the grounds relied upon in its Motion to
Dismiss.[16]

On March 22, 2007, RTC Branch 56 issued an Order,[17] dismissing BSP’s Complaint on the
ground of lack of jurisdiction. It ruled that its assumption of jurisdiction over the Complaint would
result in trespassing upon or intruding into the exclusive domain and realm of a co-equal court.
The dispositive portion of the Order reads:
WHEREFORE, foregoing premises considered, and without necessarily going into the merits of this
case[,] the Court, in the interest of justice and judicial stability, has decided to, as it hereby decides, to
GRANT the Defendant’s Motion to Dismiss.

Accordingly, this case is hereby ordered DISMISSED.

SO ORDERED.[18]

BSP timely appealed the aforesaid Order by filing a Notice of Appeal and its Appellant’s Brief.[19]

On November 11, 2008, MARRECO, instead of filing an Appellee’s Brief:filed a Motion to


Dismiss Appeal alleging that 1) the issues raised in the appellant’s brief are pure questions of
law; hence, the CA has no jurisdiction to entertain the appeal; and 2) the appeal is frivolous and
dilatory.[20] Despite notice from the CA, BSP did not file its Comment.[21]

In the first assailed Resolution dated July 25, 2008, the CA denied the Motion to Dismiss Appeal
on the ground that the issues raised in the appellant’s brief involved mixed questions of fact and
law.[22]

MARRECO then filed a Motion for Reconsideration.[23] In its Opposition to the Motion for
Reconsideration, BSP argued that the Motion for Reconsideration was a mere rehash of the
Motion to Dismiss Appeal, hence, pro-forma.[24] MARRECO then filed its Reply stating that: a)
BSP was unable to defend the CA’s Resolution in failing utterly to point out what factual issues
were raised; b) the issues raised were all legal questions; c) as no trial was held and no
evidence adduced, there was nothing to look into or evaluate; and d) the quoted paragraph in
the RTC Judgment was at best a legal conclusion or obiter dictum.[25]

In the second assailed Resolution dated October 21, 2008, the CA denied MARRECO’s Motion
for Reconsideration.[26]

Hence, this Petition for Certiorari and Mandamus.

MARRECO argues that the issues raised in BSP’s Appeal are pure questions of law which are
proper subjects of a Rule 45 petition for review on certiorari filed before the Court and not of a
notice of appeal under Rule 41 filed before the appellate court. It adds that the CA has no
jurisdiction to decide appeals where only questions of law are involved because such jurisdiction
belongs to the Court.[27] MARRECO prays that a writ of mandamus be issued directing the CA to
dismiss BSP’s appeal and a writ of certiorari be issued annulling the July 25, 2008 and October
21, 2008 Resolutions of the CA.[28]

Issue

Whether the CA acted with grave abuse of discretion amounting to lack or excess of
jurisdiction when it denied MARRECO’s Motion to Dismiss Appeal and assumed
jurisdiction over BSP’s appeal.
Ruling

We dismiss the petition.


A petition for certiorari will only lie in case of grave abuse of discretion.[29] It may be issued only
where it is clearly shown that there is patent and gross abuse of discretion as to amount to an
evasion of positive duty or virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility.[30]

Mandamus, on the other hand, is a command issuing from a court of law of competent
jurisdiction, in the name of the state or the sovereign, directed to some inferior court, tribunal, or
board, or to some corporation or person requiring the performance of a particular duty therein
specified, which duty results from the official station of the party to whom the writ is directed or
from operation of law.[31]

The CA did not act with grave abuse of discretion amounting to lack or excess of jurisdiction
when it denied MARRECO’s Motion to Dismiss Appeal and assumed jurisdiction over BSP’s
Appeal.

Section 2, Rule 41 of the Rules of Court[32] governs appeals from judgments and final orders of
the RTC:

(a) If the issues raised involve questions of fact or mixed questions of fact and law, the proper
recourse is an ordinary appeal to the CA in accordance with Rule 41 in relation to Rule 44 of
the Rules of Court; and
(b) If the issues raised involve only questions of law, the appeal shall be to the Court by petition
for review on certiorari in accordance with Rule 45 of the Rules of Court.[33] (Emphasis
supplied.)

In Sevilleno v. Carilo,[34] citing Macawiwili Gold Mining and Development Co., Inc. v. Court of
Appeals,[35] we summarized:

(1) In all cases decided by the RTC in the exercise of its original jurisdiction, appeal may be made to
the Court of Appeals by mere notice of appeal where the appellant raises questions of fact or
mixed questions of fact and law;

(2) In all cases decided by the RTC in the exercise of its original jurisdiction where the appellant
raises only questions of law, the appeal must be taken to the Supreme Court on a petition for
review on certiorari under Rule 45[;]

(3) All appeals from judgments rendered by the RTC in the exercise of its appellate jurisdiction,
regardless of whether the appellant raises questions of fact, questions of law, or mixed questions of
fact and law, shall be brought to the Court of Appeals by filing a petition for review under Rule
42.[36] (Emphasis supplied)

A question of law exists when there is doubt or controversy as to what the law is on a certain
state of facts, and there is a question of fact when the doubt or difference arises as to the truth
or falsehood of facts, or when the query necessarily invites calibration of the whole evidence
considering mainly the credibility of witnesses, existence and relevancy of specific surrounding
circumstances, their relation to each other and to the whole and probabilities of the
situation.[37] No examination of the probative value of the evidence would be necessary to
resolve a question of law. The opposite is true with respect to questions of fact.[38]

The test of whether a question is one of law or fact is not the appellation given to such question
by the party raising the same. It is whether the appellate court can determine the issue raised
without reviewing or evaluating the evidence and would only limit itself to the inquiry of whether
the law was properly applied given the facts and supporting evidence.[39] Such is a question of
law. Otherwise, it is a question of fact.

The nature of the issues to be raised on appeal can be gleaned from the appellant’s notice of
appeal filed in the trial court and in his or her brief as appellant in the appellate court. [40] Here,
BSP raised the following issues in its Appellant’s Brief:
1) In rendering the assailed order, the trial court erred in concluding that to assume jurisdiction over
the instant case will operate to trespass upon or intrude into the exclusive domain and realm of a
co-equal court.

2) Similarly, the trial court committed an erroneous appreciation of the true import of the Order dated
[January 19,] 2004 issued by Judge Ulric R. Cañete.

3) The order dismissing the case of quieting of title has practically disregarded and rendered
meaningless the provisions of the Philippine Civil Code, Chapter 3 entitled Quieting of Title.

4) Under the peculiar facts and law of the case below, the Honorable Court should remand the case to
the trial court for further proceedings as mandated by the Rules of Court involving claims by the
citizens of the country instead of dismissing the case on technicality when the same does not apply
at all considering the abrogation or denial of the right of BSP to seek redress of its claims[.] [41]

Meanwhile, in its Appellant’s Brief, BSP explained that while the January 19, 2004 Order of the
trial court in Civil Case No. MAN-3902 did not direct the cancellation of TCT No. 46781, the
Register of Deeds of Mandaue City, without notice to BSP, proceeded to cancel TCT No.
46781. As a result, BSP was compelled to file an action for annulment of title and reconveyance
or annulment of title, the action subject of the present petition. [42] BSP argued that the trial court,
in granting MARRECO’s Motion to Dismiss, erred in concluding that to rule otherwise would
amount to an intrusion into an order of a co-equal court. According to BSP, contrary to the
pronouncement of the trial court in its March 22, 2007 Order, there can be no intrusion into an
order of a co-equal court since Civil Case No. MAN-3902 did not order the cancellation of TCT
No. 46781 while BSP’s complaint for annulment of title and reconveyance or annulment of title
assails the Register of Deeds’ cancellation of TCT No. 46781.[43]

We find that BSP’s appeal does not only involve questions of law. It also involves questions of
fact. The allegations in BSP’s complaint and appellant’s brief as to the antecedent facts that led
to the cancellation of TCT No. 46781 create an uncertainty on the propriety of the trial court’s
pronouncement that to entertain BSP’s complaint would amount to an intrusion into an order of
a co-equal court and call for a calibration of the evidence on record. Also telling is BSP’s
allegation that it is a mortgagee-in good faith who obtained its title to the property by being the
highest bidder during the auction sale in the foreclosure proceedings. As an innocent third party,
it is not bound by whatever transpired between Gotesco and MARRECO. These matters
constitute a question of fact and not a question of law as MARRECO would like to present it. As
the CA correctly held:

It is indubitable that what impelled BSP to file the instant complaint for annulment of title and
reconveyance or quieting of title before RTC Branch 56, docketed as Civil Case No. Man-5524 is not the
Decision of January 19, 2004 rendered by RTC, Branch 55 in Civil Case No. Man-3902 but the
subsequent cancellation of BSP’s title without any court order to that effect. From this premise, the issue
on whether or not the assumption of jurisdiction over the instant case is equivalent to annulment of
judgment of a coequal tribunal is considered a question of fact. The surrounding facts which brought
about the cancellation of BSP’s title need to be examined to determine whether the complaint subject of
the present appeal is indeed one that amounts to the annulment of judgment of a co-equal court.

At first glance, this issue appears to involve a question of law since it does not concern itself with the
truth or falsity of certain facts. Still, in order that this Court can make a ruling on the nature of the action
instituted before RTC, Branch 56, it has to evaluate the existence and the relevance of the circumstances
that led to the cancellation of BSP’s title. The determination of these facts is crucial as it will resolve
whether the assumption of jurisdiction over the instant case would indeed tantamount to violation of the
doctrine on non-interference, whether the cancellation of BSP’s title by virtue of the Order of January 19,
2004 rendered by RTC, Branch 55 is proper though the order is silent on the matter, whether such
cancellation is tantamount to a collateral attack on BSP’s title. In short, in order to address fully the issues
raised by BSP in its Brief, this Court necessarily has to make factual findings.

Notably, plaintiff-appellant brought the present appeal raising mixed questions of fact and law. BSP
impugns the decision of the RTC dismissing its complaint on the ground that it violates the principle on
non-interference to a co equal court The resolution of the propriety of dismissal entails a review of the
factual circumstances that led the trial court to decide in such manner. Further, BSP also questions the
lower court’s appreciation of the true import of the Order dated January 19, 2004 and its disregard of the
provisions under the Civil Code on quieting of title. Hence, the filing of the present appeal before US is
proper.[44]

Given the mixed questions of law and fact raised, BSP properly elevated the RTC’s March 22,
2007 Order to the CA on ordinary appeal under Rule 41, Section 2 of the Rules of Court.

WHEREFORE, the Petition for Certiorari and Mandamus is hereby DISMISSED. The
Resolutions of the Court of Appeals dated July 25, 2008 and October 21, 2008 are AFFIRMED.
Let records of the case be REMANDED to the Court of Appeals which is DIRECTED to proceed
with the appeal with dispatch.

SO ORDERED.

Sps. Desiderio and Teresa Domingo Vs. Sps.


Emmanuel and Tita Manzano, et al.; G.R. No.
201883; November 16, 2016
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside: a) the January 4, 2012 Decision2 of
the Court of Appeals (CA) in CA-G.R. CV No. 93662 which reversed the May 22, 2009
Decision3 of the Regional Trial Court (RTC) of Caloocan City, Branch 128 in Civil Case No. C-
20102; and b) the CA’s May 18, 2012 Resolution4 denying herein petitioners’ Motion for
Reconsideration.

Factual Antecedents

Respondents Emmanuel and Tita Manzano (the Manzanos) were the registered owners of a
35,281-square meter parcel of land with improvements in Bagong Barrio, Caloocan City (subject
property), covered by Transfer Certificate of Title (TCT) No. 160752.

On June 1, 2001, the Manzanos, through their duly appointed attorney-in-fact and herein co-
respondent Franklin Estabillo (Estabillo), executed a notarized agreement5 with petitioners
Desiderio and Teresa Domingo which provided, among others, that –

Ako, si Desiderio Domingo na nakatira sa 188 Gen. Mascardo St. Bagong Barrio Kalookan City.
Na bibilhin ko ang lupa at bahay ni Tita Manzano sa 168 Gen. Mascardo St. Bagong Barrio
Kalookan City. Na ang may Special Power of Attorney si Franklin Estabillo sa halagang
(₱900,000.00) nine hundred thousand pesos. Sa aming napagkasunduan ako ay magbibigay ng
halagang (₱l00,000.00) one hundred thousand pesos para sa Reservision [sic] Fee.
Ayon sa aming napagkasunduan ililipat lamang ang Titulo ng lupa na may no. 160752 at bahay
pag nabayaran ko ng lahat ang (₱900,000.00) Nine Hundred Thousand Pesos hanggang Marso
ng 2001. Kami ay maghahati sa Gain Tax at documentary stamps na babayaran sa B.I.R. ayon
sa aming napagkasunduan.

Kalakip nito ang xerox title ng titulo ng lupa at bahay.6

Petitioners paid the ₱100,000.00 reservation fee upon the execution of the agreement.
Thereafter, they also made payments on several occasions, amounting to ₱160,000.00.
However, they failed to tender full payment of the balance when the March 2001 deadline came.
Even then, Estabillo advised petitioners to continue their payments; thus, they made additional
payments totaling ₱85,000.00. All in all, as of November 2001, petitioners had made payment in
the amount of ₱345,000.00.

All this time, the Manzanos remained in possession of the subject property.

In December 2001, petitioners offered to pay the remaining ₱555,000.00 balance, but Estabillo
refused to accept payment; instead, he advised petitioners to await respondent Tita Manzano’ s
(Tita) arrival from abroad.

When Tita arrived, petitioners tendered payment of the balance, but the former refused to
accept it. Instead, she told them that the property was no longer for sale and she was forfeiting
their payments. For this reason, petitioners caused the annotation of an affidavit of adverse
claim7 upon TCT No. 160752.

Soon thereafter, petitioners discovered that respondent Carmelita Aquino (Aquino) bought the
subject property on May 7, 2002, and a new title – TCT No. C-359293 – had been issued in her
name. Their adverse claim was nevertheless carried over to Aquino’s new title.

Ruling of the Regional Trial Court

On May 23, 2002, petitioners filed a Complaint for specific performance and damages with
injunctive relief against respondents. The case was docketed as Civil Case No. C-20102 and
assigned to Branch 128 of the RTC of Caloocan City. Petitioners sought to compel the
Manzanos to accept payment of the remaining balance, execute a deed of sale over the subject
property in their favor, and restrain the sale in favor of Aquino.
Petitioners later filed an Amended Complaint,8 praying further that Aquino’s new title – TCT No.
C-359293 – be cancelled and annulled, and that instead, the Manzanos’ TCT No. 160752 be
reinstated, or alternatively, that a new title be issued in their name upon continuation of the sale
in their favor and payment of the outstanding balance.

In their respective Answers,9 Aquino and Estabillo alleged essentially that there was no sale
between petitioners and the Manzanos, but a mere offer to buy from petitioners, which was
refused due to late payment; that the case was premature for failure to resort to conciliation; and
that Aquino’s new title was indefeasible and may not be collaterally attacked. The Manzanos,
who appear to be living in the United States of America, did not file a responsive pleading, for
which reason they were declared in default.

After the issues were joined, trial proceeded.

On May 22, 2009, the RTC issued a Decision declaring that, as against Aquino, petitioners have
a prior right over the subject property. It held that the agreement between petitioners and the
Manzanos was a contract of sale. Applying Article 1544 of the Civil Code,10 the RTC held that
Aquino was a buyer in bad faith, as she knew of petitioners’ prior purchase and registered
adverse claim – and such knowledge was equivalent to registration, and thus, the registration of
her sale was done in bad faith. Thus, the trial court decreed:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs and


against defendants as; follows:

1. The defendant Spouses Emmanuel and Tita Manzano are hereby ordered to execute a Deed
of Absolute [sic] over a house and lot covered by Transfer Certificate of Title No. 160752 of the
Registry of Deeds of Kalookan City upon the tender of payment by the plaintiffs in the amount of
Php555,000.00.

2. The Registry of Deeds is hereby ordered to cancel Transfer Certificate of Title No. C-35[9]293
issued in favor defendant [sic] Carmelita Aquino and Transfer Certificate of Title No. 160752 is
ordered reinstated.

3. The defendant Carmelita Aquino is hereby ordered to surrender possession of the property to
the plaintiffs upon the execution of the necessary deed of absolute sale.
4. The defendants Spouses Manzano and defendant Franklin Estabillo are hereby ordered to
pay, jointly and severally, the plaintiffs the sum of Php30,000.00 as reasonable attorney’s fees.

5. The defendants Spouses Manzano and defendant Estabillo are likewise ordered to pay,
jointly and severally, the costs of this suit.

SO ORDERED.11

Ruling of the Court of Appeals

Aquino filed an appeal before the CA, docketed as CA-G.R. CV No. 93662. The appellate court
initially referred the case for mediation, but the parties failed to settle amicably.

On January 4, 2012, the CA rendered the assailed Decision containing the following
pronouncement:

We find for appellant.12

The crux of the instant petition is whether the agreement between the spouses Manzano and
appellees13 is a contract of sale, as the RTC ruled, or a contract to sell, as appellant proposed.
If it is a contract of sale, then Article 1544 of the Civil Code applies, and the RTC’s Decision
stands on firm ground. However, if the contract is merely a contract to sell, the propriety of
applying Art. 1544 falters, and appellant’s principal thrust in her Brief deserves discussion.
Thus, the resolution of this issue is decisive.

xxxx

We have applied the distinctions above and t1xamined the contract between the parties. In this
regard, We differ from the RTC and find that the Manzanos and appellees entered into a mere
contract to sell.

We quote the following provision from the contract, which is particularly revealing of the
contract’s true nature:
‘Ayon sa aming napagkasunduan, ililipat lamang ang Titulo ng lupa na may no. 160752 at
bahay pag nabayaran ko ng lahat ng (₱900,000.00) Nine Hundred thousand pesos hanggang
Marso ng 2001.’

[Translated as: According to our agreement, the title of the land with no. 160752 and the house
shall only be transferred when I have completely paid the ₱900, 000. 00 by March 2001.]

The above passage clearly indicates that first, the ownership is reserved to the vendors, and
second, that the title of the subject property passes to the buyers only upon full payment of
Php900,000.00 [in] March 2001. Additionally, appellees have never even granted possession of
the subject property, and that no deed of sale, absolute or conditional, has been executed in
their favor. All have been held as indications that the contracting parties have entered into a
contract to sell.

Thus, with our determination of that character of the parties’ agreement as a contract to sell, We
now proceed to illuminate whether Art. 1544 indeed applies to the situation at bar.

Applicability of Art. 1544 to Contracts to Sell

Relevant cases affirm an indubitable rule: Article 1544 only applies to instances of double sales,
and not where one contract is some other transaction, such as a contract to sell, even if the
latter concurs with a contract of sale over the same realty.

In Cheng v. Genato, et al.,14 the Court succinctly clarified and explained the reason behind
such inapplicability, to wit:

‘However, a meticulous reading of the aforequoted provision (Art. l 544, Civil Code) shows that
said law is not apropos to the instant case. This provision connotes that the following
circumstances must concur:

(a) The two (or more) sales transactions in the issue must pertain to exactly the same subject
matter, and must be valid sales transactions. (b) The two (or more) buyers at odds over the
rightful ownership of the subject matter must each represent conflicting interests; and (c) The
two (or more) buyers at odds over the rightful ownership of the subject matter must each have
bought from the very same seller.’
These situations obviously are lacking in a contract to sell for neither a transfer of ownership nor
a sales transaction has been consummated. The contract to be binding upon the obligee or the
vendor depends upon the fulfillment or non-fulfillment of an event.’

Later jurisprudence would then echo the above doctrine. Especially persuasive is the ruling in
Spouses Nabus and Tolero v. Spouses Pacson,15 as its facts closely resemble those at bar.
Distilled, those facts show that the Nabuses (the sellers) entered into a contract with the
Pacsons (the prospective buyers) over a parcel of land. But the Pacsons failed to pay on time;
this notwithstanding, the Nabuses still accepted their late payments. The Nabuses, however,
failed to appear on the designated date for the delivery of the final payment to them.

Later, the Pacsons heard that the land had been sold to Betty Tolero, a third party, later
adjudged found to be buyer in bad faith. Tolero obtained a new title over the property pursuant
to the sale to her.

Thus, the Pacsons filed for the annulment of the deeds of sale, the cancellation of the titles
issued in favor of the buyer Betty Tolero, and for damages. The RTC and the CA ruled for the
Pacsons, and against Betty Tolero.

The Supreme Court, however, disagreed, and upheld the rights from the latter contract of sale.
The Court ruled:

‘Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The
essential elements of a contract of sale are the following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the
price;

b) Determinate subject matter; and

c) Price certain in money or its equivalent.

Under this definition, a Contract to Sell may not be considered as a Contract of Sale because
the first essential element is lacking. In a contract to sell, the prospective seller explicitly
reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not
as yet agree or consent to transfer ownership of the property subject of the contract to sell until
the happening of an event, which for present purposes we shall take as the full payment of the
purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the
subject property when the entire amount of the purchase price is delivered to him. In other
words, the full payment of the purchase price partakes of a suspensive condition, the non-
fulfillment of which prevents the obligation to sell from arising and, thus, ownership is retained
by the prospective seller without further remedies by the prospective buyer.’

The Court found that the Pacsons could have consigned the amount to be paid to the Pacsons
[sic], which would have produced the effect of payment and fulfilled the suspensive condition in
a contract to sell, hence obligating the prospective seller to transfer the title to the prospective
buyers. The Pacsons, however, failed to do so. In this case, appellees unfortunately committed
the same error.

In any case, the foregoing principles result in the rule that in contracts to sell, specific
performance is therefore an improper remedy to compel the seller to execute the deed of sale
before full payment of the purchase price. Thus, in the Nabus case, the Court held:

‘Evidently, before the remedy of specific perfom1ance may be availed of, there must be a
breach of the contract.

Under a contract to sell, the title of the thing to be sold is retained by the seller until the
purchaser makes full payment of the agreed purchase price. Such payment is a positive
suspensive condition, the non-fulfillment of which is not a breach of contract but merely an event
that prevents the seller from conveying title to the purchaser. The non-payment of the purchase
price renders the contract to sell ineffective and without force and effect. Thus, a cause of
action, for specific performance does not arise.’

As regards a subsequent ‘buyer in bad faith’ affecting prior contracts to sell, the peculiarities of a
contract to sell, emphasized above, culminate in the unique doctrine that in case a third person
purchases a property subject of a prior contract to sell, such buyer is protected from the taint of
bad faith under Article 1544. Here the ruling in Spouses Cruz and Cruz v. Spouses Fernando
and Fernando,16 citing Coronel v. Court of Appeals17 enlightens, to wit:

‘In a contract to sell, there being no previous sale of the property, a third person buying such
property despite the fulfillment of the suspensive condition such as the full payment of the
purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer
cannot seek the relief of reconveyance of the property. There is no double sale in such case.
Title to the property will transfer to the buyer after registration because there is no defect in the
owner-seller’s title per se, but the latter, of course, may be sued for damages by the intending
buyer.’

Considering these well-settled precedents, We rule that: first, the contract between the parties
was a contract to sell; second, that since there are no double sales over the same realty, Art.
1544 of the Civil Code is therefore inapplicable to the instant case; third, that because the
contract between the Manzanos and the appellees was a contract to sell, and appellees have
not paid the full purchase price by full payment or consignment, specific performance does not
lie for a reconveyance of the property; and fourth, that by virtue of the inapplicability of Art. 1544
and the nature of a contract to sell, appellant cannot be deemed in bad faith.

We find that such ruling soundly disposes of the other issues raised by appellant in her favor,
thereby needing no further discussion.

In rendering Our pronouncement, We clarify that We are not unmindful of Filinvest Development
Corporation v. Golden Haven Memorial Park18 which appellees invoked in their Brief. In the
Filinvest case, where rights from a contract to sell clashed with those from a contract of sale
over the same realty, indeed the Court applied the principle of a “bad faith buyer” in a manner
closely resembling an application of Art. 1544. However, the facts of that case present a crucial
difference. In Filinvest, no titles were yet issued in the subsequent buyer’s name; the
subsequent buyer merely sought to annotate his sales. As such, the holding in Spouses Cruz v.
Fernando, i.e., that title to the property will transfer upon registration without the third person
purchaser being held in bad faith, has not yet, so to speak, locked in place against the intending
buyer in the earlier contract to sell. Thus, before registration of the sale, the vendee may still be
held in bad faith and the sale to him annulled; but after registration, title will issue and the
slighted intending buyer can only recover damages from the seller, because, as the Spouses
Cruz v. Fernando case emphasized, the owner-seller’s title suffers no defect per se.

This is not, however, to say that appellees are deprived of remedies. As found in the Nabus
case, appellees are entitled to the reimbursement of the sums they have paid, if only to prevent
the defendants’ unjust enrichment. Appellees are also entitled to nominal damages against the
defendants Manzanos and Estabillo. x x x

xxxx
In the matter of reimbursements, it bears stating that we are also aware that the appellees paid
less than two years’ installments on their contract. It is thus relevant to discuss R.A. 6552, or the
‘Realty Installment Buyer Act’ which has been held applicable to contracts to sell realty on
installments.

Significantly, in Rillo v. Court of Appeals,19 the Court did not grant reimbursements under the
law to the prospective buyer because the buyer paid less than two year’s installments. However,
we find that this holding is inapplicable. In Rillo, the prospective buyer claimed reimbursement
under Sec. 4 of RA 6552. However, a reading of the law clarifies that Sec. 420 must be read in
connection with Sec. 3, which provides:

‘Sec. 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding industrial
lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight
hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the buyer is entitled to the following
rights in case he defaults in the payment of succeeding installments:x x x’

Clearly, the above provision and Sec. 4 apply only when the buyer defaults in payment. In case
the defaulting buyer paid less than two years’ installments, RA. 6552 grants him no right to
recover his installments. But appellees were not in default The acceptance by Estabillo of their
late installments waived the original period for payment, following Angeles v. Calasanz.21 We
find that Estabillo’s acceptance also bound his principals, the Manzanos, who accepted the late
payments, amounting to a tacit ratification of the agent’s acts, and obligated the Manza.nos to
comply with its consequences. Therefore, the period to pay the balance has not yet lapsed and
appellees were not in default.

Finally, we affirm the RTC’s grant of attorney’s fees and costs, as defendants’ unilateral
cancellation of the contract and subsequent sale to appellant, without reimbursing appellees of
their payments, constrained appellees to institute the present action to protect their interests.

WHEREFORE, the Petition is GRANTED. The Decision of the Regional Trial Court in Civil Case
No. C-20102 dated 22 May 2009 is REVERSED and SET ASIDE. Judgment is hereby rendered
upholding the validity of the sale of the subject property made by defendants Emmanuel
Manzano and Tita Manzano in favor of appellant Carmelita Aquino, as well as the validity of
Transfer Certificate of Title No. 359293 issued in the name of Carmelita Aquino. Defendants
Emmanuel Manzano and Tita Manzano and defendant Franklin Estabillo are ordered to
reimburse appellees Spouses Desiderio and Teresa Domingo the sum of Three Hundred and
Forty Five Thousand Pesos (₱345,000.00) corresponding to the installment payments they have
paid on the subject property, with annual interest of twelve percent (12%) until fully paid.
Defendants Emmanuel Manzano, Tita Manzano, and Franklin Estabillo are likewise ordered
jointly and severally to pay spouses Desiderio and Teresa Domingo nominal damages in the
amount of Ten Thousand Pesos (₱l0,000.00) and reasonable attorney’s fees amounting to
Thirty Thousand Pesos (₱30,000.00) each with annual interest of twelve percent (12%) until
fully paid. Costs against defendants Emmanuel Manzano, Tita Manzano, and Franklin Estabillo.

SO ORDERED.22

Petitioners filed a Motion for Reconsideration, which the CA denied in its subsequent May 18,
2012 Resolution. Hence, the present Petition.

Issues

In a March 24, 2014 Resolution,23 this Court resolved to give due course to the Petition, which
contains the following assignment of errors:

1. THE COURT OF APPEALS ERRED IN NOT DISREGARDING THE ISSUE RAISED BY


RESPONDENT AQUINO FOR THE FIRST TIME ON APPEAL THAT ARTICLE 1544 OF THE
CIVIL CODE IS NOT APPLICABLE TO THIS CASE.

2. THE COURT OF APPEALS ERRED IN HOLDING THAT ARTICLE 1544 IS NOT


APPLICABLE TO THIS CASE.

3. THE COURT OF APPEALS ERRED IN NOT AFFIRMING THE DECISION OF THE


REGIONAL TRIAL COURT OF CALOOCAN CITY.24

Petitioners’ Arguments

In their Petition and Reply,25 petitioners contend that respondents Aquino and Estabillo are not
entitled to the defense that Article 1544 is not applicable in this case, since they did not include
the same in their answers below; that the CA erred in not applying said Article 1544, in light of
previous Supreme Court rulings (Abarquez v. Court of Appeals26 and Filinvest Development
Corporation v. Golden Haven Memorial Park Inc.27) to the effect that Article 1544 applies even
when one of the double sale transactions involved is a mere contract to sell; that Aquino was a
purchaser in bad faith as she clearly knew of the prior sale in their favor through the adverse
claim annotated on TCT No. 160752; and that their annotation of an adverse claim on TCT No.
160752 is equivalent to registration of ownership.28

Respondent Aquino’s Arguments

Pleading affirmance, Aquino argues in her Comment (With Manifestation)29 that as correctly
ruled by the CA, Article 1544 does not apply, and she is not barred from arguing so to refute
petitioners’ insistence that the said provision applies; that it was the RTC that introduced the
applicability of Article 1544 to the case through its May 22, 2009 Decision – thus, the necessity
of arguing against it arose only on appeal; and that the agreement between the Manzanos and
petitioners being a contract to sell, Article 1544 cannot apply since as between them, no sale or
transfer of ownership occurred, and when petitioners failed to pay the purchase price in full, no
breach of contract necessarily occurred, but the agreement between them simply became
ineffective and without force and effect. Finally, Aquino contends that the cited cases of
Abarquez v. Court of Appeals and Filinvest Development Corporation v. Golden Haven
Memorial Park, Inc. are not applicable in this case, as misrepresented by petitioners: Abarquez
does not involve a contract to sell, while the Court clearly did not apply Article 1544 in Filinvest.

Our Ruling

The Court denies the Petition.

On petitioners’ contention that respondent Aquino may not raise the issue pertaining to Article
1544 for the first time on appeal, this Court holds that – as correctly noted by Aquino – since the
relevance of Article 1544 was tackled only in the RTC’s Decision, then it is understandable why
she should refute its applicability only on appeal.

Petitioners’ main contention is that while their agreement with the Manzanos was admittedly a
mere contract to sell where title is retained by the latter until full payment of the price, they
nonetheless have a superior right over the subject property, as against Aquino, by virtue of the
applicability of Article 1544 and the fact that Aquino was a buyer in bad faith.
This Court, however, agrees with the CA’ s pronouncement that Article 1544 cannot apply to the
present case. The appellate court’ s disquisition is succinct; nothing more can be added to what
it has said. Just the same, the treatment and disposition of cases of this nature is quite settled.

This ponente has had the occasion to rulethat in a contract to sell, payment of the price is a
positive suspensive condition, failure of which is not a breach of contract warranting rescission
but rather just an event that prevents the prospective buyer from compelling the prospective
seller to convey title. In other words, the non-fulfillment of the condition of full payment renders
the contract to sell ineffective and without force and effect.30

x x x A contract to sell is one where the prospective seller reserves the transfer of title to the
prospective buyer until the happening of an event, such as full payment of the purchase price.
What the seller obliges himself to do is to sell the subject property only when the entire amount
of the purchase price has already been delivered to him. ‘In other words, the full payment of the
purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the
obligation to sell from arising and thus, ownership is retained by the prospective seller without
further remedies by the prospective buyer’. x x x31

And it is precisely for the above reason that Article 1544 of the Civil Code cannot apply. Since
failure to pay the price in full in a contract to sell renders the same ineffective and without force
and effect, then there is no sale to speak of. Even petitioners’ posture that their annotation of an
adverse claim on TCT No. 160752 is equivalent to registration or claim of ownership necessarily
fails, on account of the fact that there was never a sale in their favor – and without a sale in their
favor, they could not register or claim ownership of the subject property. Thus, as between the
parties to the instant case, there could be no double sale which would justify the application of
Article 1544. Petitioners failed to pay the purchase price in full, while Aquino did, and thereafter
she was able to register her purchase and obtain a new certificate of title in her name. As far as
this Court is concerned, there is only one sale – and that is, the one in Aquino’s favor. “Since
there is only one valid sale, the rule on double sales under Article 1544 of the Civil Code does
not apply.”32

With regard to the cases cited by petitioners, Abarquez v. Court of Appeals and Filinvest
Development Corporation v. Golden Haven Memorial Park, Inc., suffice it to state that they do
not apply, In Abarquez, while the agreement entered into was a contract to sell, the land subject
of the sale was nonetheless delivered to the buyer, who took possession thereof and even
constructed a house thereon. In the present case, the subject property was never surrendered
to petitioners and they were never in possession thereof. There is a difference in the factual
milieu. On the other hand, the Filinvest case is not one involving Article 1544; and while the
Court therein held that a notice of adverse claim is a “warning to third parties dealing with the
property that someone claims an interest in it or asserts a better right than the registered
owner,”33 this is not true as regards petitioners, As already stated, petitioners’ failure to pay the
price in full rendered their contract to sell ineffective and without force and effect, thus nullifying
any claim or better right they may have had.

WHEREFORE, the Petition is DENIED. The January 4, 2012 Decision and May 18, 2012
Resolution of the Court of Appeals in CA-G.R. CV No. 93662
areAFFIRMED with MODIFICATION, in that the monetary awards shall earn interest at the rate
of 12% per annum up to June 30, 2013; thereafter, the rate of interest shall be 6% per annum
until judgment is fully satisfied.34

Guillermo Salvador, et al. Vs. Patricia, Inc.;


G.R. No. 195834; November 9, 2016
DECISION

BERSAMIN, J.:

Jurisdiction over a real action is determined based on the allegations in the complaint of the
assessed value of the property involved. The silence of the complaint on such value is ground to
dismiss the action for lack of jurisdiction because the trial court is not given the basis for making
the determination.

The Case

For review is the decision promulgated on June 25, 2010[1] and the resolution promulgated on
February 16, 2011 in CA-G.R. CV No. 86735,[2] whereby the Court of Appeals (CA) dismissed
the petitioners’ complaint in Civil Case No. 96-81167, thereby respectively reversing and setting
aside the decision rendered on May 30, 2005 by the Regional Trial Court (RTC), Branch 32, in
Manila,[3] and denying their motion for reconsideration.

Antecedents
The CA adopted the summary by the RTC of the relevant factual and procedural antecedents,
as follows:

This is an action for injunction and quieting of title to determine who owns the property occupied by the
plaintiffs and intervenor, Ciriano C. Mijares.

Additionally, to prevent the defendant Patricia Inc., from evicting the plaintiffs from their respective
improvements along Juan Luna Street, plaintiffs applied for a preliminary injunction in their Complaint
pending the quieting of title on the merits.

The complaint was amended to include different branches of the Metropolitan Trial Courts of Manila. A
Complaint-in-Intervention was filed by the City of Manila as owner of the land occupied by the plaintiffs.
Another Complaint-in-Intervention by Ciriano Mijares was also filed alleging that he was similarly
situated as the other plaintiffs.

A preliminary injunction was granted and served on all the defendants.

Based on the allegations of the parties involved, the main issue to be resolved is whether the
improvements of the plaintiffs stand on land that belongs to Patricia Inc., or the City of Manila. Who owns
the same? Is it covered by a Certificate of Title?

All parties agreed and admitted in evidence by stipulation as to the authenticity of the following
documents:

(1) Transfer Certificate of Title No. 44247 in the name of the City of Manila;

(2) Transfer Certificate of Title No. 35727 in the name of Patricia Inc.;

(3) Approved Plan PSD-38540; and

(4) Approved Subdivision Plan PCS-3290 for Ricardo Manotok.

The issue as to whether TCT 35727 should be cancelled as prayed for by the plaintiffs and intervenor,
Ciriano C. Mijares is laid to rest by agreement of the parties that this particular document is genuine and
duly executed. Nonetheless, the cancellation of a Transfer Certificate of Title should be in a separate
action before another forum.
Since the Transfer Certificates of Title of both Patricia Inc. and the City of Manila are admitted as
genuine, the question now is: Where are the boundaries based on the description in the respective titles?[4]

To resolve the question about the boundaries of the properties of the City of Manila and
respondent Patricia, Inc., the RTC appointed, with the concurrence of the parties, three geodetic
engineers as commissioners, namely: Engr. Rosario Mercado, Engr. Ernesto Pamular and
Engr. Delfin Bumanlag.[5] These commissioners ultimately submitted their reports.

On May 30, 2005, the RTC rendered judgment in favor of the petitioners and against Patricia,
Inc., permanently enjoining the latter from doing any act that would evict the former from their
respective premises, and from collecting any rentals from them. The RTC deemed it more
sound to side with two of the commissioners who had found that the land belonged to the City of
Manila, and disposed:

WHEREFORE, it is hereby ORDERED:

1. Defendant Patricia Inc. and other person/s claiming under it, are PERMANENTLY
ENJOINED to REFRAIN and DESIST from any act of EVICTION OR
EJECTMENT of the PLAINTIFFS in the premises they occupy;

2. Defendant Patricia Inc. STOP COLLECTING any rentals from the plaintiffs who may
seek reimbursement of previous payments in a separate action subject to the ownership of
the City of Manila and;

3. Attorney’s fees of P10,000.00 to each plaintiff and intervenor, Ciriano Mijares;


P20,000.00 to the City of Manila. (emphasis ours)

No pronouncement as to costs.

SO ORDERED.[6]

Decision of the CA

On appeal, the CA, in CA-G.R. CV No. 86735, reversed the RTC’s judgment,[7] and dismissed
the complaint. The CA declared that the petitioners were without the necessary interest, either
legal or equitable title, to maintain a suit for quieting of title; castigated the RTC for acting like a
mere rubber stamp of the majority of the commissioners; opined that the RTC should have
conducted hearings on the reports of the commissioners; ruled as highly improper the
adjudication of the boundary dispute in an action for quieting of title; and decreed:

WHEREFORE, premises considered, We hereby REVERSE and SET ASIDE the decision dated May
30, 2005 of the Regional Trial Court of Manila, Branch 32. Civil Case No. 96-81167 is hereby
DISMISSED for utter want of merit. Accordingly, the questioned order enjoining Patricia and all other
person/s acting on its stead (sic) to refrain and desist from evicting or ejecting plaintiffs/appellees in
Patricia’s own land and from collecting rentals is LIFTEDeffective immediately.

No costs.

SO ORDERED.[8]

The CA denied the motions for reconsideration of the petitioners and intervenor Mijares through
the assailed resolution of February 16, 2011.[9]

Hence, this appeal by the petitioners.

Issues

The petitioners maintain that the CA erred in dismissing the complaint, arguing that the parties
had openly raised and litigated the boundary issue in the RTC, and had thereby amended the
complaint to conform to the evidence pursuant to Section 5, Rule 10 of the Rules of Court; that
they had the sufficient interest to bring the suit for quieting of title because they had built their
improvements on the property; and that the RTC correctly relied on the reports of the majority of
the commissioners.

On its part, the City of Manila urges the Court to reinstate the decision of the RTC. It reprises
the grounds relied upon by the petitioners, particularly the application of Section 5, Rule 10 of
the Rules of Court.[10]

In response, Patricia, Inc. counters that the boundary dispute, which the allegations of the
complaint eventually boiled down to, was not proper in the action for quieting of title under Rule
63, Rules of Court; and that Section 5, Rule 10 of the Rules of Court did not apply to vest the
authority to resolve the boundary dispute in the RTCC.[11]
In other words, did the CA err m dismissing the petitioners’ complaint?

Ruling of the Court

The appeal lacks merit.

1.
Jurisdiction over a real action depends on
the assessed value of the property involved
as alleged in the complaint

The complaint was ostensibly for the separate causes of action for injunction and for quieting of
title. As such, the allegations that would support both causes of action must be properly stated
in the complaint. One of the important allegations would be those vesting jurisdiction in the trial
court.

The power of a court to hear and decide a controversy is called its jurisdiction, which includes
the power to determine whether or not it has the authority to hear and determine the controversy
presented, and the right to decide whether or not the statement of facts that confer jurisdiction
exists, as well as all other matters that arise in the case legitimately before the court.
Jurisdiction imports the power and authority to declare the law, to expound or to apply the laws
exclusive of the idea of the power to make the laws, to hear and determine issues of law and of
fact, the power to hear, determine, and pronounce judgment on the issues before the court, and
the power to inquire into the facts, to apply the law, and to pronounce the judgment.[12]

But judicial power is to be distinguished from jurisdiction in that the former cannot exist without
the latter and must of necessity be exercised within the scope of the latter, not beyond it.[13]

Jurisdiction is a matter of substantive law because it is conferred only by law, as distinguished


from venue, which is a purely procedural matter. The conferring law may be the Constitution, or
the statute organizing the court or tribunal, or the special or general statute defining the
jurisdiction of an existing court or tribunal, but it must be in force at the time of the
commencement of the action.[14] Jurisdiction cannot be presumed or implied, but must appear
clearly from the law or it will not be held to exist,[15] but it may be conferred on a court or tribunal
by necessary implication as well as by express terms.[16] It cannot be conferred by the
agreement of the parties;[17] or by the court’s acquiescence;[18] or by the erroneous belief of the
court that it had jurisdiction;[19] or by the waiver of objections;[20]or by the silence of the parties.[21]

The three essential elements of jurisdiction are: one, that the court must have cognizance of the
class of cases to which the one to be adjudged belongs; two, that the proper parties must be
present; and, three, that the point decided must be, in substance and effect, within the issue.
The test for determining jurisdiction is ordinarily the nature of the case as made by the complaint
and the relief sought; and the primary and essential nature of the suit, not its incidental
character, determines the jurisdiction of the court relative to it.[22]

Jurisdiction may be classified into original and appellate, the former being the power to take
judicial cognizance of a case instituted for judicial action for the first time under conditions
provided by law, and the latter being the authority of a court higher in rank to re-examine the
final order or judgment of a lower court that tried the case elevated for judicial review.
Considering that the two classes of jurisdiction are exclusive of each other, one must be
expressly conferred by law. One does not flow, nor is inferred, from the other. [23]

Jurisdiction is to be distinguished from its exercise.[24] When there is jurisdiction over the person
and subject matter, the decision of all other questions arising in the case is but an exercise of
that jurisdiction.[25] Considering that jurisdiction over the subject matter determines the power of
a court or tribunal to hear and determine a particular case, its existence does not depend upon
the regularity of its exercise by the court or tribunal.[26] The test of jurisdiction is whether or not
the court or tribunal had the power to enter on the inquiry, not whether or not its conclusions in
the course thereof were correct, for the power to decide necessarily carries with it the power to
decide wrongly as well as rightly. In a manner of speaking, the lack of the power to act at all
results in a judgment that is void; while the lack of the power to render an erroneous decision
results in a judgment that is valid until set aside.[27]That the decision is erroneous does not divest
the court or tribunal that rendered it of the jurisdiction conferred by law to try the case. [28] Hence,
if the court or tribunal has jurisdiction over the civil action, whatever error may be attributed to it
is simply one of judgment, not of jurisdiction; appeal, not certiorari, lies to correct the error.[29]

The exclusive original jurisdiction of the RTC in civil cases is conferred and provided for in
Section 19 of Batas Pambansa Blg. 129 (Judiciary Reorganization Act of 1980), viz.:

Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over
which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts;

(3) In all actions in admiralty and maritime jurisdiction where he demand or claim exceeds twenty
thousand pesos (P20,000.00);

(4) In all matters of probate, both testate and intestate, where the gross value of the estate exceeds twenty
thousand pesos (P20,000.00);

(5) In all actions involving the contract of marriage and marital relations;

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising
judicial or quasi-judicial functions;

(7) In all civil actions and special proceedings falling within the exclusive original jurisdiction of a
Juvenile and Domestic Relations Court and of the Courts of Agrarian Relations as now provided by law;
and

(8) In all other cases in which the demand, exclusive of interest and costs or the value of the property in
controversy, amounts to more than twenty thousand pesos (P20,000.00).

For the purpose of determining jurisdiction, the trial court must interpret and apply the law on
jurisdiction in relation to the averments or allegations of ultimate facts in the complaint
regardless of whether or not the plaintiff is entitled to recover upon all or some of the claims
asserted therein.[30] Based on the foregoing provision of law, therefore, the RTC had jurisdiction
over the cause of action for injunction because it was one in which the subject of the litigation
was incapable of pecuniary estimation. But the same was not true in the case of the cause of
action for the quieting of title, which had the nature of a real action — that is, an action that
involves the issue of ownership or possession of real property, or any interest in real
property[31] — in view of the expansion of the jurisdiction of the first level courts under Republic
Act No. 7691, which amended Section 33(3) of Batas Pambansa Blg. 129 effective on April 15,
1994,[32] to now pertinently provide as follows:
Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts in Civil Cases. –

Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, possession of, real
property, or any interest therein where the assessed value of the property or interest therein does
not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such
assessed value does not exceeds (sic) Fifty thousand pesos (P50,000.00) exclusive of interest,
damages of whatever kind, attorneys fees, litigation expenses and costs: x x x

As such, the determination of which trial court had the exclusive original jurisdiction over the real
action is dependent on the assessed value of the property in dispute.

An action to quiet title is to be brought as a special civil action under Rule 63 of the Rules of
Court. Although Section 1 of Rule 63 specifies the forum to be “the appropriate Regional Trial
Court,”[33] the specification does not override the statutory provision on jurisdiction. This the
Court has pointed out in Malana v. Tappa,[34] to wit:

To determine which court has jurisdiction over the actions identified in the second paragraph of Section 1,
Rule 63 of the Rules of Court, said provision must be read together with those of the Judiciary
Reorganization Act of 1980, as amended.

It is important to note that Section 1, Rule 63 of the Rules of Court does not categorically require that an
action to quiet title be filed before the RTC. It repeatedly uses the word “may”- that an action for quieting
of title “may be brought under [the] Rule” on petitions for declaratory relief, and a person desiring to file
a petition for declaratory relief “may x x x bring an action in the appropriate Regional Trial Court.” The
use of the word “may” in a statute denotes that the provision is merely permissive and indicates a mere
possibility, an opportunity or an option.

In contrast, the mandatory provision of the Judiciary Reorganization Act of 1980, as amended, uses the
word shall and explicitly requires the MTC to exercise exclusive original jurisdiction over all civil
actions which involve title to or possession of real property where the assessed value does not exceed
P20,000.00, thus:
xxxx

As found by the RTC, the assessed value of the subject property as stated in Tax Declaration No. 02-
48386 is only P410.00; therefore, petitioners Complaint involving title to and possession of the said
property is within the exclusive original jurisdiction of the MTC, not the RTC.[35]

The complaint of the petitioners did not contain any averment of the assessed value of the
property. Such failure left the trial court bereft of any basis to determine which court could validly
take cognizance of the cause of action for quieting of title. Thus, the RTC could not proceed with
the case and render judgment for lack of jurisdiction. Although neither the parties nor the lower
courts raised jurisdiction of the trial court in the proceedings, the issue did not simply vanish
because the Court can hereby motu proprio consider and resolve it now by virtue of jurisdiction
being conferred only by law, and could not be vested by any act or omission of any party.[36]

2.
The joinder of the action for injunction
and the action to quiet title
was disallowed by the Rules of Court

Another noticeable area of stumble for the petitioners related to their having joined two causes
of action, i.e., injunction and quieting of title, despite the first being an ordinary suit and the latter
a special civil action under Rule 63. Section 5, Rule 2 of the Rules of Court disallowed the
joinder, viz.:

Section 5. Joinder of causes of action. — A party may in one pleading assert, in the alternative or
otherwise, as many causes of action as he may have against an opposing party, subject to the following
conditions:

(a) The party joining the causes of action shall comply with the rules on joinder of parties;

(b) The joinder shall not include special civil actions or actions governed by special rules;

(c) Where the causes of action arc between the same parties but pertain to different venues or
jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of the causes of action
falls within the jurisdiction of said court and the venue lies therein; and
(d) Where the claims in all the causes of action arc principally for recovery of money, the aggregate
amount claimed shall he the test of jurisdiction.

Consequently, the RTC should have severed the causes of action, either upon motion or motu
proprio, and tried them separately, assuming it had jurisdiction over both. Such severance was
pursuant to Section 6, Rule 2 of the Rules of Court, which expressly provides:

Section 6. Misjoinder of causes of action. — Misjoinder of causes of action is not a ground for dismissal
of an action. A misjoined cause of action may, on motion of a party or on the initiative of the court, be
severed and proceeded with separately. (n)

The refusal of the petitioners to accept the severance would have led to the dismissal of the
case conformably with the mandate of Section, Rule 17 of the Rules of Court, to wit:

Section 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause, the plaintiff fails to appear on
the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an
unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may
be dismissed upon motion of the defendant or upon the court’s own motion, without prejudice to the right
of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall
have the effect of an adjudication upon the merits, unless otherwise declared by the court. (3a)

3.
The petitioners did not show that they were
real parties in interest to demand
either injunction or quieting of title

Even assuming that the RTC had jurisdiction over the cause of action for quieting of title, the
petitioners failed to allege and prove their interest to maintain the suit. Hence, the dismissal of
this cause of action was warranted.

An action to quiet title or remove the clouds over the title is a special civil action governed by the
second paragraph of Section 1, Rule 63 of the Rules of Court. Specifically, an action for quieting
of title is essentially a common law remedy grounded on equity. The competent court is tasked
to determine the respective rights of the complainant and other claimants, not only to put things
in their proper place, to make the one who has no rights to said immovable respect and not
disturb the other, but also for the benefit of both, so that he who has the right would see every
cloud of doubt over the property dissipated, and he could afterwards without fear introduce the
improvements he may desire, to use, and even to abuse the property as he deems best. But “for
an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the
plaintiff or complainant has a legal or an equitable title to or interest in the real property subject
of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud
on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance
of validity or legal efficacy.[37]

The first requisite is based on Article 477 of the Civil Code which requires that the plaintiff must
have legal or equitable title to, or interest in the real property which is the subject matter of the
action. Legal title denotes registered ownership, while equitable title means beneficial
ownership,[38] meaning a title derived through a valid contract or relation, and based on
recognized equitable principles; the right in the party, to whom it belongs, to have the legal title
transferred to him.[39]

To determine whether the petitioners as plaintiffs had the requisite interest to bring the suit, a
resort to the allegations of the complaint is necessary. In that regard, the complaint pertinently
alleged as follows:

THE CAUSE OF ACTION

5. Plaintiffs are occupants of a parcel of land situated at Juan Luna Street, Gagalangin, Tondo (hereinafter
“subject property”);

6. Plaintiffs and their predecessor-in-interest have been in open and notorious possession of the subject
property for more than thirty (30) years;

7. Plaintiffs have constructed in good faith their houses and other improvements on the subject property;

8. The subject property is declared an Area for Priority Development (APD) under Presidential Decree
No. 1967, as amended;

9. Defendant is claiming ownership of the subject property by virtue of Transfer Certificate of Title
(TCT) No. 35727 of the Registry of Deeds for the City of Manila. x x x
10. Defendant’s claim of ownership over the subject property is without any legal or factual basis
because, assuming but not conceding that the TCT No. 35727 covers the subject property, the parcel of
land covered by and embraced in TCT No. 35727 has already been sold and conveyed by defendant and,
under the law, TCT No. 35727 should have been cancelled;

11. By virtue of TCT No. 35727, defendant is evicting, is about to evict or threatening to evict the
plaintiffs from the said parcel of land;

12. Because of the prior sales and conveyances, even assuming but not conceding that the subject
property is covered by and embraced in Transfer Certificate of title No. 35727, defendant cannot lawfully
evict the plaintiffs from the subject property since it no longer owns the subject property;

13. Any attempted eviction of the plaintiffs from the subject property would be without legal basis and
consequently, would only be acts of harassment which are contrary to morals, good customs and public
policy and therefore, plaintiffs are entitled to enjoin the defendant from further harassing them;

14. Plaintiffs recently discovered that the subject property is owned by the City of Manila and covered by
and embraced in Transfer Certificate of Title No. 44247, a copy of which is attached hereto as Annex
“B”, of the Registry of Deeds for the City of Manila;

15. TCT No. 35727 which is apparently valid and effective is in truth and in fact invalid, ineffective,
voidable or unenforceable, and constitutes a cloud on the rights and interests of the plaintiffs over the
subject property;

16. Plaintiffs are entitled to the removal of such cloud on their rights and interests over the subject
property;

17. Even assuming, but not admitting, that defendant owns the subject property, it cannot evict the
plaintiffs from the subject property because plaintiffs’ right to possess the subject property is protected by
Presidential Decree No. 2016.

18. Even assuming, but not admitting, that defendant owns the subject property, it cannot evict the
plaintiffs from the subject property without reimbursing the plaintiffs for the cost of the improvements
made upon the subject property;
19. Because of defendant’s unwarranted claim of ownership over the subject property and its attempt to
evict or disposses the plaintiffs from the subject property, plaintiffs experienced mental anguish, serious
anxiety, social humiliation, sleepless nights and loss of appetite for which defendant should be ordered to
pay each plaintiff the amount of P20,000.00 as moral damages;

20. Because of defendant’s unwarranted claim of ownership over the subject property and its attempt to
evict or disposses the plaintiffs from the subject property, plaintiffs were constrained to litigate to protect
their rights and interests, and hire services of a lawyer, for which they should each be awarded the amount
of P10,000.00.

21. The plaintiffs and the defendants are not required to undergo conciliation proceeding before the
Katarungan Pambarangay prior to the filing of this action.[40]

The petitioners did not claim ownership of the land itself, and did not show their authority or
other legal basis on which they had anchored their alleged lawful occupation and superior
possession of the property. On the contrary, they only contended that their continued
possession of the property had been for more than 30 years; that they had built their houses in
good faith; and that the area had been declared an Area for Priority Development (APD) under
Presidential Decree No. 1967, as amended. Yet, none of such reasons validly clothed them with
the necessary interest to maintain the action for quieting of title. For one, the authenticity of the
title of the City of Manila and Patricia, Inc. was not disputed but was even admitted by them
during trial. As such, they could not expect to have any right in the property other than that of
occupants whose possession was only tolerated by the owners and rightful possessors. This
was because land covered by a Torrens title cannot b e acquired by prescription or by adverse
possession.[41] Moreover, they would not be builders entitled to the protection of the Civil
Code as builders in good faith. Worse for them, as alleged in the respondent’s
comments,[42] which they did not deny, they had been lessees of Patricia, Inc. Such
circumstances indicated that they had no claim to possession in good faith, their occupation not
being in the concept of owners.

At this juncture, the Court observes that the fact that the area was declared an area for priority
development (APD) under Presidential Decree No. 1967, as amended, did not provide sufficient
interest to the petitioners. When an area is declared as an APD, the occupants would enjoy the
benefits provided for in Presidential Decree No. 1517 (Proclaiming Urban land Reform in the
Philippines and Providing for the Implementing Machinery Thereof). In Frilles v. Yambao,[43] the
Court has summarized the salient features of Presidential Decree No. 1517, thus:
P. D. No. 1517, which took effect on June 11, 1978, seeks to protect the rights of bona-fide tenants in
urban lands by prohibiting their ejectment therefrom under certain conditions, and by according them
preferential right to purchase the land occupied by them. The law covers all urban and urbanizable lands
which have been proclaimed as urban land reform zones by the President of the Philippines. If a particular
property is within a declared Area for Priority Development and Urban Land Reform Zone, the qualified
lessee of the said property in that area can avail of the right of first refusal to purchase the same in
accordance with Section 6 of the same law. Only legitimate tenants who have resided for ten years
or more on specific parcels of land situated in declared Urban Land Reform Zones or Urban Zones, and
who have built their homes thereon, have the right not to be dispossessed therefrom and the right of
first refusal to purchase the property under reasonable terms and conditions to be determined by
the appropriate government agency. [Bold emphasis supplied]

Presidential Decree No. 1517 only granted to the occupants of APDs the right of first refusal, but
such grant was true only if and when the owner of the property decided to sell the property. Only
then would the right of first refusal accrue. Consequently, the right of first refusal remained
contingent, and was for that reason insufficient to vest any title, legal or equitable, in the
petitioners.

Moreover, the CA’s adverse judgment dismissing their complaint as far as the action to quiet
title was concerned was correct. The main requirement for the action to be brought is that there
is a deed, claim, encumbrance, or proceeding casting cloud on the plaintiffs’ title that is alleged
and shown to be in fact invalid or inoperative despite its prima facieappearance of validity or
legal efficacy, the eliminates the existence of the requirement. Their admission of the
genuineness and authenticity of Patricia, Inc.’s title negated the existence of such deed,
instrument, encumbrance or proceeding that was invalid, and thus the action must necessarily
fail.

4.
The petitioners did not have
a cause of action for injunction

The petitioners did not also make out a case for injunction in their favor.

The nature of the remedy of injunction and the requirements for the issuance of the injunctive
writ have been expounded in Philippine Economic Zone Authority v. Carantes,[44] as follows:
Injunction is a judicial writ, process or proceeding whereby a party is directed either to do a particular act,
in which case it is called a mandatory injunction or to refrain from doing a particular act, in which case it
is called a prohibitory injunction. As a main action, injunction seeks to permanently enjoin the defendant
through a final injunction issued by the court and contained in the judgment. Section 9, Rule 58 of the
1997 Rules of Civil Procedure, as amended, provides,

SEC. 9. When final injunction granted. If after the trial of the action it appears that the applicant is
entitled to have the act or acts complained of permanently enjoined, the court shall grant a final injunction
perpetually restraining the party or person enjoined from the commission or continuance of the act or acts
or confirming the preliminary mandatory injunction.

Two (2) requisites must concur for injunction to issue: (1) there must be a right to be protected and
(2) the acts against which the injunction is to be directed are violative of said right. Particularly, in
actions involving realty, preliminary injunction will lie only after the plaintiff has fully established his
title or right thereto by a proper action for the purpose. [Emphasis Supplied]

Accordingly, the petitioners must prove the existence of a right to be protected. The records
show, however, that they did not have any right to be protected because they had established
only the existence of the boundary dispute between Patricia, Inc. and the City of Manila. Any
violation of the boundary by Patricia, Inc., if any, would give rise to the right of action in favor of
the City of Manila only. The dispute did not concern the petitioners at all.

5.
Section 5, Rule 10 of the Rules of Court
did not save the day for the petitioners

The invocation of Section 5, Rule 10 of the Rules of Court in order to enable the raising of the
boundary dispute was unwarranted. First of all, a boundary dispute should not be litigated in an
action for the quieting of title due to the limited scope of the action. The action for the quieting of
title is a tool specifically used to remove of any cloud upon, doubt, or unce1iainty affecting title
to real property;[45] it should not be used for any other purpose. And, secondly, the boundary
dispute would essentially seek to alter or modify either the Torrens title of the City of Manila or
that of Patricia, Inc., but any alteration or modification either way should be initiated only by
direct proceedings, not as an issue incidentally raised by the parties herein. To allow the
boundary dispute to be litigated in the action for quieting of title would violate Section 48[46] of
the Property Registration Decree by virtue of its prohibition against collateral attacks on Torrens
titles. A collateral attack takes place when, in another action to obtain a different relief, the
certificate of title is assailed as an incident in said action.[47] This is exactly what the petitioners
sought to do herein, seeking to modify or otherwise cancel Patricia, Inc.’s title.

WHEREFORE, the Court AFFIRMS the decision promulgated on June 25, 2010 by the Court of
Appeals in CA-G.R. CV No. 86735; and ORDERS the petitioners to pay the costs of suit.

Sps. Loreto G. Nicolas and Lolita Sarigumba


Vs. Agrarian Reform Beneficiaries Association
(ABRA), et al.; G.R. No. 179566; October 19,
2016
DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari[1] assailing the Resolutions of the Court of Appeals
(CA) in CA-G.R. SP No 01312-MIN dated November 16, 2006[2] and August 3, 2007.[3] These
resolutions dismissed the appeal filed by Spouses Loreto G. Nicolas and Lolita”Sarigumba
(Spouses Nicolas) from the Decision[4] of the Department of Agrarian Reform Adjudication Board
(DARAB) in DARAB Case No. 10860 due to procedural infirmities.

The Facts

Respondent Agrarian Reform Beneficiaries Association (ARBA) is the registered owner


of a parcel of land, with an area of 429,314 square meters and located at Barangay Sto.
Nifio, Tugbok District, Davao City.[5]
The land is covered by Transfer Certificate of Title (TCT) No. CL-143 and Certificate of Land
Ownership Award (CLOA) No. 00044912.[6] The individual respondents[7] are among the named
and registered ARBA beneficiaries of the land.[8]

On August 31, 1998, petitioner Loreto G. Nicolas (Nicolas) and Olimpio R. Cruz (Cruz) filed a
Petition for the “Cancellation of the Certificate of Land Ownership Award and Reinstatement of
Title”[9] (Nicolas, et al. Petition) with the Office of the Provincial Adjudicator of the DARAB in
Davao.[10] It was docketed as DARAB Case No. XI-1482-DC-98 and filed against the Department
of Agrarian Reform (DAR) Secretary, DAR-Region XI Regional Director, DAR-Davao City
Provincial Agrarian Reform Officer, ARBA, and the Farmers Association of Davao City-KMPI
(FADC KMPI), et al. Nicolas and Cruz claimed that they are the lawful owners of two (2) parcels
of land covered by TCT Nos. T-162077 and T-162078, which were cancelled and included in
TCT No. CL-143. Nicolas and Cruz claimed they acquired the lands in 1994 through a deed of
assignment executed in their favor by Philippine Banking Corporation (PhilBanking). The lands
were erroneously included in the Comprehensive Agrarian Reform Program (CARP) though
they were already classified as within an urban zone and were, therefore, non-
agricultural. [11]Thus, Nicolas and Cruz prayed that: (1) the compulsory acquisition proceedings
relative to the lands covered by TCT Nos. T-162077 and T-162078 be declared null and void;
(2) the CLOA issued to ARBA and FADC-KMPI, et al. be cancelled; and (3) TCT Nos. T-162077
and T-162078 be transferred in their names. [12]The Provincial Adjudicator granted the petition on
May 14, 1999. [13]

ARBA and the public respondents filed their separate appeals on June 30, 1999.[14] However,
pending these appeals, Nicols and Cruz were able to execute the decision of the Provincial
Adjudicator.[15] They were able to cause the cancellation of AREA’s TCT No. CL-143 and the
reinstatement of TCT Nos. T-162077 and T-162078 in the name of Phi1Banking. [16] They
thereafter managed to cause the cancellation ofTCT Nos. T-162077 and T-162078 and have
them transferred in their names and of their spouses under TCT Nos. T-320807 and T-
320808.[17] Subsequently, these two (2) titles were subdivided into six (6) titles: TCT Nos. T-
328623, T-328624, T-328625T-328626, T-328627, and T-328628.[18] Nicolas and Cruz later sold
the land covered by TCT No. T-328626 to Spouses Marciano and Judith Tapiador (Spouses
Tapiador), in whose names a new title, TCT No. 332246, was issued.[19]

The foregoing acts of Nicolas and Cruz prompted ARBA, FADC KMPI, and the individual
respondents (ARBA, et al.) to file a complaint for “Nullity of the Cancellation of TCT No. CL-143;
Nullity of the Reinstatement of TCT Nos. T-162077 and T-162078; Nullity of TCT Nos. T-320807
and T-320808; Nullity of TCT Nos. T-328623, T-328624, T-328625, T-328626, T-328627 and T-
328628; Reinstatement ofTCT No. CL-143; Damages and Attorney’s Fee”20 (ARBA, et al.
Complaint). It was docketed as DARAB Case No. XI-1661-DC-2001 and filed against Spouses
Nicolas, Spouses Olimpio R. Cruz and Juliana Esteban (Spouses Cruz), and the Registry of
Deeds of Davao City. ARBA, et al.argued that the acts of Nicolas and Cruz pending the appeal
of the Nicolas, et al. Petition are void ab initio or without effect.[21] They cited that there was a
violation of Rule 12, Section 1 of the New Rules of Procedure of the DARAB because there was
neither a certification by the proper officer that a resolution has become final and executory nor
has any been served on them or on their counsel of record.[22] They also cited that there was no
writ of execution issued by the Board of Adjudicator.[23] ARBA, et al. also argued that under Rule
36, Section 2 of the 1977 Rules of Civil Procedure, a decision will only become final and
executory if it is entered in the Book of Entries and a Certificate of Finality is issued by the Clerk
of Court.[24]

On July 9, 2001, the Regional Adjudicator dismissed the complaint on the grounds of litis
pendentia and lack of jurisdiction.[25] The Regional Adjudicator ruled that complainants should
have ventilated their case before the DARAB in the Nicolas, et al. Petition, which was still
pending at that time. He also ruled that the case being one for annulment of judgment,
jurisdiction lies before the regional trial courts. [26]

Meanwhile, on September 24, 2001, the DARAB in the Nicolas, et al. Petition reversed the
Provincial Adjudicator and upheld the validity of the CLOA issued in the name of ARBA and
their subsequent registration with the Register ofDeeds.[27] Nicolas and Cruz appealed before the
CA (CA-G.R. SP No. 70357), which reversed and set aside the decision of the DARAB in a
decision dated October 12, 2004?8 The dispositive portion of the CA decision reads:

WHEREFORE, premises considered, the questioned Decision dated 24 September 2001 rendered by the
public respondent DARAB is herebyREVERSED and SET ASIDE and a new one entered:

1. Ordering the Register of Deeds of Davao City to Cancel TCT No. CL-143 (CLOA No. 00044912);

2. Ordering the Register of Deeds of Davao City to reinstate Transfer Certificate of Title Nos. T-162077
and T-162078 in the name of PhilBanking;

3. Maintaining the private respondents members of the ARBA and Farmers Association of Davao-KMPI
in their peaceful possession and cultivation over their respective landholdings in this case if they and/or
predecessors[-]in-interest were already tenants over the same period to June 15, 1988[;] and

4. Declaring the parcels of land in question as exempted from the coverage of CARL.[29]

From this decision, the DAR, ARBA, and Felipe Ramos (Ramos), representing a faction of
ARBA, filed separate petitions for review on certiorari before us, docketed as G.R. No. 168206,
G.R. No. 168394, and G.R. No. 168684, respectively.[30] We denied the DAR and Ramos
Petitions via minute resolutions and both denials eventually . attained finality.[31] Meanwhile, the
petition filed by ARBA in G.R. No. 168394 was still pending at that time.[32]

On the other hand, the DARAB in the ARBA, et al. Complaint reversed the Regional Adjudicator
and rendered a new judgment[33] on June 14, 2005 (DARAB Case No. 10860), the dispositive
part of which reads:

WHEREFORE, premises considered, the appealed decision is herebySET ASIDE and a NEW
JUDGMENT is rendered as follows:

1. Declaring the cancellation of complainant-appellant ARBA’s TCT No. CL-143, as null


and void;

2. Declaring the reinstatement on September 28, 1999 of the previously cancelled TCT No.
T-162077 and TCT No. T-162078, under the name of Philippine Banking Corporation, as
null and void; ·

3. Declaring the transfer of TCT No. T-162077 and TCT No. 162078 under the names of
respondents-appellees Loreto G. Nicolas and Olimpio R. Cruz, and their respective
spouses, in TCT No. T-320807 and TCT No. T-320808, respectively, on September 1,
2000 as null and void;

4. Declaring the transfer of TCT No. T-320807 and TCT No. T-320808 under the names of
respondents appellees Loreto G. Nicolas and Olimpio R. Cruz, and their respective
spouses, into six (6) titles, to wit, TCT Nos. T-328623, T-328624, T-328625, T-328626,
T-328627, T-328628, on September 21, 2000, as null and void;

5. Declaring the sale or purchase of TCT No. T-328626 executed by respondents-appellees


Loreto G. Nicolas and Olimpio R. Cruz, and their respective spouses, in favor of spouses
Marciano and Judith Tapiador, as null and void;

6. Declaring TCT Nos. T-162077, T-162078, T-320807, T-320808, T-328623, T-328624, T-


3286 5, T-328626, T-328627, T-328628 and T-332246, as null and void; and ·

7. Ordering the Registry of Deeds of Davao City to reinstate complainant-appellant ARBA’s


TCT No. CL-143.
SO ORDERED.[34]

The DARAB stressed that in view of the Board’s ruling dated September 24, 2001 in the
Nicolas, et al. Petition in favor of ARBA, et al., all of the acts committed and/or caused to be
committed by Nicolas and Cruz pending appeal were contrary and should, therefore, be
nullified.[35]

Citing its 2003 Rules of Procedure, the DARAB held that it was erroneous to execute the
judgment in the Nicolas, et al. Petition pending appeal. The DARAB found no good and urgent
reason to justify the execution pending appeal, which meant that Nicolas and Cruz were in bad
faith when they committed and/or caused to be committed the execution of the judgment to the
prejudice of individual respondents.[36] Thus, Nicolas and Cruz have to suffer the adverse
consequences of the reversal of the decision previously rendered in their favor.[37]

The DARAB denied the Motion for Reconsideration filed by Spouses Nicolas, et al.[38] Spouses
Nicolas filed a petition before the CA (CA-G.R. SP No. 01312-MIN), which was dismissed
because of procedural infirmities.[39]

The Petition

Spouses Nicolas now appeal the resolutions and argue that the CA erred in:
1) refusing due course to their petition when it was clearly apparent that the DARAB decision
has already been overtaken and superseded by subsequent decisions of the Supreme Court;
and

2) not recognizing that the issues addressed by the DARAB had already been settled by the
Supreme Court and subject to the doctrines of stare decisis andres judicata.[40]

Spouses Nicolas argue that the DARAB decision itself states that the only issue involved therein
was the appropriateness of the execution of judgment in favor of Spouses Nicolas pending
appeal.[41] However, the DARAB treated its decision as final and executory, irrespective of the
subsequent outcome of further proceedings in the main action, the Nicolas, et al. Petition, which
was brought before the CA and us.[42]

Spouses Nicolas point out the subsequent decision of the CA in their favor in the Nicolas, et al.
Petition.[43] They argue that with our resolutions in G.R. No. 168206 and G.R. No. 168684 (the
DAR and Ramos Petitions), we have already affirmed with finality the findings of the CA that the
authority of the DAR is limited only to all public and private agricultural lands.[44] Likewise, the
DARAB decision in the ARBA, et al. Complaint conflicts with the decisions in the Nicolas, et al.
Petition. Spouses Nicolas insist that the DARAB in the ARBA, et al. Complaint should have
confined the issue as to whether the execution of judgment pending appeal was appropriate.
The decretal portion of its decision, however, dwelled upon the very issues raised on appeal in
the Nicolas, et al. Petition.[45]

Issues

1) Whether the CA correctly dismissed the appeal of petitioners in the ARBA, et


al. Complaint on procedural grounds.
2) Whether the issues addressed by the DARAB in the ARBA, et al. Complaint have already
been superseded and. settled by our ruling in G.R. No. 168394,[46]the Nicolas, et al. Petition.

The Court’s Ruling


We grant the petition.
The CA erred in dismissing the appeal
of petitioners on pure technicalities.

The CA dismissed the appeal of Spouses Nicolas on the following procedural grounds:

1) The petition was filed via Rule 45 of the Rules of Civil Procedure, which is cognizable only by
the Supreme Court, rather than Rule 43;[47]

2) Only photocopies, instead of duplicate original or certified true copies, of the assailed
decision and resolution of DARAB were attached to the petition;[48]and

3) The Integrated Bar of the Philippines (IBP) Official Receipt number of their counsel indicated
in the petition is not current.[49]

Spouses Nicolas filed a Motion for Reconsideration and Leave of Court to File Amended
Petition. They insisted that their Petition for Review was erroneously captioned “Petition for
Review on Certiorari” and that the allegations in their pleading and the context in which it was
filed show that they intended to file a Petition for Review under Rule 43.[50]
Spouses Nicolas also explained that they inadvertently attached the original copies of the
assailed decision and resolution to one of the duplicate copies of the petition.[51] Spouses Nicolas
likewise attached a certified true copy of the assailed decision of DARAB in their Amended
Petition and furnished the CA a photocopy of their counsel’s current IBP Official Receipt
number.[52] Spouses Nicolas implored the CA to resolve the petition on the merits and not on the
formal deficiencies so as not to render nugatory our final decision in G.R. No. 168394.[53]

Despite the explanation and compliance of Spouses Nicolas, the CA still denied their motion in
its Resolution[54] dated August 3, 2007. The CA held that the Rules of Procedure of DARAB
mandates that judicial review of DARAB orders or decisions are governed by the Rules of Court,
specifically Rule 43. Since Spouses Nicolas availed of the wrong mode of appeal via a petition
for review on certiorari under Rule 45, it cannot be remedied by the mere filing of an Amended
Petition for Review under Rule 43. Hence, the wrong mode of appeal taken did not vest
jurisdiction on the CA over the petition. Accordingly, the period within which to file the petition
was not tolled.[55]

Finally, the CA ruled that pursuant to Section 4 of Supreme Court Circular No. 2-90,[56] an appeal
taken to the CA by the wrong or inappropriate mode shall be dismissed.[57]

While we agree that Rule 43 is the correct mode of appeal for decisions, orders, or resolutions
of the DAR Secretary, we find that the CA should not have easily dismissed the petition after
petitioners pad adequately explained and rectified their procedural lapses, which were neither
gross nor inexcusable. Captioning the petition as a Rule 45 instead of a Rule 43 was a clear
inadvertence. Apart from this error and the one on the attached decisions being mere
photocopies, petitioners have complied with all the other requirements of a Rule 43 petition.

More importantly, the property rights at stake in this case, which will be discussed here shortly,
should have merited reconsideration from the CA to entertain the petition. Dismissal of appeals
purely on technical grounds is frowned upon where the policy of the court is to encourage
hearings of appeals on their merits and the rules of procedure ought not to be applied in a very
rigid, technical sense; rules of procedure are used only to help secure, not override substantial
justice. It is a far better and more prudent course of action for the court to excuse a technical
lapse and afford the parties a review of the case on appeal to attain the ends of justice rather
than dispose of the case on technicality and cause a grave injustice to the parties, giving a false
impression of speedy disposal of cases while actually resulting in more delay, if not a
miscarriage of justice.[58]
Courts have the prerogative to relax procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties’
right to due process.[59] We further explained in City of Dumaguete v. Philippine Ports Authority:[60]

Procedural rules were conceived to aid the attainment of justice. If a stringent application of the rules
would hinder rather than serve the demands of substantial justice, the former must yield to the latter. x x x

xxx

Likewise, in Samoso v. CA, the Court ruled:


But time and again, the Court has stressed that the rules of procedure are not to be applied in a very strict
and technical sense. The rules of procedure are used only to help secure not override substantial justice
(National Waterworks & Sewerage System vs. Municipality of Libmanan, 97 SCRA 138 [1980]; Gregorio
v. Court of Appeals, 72 SCRA 120 [1976]). The right to appeal should not be lightly disregarded by a
stringent application of rules of procedure especially where the appeal is on its face meritorious and the
interests of substantial justice would be served by permitting the appeal (Siguenza v. Court of Appeals,
137 SCRA 570 [1985]; Pacific Asia Overseas Shipping Corporation v. National Labor Relations
Commission, et al., G.R. No. 76595, May 6, 1998) x x x[61] (Emphasis supplied.)

The issue in the ARBA, et al.


Complaint has not been rendered
moot and academic.

Preliminarily, it may seem at first blush that our ruling in G.R. No. 168394 on the Nicolas, et al.
Petition is a supervening event that has rendered this petition moot and academic. An issue is
said to have become moot and academic when it ceases to present a justiciable controversy, so
that a declaration on the issue would be of no practical use or value. In such cases, there is no
actual substantial relief to which the plaintiff would be entitled and which would be negated by
the dismissal of the complaint.[62] Based on this definition, we hold that the petition has not been
mooted.

For one, there is still a justiciable, live controversy between the parties despite our ruling in G.R.
No. 168394. In Intramuros Tennis Club, Inc. v. Philippine Tourism Authority[63] we did not find
that the petition was rendered moot or illusory by the fact that execution was effected and
possession of the subject matter of the case was restored to private respondents. We held that
the resolution of the petition requires a determination of whether the CA gravely abused its
discretionary power to order execution pending appeal as prescribed in Section 2, Rule 39 of
the 1997 Revised Rules of Court, and where such grave abuse of discretion is established, the
execution pending appeal pursuant to the resolutions of the CA may be voided. Thus, we
concluded that the petition presented a live and justiciable controversy.[64]

We emphasize that the Nicolas, et al. Petition and the ARBA, et al. Complaint are two different
initiatory pleadings that raise two completely different issues but which are, at the same time,
intimately related. The issue in the Nicolas, et al. Petition is whether the parcels of land are
under the compulsory coverage of the Comprehensive Agrarian Reform Law[65] (CARL). The
heart of the ARBA, et al. Complaint, on the other hand, is whether the acts of Nicolas and Cruz
pending appeal are valid and legal. We have ruled in favor of petitioners in G.R. No. 168394
and declared that the parcels of land are outside the coverage of CARL. Accordingly, we also
ordered the cancellation of the CLOAs in favor of respondents and ordered the Register of
Deeds to reinstate the TCTs in the name of petitioners’ predecessor-in-interest,
PhilBanking.[66] The DARAB in the ARBA, et al. Complaint, meanwhile, ruled that the execution
pending appeal was invalid and so declared as void the cancellation of the CLOAs of
respondents and the reinstatement of the TCTs in the name of PhilBanking. It also ordered the
Register of Deeds to reinstate respondents’ TCT (CLOAs). Given these conflicting declarations,
what petitioners are attempting to achieve in this petition, therefore, is an annulment of the
DARAB and CA decisions in the ARBA, et al. Complaint in order to conform to our ruling in G.R.
No. 168394. The non-application of the second part of the definition of a moot and academic
issue on the practical use or value of a declaration on the dispute now comes into play. A
declaration from us sustaining petitioners’ position and granting them their prayer for relief
would still be of practical value to them. As we shall also discuss and show shortly, our ruling
here will also be of practical value to respondents.

In Pasig Printing Corporation v. Rockland Construction Company, Inc.,[67] we decided the case
on the merits despite the finality of the main case because of peculiar circumstances. If we
chose not to, erroneous resolutions of the CA would have remained in force and would have
prejudiced the possessory rights of one of the parties.[68] We also face the same dilemma here. If
we were to simply deny the petition on the ground of mootness, the conflicting decisions of
Nicolas, et al. Petition and the ARBA, et al. Complaint would subsist.

Further, there is another lingering issue that demands judicial review. Our ruling in G.R. No.
168394 effectively upholds the rights of petitioners over the land and consequently, also
upholds their legitimate exercise of such rights. But again, the conflicting decisions pose a·
problem, since the DARAB in the ARBA,et al. Complaint also invalidated the following acts
ofNicolas and Cruz on the ground of bad faith:

1. The transfer of TCTs in the name of PhilBanking to petitioner Nicolas and Cruz and
their respective spouses;

2. The transfer and subdivision of the TCTs in the names of petitioner Nicolas and Cruz
and their respective spouses; and

3. The sale of a parcel of land from the subdivided property (covered by TCT No. T-
328626) executed by petitioner Nicolas and Cruz and their respective spouses in favor
of Spouses Tapiador.

A question now arises as to the status of these acts. Will the invalidation by the DARAB stand or
must it be overturned? We note that at the same time, however, the validity of the foregoing acts
is hinged on the validity of the execution pending appeal. There is, therefore, a need to settle
the actual controversy surrounding these acts.

The doctrines of res judicata and


stare decisis do not apply in this
case.

Petitioners posit that G.R. No. 168394 has finally settled the issues addressed by the DARAB in
the ARBA, et al. Complaint and the decision must no longer be disturbed owing to the doctrines
of stare decisis and res judicata. We do not agree.

To begin with, not all elements of stare decisis and res judicata are present in this case. Stare
decisis means that for the sake of certainty, a conclusion reached in one case should be
applied to those that follow if the facts are substantially the same, even though the parties
may be different. It proceeds from the first principle of justice that, absent any powerful
countervailing considerations, like cases ought to be decided alike. Thus, where the same
questions relating to the same’ event have been put forward by the parties similarly
situated as in a previous case litigated and decided by a competent court, the rule
of stare decisis is a bar to any attempt to relitigate the same issue.[69]
According to the doctrine of res judicata, an existing ·final judgment or decree rendered on the
merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter
within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions
or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and
matters in issue in the first suit.[70]

The doctrines of res judicata (which means a “matter adjudged”) and stare decisis non quieta et
movere (or simply, stare decisis which means “follow past precedents and do not disturb what
has been settled”) are general procedural law principles which both deal with the effects of
previous but factually similar dispositions to subsequent cases.[71] Both doctrines speak of a first
suit that has been previously decided by a court with finality. Both doctrines bar the relitigation
of the same or similar issues raised in said first suit. In other words, the doctrines are applied
prospectively.

Here, the first suit referred to is G.R. No. 168394, the. Nicolas, et al. Petition, which decided
with finality the issue of whether the subject parcels of land are under the compulsory coverage
of CARL. The ARBA, et al. Complaint is not relitigating this issue and there is no subsequent
suit that is attempting to do so.

The case of Vda. De Salanga v. Alagar[72] is on point. In that case, a controversy also arose as a
consequence of the execution pending appeal of a judgment in an ejectment case. While the
ejectment case was pending appeal before the CA, the Regional Trial Court ordered the
execution of the judgment of the Municipal Trial Court pending appeal. The auction sale of the
properties pushed through, prompting the private respondent to file a petition for its annulment.
When the ejectment case attained finality, plaintiff moved for the dismissal of the petition for
annulment of the public auction sale on the ground that it has been rendered moot and
academic and barred by the final and executory judgment in the ejectment case. Citing what we
have laid down inCagayan de Oro Coliseum, Inc. v. Court of Appeals,[73] we disagreed with
plaintiff that there was res judicata between the petition for annulment of the public auction sale
and the final judgment rendered in the ejectment case. We ruled that the elements of identity of
subject matter and causes of action were absent. The petition for annulment of the public
auction sale did not directly involve the property subject matter of the ejectment case. It was
concerned with the validity of the execution proceedings, specifically the validity of the auction
sale of private respondent’s properties to satisfy the money judgment in the ejectment case. As
such, said cases fail the test of identity of causes of action, i.e., whether the same facts or
evidence would support and establish the causes of action in each case.[74]
Similarly in this case, there is no identity of causes of action. To repeat, the issue in the
Nicolas, et al. Petition is whether the property is exempt from the coverage of CARL, while the
issue in the ARBA, et al. Complaint is whether the acts of petitioners pending,appeal of the
Nicolas, et al. Petition are valid and legal. Clearly, they are distinct issues.

Further, our ratio decidendi in a number of cases[75] where we allowed the simultaneous filing of
an appeal on the merits of the case and a petition forcertiorari on the grant of an execution
pending appeal may be applied here. In these cases, we have held that one party may validly
question the decision in a regular appeal and at the same time assail the execution pending
appeal viacertiorari without violating the non-forum shopping rule because the merits of the case
would not be addressed in the petition dealing with the execution and vice versa. We stressed
that although there is identity of parties, the causes of action and the reliefs sought are different.
The issue in these cases may have been whether there was forum shopping, but the logic
behind our pronouncements applies here, considering that the test to determine whether a party
violated the rule against forum shopping is whether the elements oflitis pendentia are
present, or whether the final judgment in one case will amount to res judicata in
another.[76]

The acts of Nicolas and Cruz pending


appeal were done in violation of the
1994 DARAB Rules of Procedure.

Rule XII of the 1994 DARAB Rules of Procedure (the Rules) on Execution provides:

RULE XII
Execution

Sec. 1. Execution Upon Final Order or Decision. Execution shall issue upon an order, resolution
or decision that finally disposes of the action or proceeding. Such execution shall issue as a
matter of course and upon the expiration of the period to appeal therefrom if no appeal has been
duly perfected.
The Board or Adjudicator concerned may, upon certification by the proper officer that a resolution, order
or decision has been served to the counsel or representative on record and to the party himself, and has
become final and executory, and, upon motion or motu propio, issue a writ of execution ordering the
DAR Sheriff or any DAR officer to enforce the same. In appropriate cases, the Board or any of its
Members or its Adjudicator shall deputize and direct the Philippine National Police, Armed Forces of the
Philippines or any of their component units or other law enforcement agencies in the enforcement of any
final order, resolution or decision.

Sec. 2. Execution Pending Appeal. Any motion for execution of the decision of the Adjudicator pending
appeal shall be filed before the Board, and the same may be granted upon showing good reasons and
under conditions which the Board may require.

Sec. 3. Applicability of the Uniform Rules of Procedure of the Court of Agrarian Relations (CAR). Rule
XIX of the Uniform Rules of Procedure of the CAR, with respect to execution, shall apply insofar as they
are not inconsistent with these Rules.

The Rules provides that execution shall issue as a matter of course upon the expiration of the
period to appeal therefrom if no appeal has been duly perfected. Here, the Decision of the
Provincial Adjudicator in the Nicolas, et al. Petition was not yet final and executory when Nicolas
and Cruz executed the decision in their favor. ARBA, et al. and the DAR were able to perfect
their appeals.

More importantly, the execution pending appeal was done in blatant violation of Section 2 of the
Rules. Nicolas and Cruz did not file any motion for execution of the decision of the Adjudicator
pending appeal before the Board. There is also no order from the Board allowing the execution
pending appeal upon showing of good reasons. Simply put, the execution pending appeal was
done unilaterally and extrajudicially.

To justify their acts, Nicolas and Cruz asserted in their Answer before the Regional Adjudicator
that the cancellation of TCT No. CL-143 and the reinstatement and transfer of the titles were
initiated by the Register of Deeds of Davao City in compliance with the decision of the Provincial
Adjudicator in the Nicolas, et al. Petition.[77] They also faulted the DAR and ARBA for failing to
provide a copy of the Notice of Appeal to the Register of Deeds of Davao City.[78]

Nicolas and Cruz further argued that they acted in accordance with law in safeguarding their
interest on the parcels of land after finally acquiring full ownership of the properties. They
claimed that they had to act expeditiously, but legally, to have the titles to the subject parcels of
land transferred in their name to frustrate the sinister moves of ARBA, et al. to dissipate the
asset and deny the lawful owners of taking actual possession of the property. According to
Nicolas and Cruz, the issuance of new titles in their name was the only viable option that will
provide them adequate protection against the bad intentions of ARBA, et al. They alleged that
ARBA, et al. have already demonstrated their capacity for committing illegal acts as evidenced
by the rampant selling of rights over the areas of cultivation awarded to them by their respective
organizations, which started in 1992 or not even a year after they were erroneously awarded the
lands under CARP and have been going on over the years. Nicolas and Cruz feared that if they
will not have the titles registered in their names, it is not far-fetched that the illegal selling of
rights by ARBA, et al. will continue, and that the buyers will flock the area and occupy the lands
to the detriment of the legitimate owners.[79]

We find the justifications of Nicolas and Cruz unacceptable. Execution of a judgment pending
appeal is only an exception to the general rule. Being an exception, the existence of “good
reasons” is essential. “Good reasons” has been held to consist of compelling circumstances
justifying the immediate execution lest judgment becomes illusory. Such reasons must
constitute superior circumstances demanding urgency which will outweigh the injury or
damages should the losing party secure a reversal of the judgment. The rules do not specify the
“good reasons” to justify execution pending appeal; thus, it is the discretion of the court to
determine what may be considered as such.[80]

We have allowed execution pending appeal in the following cases:

The execution of a judgment before becoming final by reason of appeal is recognized. However, this
highly exceptional case must find itself firmly founded upon good reasons warranting immediate
execution. For instance, execution pending appeal was granted by this Court where the prevailing party is
of advanced age and in a precarious state of health and the obligation in the judgment is non
transmissible, being for support, or where the judgment debtor is insolvent. Execution pending appeal was
also allowed by this Court where defendants were exhausting their income and have no other property
aside from the proceeds ofthe subdivision lots subject of the action.[81]

The justifications cited by Nicolas and Cruz do not meet the definition of “good reasons” for they
are not compelling enough. First, they cannot fault the DAR and ARBA for failing to provide a
copy of the Notice of Appeal to the Register of Deeds of Davao City. The Rules provides that to
perfect an appeal, the Notice of Appeal must be served on the adverse party. [82] It is not required
to serve a copy on the Register of Deeds. Moreover, the Register of Deeds cannot, on his own
initiative, cancel TCT No. CL-143, reinstate the titles in the name of PhilBanking, and finally
transfer the titles in the names of Spouses Nicolas, Spouses Cruz and third persons. The
DARAB or Adjudicator concerned must issue a writ of execution ordering the DAR Sheriff or any
DAR officer to execute the decision.[83]
Additionally, the fear of Nicolas and Cruz-that if they will not have the titles registered in their
names, ARBA, et al. shall sell their rights over the property and the buyers shall occupy the lots
to the detriment of the lawful owners-is not a “superior circumstance demanding urgency which
will outweigh the injury or damages should the losing party secure a reversal of the
judgment.”[84] In this case, both parties stand to lose the ownership of the subject parcels of land.
If Nicolas and Cruz wanted to protect their interest over the property, they could have recorded
a notice of lis pendens in the Registry of Deeds. What they did, on the contrary, were the very
acts they feared ARBA, et al. would do: Nicolas and Cruz themselves hastily subdivided the
properties and sold a parcel to third parties.

The execution pending appeal having been done in violation of the Rules, the acts taken
pursuant to it are, therefore, void and of no effect. We have ruled inCarpio v. Court of Appeals:[85]

In any case, we proceed to rule that because the writ of execution was void, all actions and proceedings
conducted pursuant to it were also void and of no legal effect. To recall, this Court affirmed the Decision
of the CA in CA G.R. SP No. 84632, annulling the RTC’s Omnibus Order granting the Motion for
Immediate Execution pending appeal. We affirmed theCA Decision because of the RTC’s failure to state
any reason, much less good reason, for the issuance thereof as required under Section 2, Rule 39. In the
exercise by the trial court of its discretionary power to issue a writ of execution pending appeal, we
emphasize the need for strict compliance with the requirtjment for the statement of a good reason,
because exeception pending appeal is the exception rather than the rule.

Since the writ of execution was manifestly void for having been issued without compliance with the rules,
it is without any legal effect. In other words, it is as if no writ was issued at all. Consequently, all actions
taken pursuant to the void writ of execution must be deemed to have not been taken and to have had no
effect. Otherwise, the Court would be sanctioning a violation of the right to due process of the judgment
debtors-respondent-spouses herein.[86]

The foregoing, notwithstanding, we are aware of our decisions concerning the Nicolas, et
al. Petition in G.R. No. 168206, G.R. No. 168684, and G.R. No. 168394. Specifically, in G.R.
No. 168394, we recognized Nicolas and Cruz as the lawful assignees and successors-in-
interest of PhilBanking, the original owner of the lands included in TCT No. CL-143. We agreed
with the CA that these lands are outside the coverage of CARL. Thus, we affirmed the decision
of the CA, which had the following disposition:
1. Ordering the Register of Deeds of Davao City to cancel TCT No. CL-143 (CLOA No.
00044912);

2. Ordering the Register of Deeds of Davao City to reinstate Transfer Certificate of Title
Nos. T-162077 and T-162078 in the name of PhilBanking;

3. Maintaining the private respondents members of the ARBA and Farmers Association of
Davao-KMPI in their peaceful possession and cultivation over their respective
landholdings in this case if they and/or predecessors-in-interest were already tenants over
the same prior to June 15, 1988; and

4. Declaring the parcels of land in question as exempted from the coverage of CARL.[87]

Being final and executory, G.R. No. 168394 must now be respected. While the execution
pending appeal by Nicolas and Cruz was correctly declared invalid by the DARAB, to sustain its
disposition in the ARBA, et al. Complaint would run counter to G.R. No. 168394 and ultimately
prejudice the rights of Spouses Tapiador, who may be innocent purchasers for value. Thus, we
are constrained to reverse and set aside the decision of the DARAB in the ARBA, et al.
Complaint.

ARBA, et al. are entitled to nominal damages.

Article 2221 of the Civil Code provides that nominal damages may be awarded in order that the
plaintifr s right, which has been violated or invaded by the defendant, may be vindicated or
recognized and not for the purpose of indemnifying the plaintiff for any loss suffered. We have
laid down the concept of nominal damages in the following wise:

Nominal damages are ‘recoverable where a legal right is technically violated and must be vindicated
against an invasion that has produced no actual present loss of any kind or where there has been a breach
of contract and no substantial injury or actual damages whatsoever have been or can be shown.’[88]

In Lacsin v. Hizon,[89] we awarded the petitioner nominal damages in the amount of Seventy-five
Thousand Pesos (P75,000.00) after recognizing that she was unduly deprived of her ownership
rights over the disputed property, and was compelled to litigate for almost ten (10) years. We
considered the amount of P75,000.00 as sufficient nominal damages, after taking into account
the length of time petitioner was deprived of her property and the bad faith attending
respondents’ actuations in the case.[90] Similarly in this case, petitioners acted in bad faith when
they caused the execution of the ruling of the Provincial Adjudicator pending appeal before the
DARAB without any recourse to the legal rules and procedure. With this blatant violation of the
Rules on execution pending appeal, petitioners trampled on the due process rights of ARBA, et
al., to say the least. Worse, the execution enabled them to prematurely subdivide the properties
and sell them to third persons. This fraudulent sale equally trampled on the potential property
rights of ARBA, et al., which, at that time, were the subject of a pending litigation.

Thus, considering the bad faith petitioners exhibited in this case, we find them liable for nominal
damages in the amount of P75,000.00, which is in line with Locsin. Moreover, they are liable for
attorneY’s fees in the amount of P75,000.00 and the costs of suit.

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The Resolutions of
the Court of Appeals in CA-G.R. SP No. 01312-MIN dated November 16,2006 and August 3,
2007 are REVERSED and SET ASIDE.Accordingly, the Decision of the Department of Agrarian
Reform Adjudication Board in DARAB Case No. 10860 is hereby ANNULLED and SET
ASIDE.Spouses Loreto G. Nicolas and Lolita Sarigumba are further ORDERED to pay
respondents Seventy-five Thousand Pesos (P75,000.00) as nominal damages, P75,000.00 as
attorney’s fees, and the costs of suit.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Perez, and Reyes, JJ., concur.

Rizalina Gemina, et al. Vs. Juanito Eugenio, et


al.; G.R. No. 215802; October 19, 2016
DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the October 17, 2012
Decision[1] and the November 13, 2014 Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV
No. 94865, which affirmed the July 31, 2009 Decision[3] and the November 16, 2009 Order[4] of
the Regional Trial Court, Branch 14, Laoag City (RTC) in Civil Case No. 13225-12, a case for
annulment of instrument.

Spouses Candido Eugenio and Fernanda Geronimo (Spouses Eugenio) were the registered
owners of a parcel of land designated as Lot 25742 situated in Brgy. Barit, Laoag City, with an
area of 5,299 square meters and covered by Original Certificate of Title (OCT) No.
15218 (subject property).

Tomas, Cristina, Severina, Catalino, and Antero, all surnamed Eugenio, were the children of
Spouses Eugenio. Petitioners Rizalina Gemina, Rosario Acantilado and Juanita Reyes are the
heirs of Cristina and Severina; petitioner Efren Eugenio is the heir of Catalino; petitioners
Perfecto Eugenio, Romelia Eugenio, Amador Eugenio, Jr., Antonio Eugenio, Elvira Simeon, and
Lerma Rebac are the heirs of Antero; and petitioner Tomas Eugenio is the heir of Tomas.

In January 2004, Rizalina learned that the subject property was sold by a certain Francisco
Eugenio (Francisco) to respondent Spouses Laurel and Zenaida Mariano (Spouses Mariano).

The petitioners, through Candido Gemina, Jr. (Candido, Jr.), called the attention of Spouses
Mariano regarding the subject property. According to Spouses Mariano, they bought 4,000
square meters of the subject property, brokered by Francisco, through two (2) deeds of absolute
sale.

The matter not being settled, the petitioners, represented by Candido, Jr., filed a complaint for
annulment of the instruments before the RTC. They alleged that they were the legal heirs of the
deceased Spouses Eugenio, who were the registered owners of the subject property. They
further averred that the vendors sold the subject property without the consent of all the legal
heirs, thus, the contract of sale was null and void.

The RTC Ruling

In a Decision, dated July 31, 2009, the RTC dismissed the complaint on the ground that the
petitioners were not the real parties in interest. It noted that from the allegations in the
complaint, the right that the petitioners sought to protect or enforce was that of an heir. Thus, it
held that there was a need to establish their status as heirs in a special proceeding for that
purpose before they could institute an ordinary civil action to enforce their rights in the subject
property and to have legal personality to seek the nullity of the instruments which affected their
rights in the said property.

The RTC, however, declared that Spouses Mariano were buyers in good faith and for value. It
found that the petitioners had failed to rebut the presumption of regularity of performance of duty
of the notaries public who notarized the two (2) instruments of sale and the presumption of good
faith in favor of the buyers. The RTC noted that the unrebutted testimony of respondent Laurel
Mariano (Laurel) showed that he was prudent in ascertaining the identities of the vendors of the
property. It was also pointed out that some of the heirs were introduced to Spouses Mariano by
Francisco, who, in turn, represented to Laurel that the duplicate owner’s copy of the title was
lost. The RTC disposed the case in this wise:

WHEREFORE, in view of the foregoing disquisition, this court hereby renders judgment:

(1) dismissing the instant complaint on the ground that the plaintiffs are not the real parties in interest
and the complaint states no cause of action;

(2) adjudging the defendants spouses Laurel Mariano and Zenaida Mariano as buyer in good faith and
for value because their vendors have lawful shares, interests and participation in the portion of Lot
No. 25742 and in the other property/properties as part of the intestate estate of the late spouses
Candido Eugenio and Fernanda Geronimo;

(3) ordering the plaintiffs and their henchmen, representatives or assigns to respect the ownership and
possession of the defendants spouses Laurel Mariano and Zenaida Mariano over the portions sold
to them;

(4) ordering the plaintiffs to pay jointly and solidarily to the defendants spouses Laurel Mariano and
Zenaida Mariano the following civil liability, viz:

1. P500,000.00 as and by way of moral damages;

2. P100,000.00 as and by way of exemplary damages;

3. P75,000.00 as and by way of nominal damages;


4. P25,000.00 as and by way of temperate damages in lieu of actual expenses as it
cannot be ignored that the above-named defendants spouses have incurred expenses
in protecting and defending their rights subject of the complaint against them.

(5) ordering the plaintiffs to pay the cost of the suit.

SO ORDERED.[5]

The petitioners moved for reconsideration, but their motion was denied by the RTC in an order,
dated November 16, 2009.

Aggrieved, the petitioners filed an appeal before the CA.

The CA Ruling

In its assailed Decision, dated October 17, 2012, the CA affirmed the decision of the RTC. It
agreed with the RTC that the petitioners must first institute a special proceeding to determine
their status as heirs of Spouses Eugenio before they could file an ordinary civil action to nullify
the deeds of sale. It found that the petitioners were not the real parties in interest to file the suit
in the RTC. Hence, the CA ruled that the RTC correctly dismissed the petitioners’ complaint for
want of cause of action. The dispositive portion reads:

WHEREFORE, premises considered, the Decision dated July 31, 2009 of the Regional Trial Court of
Laoag City, Branch 14 is hereby affirmed with modification in that the award for moral and exemplary
damages are hereby deleted.

SO ORDERED.[6]

The petitioners moved for reconsideration, but their motion was denied by the CA in its assailed
resolution, dated November 13, 2014.

Hence, this petition.

ISSUES
I
WHETHER THE PETITIONERS MUST INSTITUTE A SPECIAL PROCEEDING TO DETERMINE
THEIR STATUS AS HEIRS OF SPOUSES EUGENIO BEFORE THEY COULD FILE AN
ORDINARY ACTION FOR ANNULMENT OF INSTRUMENT

II
WHETHER THE COURT COULD STILL ADJUDGE SPOUSES MARIANO AS BUYERS IN
GOOD FAITH AFTER IT ALREADY RULED THAT THE PETITIONERS WERE NOT THE
REAL PARTIES IN INTEREST.

The petitioners argue that the issue regarding their capacity to file the complaint and pray for the
nullification of the questioned sale should be deemed waived considering that the same was
never raised either as a ground in a motion to dismiss or as an affirmative defense; that when
the respondents submitted in evidence the family tree showing the petitioners’ lineage to the
deceased registered owners, they already admitted that the petitioners were heirs of Spouses
Eugenio; and that the RTC erred in adjudging Spouses Mariano as buyers in good faith
because if indeed the petitioners’ complaint failed to state a cause of action, the only judgment
that the RTC could have rendered was a dismissal of the case.

In their Comments on the Petition for Review,[7] dated October 5, 2015, the respondents
contended that the petitioners must first file a special proceeding to determine that they were
the legal heirs of Spouses Eugenio before they could institute an ordinary action for the
annulment of the deeds of sale; and that the petitioners did not present any evidence to prove
that they were the legal heirs of the deceased registered owners.

In their Reply,[8] dated March 17, 2016, the petitioners reiterated their argument that failure to
state a cause of action must be raised in a motion to dismiss or as a defense in the answer, and
that failure to do so would result in a waiver of such ground; that it would be superfluous to
subject the estate to administration proceedings as the petitioners had already presented
evidence to establish their right as heirs of Spouses Eugeni o; and that the necessity of the
institution of a separate special proceeding to deal specifically on the issue of heirship would
only become essential if the parties in the ordinary civil case could not agree on the matter.

The Court’s Ruling


The petitioners must institute a
special proceeding to determine their
status as heirs of Spouses Eugenio
An ordinary civil action is one by which a party sues another for the enforcement or protection of
a right, or the prevention or redress of a wrong.[9]A special proceeding, on the other hand, is a
remedy by which a party seeks to establish a status, a right or a particular fact.[10]

The Rules of Court provide that only a real party-in-interest is allowed to prosecute and defend
an action in court. A real party-in-interest is the one who stands to be benefited or injured by the
judgment in the suit or the one entitled to the avails thereof.[11] Such interest, to be considered a
real interest, must be one which is present and substantial, as distinguished from a mere
expectancy, or a future, contingent, subordinate or consequential interest. A plaintiff is a real
party in interest when he is the one who has a legal right to enforce or protect.[12]

In cases wherein the alleged heirs of a decedent, in whose name a property was registered, sue
to recover the said property through the institution of an ordinary civil action, such as a
complaint for reconveyance and partition or nullification of transfer certificate of titles and other
deeds or documents related thereto, the Court has consistently ruled that a declaration of
heirship is improper in an ordinary civil action because the matter is within the exclusive
competence of the court in a special proceeding. In the case ofPortugal v. Portugal-
Beltran,[13] the Court wrote:

The common doctrine in Litam, Solivio and Guilas in which the adverse parties are putative heirs to the
estate of a decedent or parties to the special proceedings for its settlement is that if the special proceedings
are pending, or if there are no special proceedings filed but there is, under the circumstances of the
case, a need to file one, then the determination of, among other issues, heirship should be raised and
settled in said special proceedings. Where special proceedings had been instituted but had been finally
closed and terminated, however, or if a putative heir has lost the right to have himself declared in the
special proceedings as co-heir and he can no longer ask for its re-opening, then an ordinary civil action
can be filed for his declaration as heir in order to bring about the annulment of the partition or distribution
or adjudication of a property or properties belonging to the estate of the deceased.[14] (Emphasis supplied)

In the case at bench, while the complaint was denominated as an action for annulment of
instrument, a review of the allegations therein reveals that the right being asserted by the
petitioners is their right as heirs of Spouses Eugenio.
The petitioners, however, have yet to substantiate their claim as the legal heirs of Spouses
Eugenio who are, thus, entitled to the subject property. Neither is there anything in the records
of this case which would show that a special proceeding had been instituted to have themselves
declared as heirs of Spouses Eugenio. Thus, there is a need to establish their status as such
heirs in the proper forum.

By way of exception, the need to institute a separate special proceeding for the determination of
heirship may be dispensed with if it appears from the records of the case that the only property
left by the decedent was the subject matter of the case and that the parties had already
presented evidence to establish their right as heirs of the decedent,[15] or when a special
proceeding had been instituted but had been finally closed and terminated, and hence, could
not be re-opened.[16]

Here, none of the foregoing exceptions, or any of similar nature, appears to exist. Moreover, the
petitioners failed to substantiate their claim that they were the heirs of Spouses Eugenio
because first, based on the testimony of petitioner Juanita Reyes, it appeared that Spouses
Eugenio had other children aside from those mentioned in the complaint.[17] Second, the
petitioners did not submit the death certificates of Spouses Eugenio. Finally, the entry at the
back of the copy of OCT No. 15218, which was the subject of the sale between the heirs of
Spouses Eugenio and a certain Josefa Z. Cu, indicated that Spouses Eugenio had left only four
(4) children contrary to what the petitioners alleged in their complaint.

Thus, with these circumstances, there is a greater necessity for the institution of a special
proceeding for the determination of the lawful heirs of Spouses Eugenio.

The RTC properly dismissed


the case for lack of cause of
action

The RTC’s dismissal of the case for failure to state a cause of action should be treated as
dismissal for lack of cause of action for it was made after the trial on the merits.

In his book entitled Remedial Law Compendium,[18] Justice Florenz D. Regalado, a recognized
commentator on remedial law, explained the distinction between failure to state a cause of
action and lack of cause of action:
What is contemplated, therefore, is a failure to state a cause of action which is provided in Sec. 1(g) of
Rule 16. This is a matter of insufficiency of the pleading. Sec. 5 of Rule 10, which was also included as
the last mode for raising the issue to the court, refers to the situation where the evidence does not prove a
cause of action. This is, therefore, a matter of insufficiency of evidence. Failure to state a cause of action
is different from failure to prove a cause of action. The remedy in the first is to move for dismissal of the
pleading, while the remedy in the second is to demur to the evidence, hence reference to Sec. 5 of Rule 10
has been eliminated in this section. The procedure would consequently be to require the pleading to state
a cause of action, by timely objection to its deficiency; or, at the trial, to file a demurrer to evidence, if
such motion is warranted.

As the rule now stands, the neglect to invoke the ground of failure to state a cause of action in a
motion to dismiss or in the answer would result in its waiver. The reason for the deletion is that
failure to state a cause of action may be cured under Section 5, Rule 10 of the Rules of Court:[19]

Section 5. Amendment to conform to or authorize presentation of evidence. — When issues not raised by
the pleadings are tried with the express or implied consent of the parties they shall be treated in all
respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of
any party at any time, even after judgment; but failure to amend does not affect the result of the trial of
these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the
pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the
presentation of the merits of the action and the ends of substantial justice will be subserved thereby. The
court may grant a continuance to enable the amendment to be made.

In this case, the ground of failure to state a cause of action was indeed waived because the
respondents did not raise the same in a motion to dismiss or in their answer. The RTC
continued to try the case and even attempted to determine if the petitioners were the lawful
heirs of Spouses Eugenio. After examining the records, the Court is of the view that it is better
to first resolve the issue of heirship in a separate proceeding.

The ground for dismissal being that the petitioners are not the real parties-in-interest, it was
premature on the part of the RTC and the CA to declare that the respondents are buyers in
good faith. Hence, this judgment is without prejudice to the filing of an action for annulment of
instrument and/or reconveyance of property against the proper parties after a determination of
the lawful heirs of Spouses Eugenio in a separate proceeding.
WHEREFORE, the petition is DENIED.

Maramion, et al. Vs. Agdao Landless Residents


Association, et al.; G.R. Nos. 188642 &
189425/G.R. No. 188888-89; October 17, 2016
DECISION

JARDELEZA, J.:

These are consolidated petitions for review on certiorari assailing the Court of Appeals’ (CA)
Decision[1] and Resolution[2] dated November 24, 2008 and June 19, 2009, respectively, in CA-
G.R. SP No. 01858-MIN and CA-G.R. SP No. 01861-MIN. The CA affirmed with modification
the Decision[3] of the Regional Trial Court (court a quo) dated July 11, 2007 which ruled in favor
of respondents.

The Parties

Petitioners are Agdao Landless Residents Association, Inc. (ALRAI), a non-stock, non-
profit corporation duly organized and existing under and by virtue of the laws of the
Republic of the Philippines,[4] and its board of directors,[5] namely, Armando Javonillo
(Javonillo), Ma. Acelita Armentano (Armentano), Alex Josol, Salcedo de la Cruz, Jr.,
Claudio Lao, Antonia Amorada, Julius Alinsub, Pompeniano Espinosa, Consorcio
Delgado, Romeo Cabillo, Benjamin Lamigo, Ricardo Bacong, Rodolfo Galenzoga, and
Asuncion Alcantara (Alcantara).[6]Respondents are allegedly ousted members of ALRAI,
namely, Rolando Maramion, Leonidas Jamisola, Virginia Canoy (Canoy), Elizabeth
Gonzales, Crispiniano Quire-Quire, Emestino Dunlao, Ella Demandante, Ella Ria
Demandante, Elgin Demandante, Satumina Witara (Witara), Virgilio Dayondon
(Dayondon), Melencia Maramion, Angelica Penkian (Penkian), Presentacion Tan,
Hemani Gregory (Gregory), Rudy Gimarino (Gimarino), Valentin Cameros, Radel
Cameros (Cameros), Zoilo Jabonete, Luisito Tan (Tan), Joseph Quire Quire, Emestino
Dunlao, Jr., Fred Dunlao, Liza Maramion, Clarita Robilla (Robilla), Renata Dunlao and
Prudencio Juariza, Jr. (Juariza).[7]
The Antecedents
Dakudao & Sons, Inc. (Dakudao) executed six Deeds of Donation [8] in favor of ALRAI
covering 46 titled lots (donated lots).[9] One Deed of Donation[10] prohibits ALRAI, as
donee, from partitioning or distributing individual certificates of title of the donated lots to
its members, within a period of five years from execution, unless a written authority is
secured from Dakudao.[11] A violation of the prohibition will render the donation void, and
title to and possession of the donated lot will revert to Dakudao.[12] The other five Deeds
of Donation do not provide for the five-year restriction.
In the board of directors and stockholders meetings held on January 5, 2000 and January 9,
2000, respectively, members of ALRAI resolved to directly transfer 10 of the donated lots to
individual members and non members of ALRAI.[13] Transfer Certificate of Title (TCT) Nos. T-
62124 (now T-322968), T-297811 (now TCT No. T-322966), T-297813 (now TCT No. T-
322967) and T-62126 (now TCT No. T-322969) were transferred to Romeo Dela Cruz (Dela
Cruz). TCT Nos. T-41374 (now TCT No. T-322963) and T-41361 (now TCT No. T-322962) were
transferred to petitioner Javonillo, the president of ALRAI. TCT Nos. T-41365 (now TCT No. T-
322964) and T-41370 (now TCT No. T-322964) were transferred to petitioner Armentano, the
secretary of ALRAI. TCT Nos. T-41367 (now TCT No. T-322971) and T-41366 were transferred
to petitioner Alcantara, the widow of the fanner legal counsel of ALRAI. The donated lot covered
by TCT No. T-41366 (replaced by TCT No. T-322970) was sold to Lily Loy (Loy) and now
covered by TCT No. T-338403.[14]

Respondents filed a Complaint[15] against petitioners. Respondents alleged that petitioners


expelled them as members of ALRAI, and that petitioners are abusing their powers as
officers.[16] Respondents further alleged that petitioners were engaged in the following
anomalous and illegal acts: (1) requiring ALRAI’s members to pay exorbitant arrear fees when
ALRAI’s By-Laws only set membership dues at P1.00 per month;[17] (2) partially distributing the
lands donated by Dakudao to some officers of ALRAI and to some non-members in violation of
the Deeds of Donation;[18] (3) illegally expelling them as members of ALRAI without due
process;[19] and (4) being unable to show the books of accounts of ALRAI.[20] They also alleged
that Loy (who bought one of the donated lots from Alcantara) was a buyer in bad faith, having
been aware of the status of the land when she bought it.[21]

Thus, respondents prayed for: (1) the restoration of their membership to ALRAI; (2) petitioners
to stop selling the donated lands and to annul the titles transferred to Javonillo, Armentano,
Dela Cruz, Alcantara and Loy; (3) the production of the accounting books of ALRAI and receipts
of payments from ALRAI’s members; (4) the accounting of the fees paid by ALRAI’s members;
and (5) damages.[22]

In their Answer,[23] petitioners alleged that ALRAI transferred lots to Alcantara as attorney’s fees
ALRAI owed to her late husband, who was the legal counsel of ALRAI.[24] On the other hand,
Javonillo and Armentano, as president and secretary of ALRAI, respectively, made a lot of
sacrifices for ALRAI, while Dela Cruz provided financial assistance to ALRAI.[25]

Petitioners also alleged that respondents who are non-members of ALRAI have no personality
to sue. They also claimed that the members who were removed were legally ousted due to their
absences in meetings.[26]

The Ruling of the RTC


On July 11, 2007, the court a quo promulgated its Decision,[27] the decretal portion of
which reads:
After weighing the documentary and testimonial evidence presented, as well as the arguments
propounded by the counsels, this Court tilts the scale of justice in favor of complainants and hereby grants
the following:

1. Defendants are enjoined from disposing or selling further the donated lands to the
detriment of the beneficiary-members of the Association;

2. The Complainants and/or the ousted members are hereby restored to their
membership with ALRAI, and a complete list of all bona fide members should be
made and submitted before this Court;

3. The Register of Deeds of the City of Davao is directed to annul the Land Titles
transferred to Armando Javonillo, Ma. Acelita Armentano, Romeo dela Cruz,
Asuncion Alcantara and Lily Loy with TCT Nos. T-322962, T-322963, T-322964, T-
322965, T-322966, T-322967, T-322968, T-322969, T-322971 and T-338403
(formerly T-322970), respectively; and to register said titles to the appropriate donee
provided in the Deeds of Donation; and

4. Defendants are further directed to produce all the Accounting Books of the
Association, receipts of the payments made by all the members, and for an
accounting of the fees paid by the members from the time of its incorporation up to
the present;

5. Moral, exemplary and attorney’s fees being unsubstantiated, the same cannot be
given due course; and

6. Defendants are ordered to shoulder the costs of suit.

SO ORDERED.[28]

The court a quo treated the case as an intra-corporate dispute.[29] It found respondents to
be bona fide members of ALRAI.[30] Being bona fide members, they are entitled to notices of
meetings held for the purpose of suspending or expelling them from ALRAI. [31] The court a
quo however found that respondents were expelled without due process.[32] It also annulled all
transfers of the donated lots because these violated the five-year prohibition under the Deeds of
Donation.[33] It also found Loy a purchaser in bad faith.[34]

Both Loy and petitioners filed separate appeals with the CA. Loy’s appeal was docketed as CA-
G.R. SP No. 01858;[35] while petitioners’ appeal was docketed as CA-G.R. SP No. 1861.[36] In its
Resolution[37] dated October 19, 2007, the CA ordered the consolidation of the appeals.

The Ruling of the Court of Appeals

The CA affirmed with modification the court a quo‘s Decision. The decretal portion of the
CA Decision[38] dated November 24, 2008 reads:
WHEREFORE, the consolidated petitions are PARTLY GRANTED. The assailed Decision dated July
11,2007 of the Regional Trial Court (RTC), Eleventh (11th)Judicial Region, Branch No. 10 of Davao City
in Civil Case No. 29,047-02 is hereby AFFIRMED with MODIFICATION.

The following Transfer Certificates of Title are declared VALID:

1. TCT Nos. T-322966, T-322967, T-322968 and T-322969 in the name of petitioner
Romeo C. DelaCruz; and

2. TCT No. T-338403 in the name of petitioner Lily Loy.


The following Transfer Certificates of Title are declared VOID:

1. TCT Nos. T-322963 and T-322962 in the name of Petitioner Armando Javonillo;

2. TCT Nos. T-322964 and T-322965 in the name of petitioner Ma. Acelita Armentano; and

3. TCT No. T-322971 in the name of petitioner Asuncion A. Alcantara.

Petitioners who are members of ALRAI may inspect all the records and books of accounts of ALRAI and
demand accounting of its funds in accordance with Section 1, Article VII and Section 6, Article V of
ALRAI’s Constitution and By-Laws.

SO ORDERED.[39]

Under Section 2, Article III of ALRAI’s Amended Constitution and By-Laws (ALRAI Constitution),
the corporate secretary should give written notice of all meetings to all members at least three
days before the date of the meeting.[40]The CA found that respondents were not given notices of
the meetings held for the purpose of their termination from ALRAI at least three days before the
date of the meeting.[41] Being existing members of ALRAI, respondents are entitled to inspect
corporate books and demand accounting of corporate funds in accordance with Section 1,
Article VII and Section 6, Article V ofthe ALRAI Constitution.[42]

The CA also noted that among the donated lots transferred, only one [under TCT No. T-41367
(now TCT No. 322971) and transferred to Alcantara] was covered by the five-year
prohibition.[43] Although petitioners attached to their Memorandum[44] dated November 19, 2007 a
Secretary’s Certificate[45] of Dakudao resolving to remove the restriction from the land covered by
TCT No. T-41367, the CA did not take this certificate into consideration because petitioners
never mentioned its existence in any of their pleadings before the court a quo. Thus, without the
required written authority from the donor, the CA held that the disposition of the land covered by
TCT No. T-41367 is prohibited and the land’s subsequent registration under TCT No. T-322971
is void.[46]

However, the CA nullified the transfers made to Javonillo and Armentano because these
transfers violated Section 6 of Article IV of the ALRAI Constitution. Section 6 prohibits directors
from receiving any compensation, except for per diems, for their services to ALRAI. [47] The CA
upheld the validity of the transfers to Dela Cruz and Alcantara[48] because the ALRAI Constitution
does not prohibit the same. The CA held that as a consequence, the subsequent transfer of the
lot covered by TCT No. T-41366 to Loy from Alcantara was also valid.[49]

Both parties filed separate motions for reconsideration with the CA but these were denied in a
Resolution[50] dated June 19, 2009.

Thus, the parties filed separate petitions for review on certiorari under Rule 45 of the Rules of
Court with this Court. In a Resolution[51] dated September 30, 2009, we resolved to consolidate
the petitions considering they assail the same CA Decision and Resolution dated November 24,
2008 and June 19, 2009, respectively. The petitions also involve the same parties and raise
interrelated issues.

The Issues

Petitioners raise the following issues for resolution of the Court, to wit:
1. Whether respondents should be reinstated as members of ALRAI; and

2. Whether the transfers of the donated lots are valid.

Our Ruling

We find the petition partly meritorious.


I. Legality of respondents’ termination

Petitioners argue that respondents were validly dismissed for violation of the ALRAI Constitution
particularly for non-payment of membership dues and absences in the meetings.[52]

Petitioners’ argument is without merit. We agree with the CA’s finding that respondents were
illegally dismissed from ALRAI.

We stress that only questions of law may be raised in a petition for review oncertiorari under
Rule 45 of the Rules of Court, since “the Supreme Court is not a trier of facts.”[53] It is not our
function to review, examine and evaluate or weigh the probative value of the evidence
presented.
When supported by substantial evidence, the findings of fact of the CA are conclusive and
binding on the parties and are not reviewable by this Court, unless the case falls under any of
the recognized exceptions in Jurisprudence.[54]

The court a quo held that respondents are bona fide members of ALRAL[55]This finding was not
disturbed by the CA because it was not raised as an issue before it and thus, is binding and
conclusive on the parties and upon this Court.[56] In addition, both the court a quo and the CA
found that respondents were illegally removed as members of ALRAI. Both courts found that in
terminating respondents from ALRAI, petitioners deprived them of due process.[57]

Section 91[58] of the Corporation Code of the Philippines (Corporation Code)[59] provides that
membership in a non-stock, non-profit corporation (as in petitioner ALRAI in this case) shall be
terminated in the manner and for the cases provided in its articles of incorporation or the by-
laws.

In tum, Section 5, Article II of the ALRAI Constitution[60] states:

Sec. 5. – Termination of Membership – Membership may be lost in any of the following: a) Delinquent
in the payment of monthly dues; b)failure to [attend] any annual or special meeting of the
association for three consecutive times without justifiable cause, and c) expulsion may be exacted by
majority vote of the entire members, on causes which herein enumerated: 1) Act and utterances which are
derogatory and harmful to the best interest of the association; 2) Failure to attend any annual or special
meeting of the association for six (6) consecutive months, which shall be construed as lack of interest to
continue his membership, and 3) any act to conduct which are contrary to the objectives, purpose and
aims of the association as embodied in the charter[.][61]

Petitioners allege that the membership of respondents in ALRAI was terminated due to (a) non-
payment of membership dues and (b) failure to consecutively attend meetings.[62] However,
petitioners failed to substantiate these allegations. In fact, the court a quo found that
respondents submitted several receipts showing their compliance with the payment of monthly
dues.[63] Petitioners likewise failed to prove that respondents’ absences from meetings were
without any justifiable grounds to result in the loss of their membership in ALRAI.

Even assuming that petitioners were able to prove these allegations, the automatic termination
of respondents’ membership in ALRAI is still not warranted. As shown above, Section 5 of the
ALRAI Constitution does not state that the grounds relied upon by petitioners will cause
the automatictermination of respondents’ membership. Neither can petitioners argue that
respondents’ memberships in ALRAI were terminated under letter (c) of Section 5, to wit:

x x x c) expulsion may be exacted by majority vote of the entire members, on causes which herein
enumerated: 1) Act and utterances which are derogatory and harmful to the best interest of the
association; 2) Failure to attend any annual or special meeting of the association for six (6) consecutive
months, which shall be construed as lack of interest to continue his membership, and 3) any act to conduct
which are contrary to the objectives, purpose and aims of the association as embodied in the charter; x x
x[64]

Although termination of membership from ALRAI may be made by a majority of the members,
the court a quo found that the “guideline (referring to Section 2, Article III of the ALRAI
Constitution) was not followed, hence, complainants’ ouster from the association was illegally
done.”[65] The court a quo cited Section 2, Article III of the ALRAI Constitution which provides,
thus:

Sec. 2. -Notice- The Secretary shall give or cause to be given written notice of all meetings, regular or
special to all members of the association at least three (3) days before the date of each meetings either by
mail or personally. Notice for special meetings shall specify the time and the purposes or purpose for
which it was called; x x x [66]

The CA concurred with the finding of the court a quo.[67] The CA noted that the evidence
presented revealed that the General Meeting for the termination of membership was to be held
on July 29, 2001, at 2 o’clock in the afternoon; but the Notice to all officers and members of
ALRAI informing them about the General Meeting appeared to have been signed by ALRAI’s
President only on July 27, 2001.[68] Thus, the CA held that the “notice for the July 29, [2001]
meeting where the general membership of ALRAI approved the expulsion of some of the
respondents was short of the three (3)-day notice requirement. More importantly, the petitioners
have failed to adduce evidence showing that the expelled members were indeed notified of any
meeting or investigation proceeding where they are given the opportunity to be heard prior to
the termination of their membership.”[69]

The requirement of due notice becomes more essential especially so since the ALRAI
Constitution provides for the penalties to be imposed in cases where any member is found to be
in arrears in payment of contributions, or is found to be absent from any meeting without any
justifiable cause. Section 3, Article II and Section 3, Article III of the ALRAI Constitution provide,
to wit:

Article II
xxx
Sec. 3. – Suspension of members Any member who shall be six (6) months in arrears in the
payment of monthly dues or additional contributions or assessments shall be automatically
suspended and may be reinstated only upon payment of the corresponding dues in arrears or
additional contributions and after approval of the board of Directors.[70]
xxx
Article III
xxx
Sec. 3. – Any member who shall be absent from any meeting without justifiable causes shall be
liable to a fine of Two Pesos (P 2.00);[71]

Clearly, members proved to be in arrears in the payment of monthly dues, contributions, or


assessments shall only be automatically suspended; while members who shall be absent from
any meeting without any justifiable cause shall only be liable for a fine. Nowhere in the ALRAI
Constitution does it say that the foregoing actions shall cause the automatic termination of
membership. Thus, the CA correctly ruled that “respondents’ expulsion constitutes an
infringement of their constitutional right to due process of law and is not in accord with the
principles established in Article 19 of the Civil Code, x x x.”[72]

There being no valid termination of respondents’ membership m ALRAI, respondents remain as


its existing members.[73] It follows that as members, respondents are entitled to inspect the
records and books of accounts of ALRAI subject to Section 1, Article VII[74] of ALRAI’s
Constitution, and they can demand the accounting of its funds in accordance with Section 6,
Article V of the ALRAI Constitution.[75] In addition, Sections 74[76] and 75[77] of the Corporation
Code also sanction the right of respondents to inspect the records and books of accounts of
ALRAI and demand the accounting of its funds.

II. On the validity of the donated lots

We modify the decision of the CA.


At the onset, we find that the cause of action and the reliefs sought in the complaint pertaining
to the donated lands (ALRAI’s corporate property) strictly call for the filing of a derivative suit,
and not an individual suit which respondents filed.

Individual suits are filed when the cause of action belongs to the stockholder personally, and not
to the stockholders as a group, or to the corporation, e.g. denial of right to inspection and denial
of dividends to a stockholder. If the cause of action belongs to a group of stockholders, such as
when the rights violated belong to preferred stockholders, a class or representative suit may be
filed to protect the stockholders in the group.[78]

A derivative suit, on the other hand, is one which is instituted by a shareholder or a member of a
corporation, for and in behalf of the corporation for its protection from acts committed by
directors, trustees, corporate officers, and even third persons.[79] The whole purpose of the law
authorizing a derivative suit is to allow the stockholders/members to enforce rights which are
derivative (secondary) in nature, i.e., to enforce a corporate cause of action.[80]

The nature of the action, as well as which court or body has jurisdiction over it, is determined
based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not
the plaintiff is entitled to recover upon all or some of the claims asserted therein.[81]

In this case, the complaint alleged, thus:

FIRST CAUSE OF ACTION

9. Sometime in 2001, Complainants accidentally discovered that portions of the aforementioned


donated lands were partially distributed by the Officers of said association, AMONG
THEMSELVES, without knowledge of its members.
xxx

11. Then there was illegal partial distribution of the donated lands. Not only the President and
Secretary of the Association, but also some personalities who are not members of the association
and who themselves own big tracts of land, are the recipients of the donated lands, which acts are
contrary to the clear intents as indicated in the deed of donation. x x x[82]

In the same complaint, respondents prayed .for the following reliefs, among others, to wit:
a) An Order for a writ of PRELIMINARY PROHIBITORY MANDATORY INJUNCTION to stop the
Defendants from disposing the donated lands to the detriment of the beneficiary-members of the
Association[.]

xxx

c) To cease and desist from selling donated lands subject of this case and to annul the titles
transferred x x x.
d) To annul the Land Titles fraudulently and directly transferred from the Dacudao in the names of
Defendants Javonillo, Armentano, Romeo de la Cruz and Alcantara, and subsequently to defendant Lily
Loy in the name of Agdao Landless Associatidn.[83]

In a strict sense, the first cause of action, and:the reliefs sought, should have been brought
through a derivative suit. The first cause of action pertains to the corporate right of ALRAI
involving its corporate properties which it owned by virtue of the Deeds of Donation. In
derivative suits, the real party-in-interest is the corporation, and the suing stockholder is a mere
nominal party.[84] A derivative suit, therefore, concerns “a wrong to the corporation itself.”[85]

However, we liberally treat this case (in relation to the cause of action pertaining to ALRAI’s
corporate properties) as one pursued by the corporation itself, for the following reasons.

First, the court a quo has jurisdiction to hear and decide this controversy. Republic Act No.
8799,[86] in relation to Section 5 of Presidential Decree No. 902-A,[87] vests the court a quo with
original and exclusive jurisdiction to hear and decide cases involving:

Sec. 5. x x x

(a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers
or partnership, amounting to fraud and misrepresentation which may be detrimental to the interest of the
public and/or of the stockholders, partners, members of associations or organizations registered with the
Commission.

Second, we note that petitioners did not object to the institution of the case (on the ground that a
derivative suit should have been lodged instead of an individual suit) in any of the proceedings
before the court a quo or before the CA.[88]
Third, a reading of the complaint (in relation to the cause of action pertaining to ALRAI’s
corporate properties) shows that respondents do not pray for reliefs for their personal benefit;
but in fact, for the benefit of the ALRAI, to wit:

c) To cease and desist from selling donated lands subject of this case and to annul the titles transferred to
Armando Javonillo, Ma. Acelita Armentano, Romeo de Ia Cruz, Asuncion Alcantara and Lily Loy x x x.

d) To annul the Land Titles fraudulently and directly transferred from the (sic) Dacudao in the names of
Defendants Javonillo, Armentano, Romeo de la Cruz and Alcantara, and subsequently to Defendant Lily
Loy in the name of Agdao Landless Assiociation.[89]

The reliefs sought show that the complaint was filed ultimately to curb the alleged
mismanagement of ALRAI’s corporate properties. We note that the danger sought to be avoided
in Evangelista v. Santos[90] does not exist in this case. In Santos, plaintiff stockholders sought
damages against the principal officer of the corporation, alleging that the officer’s
mismanagement of the affairs and assets of the corporation brought about the loss of the value
of its stocks. In ruling against the plaintiff-stockholders, this Court held that “[t]he stockholders
may not directly claim those damages for themselves for that would result in the appropriation
by, and the distribution among them of part of the corporate assets before the dissolution of the
corporation x x x.”[91] More, in Santos, if only the case was brought before the proper venue, this
Court added, “we note that the action stated in their complaint is susceptible of being converted
into a derivative suit for the benefit of the corporation by a mere change in the prayer.”[92]

In this case, the reliefs sought do not entail the premature distribution of corporate assets. On
the contrary, the reliefs seek to preserve them for the corporate interest of ALRAI. Clearly then,
any benefit that may be recovered is accounted for, not in favor of respondents, but for the
corporation, who is the real party-in-interest Therefore, the occasion for the strict application of
the rule that a derivative suit should be brought in order to protect and vindicate the interest of
the corporation does not obtain under the circumstances of this case.

Commart (Phils.), Inc. v. Securities and Exchange Commission (SEC)[93] upholds the same
principle. In that case, the chairman and board of directors of Commart were sued for diverting
into their private accounts amounts due to Commart as commissions. Respondents argued that
the Hearing Panel of the SEC should dismiss the case·on the ground that it has no jurisdiction
over the matter because the case is not a derivative suit The Hearing Panel denied the motion,
and was affirmed by the SEC. Upon appeal, this Court affirmed the decision of the SEC, to wit:
The complaint in SEC Case No. 2673, particularly paragraphs 2 to 9 under First Cause of Action, readily
shows that it avers the diversion of corporate income into the private bank accounts of petitioner x x x
and his wife. Likewise, the principal relief prayed for in the complaint is the recovery of a sum of
money in favor of the corporation. This being the case, the complaint is definitely a derivative suit. xxx

xxx

In any case, the suit is for the benefit of Commart itself, for a judgment in favor of the
complainants will necessarily mean recovery by the corporation of the US$2.5 million alleged to
have been diverted from its coffers to the private bank accounts of its top managers and
directors. Thus, the prayer in the Amended Complaint is for judgment ordering respondents x x
x, “to account for and to, turn over or deliver to the Corporation” the aforesaid sum, with legal
interest, and “ordering all the respondents, as members of the Board of Directors to take such
remedial steps as would protect the corporation from further depredation of the funds and
property.”[94]

Fourth, based on the records, we find that there is substantial compliance with the requirements
of a derivative suit, to wit:

a) [T]he party bringing suit should be a shareholder as of the time of the act or transaction complained of,
the number of his shares not being material;

b) [H]e has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for
the appropriate relief but the latter has failed or refused to heed his plea; and

c) [T]he cause of action actually devolves on the corporation, the wrongdoing or harm having been, or
being caused to the corporation and not to the particular stockholder bringing the suit.[95]

Here, the court a quo found that respondents are bona fide members of ALRAI.[96] As for the
second requisite, respondents also have tried to demand appropriate relief within the
corporation, but the demand was unheeded. In their Memorandum before the CA, respondents
alleged, thus:

4.18 The occurrence of the series of distressing revelation promptedRespondents to confront Defendant
Armentano on the accounting of all payments made including the justification for the illegal distribution
of the Donated Land to four persons mentioned in preceding paragraph (4.12) of this memorandum.
Unfortunately, Petitioner Armentano merely reasoned their (referring to the four persons) right to claim
ownership of the land as compensation for their service and attorney’s fees;

4.19 Anxious of the plan of action taken by the Respondents against the Petitioners, the latter started
harassing the unschooled Respondents by unduly threatening them. Respondents simply wanted the land
due them, an accounting of the finances of the Association and justification of the illegal disposition of
the Donated Land which was donated for the landless members of the Association;

4.20 As a consequence, Petitioners on their own, with grave abuse of power and in violation of the
Constitution and By-Laws of the Association maliciously expelled the Respondents particularly those
persistently inquisitive about Petitioners’ moves and acts which only emphasized their practice of
upholding the MOB RULE by presenting solicited signatures of alleged members and non-members
written on a scrap of paper signifying confirmation of the ouster (sic) members. x x x[97]

We note that respondents’ demand on Armentano substantially complies with the second
requirement. While it is true that the complaining stockholder must show that he has exhausted
all the means within his reach to attain within the corporation the redress for his grievances,
demand is unnecessary if the exercise will result in futility.[98] Here, after respondents demanded
Armentano to justify the transfer of ALRAI’s properties to the individual petitioners, respondents
were expelled from the corporation, which termination we have already ruled as invalid. To our
mind, the threat of expulsion against respondents is sufficient to forestall any expectation of
further demand for relief from petitioners. Ultimately, to make an effort to demand redress within
the corporation will only result in futility, rendering the exhaustion of other remedies
unnecessary.

Finally, the third requirement for the institution of a derivative suit is clearly complied with. As
discussed in the previous paragraphs, the cause of action and the reliefs sought ultimately
redound to the benefit of ALRAI. In this case, and as in a proper derivative suit, ALRAI is the
party-in-interest and respondents are merely nominal parties.

In view of the foregoing, and considering further the interest of justice, and the length of time
that this case has been pending, we liberally treat this case as one pursued by the corporation
to protect its corporate rights. As the court a quo noted, this case “commenced [on] April 2,
2002, blossomed in a full-blown trial and ballooned into seven (7) voluminous rollos.”[99]
We now proceed to resolve the issue of the validity of the transfers of the donated lots to
Javonillo, Armentano, DelaCruz, Alcantara and Loy. We agree with the CA in ruling that the
TCTs issued in the names of Javonillo, Armentano and Alcantara are void.[100] We modify the
ruling of the CA insofar as we rule that the TCTs issued in the names of Dela Cruz and Loy are
also void.[101]

One of the primary purposes of ALRAI is the giving of assistance in uplifting and promoting
better living conditions to all members in particular and the public in general.[102] One of its
objectives includes “to uplift and promote better living condition, education, health and general
welfare of all members in particular and the public in general by providing its members humble
shelter and decent housing.”[103] Respondents maintain that it is pursuant to this purpose and
objective that the properties subject of this case were donated to ALRAI.[104]

Section 36, paragraphs 7 and 11 of the Corporation Code provide:

Sec. 36. Corporate powers and capacity. – Every corporation incorporated under this Code has the power
and capacity:

xxx

7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage and otherwise
deal with such real and personal property, including securities and bonds of other
corporations, as the transaction of the lawful business of the corporation may reasonably and
necessarily require, subject to the limitations prescribed by law and the Constitution.
xxx

11. To exercise such other powers as may be essential or necessary to carry out its purpose or
purposes as stated in the articles of incorporation.[105]

The Corporation Code therefore tells us that the power of a corporation to validly grant or
convey any of its real or personal properties is circumscribed by its primary purpose. It is
therefore important to determine whether the grant or conveyance is pursuant to a legitimate
corporate purpose, or is at least reasonable and necessary to further its purpose.

Based on the records of this case, we find that the transfers of the corporate properties to
Javonillo, Armentano, Dela Cruz, Alcantara and Loy are bereft of any legitimate corporate
purpose, nor were they shown to be reasonably necessary to further ALRAI’s purposes. This is
principally because, as respondents argue, petitioners “personally benefitted themselves by
allocating among themselves vast track of lands at the dire expense of the landless general
membership of the Association.”[106]

We take first the cases of Dela Cruz, Alcantara and Loy.

We disagree with theCA in ruling that the TCTs issued in the name of Dela Cruz are valid. The
transfer of property to him does not further the corporate purpose of ALRAI. To justify the
transfer to Dela Cruz, petitioners merely allege that, “[o]n the other hand, the lots given by
ALRAI to Romeo de la Cruz were compensation for the financial assistance he had been
extending to ALRAI.”[107] Records of this case do not bear any evidence to show how much Dela
Cruz has extended to ALRAI as financial assistance. The want of evidence to support this
allegation cannot allow a determination whether the amount of the financial help that Dela Cruz
extended to ALRAI is commensurate to the amount of the property transferred to him. The lack
of evidence on this point is prejudicial to ALRAI because ALRAI had parted with its property
without any means by which to determine whether the transfer is fair and reasonable under the
circumstances.

The same is true with the transfer of properties to Alcantara. Petitioners allege that Alcantara’s
husband, Atty. Pedro Alcantara, “handled all the legal work both before the Regional Trial Court
in Davao City (Civil Case No. 16192) and the Court of Appeals in Manila (CA GR No. 13744).
He agreed to render his services although he was being paid intermittently, with just small
amounts, in the hope that he will be compensated when ALRAI triumphs in the
litigation.”[108] Petitioners thus claim that “[b]ecause of the legal services of her husband, who is
now deceased, petitioner Alcantara was given by ALRAI two (2) lots x x x.”[109]

Petitioners admit that Atty. Pedro Alcantara represented ALRAI as counsel on part contingency
basis.[110] In their Memorandum before the court a quo, respondents alleged that, “[i]n fact,
Complainants have duly paid Atty. Alcantara’s legal fees as evidence (sic) by corresponding
receipts issued by the receiving Officer of the Association.”[111] The aforementioned
receipts[112]show that Atty. Pedro Alcantara had already been paid the total amount of
P16,845.00.

In Rayos v. Hernandez,[113] we held that a contingent fee arrangement is valid in this jurisdiction.
It is generally recognized as valid and binding, but must be laid down in an express contract. In
the same case, we have identified the circumstances to be considered in determining the
reasonableness of a claim for attorney’s fees as follows: (1) the amount and character of the
service rendered; (2) labor, time, and trouble involved; (3) the nature and importance of the
litigation or business in which the services were rendered; (4) the responsibility imposed; (5) the
amount of money or the value of the property affected by the controversy or involved in the
employment; (6) the skill and experience called for in the performance of the services; (7) the
professional character and social standing of the attorney; (8) the results secured; (9) whether
the fee is absolute or contingent, it being recognized that an attorney may properly charge a
much larger fee when it is contingent than when it is not; and (10) the financial capacity and
economic status of the client have to be taken into account in fixing the reasonableness of the
fee.[114]

In this case however, petitioners did not substantiate the extent of the services that Atty. Pedro
Alcantara rendered for ALRAL In fact, no engagement or retainer contract was ever presented
to prove the terms of their agreement. Petitioners did not also present evidence as to the value
of the ALRAI properties at the time of transfer to Alcantara. There is therefore no proof that the
amount of the properties transferred to Alcantara, in addition to the legal fees he received, is
commensurate (as compensation) to the reasonable value of his legal services. Using the
guidelines set forth in Rayos, absent proof, there is no basis to determine whether the transfer
of the property to Alcantara is reasonable under the circumstances.[115]

The importance of this doctrine in Rayos is emphasized in the Canons of Professional


Ethics[116] and the Rules of Court.[117] In both, the overriding consideration is the reasonableness
of the terms of the contingent fee agreement, so much so that the grant of the contingent fee is
subject to the supervision of the court.[118]

Spouses Cadavedo v. Lacaya[119] further illustrates this principle. In that case, this Court was
confronted with the issue of whether the contingent attorney’s fees consisting of one-half of the
property that was subject of litigation was valid and reasonable. This Court ruled that the
attorney’s fee is excessive and unconscionable, and is therefore void. The Court said that as
“matters then stood, [there] was not a sufficient reason to justify a large fee in the absence of
any showing that special skills and additional work had been involved.”[120] The Court also noted
that Spouses Cadavedo and Atty. Lacaya already made arrangements for the cost and
expenses for the cases handled.[121]
Similarly in this case, there is no proof that special skills and additional work have been put in by
Atty. Pedro Alcantara. Further, as adverted to in previous paragraphs, receipts show that
intermittent payments as legal fees have already been paid to him. We also note that in this
case, not only one-half of a property was transferred to Alcantara as compensation; but two
whole parcels of land – one with more or less 400 square meters (TCT No. 41366), and the
other with more or less 395 square meters (TCT No. 41367). [122] The amount of fee contracted
for, standing alone and unexplained would be sufficient to show that an unfair advantage had
been taken of the client, or that a legal fraud had been perpetrated on him.[123]

Consequently, we also find that Alcantara’s subsequent sale to Loy is not valid. Alcantara
cannot sell the property, over which she did not have the right to own, in the first place. More,
based on the records, the court a quo had already made a finding that Loy is guilty of bad faith
as to render her purchase of the property from Alcantara void. [124]

We likewise find that there is failure to show any legitimate corporate purpose in the transfer of
ALRAI’s corporate properties to Javonillo and Armentano.

The Board Resolution[125] confirming the transfer of ALRAI’s corporate properties to Javonillo and
Armentano merely read, “[t]hat the herein irrevocable confirmation is made in recognition of, and
gratitude for the outstanding services rendered by x x x Mr. Armando Javonillo, our tireless
President and Mrs. Acelita Armentano, our tactful, courageous, and equally tireless Secretary,
without whose efforts and sacrifices to acquire a portion of the realty of Dacudao & Sons, Inc.,
would not have been attained.”[126] In their Memorandum, petitioners also alleged that “[t]he most
difficult part of their (Javonillo and Armentano) job was to raise money to meet expenses. x x x It
was very difficult for petitioners Javonillo and Armentano when they needed to pay P300,000.00
for realty tax on the land donated by Dakudao and Sons, Inc. to ALRAI. It became more difficult
when the Bureau of Internal Revenue was demanding P6,874,000.00 as donor’s tax on the
donated lands. Luckily, they were able to make representation with the BIR to waive the tax.”[127]

These reasons cannot suffice to prove any legitimate corporate purpose in the transfer of the
properties to Javonillo and Armentano. For one, petitioners cannot argue that the properties
transferred to them will serve as reimbursements of the amounts they advanced for ALRAL
There is no evidence to show that they indeed paid the realty tax on the donated lands. Neither
did petitioners present any proof of actual disbursements they incurred whenever Javonillo and
Armentano allegedly helped Atty. Pedro Alcantara in handling the cases involving ALRAI.[128] Like
in the cases of Dela Cruz and Alcantara, absent proof, there was no basis by which it could
have been determined whether the transfer of properties to Javonillo and Armentano was
reasonable under the circumstances at that time. Second, petitioners cannot argue that the
properties are transferred as compensatioh for Javonillo. It is well settled that directors of
corporations presumptively serve without compensation; so that while the directors, in assigning
themselves additional duties, act within their power, they nonetheless act in excess of their
authority by voting for themselves compensation for such additional duties.[129] Even then, aside
from the claim of petitioners, there is no showing that Javonillo rendered extraordinary or
unusual services to ALRAI.

The lack of legitimate corporate purpose is even more emphasized when Javonillo and
Armentano, as a director and an officer of ALRAI, respectively, violated the fiduciary nature[130] of
their positions in the corporation.

Section 32 of the Corporation Code provides, thus:

Sec. 32. Dealings of directors, trustees or officers with the corporation.—A contract of the corporation
with one or more of its directors or trustees or officers is voidable, at the option of such corporation,
unless all of the following conditions are present:

1. That the presence of such director or trustee in the board meeting in which the contract was approved
was not necessary to constitute a quorum for such meeting;
2. That the vote of such director or trustee was not necessary for the approval of the contract;
3. That the contract is fair and reasonable under the circumstances; and
4. That in case of an officer, the contract has been previously authorized by the board of directors.

Where any of the first two conditions set forth in the preceding paragraph is absent, in the case of a
contract with a director or trustee, such contract may be ratified by the vote of the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock or of at least two thirds (2/3) of the
members in a meeting called for the purpose: Provided, That full disclosure of the adverse interest of the
directors or trustees involved is made at such meeting: Provided, however, That the contract is fair and
reasonable under the circumstances.

Being the corporation’s agents and therefore, entrusted with the management of its affairs, the
directors or trustees and other officers of a corporation occupy a fiduciary relation towards it,
and cannot be allowed to contract with the corporation, directly or indirectly, or to sell property to
it, or purchase property from it, where they act both for the corporation and for
themselves.[131] One situation where a director may gain undue advantage over his corporation is
when he enters into a contract with the latter. [132]

Here, we note that Javonillo, as a director, signed the Board Resolutions[133]confirming the
transfer of the corporate properties to himself, and to Armentano. Petitioners cannot argue that
the transfer of the corporate properties to them is valid by virtue of the Resolution [134] by the
general membership of ALRAI confirming the transfer for three reasons.

First, as cited, Section 32 requires that the contract should be ratified by a vote representing at
least two-thirds of the members in a meeting called for the purpose. Records of this case do not
show whether the Resolution was indeed voted by the required percentage of membership. In
fact, respondents take exception to the credibility of the signatures of the persons who voted in
the Resolution. They argue that, “from the alleged 134 signatures, 24 of which are non-
members, 4 of which were signed twice under different numbers, and 27 of which are
apparently proxies unequipped with the proper authorization. Obviously, on such alleged
general membership meeting the majority of the entire membership was not attained.” [135]

Second, there is also no showing that there was full disclosure of the adverse interest of the
directors involved when the Resolution was approved. Full disclosure is required under the
aforecited Section 32 of the Corporation Code.[136]

Third, Section 32 requires that the contract be fair and reasonable under the circumstances. As
previously discussed, we find that the transfer of the corporate properties to the individual
petitioners is not fair and reasonable for (1) want of legitimate corporate purpose, and for (2) the
breach of the fiduciary nature of the positions held by Javonillo and Armentano. Lacking any of
these (full disclosure and a showing that the contract is fair and reasonable), ratification by the
two-thirds vote would be of no avail.[137]

In view of the foregoing, we rule that the transfers of ALRAI’s corporate properties to Javonillo,
Armentano, Dela Cruz, Alcantara and Loy are void. We affirm the finding of the court a quo
when it ruled that “[n]o proof was shown to justify the transfer of the titles, hence, said transfer
should be annulled.”[138]

WHEREFORE, in view of the foregoing, the petitions for review on certiorari in G.R. Nos.
188642 & 189425 and in G.R. Nos. 188888-89 are PARTIALLY GRANTED. The Decision of
the CA dated November 24, 2008 and its Resolution dated June 19, 2009 ruling that
respondents are reinstated as members of ALRAI are hereby AFFIRMED. The Decision of
theCA dated November 24, 2008 and its Resolution dated June 19, 2009 are MODIFIED as
follows:

The following Transfer Certificates of Title are VOID:

(1) TCT Nos. T-322962 and T-322963 in the name of Armando Javonillo;
(2) TCT Nos. T-322964 and T-322965 in the name of Ma. Acelita Armentano;
(3) TCT Nos. T-322966, T-322967, T-322968, and T-322969 in the name of Romeo Dela Cruz;
(4) TCT No. T-338403 in the name of Lily Loy; and
(5) TCT No. T-322971 in the name of Asuncion Alcanta

Buenavista Properties, Inc. and/or Josephine


Conde Vs. Ramon G. Mariño; G.R. No. 212980;
October 10, 2016
RESOLUTION

BRION, J.:

Before us is the petitioners’ Motion for Reconsideration with Leave of Courtaddressing the
April 4, 2016 Resolution of this Court that denied “the motion with FINALITY, no substantial
argument having been adduced to warrant the reconsideration sought.” The previously denied
motion was the petitioners’ motion for reconsideration of our Resolution dated September 17,
2014, which denied the petition for review on certiorari.

I. FACTUAL BACKDROP OF GR NO. 212980:

The Spouses Buencamino and Spouses San Juan (landowners) entered into a Joint Venture
Agreement (JVA) with La Savoie Development Corporation. The parties agreed that La Savoie
would develop the three (3) parcels of land located in San Rafael, Bulacan into a commercial
and residential subdivision (Buenavista Park Subdivision), and manage the project including its
sales. The pricing of the lots were to be determined jointly by the landowners and La Savoie.
The landowners subsequently sold their property to Josephine Conde (Conde) who assigned
her interests to Buenavista Properties, Inc. (BPI). Conde and BPI thereafter executed
an Addendum[1] (to the JVA) extending the period of development to 1997.

Soon after, BPI, through Conde, wrote La Savoie several letters asking the latter “to stop selling
until [it has] put enough development to obtain the best prices”,[2] and until they have agreed on
the revised prices. In a letter datedAugust 17, 1997, BPI reiterated its request and to
“immediately stop selling the subdivision lots until [they] have agreed on the prices x x x
otherwise, [it] shall be forced to invoke the termination clause of the JVA.”[3] BPFs requests were
left unheeded.

On July 18, 1997, respondent Ramon G. Mariño (Mariño) and La Savoie, through its President
Jeanne Menguito (Menguito), entered into a Contract to Sell[4] involving a parcel of land in
Buenavista Park Subdivision. Paragraph 4 of the Contract provides that upon complete payment
of the purchase price, La Savoie agrees to execute a final deed of sale in favour of Mariño.

On February 28, 1998, BPI filed before the Regional Trial Court (RTC) a complaint against La
Savoie for the termination of the JVA, recovery of properties plus damages, with a prayer for a
temporary restraining order and a writ of preliminary injunction[5] (JVA rescission case). The RTC
issued a writ of preliminary injunction on August 11, 1998, enjoining La Savoie from selling
the remaining unsold lots in the Buenavista Park Subdivision.[6]

Mariño completed the payment for the subdivision lot on September 19, 2001. La Savoie
thereafter transmitted the corresponding Deed of Absolute Sale to BPI for its
execution.[7] Despite demands, BPI refused to sign the Deed and to deliver the title in favor of
Mariño. BPI claimed that La Savoie, in excess of authority, sold the subdivision lots in prices
fixed unilaterally and without BPFs approval.

In a decision[8] dated June 12, 2003, the RTC, among others: (1) terminated the JVA and the
Addendum to the JVA; and (2) ordered La Savoie to deliver to BPI the possession of the
Buenavista Park Subdivision together with all the improvements thereon.

Mariño subsequently filed before the Housing and Land Use Regulatory Board (HLURB) an
action for specific performance against the petitioners.
In its decision dated June 5, 2006, the HLURB-Legal Services Group ordered the petitioners
to: (1) deliver the title, covering the purchased subdivision lot, to Mariño under the
latter’s name free from all liens and encumbrances within thirty days from finality; and (2)
pay the amount of P20,000.00 as exemplary damages, P30,000.00 as attorney’s fees, and
P20,000.00 as cost of suit.

Meanwhile, in a decision[9] dated August 10, 2006, the CA affirmed the June 12, 2003 decision
of the RTC in the JVA rescission case. The case eventually reached this Court, on La
Savoie’s appeal, which the Court denied in a Resolution[10] dated February 19, 2007.

On September 17, 2007, the HLURB Commissioners affirmed the findings of facts and
conclusions of law contained in the decision of the HLURB-Legal Services Group.

The petitioners appealed the September 17, 2007 HLURB decision before the Office of the
President (OP) which the latter denied in its September 30, 2008 decision. The OP likewise
denied the petitioners’ motion for reconsideration in its May 7, 2009 decision.

The CA Ruling

In its September 30, 2013 decision, the CA affirmed the September 30, 2008 OP decision
declaring that:

First, La Savoie’s sale of the lot to Mariño is not ultra vires. The CA pointed out that Mariño does
not appear to have been aware of BPFs letters to La Savoie asking the latter to stop the sale of
the lots until they have agreed on the price. Thus, BPFs withdrawal of authority to sell cannot
bind Mariño.

Second, even if La Savoie had exceeded its authority to sell, BPI is solidarity liable for allowing
the former to act as though it had full powers following Article 1911 of the Civil Code.

Third, at the time of the execution of the Contract to Sell, no case had been filed by BPI to
prevent La Savoie from selling the property. BPI only filed a case for rescission of the TV A
seven months after the execution of sale to Mariño.
Fourth, Mariño is entitled to the delivery of the title as he had fully paid the purchase price
pursuant to Section 25 of Presidential Decree (PD) No. 957 (or the Subdivision and
Condominium Buyers’ Protective Decree).

Fifth, La Savoie is not an indispensable party to the case who could have rendered the decision
void per Section 7, Rule 3 of the Rules of Court. According to the CA, La Savoie has already
transmitted the Deed of Absolute Sale over the subject lot to BPI. Since the title is in BPFs
name and possession, it has the obligation to execute the Deed and deliver the title to Mariño;
thus, BPI is the indispensable party, not La Savoie and Menguito.

Lastly, the Court’s denial of La Savoie’s petition in the JVA rescission case was contained only
in a minute resolution. Thus, the CA concluded citing Deutsche Bank AG Manila Branch v.
Commissioner of Internal Revenue,[11] the denial cannot be deemed a binding precedent to the
case especially when different issues and parties are involved.

II. THE PETITION

BPI argued in its petition for review on certiorari before this Court that:

1. the authority to sell granted to La Savoie under the JVA was a limited authority to
sell, i.e., only “by way of engaging the services of brokers”;

2. since La Savoie’s authority to sell was limited, its act of selling the lot to Mariño is ultra
vires;

3. BPI and its President Conde were not parties to the Contract to Sell with Mariño, but
rather La Savoie and its President Menguito, thus, the Contract did not and could not
bind them;

4. As they were not parties to the Contract to Sell, Mariño did not have a cause of action
against them and the HLURB should have dismissed the latter’s case against it;

5. La Savoie and its President Menguito are indispensable parties in this case, hence,
Mariño’s failure to implead them rendered the decision of the HLURB void;
6. BPI filed a third-party complaint against La Savoie in the former’s Answer to Mariño’s
Complaint;

7. Mariño is a buyer in bad faith because he failed to examine the title;

8. the duty of delivering the title to the buyer under Section 25 of Presidential Decree 957
cannot be imposed on a non-party to a contract; and

9. the CA, which this Court affirmed, had previously decided a case, involving closely
identical facts, in favour of BPI; and the OP in fact had similarly dismissed the cases
filed against BPI for refusing to honor La Savoie’s unauthorized sale to buyers in
similar situations.

III. INCIDENTS SUBSEQUENT TO THE


FILING OF THE PETITION

The Court’s September 17, 2014 Minute Resolution

On September 17, 2014, the Court issued a minute resolution[12] denying the petition for
“failure to sufficiently show any reversible error in the assailed judgment to warrant the exercise
of this Court’s discretionary appellate jurisdiction, and for raising substantially factual issues.”

Petitioner’s motion for reconsideration (1st MR)

On November 10, 2014, the petitioners sought reconsideration[13] of the Court’s September 17,
2014 Resolution reiterating that:

1. the authority to sell BPI granted to La Savoie under the JVA was a limited authority to
sell, i.e., only “by way of engaging the services of brokers”;

2. BPI had already withdrawn this limited authority to sell on July 22, 1996, or almost one
year before La Savoie sold the subject subdivision lot to Mariño on July 18, 1997;

3. the CA, which this Court affirmed, had previously decided a case, involving closely
identical facts, in favour of BPI; and
4. there was no privity of contract between BPI and Mariño as the Contract to Sell was
entered into between La Savoie and Mariño.

Mr. Delfin V. Cruz’s November 25, 2014 Letter (1st Letter)

On November 25, 2014, Mr. Delfin V. Cruz wrote Associate Justices Arturo D. Brion and
Mariano C. Del Castillo identical letters[14] bringing to the Justices’ attention the present case
which he believed was “railroaded and continue to be railroaded by prosecutors, judges, and
justices because of money and influence.”[15]

The Court’s April 4, 2016 Minute Resolution

On April 4, 2016, the Court issued a resolution[16] denying with finality the petitioners’ motion for
reconsideration because “no substantial argument having been adduced to warrant the
reconsideration sought.”

Petitioners’ Motion for Reconsideration with


Leave of Court (2 MR)
nd

On June 1, 2016, the petitioners filed a Motion for Reconsideration With Leave of Court [17] from
the Court’s April 4, 2016 resolution denying with finality their 1st MR (the motion for
reconsideration of the Court’s September 17, 2014 Resolution); the present motion prayed that
the Court “take a second look at the many valid arguments and the overwhelming evidences
presented which prove that the [CA] twisted the facts and acted with grave abuse of discretion
equivalent to a capricious and whimsical exercise of judgment resulting in a x x x warped and
one-sided decision.”[18]

The petitioners insist that:

1. the authority to sell BPI granted to La Savoie under the JVA was a limited authority to
sell, i.e., only “by way of engaging the services of brokers” which authority BPI already
withdrew on July 22, 1996, or almost one year before La Savoie sold the subject
subdivision lot to Mariño on July 18, 1997;

2. La Savoie and its President Menguito are indispensable parties in this case, hence,
Mariño’s failure to implead them rendered the decision of the HLURB void;
3. there was no privity of contract between BPI and Mariño as the Contract to Sell was
entered into between La Savoie and Mariño; and

4. the CA, which this Court affirmed, had previously decided a case, involving closely
identical facts, in favour of BPI.

Mr. Delfin Cruz’s June 21, 2016 Letter (2nd Letter)

On June 21, 2016, Mr. Delfin V. Cruz sent Associate Justice Brion a second letter relating that
he sent the 1st Letter “believing that [the] petition x x x did not undergo [J. Brion’s] scrutiny
because I was convinced by your public pronouncements that you are guided by the rule of
‘FAIRNESS’ and the sense of ‘HIYA’ and so you would never affirm a resolution upholding a
[CA] decision that is way out of line because it is not based on documentary evidence, law, and
jurisprudence.”[19]

The Court’s July 13, 2016 Resolution

In a resolution dated July 13, 2016, the Court resolved to:

1. DEFER ACTION on the petitioners’ Motion for Reconsideration with Leave of Court
dated June 1, 2016;

2. DEFER ACTION on Delfin Cruz’s letters of June 21, 2016 and November 25, 2014
(the latter having been simply previously noted);

3. REQUIRE Delfin V. Cruz to: (a) define his exact relationship with Buenavista
Properties, Inc.; (b) state if he had been authorized by Buenavista Properties and/or its
counsel to write his letters dated November 25, 2014 and June 21, 2016 respectively,
both within 10 days from receipt of this resolution; and

4. REQUIRE Buenavista Properties, Inc. and its counsel of record to state if they are
aware of the letters of Delfin V. Cruz; to confirm the exact relationship of Delfin V. Cruz
with Buenavista Properties, Inc. and if they authorized Delfin V. Cruz to write the
above-mentioned letters, all within 10 days from receipt of this Resolution.

Mr. Delfin Cruz’s July 28, 2016 Letter (3rd Letter)


In his letter dated July 28, 2016 (with enclosed copy of the JVA between BPI and La Savoie)
addressed to J. Brion, Mr. Delfin Cruz reiterated that “there is no factual basis for the Court of
Appeals to say that La Savoie had the authority to sell, much less to promise to execute a deed
of sale in favour of Mr. Mariño, because the SPA does not endow such power to La Savoie. ”

Mr. Delfin Cruz insists that the Court of Appeals’ decision, which compelled them to deliver the
title to Mariño, is anchored on the falsehood that BPI gave La Savoie the power to sell, hence, it
is “clearly not motivated by the ‘RULE OF FAIRNESS’ and the ‘SENSE OF HIYA’ that you
(referring to J. Brion) proclaim you are guided by x x x. ” He implored J. Brion to “hand down a
decision in accordance with [his] ‘rule of fairness’ and the ‘sense of hiya.”

Mr. Delfin Cruz’s September 3, 2016 Letter (4th Letter)

In his letter dated September 3, 2016, addressed to J. Brion, Mr. Delfin Cruz stated that he was
the “Chairman of the Board of Buenavista while the case between it and Ramon G. Mariño was
still in the early stage” which made him intimately aware of the facts of the case.

He admitted that he wrote J. Brion merely as a concerned citizen “even if I was not specifically
authorized by either Buenavista or its lawyer, Atty. Ben I. Ibuyan, to write you” and reiterated the
reasons he stated in his previous three letters for writing J. Brion.

Finally, he apologized if his last letter appeared as a threat, emphasizing that it was not his
intention and was in fact, “careful in using the words: ‘I do not wish to resort to extra-judicial
means….”.

Petitioner Buenavista’s Compliance

For its part, the petitioner, thru counsel, complied with our July 13, 2016 Resolution by
submitting the joint affidavit of Cresencio R. Selispara and Gemma S. Buenafe attesting that
they did not authorize Mr. Delfin Cruz to write his letters to the Court and were not even aware
till they received the Court’s directive of July 13, 2013 that these letters were written.

The Court’s Ruling


The Court has already denied with finality BPI’s
motion for reconsideration in its April 4, 2016
resolution; BPI’s June 1, 2016 Motion for
Reconsideration With Leave of Court is a
prohibited second motion for reconsideration.
We emphasize that the June 1, 2016 Motion for Reconsideration With Leave of Court that BPI
filed addressing the Court’s April 4, 2016 Resolution (denying with finality its November 10,
2014 motion for reconsideration) is a prohibited second motion for reconsideration pursuant to
Section 2, Rule 52 in relation with Section 4, Rule 56, both of the Rules of Court, as well as
pursuant to Section 3, Rule 15 of the Internal Rules of the Supreme Court.

Section 2 of Rule 52 states that “[n]o second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained. “

Under Section 3 of Rule 15, the Court “shall not entertain a second motion for reconsideration,
and any exception to this rule can only be granted in the higher interest of justice. There is
reconsideration ‘in the higher interest of justice’ when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties.” Note, however, that while the Rule provides for
exceptions, the second motion for reconsideration can still only be entertained “before the
ruling sought to be reconsidered becomes final by operation of law or by the Court’s
declaration.”

The case does not present a situation that would justify the Court in granting BPI’s June 1, 2016
Motion for Reconsideration With Leave of Court – a second motion for reconsideration which
the Court should not entertain.

Moreover, jurisprudence has settled that a “decision that has acquired finality becomes
immutable and unalterable [,] and may no longer be modified in any respect even if the
modification is meant to correct erroneous conclusions of fact or law and whether it [will be]
made by the court that rendered it or by the highest court of the land.’ ‘Once a judgment or order
becomes final, all the issues between the parties are deemed resolved and laid to rest.’ No
additions can be made to the decision, and no other action can be taken on it, except to order
its execution.”[20]

As discussed above, the Court denied with finality BPFs November 10, 2014 motion for
reconsideration in the April 4, 2016 resolution; the resolution likewise provided that “[n]o further
pleadings or motions shall be entertained in this case. Let entry of final judgment be made in
due course.”
In sum, these reasons sufficiently justify the Court in refusing to entertain BPI’s June 1,
2016 second motion for reconsideration.

In any event, the Court correctly denied BPI’s


petition for review on certiorari and motion
for reconsideration.

In any event, the Court correctly denied BPI’s petition for review on certiorari,in its September
17, 2014 resolution, as well as its 1st MR in the April 4, 2016 resolution. The issues and
arguments BPI raised in its petition, as reiterated in its 1st and 2nd MRs, merely repeated the
issues it has previously raised before the HLURB, the OP, and the CA, which issues all three
tribunals had duly considered and uniformly ruled against BPI.

We point out that the issues BPI raised in its petition and MRs can be summed up into two: (1)
whether La Savoie had the authority to sell the subdivision lots pursuant to the JVA and its
Addendum; and (2) assuming arguendo that La Savoie had the authority to sell under the JVA,
whether such authority had already been rescinded prior to the execution of the Contract to Sell
with Mariño.

We find it clear from the pertinent provisions of the JVA, footnoted below, that contrary to BPI’s
claim, La Savoie was empowered to sell the Buenavista Park Subdivision lots, including the
subject lot it sold to Mariño.[21]

This conclusion proceeds from the examination of clauses 2.2, 3.1, and 6.2 of the JVA which
states that La Savoie had the power to, among others: (1) provide and exercise general
management over the project including its marketing and sales; (2) to act as BPI’s attorney-
in-fact with full power and authority to take full possession of the realty, including engaging
the services of brokers; and (3) sell the lots, within the specified period. Additionally, La
Savoie had the authority to receive and give receipts under its name, payments from
buyers of the subdivision lots, per clause 7.1 of the JVA.

Likewise and contrary to BPI’s assertion, the Contract to Sell between La Savoie and Mariño
was executed before BPI categorically withdrew La Savoie’s authority to sell under the
JVA. Note that per clause 8.1 of the JVA, in case La Savoie fails or refuses to perform its
obligations under the JVA or violates any provisions of the JVA, BPI could either sue the former
for specific performance or cancel the contract via written communication to this effect.
In this case, BPI’s option to cancel the JVA, instead of suing for specific performance, became
categorically clear only on February 28, 1998 when it filed the JVA rescission case against La
Savoie. La Savoie and Mariño entered into the Contract to Sell on July 18, 1997 or seven (7)
months prior to the filing of the JVA rescission case; undoubtedly, La Savoie then still retained
the full authority under the JVA to enter into the Contract to Sell with Mariño.

While BPI wrote La Savoie several letters prior to the filing of the JVA rescission case, i.e., on
July 22, 1996, August 15, 1996, September 30, 1996, and August 15, 1997, requesting and/or
asking the latter to suspend or stop selling the subdivision lots until they have agreed on the
selling price, BPI never categorically terminated the JVA nor withdrew La Savoie’s authority to
sell through these letters.[22]

Notably, and again contrary to BPFs claim, these letters show that it did not cancel the JVA prior
to the filing of the JVA rescission case because, as of its August 15, 1997 letter, it was still
about to invoke the termination clause of the JVA.

The above considerations are outlined to show the considerations the Court took into account in
denying the petition outright (aside from the reason that the issues raised were mostly factual
issues that a Rule 45 petition does not allow). Thus, this Court can only NOTE without action
BPFs June 1, 2016 Motion for Reconsideration With Leave of Court addressing the April 4,
2016 Resolution of the Court (denying with finality its November 10, 2014 motion for
reconsideration). It is a second motion for reconsideration that is prohibited under Section 2,
Rule 52 in relation with Section 4, Rule 56, both of the Rules of Court, as well as under Section
3, Rule 15 of the Internal Rules of the Supreme Court.

The Court NOTES Mr. Delfin Cruz’s compliance, through his September 3, 2016 Letter, with the
Court’s July 13, 2016 Resolution, among others, requiring him to: (a) define his exact
relationship with Buenavista Properties, Inc.; (b) state if he had been authorized by Buenavista
Properties and/or its counsel to write his letters dated November 25, 2014 and June 21, 2016
respectively.

Since he is not a formal party to the case, the Court cannot recognize the representations Mr.
Delfin Cruz has made before this Court – through his letters dated November 25, 2014, June
21, 2016, July 28, 2016, and September 3, 2016 — in relation with the present case.
In line with this position, the Court likewise chooses to gloss over the observations that Mr.
Delfin Cruz has made in his various letters against the Court and its Members.

The Court, however, observes that interventions of the kind that Mr. Delfin Cruz undertook are
the kind of interference that only delays the resolution of cases in this Court; hence, our rule that
parties should always speak through their counsels. If we do not penalize the counsels of record
in this case at all, it is only because they promptly replied that they did not know of the
intervention of Mr. Delfm Cruz who is no longer an official of their client company.

The Court likewise warns Mr. Delfin Cruz in the strongest terms that any further word from him,
whether directly made to this Court or its Members or in the social media (as he had
threatened), tending to interfere with the processes of the present case, to malign this
Court or its Members, to disparage their reputation or to impugn their integrity, shall be
dealt with severely and without consideration of Mr. Delfin Cruz’ age or age-related infirmities.

WHEREFORE, premises considered, the Court resolves to:

1. NOTE without action Buenavista Properties Inc.’s June 1, 2016 Motion for
Reconsideration With Leave of Court, filed to challenge the Court’s April 4, 2016
Resolution that DENIED WITH FINALITYits November 10, 2014 Motion for
Reconsideration; and

2. NOTE the letter dated September 3, 2016 (filed in compliance with the Court’s
directive to explain in the July 13, 2016 Resolution) and the other previous letters of
Mr. Delfin Cruz. The Court, however,WARNS in the strongest terms that any further
word from Mr. Delfm Cruz, whether directly made to this Court or its Members or in the
social media (as Mr. Cruz had threatened), tending to interfere with the processes of
the present case, to malign the Court or its Members, to disparage their reputation or
to impugn their integrity, shall be dealt with severely and without consideration of Mr.
Delfin Cruz’ age or age-related infirmities.

Republic of the Philippines Vs. Salud Abalos


and Justina Clarissa P. Mamaril; G.R. No.
209385; August 31, 201
RESOLUTION

REYES, J.:

Before the Court is a petition for review on certiorari[1] under Rule 45 of the Rules of Court
seeking the review and nullification of the Decision[2] dated September 23, 2013 of the Court of
Appeals (CA) in CA-G.R. CV No. 96942, filed by the Republic of the Philippines (petitioner)
through the Office of the Solicitor General (OSG).

Antecedent Facts

In 2007, Justina Clarissa Mamaril (Mamaril) bought on installment basis a parcel of land located
in Barrio Concepcion, Municipality of Rosario, La Union from her aunt, Salud Abalos (Abalos).
The piece of land is covered by Transfer Certificate of Title (TCT) No. T-24567. Abalos
entrusted to Mamaril the owner’s duplicate copy of the TCT upon the first payment of installment
made by the latter. Sometime in 2008, Mamaril agreed to lend the title of the land to Abalos who
was in dire need of money. Abalos used the said title of land as collateral for the loan she
intended to secure from the Rural Bank of Rosario, San Fabian Branch. The mortgage was
cancelled in 2009. Upon full payment of the last installment due, Mamaril requested Abalos to
return the owner’s duplicate copy of the title. However, Mamaril discovered that the duplicate
copy of the TCT was already missing.[3]

Mamaril went to the Register of Deeds (RD) of San Fernando City, La Union to secure a copy of
the original certificate of title of the parcel of land. To her dismay, the said office claimed that no
records pertaining to her title were found and such may have been one among those files not
recovered from a fire which razed their office on August 26, 2000.[4]

On August 17, 2009, Mamaril and Abalos (respondents) filed a petition for reconstitution of title
covering the subject parcel of land before the Regional Trial Court (RTC) of Agoo, La Union and
prayed that a new owner’s duplicate certificate of title be issued in lieu of the lost one.[5] In
support of the petition, the respondents offered the following documents: Print Copy of the
Microfilm Copy of TCT No. T-24567; Deed of Absolute Sale dated July 22, 2009; Certification
from the RD of San Fernando City, La Union; Tax Receipts; Certification of Mortgage; and
Withdrawal and Release Paper from the Rural Bank of Rosario.[6]
Ruling of the RTC

In its Decision[7] dated January 31, 2011, the RTC partially granted the petition filed by the
respondents. It granted the petition for reconstitution but denied the prayer for the issuance of
new owner’s duplicate copy of title due to their failure to file an affidavit of loss before the RD.
The dispositive portion reads:

WHEREFORE, the foregoing considered, the instant petition is partly granted. The Reconstituting
Officer of the [RD] of La Union is ordered to reconstitute TCT No. T-24567, in exactly the same terms
and conditions as the lost title with all the annotations and encumbrances imposed thereon, upon payment
by the [respondents] of lawful fees.

Serve a copy of this Decision upon the [RD] of San Fernando City, La Union, Provincial Prosecutor’s
Office of Agoo, La Union, [OSG] and Land Registration Authority.

SO ORDERED.[8]

The petitioner, through the OSG, filed a motion for reconsideration which the RTC denied in its
Order[9] dated April 1, 2011.

Ruling of the CA

The OSG brought its case before the CA raising the issue of whether the RTC erred in granting
the respondents’ petition for reconstitution of title. The CA resolved the case in favor of the
respondents finding the documents they submitted sufficient to serve as bases for reconstituting
the lost certificate of title.[10] The CA disposed of the case as follows:

WHEREFORE, the appeal is DISMISSED. The January 31, 2011 Decision of the [RTC], Branch 32,
Agoo, La Union in Administrative Case No. A-3581 is hereby AFFIRMED in toto.

SO ORDERED.[11]

Aggrieved, the petitioner, through the OSG, filed the present petition for review
on certiorari under Rule 45 of the Rules of Court claiming that the CA erred in affirming the RTC
decision granting the respondents’ petition for reconstitution of the subject parcel of land.[12] In
support of its argument, the OSG asserts that the documents presented by the respondents are
not enough to warrant reconstitution of title.[13]

Ruling of the Court

The petition is impressed with merit.

In several occasions, the courts were reminded to be cautious in granting the reconstitution of
lost or destroyed certificates of title. The respondents sought to restore TCT No. T-24567 in
exactly the same way before its alleged loss during the fire on August 26, 2000 in the RD of San
Fernando City, La Union. Reconstitution of certificate of title partakes of a land registration
proceeding and must be granted only upon clear proof that the title sought to be restored was
indeed issued to the petitioner.[14] Jurisprudence prescribed the requirements to warrant the
order of reconstitution, namely: (a) that the certificate of title had been lost or destroyed; (b) that
the documents presented by petitioner are sufficient and proper to warrant reconstitution of the
lost or destroyed certificate of title; (c) that the petitioner is the registered owner of the property
or had an interest therein; (d) that the certificate of title was in force at the time it was lost or
destroyed; and (e) that the description, area and boundaries of the property are substantially the
same and those contained in the lost or destroyed certificate of title.[15] The respondents failed to
meet these requisites. Notably, the respondents claimed the loss, not only of the original of the
Torrens title on file with the RD but also that of the owner’s duplicate copy. Due to the inability of
the respondents to comply with the required affidavit of loss, the RTC denied the issuance of the
owner’s duplicate copy.

Republic Act (R.A.) No. 26, which is also known as An Act Providing a Special Procedure for the
Reconstitution of Torrens Certificates of Title Lost or Destroyed, governs the petition filed by the
respondents. Section 3 of R.A. No. 26 enumerates the bases or the sources from which the
certificates of title shall be reconstituted. It reads:

Sec. 3. Transfer certificates of title shall be reconstituted from such of the sources hereunder enumerated
as may be available, in the following order:

(a) The owner’s duplicate of the certificate of title;

(b) The co-owner’s, mortgagee’s, or lessee’s duplicate of the certificate of title;


(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal
custodian thereof;

(d) The deed of transfer or other document, on file in the registry of deeds, containing the description of
the property, or an authenticated copy thereof, showing that its original had been registered, and pursuant
to which the lost or destroyed transfer certificate of title was issued;

(e) A document, on file in the registry of deeds, by which the property, the description of which is given
in said document, is mortgaged, leased or encumbered, or an authenticated copy of said document
showing that its original had been registered; and

(f) Any other document which, in the judgment, of the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.

The petition for reconstitution filed by the respondents was accompanied by the following
documents:

a) Microfilm print copy of TCT No. T-24567;

b) Deed of Absolute Sale dated July 22, 2009;

c) Certification stating that TCT No. T-24567 is not among those recovered after the August 26, 2000
fire that destroyed the RD;

d) Four receipts for real property taxes;

e) Cancellation and Discharge of Mortgage issued by Rural Bank;

f) List prepared by the Rural Bank showing the document it released to Mamaril on November 30,
2005; and

g) Official Receipt No. 0554 pertaining to the full payment of Abalos’ obligation to Rural Bank.
The OSG argues that none of the aforementioned documents falls under Section 3(a) to 3(e) of
R.A. No. 26. Consequently, the petition of the respondents may be treated as one filed under
Section 3(f) of R.A. No. 26 which requires that the petition for reconstitution be accompanied
with a plan and technical description of the property duly approved by the Commissioner of
Land Registration or with a certified copy of the description taken from a prior certificate of title
covering the same property pursuant to the provision of Section 12 of R.A. No. 26.[16]

According to the OSG, since the respondents failed to present in evidence the plan and
technical description of the subject parcel of land, their petition for reconstitution cannot be
granted as there are no sufficient bases for it.[17]

On the face of the inability of the respondents to establish the loss of the owner’s duplicate copy
which is one of the specifically enumerated competent sources for the reconstitution of title, the
other pieces of evidence presented also failed to justify their prayer. The respondents anchored
their plea for the grant of reconstitution of title mainly on the certified print copy of the microfilm
of TCT No. T-24567 which the respondents deemed to qualify under Section 3(c) of R.A. No.
26. However, its authenticity was relentlessly questioned by the OSG on the ground that the
person who signed the certification was not established as a public officer and that she has the
custody of the original microfilm.[18] The Court cannot just brush aside serious doubts on the
veracity of the evidence presented by the respondents supporting their case for reconstitution of
title. Entrenched in jurisprudence is a warning directing the courts to be careful in granting
reconstitution of lost or destroyed certificates of title, both original and duplicate owner’s on the
basis of documents and decrees made to appear authentic from mere photocopies and
certifications of officials supposedly signed with the seals of their office affixed thereon, bearing
in mind the ease and facility with which documents are made to appear as official and
authentic.[19]

In order to shield the Torrens system from possible fraudulent schemes which threaten the
stability and integrity of land ownership in the country, the Court fm4s it proper to remand the
instant case to the RTC for consideration and further evaluation of contentious factual questions
surrounding the existence of the subject Torrens title as well as the circumstances of its loss.
The trial courts are mandated to scrutinize and carefully verify all supporting documents so that
no fact, circumstance, or incident which corroborates or relates to the existence and loss of the
title will be left unexamined.[20]
WHEREFORE, the petition is hereby partly GRANTED. The Decision dated September 23,
2013 of the Court of Appeals in CA-G.R. CV No. 96942 is hereby REVERSED and SET ASIDE.
The case is REMANDED to the court of origin for further proceedings and proper disposition.

Sangguniang Panlalawigan of Bataan Vs.


Congressman Enrique T. Garcia, Jr., et al.; G.R.
No. 174964; October 5, 2016
DECISION

REYES, J.:

Before this Court is a Petition for Review on Certiorart[1] of the Decision[2]dated February 7, 2006
of the Court of Appeals (CA) in CA-G.R. SP No. 85902 upholding the Decision dated November
29, 2002 of the Regional Trial Court (RTC) of Bataan which granted the petition for a writ of
mandamus in Special Civil Action No. 7043.

Antecedent Facts

Lot Nos. 2193 and 2194 of the Bataan Cadastre, containing 1,222 square meters and 10,598 sq
m, respectively, were registered in the name of the Province of Bataan. Both lots were
embraced in Original Certificate of Title (OCT) No. N-182, and occupied by the Bataan
Community Colleges (BCC) and the Medina Lacson de Leon School of Arts and Trades
(MLLSAT), both State-run schools.[3]

On February 26, 1998, the Congress of the Philippines passed Republic Act (R.A.) No. 8562,
authored by Congressman Enrique T. Garcia, Jr. (Cong. Garcia), converting the MLLSAT into a
polytechnic college, to be known as the Bataan Polytechnic State College (BPSC), and
integrating thereto the BCC.[4] Section 24 of R.A. No. 8562 provides that:

All parcels of land belonging to the government occupied by the Medina Lacson de Leon School of Arts
and Trades and the Bataan Community Colleges are hereby declared to be the property of the Bataan
Polytechnic State College and shall be titled under that name: Provided, That should the State College
cease to exist or be abolished or should such parcels of land aforementioned be no longer needed by the
State College, the same shall revert to the Province of Bataan.
On the basis of the above provision, Cong. Garcia wrote to then Governor of Bataan Leonardo
Roman, and the Sangguniang Panlalawigan of Bataan (petitioner), requesting them to cause
the transfer of the title of the aforesaid lots to BPSC. No transfer was effected.[5]

Thus, Cong. Garcia, along with the faculty members and some concerned students of BPSC
(collectively, the respondents) filed a Special Civil Action for Mandamus with the RTC of
Balanga, Bataan against the Governor and the petitioner. Initially, the Board of Trustees of the
BPSC was impleaded as an unwilling plaintiff but was eventually included as co-petitioner in the
civil suit pursuant to Resolution No. 14, Series of 2000 of the BPSC.[6]

In their Comment, the Governor and the petitioner took issue with the standing of the
respondents, arguing that they were not the real parties in interest who would be benefited or
injured by the judgment, or the party entitled to the avails of the suit. They asserted that the
subject properties were owned by the Province of Bataan and not the State, for them to be
simply transferred to the BPSC by virtue of the law.[7]

In its Decision dated November 29, 2002, the RTC granted the writ of mandamus. The fallo of
the RTC decision reads:

WHEREFORE, a writ of mandamus is hereby issued, ordering respondents to forthwith:

1. Deliver the owner’s duplicate copy of [OCX] No. N-182 to the Register of Deeds of Bataan, free from
any hen or encumbrance;

2. Execute the corresponding deed of conveyance of the parcels of land in issue in favor of the [BPSC];
and

3. Cause the transfer and registration of the title to and in the name of the [BPSC].

SO ORDERED.[8]

The Governor and the petitioner appealed to the CA alleging that the subject lots were the
patrimonial properties of the Province of Bataan, and as such they cannot be taken by the
National Government without due process of law and without just compensation. They also
pointed out that certain loan obligations of the Province of Bataan to the Land Bank of the
Philippines (LBP) were secured with a mortgage on the lots; and since the mortgage lien was
duly annotated on its title, OCT No. N-182, the writ of mandamus violated the non-impairment
clause of the Constitution. The Governor and the petitioner reiterated that the respondents had
no legal standing since they were not the real parties in interest.[9]

In the Decision[10] dated February 7, 2006, the CA affirmed the RTC.

The CA rejected the claim that the subject lots were the patrimonial properties of the Province of
Bataan, declaring that the petitioner failed to provide proof that the Province of Bataan acquired
them with its own private or corporate funds, and for this reason the lots must be presumed to
belong to the State, citing Salas, etc., et al. v. Hon. Jarencio, etc., et al.[11] Concerning the
mortgage to the LBP, the appellate court agreed with the RTC that the consent of the LBP to the
transfer of title to BPSC must be obtained, and the mortgage lien must be carried over to the
new title. The CA also held that BPSC is a real party in interest on the basis of Section 24 of
R.A. No. 8562, and was correctly impleaded as a co-petitioner. The subsequent motion for
reconsideration was denied in the CA Resolution[12] dated September 20, 2006; hence, this
petition.

Issues

WHETHER OR NOT THE SUBJECT PARCELS OF LAND ARE PATRIMONIAL PROPERTIES OF


THE PROVINCE OF BATAAN WHICH CANNOT BE TAKEN WITHOUT DUE PROCESS OF LAW
AND WITHOUT JUST COMPENSATION.

II

WHETHER OR NOT A WRIT OF MANDAMUS MAY BE ISSUED AGAINST THE PETITIONER


TO COMPEL THE TRANSFER OF THE SUBJECT PROPERTIES WITHOUT DUE PROCESS OF
LAW AND WITHOUT JUST COMPENSATION.[13]

The petitioner insists that the subject lots are not communal lands, or legua comunal as they
were known under the laws of colonial Spain, but are the patrimonial properties of the Province
of Bataan, which were issued a Torrens title by the Cadastral Court on August 11, 1969 in
Cadastral Case No. 5;[14] that while in Salas,[15] the title of the State over the disputed lot was
expressly recognized by the City of Manila, this is not so in the case at bar;[16] that in the exercise
of its proprietary rights over the subject lots, the Province of Bataan has used them as collateral
for its loan obligations with the LBP;[17] that in its Manifestation and Motion dated February 24,
2000, the Board of Trustees of BPSC even acknowledged the titles of the Province of Bataan
over the subject properties.[18]

In addition to the above contentions, the petitioner proffers an alleged novel argument that R.A.
No. 8562 infringes on the State’s underlying policy of local autonomy for its territorial and
political subdivisions, found in Article X of the 1987 Constitution (formerly Article XI, 1973
Constitution) and now fleshed out in a landmark legislation, R.A. No. 7160, better known as the
Local Government Code of 1991 (LGC). Thus, for this Court to still sustain its ruling
in Salas would render the State’s policy of local autonomy purely illusory.[19]

Ruling of the Court

The decision of the CA is affirmed.

A. Under the well-entrenched and


time-honored Regalian Doctrine, all
lands of the public domain are
under the absolute control and
ownership of the State.

The State’s ownership of and control over all lands and resources of the public domain are
beyond dispute. Reproducing almost verbatim from the 1973 Constitution,[20] Section 2, Article
XII of the 1987 Constitution provides that “[a]ll lands of the public domain, waters, minerals,
coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State, x x x.” In Section
1, Article XIII of the Amended 1935 Constitution, it was also provided that “[a]ll agricultural
timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy and other natural resources of the Philippines belong
to the State x x x.”

Thus, in Cariño v. Insular Government,[21] a case of Philippine origin, the Supreme Court of the
United States of America acknowledged that “Spain in its earlier decrees embodied the
universal feudal theory that all lands were held from the Crown x x x.” In Hong Hok v.
David,[22] citing Cariño, the Court likewise said that the theory is a manifestation of the concept of
the Regalian Doctrine, or jura regalia,[23] which is enshrined in our 1935, 1973, and 1987
Constitutions. As adopted in our republican system, this medieval concept is stripped of royal
overtones; and ownership of all lands belonging to the public domain is vested in the
State.[24] Under this well-entrenched and time-honored Regalian Doctrine, all lands of the public
domain are under the absolute control and ownership of the State.

B. Local government property


devoted to governmental purposes,
such as local administration, public
education, and public health, as
may be provided under special
laws, is classified as public.

In The Province of Zamboanga del Norte v. City of Zamboanga, et al.[25] cited by the CA, the
Province of Zamboanga del Norte sought to declare unconstitutional R.A. No. 3039, which
ordered the transfer of properties belonging to the Province of Zamboanga located within the
territory of the City of Zamboanga to the said City, for depriving the province of property without
due process and just compensation. In said case, the Court classified properties of local
governments as either (a) properties for public use, or (b) patrimonial properties, and held that
the capacity in which the property is held by a local government is dependent on the use to
which it is intended and for which it is devoted. If the property is owned by the municipal
corporation in its public and governmental capacity, it is public and Congress has absolute
control over it; but if the property is owned in its private or proprietary capacity, then it is
patrimonial and Congress has no absolute control, in which case, the municipality cannot be
deprived of it without due process and payment of just compensation.[26] In upholding the validity
of R.A. No. 3039, the Court noted that it affected “lots used as capitol site, school sites and its
grounds, hospital and leprosarium sites and the high school playground sites – a total of 24 lots
– since these were held by the former Zamboanga province in its governmental capacity and
therefore are subject to the absolute control of Congress.” [27]

According to the Court, there are two established norms to determine the classification of the
properties: that of the Civil Code, particularly Articles 423 and 424 thereof, and that obtaining
under the law of Municipal Corporations. Articles 423 and 424 of the Civil Code provide, as
follows:
Art. 423. The property of provinces, cities and municipalities is divided into property for public use and
patrimonial property.

Art. 424. Property for public use, in the provinces, cities, and municipalities, consists of the provincial
roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works
for public service paid for by said provinces, cities, or municipalities.

All other property possessed by any of them is patrimonial and shall be governed by this Code, without
prejudice to the provisions of special laws.

In Province of Zamboanga del Norte,[28] properties for the free and indiscriminate use of
everyone are classified under the Civil Code norm as for public use, while all other properties
are patrimonial in nature. In contrast, under the Municipal Corporations Law norm, to be
considered public property, it is ‘enough that a property is held and devoted to a governmental
purpose, such as local administration, public education, and public health.[29]Nonetheless, the
Court clarified that the classification of properties in the municipalities, other than those for
public use, as patrimonial under Article 424 of the Civil Code, is “without prejudice to the
provisions of special laws,”[30]holding that the principles obtaining under the Law of Municipal
Corporations can be considered as “special laws”[31]

Moreover, in the 2009 case of Heirs of Mario Malabanan v. Republic of the Philippines,[32] the
Court reiterated that Article 420(2) of the Civil Code makes clear that properties “which belong
to the State, without being for public use, and are intended for some public service or for the
development of the national wealth,” are public dominion property. For as long as the property
belongs to the State, although already classified as alienable or disposable, it remains property
of the public dominion when it is “intended for some public service or for the development of the
national wealth.”[33]

C. Property registered in the name


of the municipal corporation but
without proof that it was acquired
with its corporate funds is deemed
held by it in trust for the State.

The Court takes instructions from the case, of Salas as to properties belonging to the municipal
government. In Salas, at issue was the constitutionality of R.A. No. 4118 passed on June 20,
1964,[34] whereby Congress reserved a lot, long titled in the name of the City of Manila, as
communal property, and converted it into disposable land of the State for resale in small lots to
its bona fide occupants. On February 24, 1919, Lot No. 1, Block 557 of the Cadastre of the City
of Manila, containing 9,689.80 sq m, was declared by the Court of First Instance of Manila,
Branch 4, acting as a land registration court in Case No. 18, G.L.R.O. Record No. 111, as
owned by the City of Manila in fee simple. On August 21, 1920, OCT No. 4329 was issued in
the name of the City of Manila over the said lot. On various dates in 1924, the City of Manila
sold portions of Lot No. 1, Block 557 to a certain Pura Villanueva (Villanueva). OCT No. 4329
was cancelled, and transfer certificates of title (TCT) were issued to Villanueva for the portions
sold to her, while TCT No. 22547 was issued to the City of Manila for the remainder of Lot No. 1
containing 7,490.10 sq m, now designated, as Lot No. 1-B-2-B of Block 557.[35]

On September 21, 1960, the local board of the City of Manila wrote to the President of the
Philippines seeking assistance in declaring the aforesaid lot as patrimonial property of the city
for the purpose of reselling the same in small lots to the actual occupants thereof. R.A. No. 4118
was passed by Congress on June 20, 1964 for this purpose.[36] On February 18, 1965, Manila
Mayor Antonio Villegas (Mayor Villegas) was furnished a copy of a subdivision plan for TCT No.
22547. He interposed no objection to the implementation of R.A. No. 4118, and TCT No. 22547
was duly surrendered to the Land Authority.[37]

Inexplicably, now claiming that R.A. No. 4118 was unconstitutional, Mayor Villegas brought on
December 20, 1966 an action for injunction and/or prohibition with preliminary injunction, to
restrain, prohibit and enjoin the Land Authority and the Register of Deeds of Manila from
implementing R.A. No. 4118. On September 23, 1968, the RTC declared the said law
unconstitutional for depriving the City of Manila of its property without due process and just
compensation.[38]

Acting on the petition for review, the Court declared that Lot 1-B-2-B of Block 557 was a
communal property held in trust by the City of Manila for the State, and therefore subject to the
paramount power of Congress to dispose of. Thus:

[T]he City of Manila, although declared by the Cadastral Court as owner in fee simple, has not shown by
any shred of evidence in what manner it acquired said land as its private or patrimonial property. It is true
that the City of Manila as well as its predecessor, the Ayuntamiento de Manila, could validly acquire
property in its corporate or private capacity, following the accepted doctrine on the dual character –
public and private – of a municipal corporation. And when it acquires property in its private capacity, it
acts like an ordinary person capable of entering into contracts or making transactions for the transmission
of title or other real rights. When it comes to acquisition of land, it must have done so under any of the
modes established by law for the acquisition of ownership and other real rights. In the absence of a title
deed to any land claimed by the City of Manila as its own, showing that it was acquired with its private or
corporate funds, the presumption is that such land came from the State upon the creation of the
municipality(Unson vs. Lacson, et al., 100 Phil. 695). Originally the municipality owned no patrimonial
property except those that were granted by the State not for its public but for private use. Other properties
it owns are acquired in the course of the exercise of its corporate powers as a juridical entity to which
category a municipal corporation pertains.

Communal lands or “legua comunal” came into existence when a town or pueblo was established in this
country under the laws of Spain (Law VII, Title III, Book VI, Recopilacion de las Leyes de Indios). The
municipalities of the Philippines were not entitled, as a matter of right, to any part of the public domain
for use as communal lands. The Spanish law provided that the usufruct of a portion of the public domain
adjoining municipal territory might be granted by the Government for communal purposes, upon proper
petition, but, until granted, no rights therein passed to the municipalities, and, in any event, the ultimate
title remained in the sovereign (City of Manila vs. Insular Government, 10 Phil. 327).

xxxx

It may, therefore, be laid down as a general rule that regardless of the source or classification of land in
the possession of a municipality, excepting those acquired with its own funds in its private or corporate
capacity, such property is held in trust for the State for the benefit of its inhabitants, whether it be for
governmental or proprietary purposes. It holds such lands subject to the paramount power of the
legislature to dispose of the same, for after all it owes its creation to it as an agent for the performance of
a part of its public work, the municipality being but a subdivision or instrumentality thereof for purposes
of local administration. Accordingly, the legal situation is the same as if the State itself holds the property
and puts it to a different use (2 Mc Quilin,Municipal Corporations, 3rd Ed. p. 197, citing Monagham vs.
Armatage,218 Minn. 27, 15 N. W. 2nd 241).

True it is that the legislative control over a municipal corporation is not absolute even when it comes to its
property devoted to public use, for such control must not be exercised to the extent of depriving persons
of their property or rights without due process of law, or in a manner impairing the obligations of
contracts. Nevertheless, when it comes to property of the municipality which it did not acquire in its
private or corporate capacity with its own funds, the legislature can transfer its administration and
disposition to an agency of the National Government to be exposed of according to its discretion. Here it
did so in obedience to the constitutional mandate of promoting social justice to insure the well-being and
economic security of the people.[39] (Underscoring ours)

D. R.A. No. 8562 was not intended


to expropriate the subject lots titled
in the name of the Province of
Bataan, but to confirm their
character as communal land of the
State and to make them available
for disposition by the National
Government.

The case of Rabuco v. Hon. Villegas,[40] decided in 1974, is a virtual reprise of the 1968 case
of Salas. In Rabuco, the constitutionality of R.A. No. 3120[41] was challenged, which provided for
the subdivision of Lot No. 21-B, Block 610 of the Cadastre of the City of Manila, containing
about 10,198 sq m into residential lots, and the sale thereof to the tenants and bona fide
occupants. The law declared Lot No. 21-B “reserved as communal property” and then ordered it
converted into “disposable and alienable lands of the State.”[42]

The Court ruled that, like R.A. No. 4118 in Salas, R.A. No. 3120 was intended to implement the
social justice policy of the Constitution and the government’s program of land for the landless.
Thus, the sale of the subdivided lots to the bona fide occupants by authority of Congress was
not an exercise of eminent domain or expropriation without just compensation, which would
have been in violation of Section 1(2),[43] Article III of the 1935 Constitution, but simply a
manifestation of its right and power to deal with State property. [44] “It is established doctrine that
the act of classifying State property calls for the exercise of wide discretionary legislative power
which will not be interfered with by the courts.”[45] In Rabuco, the rule in Salas was reiterated that
property of the public domain, although titled to the local government, is held by it in trust for the
State. It stated:

The Court [in Salas] reaffirmed the established general rule that “regardless of the source or classification
of land in the possession of a municipality, excepting those acquired with its own funds in its private or
corporate capacity, such property is held in trust for the State for the benefit of its inhabitants, whether it
be for governmental or proprietary purposes. It holds such lands subject to the paramount power of the
legislature to dispose of the same, for after all it owes its creation to it as an agent for the performance of
a part of its public work, the municipality being but a subdivision or instrumentality thereof for purposes
of local administration. Accordingly, the legal situation is the same as if the State itself holds the property
and puts it to a different use” and stressed that “the property, as has been previously shown, was not
acquired by the City of Manila with its own funds in its private or proprietary capacity. That it has in its
name a registered title is not questioned, but this title should be deemed to be held in trust for the State as
the land covered thereby was part of the territory of the City of Manila granted by the sovereign upon its
creation.”[46]

E. The State’s policy to promote


local autonomy and to devolve the
powers of the National Government
to its political subdivisions has for
its purpose to improve the quality
of local governance.

Sections 2 and 3, Article X of the 1987 Constitution, relied upon by the petitioner, provide:

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and
accountable local government structure instituted through a system of decentralization with effective
mechanisms of recall, initiative, and referendum, allocate among the different local government units
their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and
removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to
the organization and operation of the local units.

Pursuant to its mandate, the Congress passed the LGC in 1991 to spell out the above-declared
policy of the State, which is now amplified in Section 2 of R.A. No. 7160. It states, as follows:

Sec. 2. Declaration of Policy. – (a) It is hereby declared the policy of the State that the territorial and
political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to
attain their fullest development as self-reliant communities and make them more effective partners in the
attainment of national goals. Toward this end, the State shall provide for a more responsive and
accountable local government structure instituted through a system of decentralization whereby local
government units shall be given more powers, authority, responsibilities, and resources. The process of
decentralization shall proceed from the National Government to the local government units.
xxxx

Also invoked by the petitioners are Sections 18 and 22 of the LGC, which state as follows:

Sec. 18. Power to Generate and Apply Resources. — Local government units shall have the power and
authority to establish an organization that shall be responsible for the efficient and effective
implementation of their development plans, program objectives and priorities; to create their own sources
of revenues and to levy taxes, fees, and charges which shall accrue exclusively for their use and
disposition and which shall be retained by them; to have a just share in national taxes which shall be
automatically and directly released to them without need of any further action; to have an equitable share
in the, proceeds from the utilization and development of the national wealth and resources within their
respective territorial jurisdictions including sharing the same with the inhabitants by way of direct
benefits; to acquire, develop, lease, encumber, alienate, or otherwise dispose of real or personal property
held by them in their proprietary capacity and to apply their resources and assets for productive,
developmental, or welfare purposes, in the exercise or furtherance of their governmental or proprietary
powers and functions and thereby ensure their development into self-reliant communities and active
participants in the attainment of national goals.

Sec. 22. Corporate Powers. – x x x

xxxx

(d) Local government units shall enjoy full autonomy in the exercise of their proprietary functions and in
the management of their economic enterprises, subject to the limitations provided in this Code and other
applicable laws.

In the instant petition, it is essentially the petitioner’s assertion that the State’s policy of local
autonomy and decentralization endows the Province of Bataan with patrimonial rights to use or
dispose of the subject lots according to its own development plans, program objectives and
priorities.

The Court disagrees.

Local autonomy and decentralization of State powers to the local political subdivisions are the
results of putting restraints upon the exercise by the Presidents of executive powers over local
governments. Section 4, Article X of the 1987 Constitution reads in part: “The President of the
Philippines shall exercise general supervision over local governments.” As with the counterpart
provisions of our earlier Constitutions, the aforesaid provision has been interpreted to exclude
the President’s power of control over local governments.[47] The Constitutions of 1935, 1973 and
1987 have uniformly differentiated the President’s power of supervision over local governments
and his power of control of the executive departments, bureaus and offices.[48]In Pimentel, Jr. v.
Hon. Aguirre,[49] it was held that Section 4 confines the President’s power over local
governments to one of general supervision, thus:

Under our present system of government, executive power is vested in the President. The members of the
Cabinet and other executive officials are merely alter egos. As such, they are subject to the power of
control of the President, at whose will and behest they can be removed from office; or their actions and
decisions changed, suspended or reversed. In contrast, the heads of political subdivisions are elected by
the people. Their sovereign powers emanate from the electorate, to whom they are directly accountable.
By constitutional fiat, they are subject to the President’s supervision only, not control, so long as their
acts are exercised within the sphere of their legitimate powers. By the same token, the President may not
withhold or alter any authority or power given them by the Constitution and the law.[50]

On the other hand, local autonomy and decentralization of State powers to the local political
subdivisions have for their object to make governance directly responsive at the local levels by
giving them a free hand to chart their own destiny and shape their future with minimum
intervention from central authorities, thereby rendering them accountable to their local
constituencies.[51] Thus, [h]and in hand with the constitutional restraint on the President’s power
over local governments is the state policy of ensuring local autonomy”[52] As farther explained
in Pimentel, Jr.:

Under the Philippine concept of local autonomy, the national government has not completely relinquished
all its powers over local governments, including autonomous regions. Only administrative powers over
local affairs are delegated to political subdivisions. The purpose of the delegation is to make governance
more directly responsive and effective at the local levels. In turn, economic, political and social
development at the smaller political units are expected to propel social and economic growth and
development. But to enable the country to develop as a whole, the programs and policies effected locally
must be integrated and coordinated towards a common national goal. Thus, policy-setting for the entire
country still lies in the President and Congress. As we stated in Magtajas v. Pryce Properties Corp.,
Inc.,municipal governments are still agents of the national government.[53](Citation omitted)
It is clear, then, that local autonomy and decentralization do not deal directly with Issues
concerning ownership, classification, use or control of properties of the public domain held by
local governments. The State retains power over property of the public domain, exercised
through Congress.

F. The grant of autonomy to local


governments, although a radical
policy change under the 1973 and
1987 Constitutions, does not affect
the settled rule that they possess
property of the public domain in
trust for the State.

The 1973 Constitution devoted an entire Article, Article XI, consisting of five sections, to laying
down its policy for the empowerment of the local governments. The 1987 Constitution, in turn,
fully devotes all 21 sections of its Article X for local government. It introduces significant new
provisions, such as the establishment of autonomous regions (Section 18) and the guarantee of
just share of the local governments in the national taxes and equitable share in the proceeds
from the utilization of the national wealth (Sections 6 and 7). It was unlike in the 1935
Constitution, which simply provided in Section 10 of Article VII, dealing with the Executive
Department, that “[t]he President shall have control of all executive departments, bureaus or
offices, exercise general provision over all local governments as may be provided by law, and
take care that the laws be faithfully executed.”

The erudite Justice Enrique Fernando (Justice Fernando), in his highly instructive separate
concurring opinion in Rabuco,[54] did at first admit to doubts as to the continuing authoritativeness
of Province of Zamboanga del Norte and Salas, both promulgated before the effectivity of the
1973 Constitution, in view of the significant innovations introduced therein pertaining to the
autonomy of local governments. He stated that the goal of the 1973 Constitution was “the fullest
autonomy to local government units consistent with the basic theory of a unitary, not a federal,
polity,”[55] hoping thereby to attain “their fullest development as self-reliant
communities.”[56]According to him, under the 1973 Constitution, “[tjhings have changed
radically,”[57] noting that under the 1935 Constitution, “[i]t could hardly be assumed x x x that x x x
the [local governments] could justifiably lay claim to real autonomy.”[58] He observed thus:
We start with the declared principle of the State guaranteeing and promoting the autonomy of local
government units. We have likewise noted the earnestness of the framers as to the attainment of such
declared objective as set forth in the specific article on the matter. It is made obligatory on the National
Assembly to enact a local government code. What is more, unlike the general run of statutes, it cannot be
amended except by a majority vote of all its members. It is made to include “a more responsive and
accountable local government structure with an effective system of recall,” with an expressed reference to
“qualifications, election and removal, term, salaries, powers, functions, and duties of local officials, [as
well as] all other matters relating to the organization and operation of the local units.” Mention is likewise
made of the “powers, responsibilities, and resources,” items that are identified with local autonomy. As if
that were not enough, the last sentence of this particular provision reads: “However, any change in the
existing form of local government shall not take effect until ratified by a majority of the votes cast in a
plebiscite called for the purpose.” To the extent that the last section requires that the creation, division,
merger, abolition or alteration of a boundary of a province, city, municipality, or barrio, must be in
accordance with the criteria established in the local government code and subject to the approval by a
majority of the votes cast in a plebiscite in such unit or units, the adherence to the basic principle of local
self government is quite clear. Equally significant is the stress on the competence of a province, city,
municipality or barrio “to create its own sources of revenue and to levy taxes subject to such limitations
as may be provided by law.” The care and circumspection with which the framers saw to the enjoyment
of real local self-government not only in terms of administration but also in terms of resources is thus
manifest. Their intent is unmistakable. Unlike the case under the 1935 Constitution, there is thus a clear
manifestation of the presumption now in favor of a local government unit. It is a well-nigh complete
departure from what was. Nor should it be ignored that a highly urbanized city “shall be independent” not
only of the national government but also of a province. Would it not follow then that under the present
dispensation, the moment property is transferred to it by the national government, its control over the
same should be as extensive and as broad as possible, x x x.[59] (Citations omitted)

Up to that point, it could almost be presumed that Justice Fernando would dissent from the
lucid ponencia of Justice Claudio Teehankee (Justice Teehankee), borne of logical doubts as to
whether Province of Zamboanga del Norte and Salas still retained their unimpaired doctrinal
force under the then new 1973 Constitution. But two considerations kept him reined in, so to
speak. One was Justice Teehankee’s “reference to the ratio decidendi of [Salas] as to the trust
character impressed on communal property of a municipal corporation, even if already
titled,”[60] “regardless of the source of classification of land in the possession of a municipality,
excepting those acquired with its own funds in its private or corporate capacity.”[61] Justice
Fernando acknowledged that the local government “holds such [communal property] subject to
the paramount power of the legislature to dispose of the same, for after all it owes its creation to
it as an agent for the performance of a part of its public work, the municipality being but a
subdivision or instrumentality thereof for purposes of local administration.”[62]

Rabuco stressed that the properties in controversy were not acquired by the City of Manila with
its own private funds. Thus, according to Justice Fernando, “That [the City of Manila] has in its
name a registered title is not questioned, but this title should be deemed to be held in trust for
the State as the land covered thereby was part of the territory of the City of Manila granted by
the sovereign upon its creation.”[63] This doctrine, according to Justice Fernando, has its basis in
the Regalian Doctrine and is unaffected by the grant of extensive local autonomy under the
1973 Constitution. “It is my view that under the [1973] Constitution, as was the case under the
1935 charter, the holding of a municipal corporation as a unit of state does not impair the
plenary power of the national government exercising dominical rights to dispose of it in a
manner it sees fit, subject to applicable constitutional limitations as to the citizenship of the
grantee.”[64]

The other consideration noted by Justice Fernando in the ponencia of Justice Teehankee
in Rabuco he found further compelling was “the even more fundamental principle of social
justice, which was given further stress and a wider scope in the present Constitution.”[65] He
concluded that R.A. No. 3120, like R.A. No. 4118, was intended to implement the social justice
policy of the Constitution and the government program of land for the landless, and was not
“intended to expropriate the property involved but merely to confirm its character as communal
land of the State and to make it available for disposition by the National Government.” [66]

G. The Province of Bataan has the


duty to provide an adequate
security for its loans with the LBP,
without defeating BPSC’s right to
hold title to the contested lots.

The RTC ordered the Province of Bataan to deliver the owner’s duplicate copy of OCT No. N-
182 to the Register of Deeds of Bataan, free from any lien or encumbrance, to execute the
corresponding deed of conveyance in favor of BPSC, and to cause the transfer and registration
of the title to and in the name of the said college. The Province of Bataan erroneously believed
that it could mortgage the subject lots, notwithstanding that it held the same in trust for the State
and despite the fact that the said lots were actually being occupied by two government schools.
As the RTC urged, then, the Province of Bataan must address this issue of security for its loans
with LBP. It cannot complain that its compliance with the order of the RTC might violate the non-
impairment clause of the Constitution, since its duty to provide a replacement security for its
loans with LBP is clear.

H. BPSC is entitled to a writ of


mandamus.

Section 3, Rule 65 of the 1997 Rules of Civil Procedure provides that a writ of mandamus shall
issue where a tribunal, corporation, board, officer or person unlawfully neglects the performance
of an act which the law specifically enjoins as a duty, to command the respondent to do the act
required to be done to protect the rights of the petitioner. Herein petitioner has argued that the
mandamus applicants are not entitled thereto because they are not real parties in interest. It is a
rule re-echoed in a long line of cases that every action must be prosecuted or defended in the
name of the real party in interest, meaning “the party who stands to be benefited or injured by
the judgment in the suit, or the party entitled to the avails of the suit.”[67]

At issue in this petition is Section 24 of R.A. No. 8562, which directs that “[a]ll parcels of land
belonging to the government occupied by the [MLLSAT] and the [BCC] are hereby declared to
be the property of the [BPSC] and shall be titled under that name.” There is no dispute that the
Congress has expressly intended to entrust to BPSC the titles to the subject lots. Being the sole
beneficiary of Section 24 of R.A. No. 8562, BPSC is the real party in interest, and is entitled to
mandamus to enforce its right thereunder.[68]

WHEREFORE, in view of the foregoing, the petition for review on certiorari isDENIED. The
Decision of the Court of Appeals dated February 7, 2006 in CA-G.R. SP No. 85902
is AFFIRMED.

Marilou Balasbas, et al. Vs. Roberto L. Uy


Realty & Development Corporation; G.R. No.
187544; October 3, 2016
DECISION

JARDELEZA, J.:
This is a Petition for Review on Certiorari[1] under Rule 45 of the Revised Rules of Court
assailing the Decision[2]dated January 30, 2009 and Resolution[3] dated April 17, 2009 of the
Court of Appeals (CA) in C.A. G.R. CV No. 87950, which affirmed the Decision [4] dated
September 30, 2005 of the Regional Trial Court (RTC) of Pasay City, Branch 109, in Civil Case
No. 2797-P.

Facts

Roberto L. Uy Realty and Development Corporation (Uy Realty) is the registered owner
of a parcel of land identified as Lot No. 555 with an area of 6,196.91 square meters,
covered by Transfer Certificate of Title No. (TCT No.) 24612 and located at 318-320 Int.
EDSA, Barangay Sto. Niño, Pasay City.[5]
On July 16, 1982, Uy Realty brought to the attention of the Office of the City Engineer, Pasay
City, the presence of the houses of Marilou Balasbas, Felipe Olegario, Jose Narvaez, Rodolfo
Bwnanlag, Teodoro Misia, Marcelino Vila, Hilario Alcala, Macario Cordova, Salvador Abaigar,
Atilano Bacud and Leoni des Bolvido (Balasbas, et al.) which were illegally constructed on its
property.[6]

On August 9, 1982, the Pasay City Office of the City Engineer Building Inspector Rodolfo M.
Medroso (Engr. Medroso) submitted a letter-report[7] to the Pasay City Office of the City
Engineer Building Official Engineer Jesus L. Reyna (Engr. Reyna) stating that there are eleven
(11) houses, mostly make-shift, on the property, and that the names of the owners of the
houses do not appear in the official registry book for building permits.

Thus, on April 26, 1983, then Pasay City Mayor Pablo Cuneta (Mayor Cuneta) issued a
letter[8] to Balasbas, et al. informing them that per verification from the Office of the City
Engineer, none of the structures Balasbas, et al. built on the property had the necessary
building permits. As a result, Mayor Cuneta directed Balasbas, et al. to vacate the property and
to dismantle their structures.

Due to Balasbas, et al.‘s refusal to comply with the order of Mayor Cuneta, on April 19, 1985, Uy
Realty filed before the RTC of Pasay City a Complaint[9] for recovery of possession against
Balasbas, et al. The case was docketed as Civil Case No. 2797-P and raffled to Branch 113. Uy
Realty prayed that an order be issued directing Balasbas, et al.to voluntarily and peacefully
vacate and surrender the portion of Uy Realty’s property they are illegally occupying and to pay
Uy Realty attorney’s fees, expenses of litigation and other consequential damages.[10]
Balasbas, et al. filed their Answer[11] through their counsel, Atty. Gladys P. Garcia (Atty. Garcia),
of the Citizens Legal Assistance Office detailed at the Pasay City Hall. Balasbas, et al. alleged
that they have been residing in the premises for the past thirty-two (32) years. They used to pay
rentals to a certain Jesus Uy but stopped in 1975 when they learned that Jesus Uy was not the
owner of the lot on which they lived. The property on which their houses stand is not included in
Uy Realty’s property as shown in the vicinity map of the City Assessor of Pasay City. Uy
Realty’s property is designated as Lot No. 555 while the portion of the property where
Balasbas, et al.‘s houses stand is designated as Lot No. 537 [Lot No. 587 [12]] Uy Realty
encroached upon a portion of Lot No. 587 by covering the creek which separates the lot where
Balasbas, et al.‘s houses are built.[13] They prayed for the dismissal of the complaint and claimed
moral and exemplary damages, as well as litigation expenses, from Uy Realty.[14]

During the pre-trial on July 11, 1985, [15] the parties agreed that the only issue to be resolved is
whether the property claimed by Uy Realty is the same property on which Balasbas, et al.‘s
houses stand, or, whether the property claimed by Uy Realty goes beyond the area covered by
its title such that a portion of it encroaches upon the land on which Balasbas, et al. built their
dwellings.

Trial ensued. On January 29, 1987, the trial court issued an Order[16] stating that the only way to
determine if any of the houses were constructed on Uy Realty’s property is to conduct an actual
survey. The trial court ordered the creation of a survey team which will conduct an actual survey
on the land based on the technical description found in TCT No. 24612. The team would consist
of two (2) representatives from each party, and a geodetic engineer from the City Engineer’s
Office of Pasay City as the team leader.

Engineer Amador Abaya (Engr. Abaya) of the City Engineer’s Office was designated as the
team leader. On March 31, 1987, he submitted a report 17 (Abaya Report) indicating that there
are no monuments on the ground which would enable him to determine the boundary of Lot No.
555 owned by Uy Realty and the extent of encroachment of Balasbas, et al.‘s houses on Lot No.
555 and that a seven-meter canal separates Lot No. 555 and Lot No. 587 owned by a certain
Mr. Saulog. Attached to the report was a sketch plan[18] showing Lot No. 555, Lot No. 587 and
the canal which separates the two (2) lots. According to the sketch plan, the following persons’
properties occupy Uy Realty’s property:

1. Nenita Alcala;
2. Virginia Bumanlag;

3. Atilano Bacud;

4. Elpidio Daos;

5. Federico Milante;

6. Lita Banos;

7. Marilou Balasbas;

8. Elmo Sulia; and

9. Teodoro Mesia.[19]

The sketch plan also indicated that the following persons’ properties are inside the canal
separating Uy Realty’s property and Mr. Saulog’s property:

1. Lourdes Olegario;

2. Marcelino Diza;

3. Jose Narvaez;

4. Nestor Aquino; and

5. Custodio Carunsay.[20]

On June 11, 1987, the parties agreed to a stipulation of facts[21] which they reaffirmed on July 6,
1987.[22] On July 9, 1987, the trial court issued an Order[23] rendering partial judgment, to wit:

The parties in the above-entitled case, assisted by their respective counsel, made the following admissions
and/or stipulations embodied in the Commissioner’s Report dated March 31, 1987, counsel for plaintiff’s
manifestation and motion dated May 18, 1987, counsel for the defendants manifestation and motion dated
June 11, 1987 amplified in the order dated June 11, 1987, counsel for the defendants’ written
manifestation dated June 19, 1987, and again affirmed by attending counsels on July 6, 1987, to wit:
1) That the parties signify their conformity to the report of Commissioner Amador Abaya dated March
31, 1987 subject only to the qualification that the strip of land measuring approximately seven [7] meters
wide, perceived to be either a waterway/canal or right of way, will be the subject of further hearing on the
merits;

2) That the defendants whose houses or portions thereof were erected and are within plaintiff’s parcel of
land as depicted in the aforesaid Commissioner’s Report dated March 31, 1987 and its enclosures, will
voluntarily remove said structures or portions thereof which encroach on plaintiff’s realty, within a period
of ninety (90) days from receipt of a copy of this partial judgment; provided that the same shall be
undertaken in the presence of Commissioner Amador Abaya who shall determine in the field the exact
boundary of the property involved as much as possible in the presence of the parties or their
representatives; and[]

3) In the event plaintiff should construct a boundary wall or place land monuments (mojones) on the
portion of its property affecting the defendants’ habitation, the same shall be made in the presence of
Commissioner Amador Abaya and with prior notice to the defendants or their counsel of record.

WHEREFORE, the Court renders partial judgment on the basis of the foregoing stipulations and/or
admissions, and enjoins the parties to comply strictly with the terms and conditions thereof.

SO ORDERED.[24]

On March 23, 1988, Felicisimo C. Ilagan filed a motion to intervene[25] alleging that he was a
successor-in-interest of Salvador Abaigar. The former’s intervention was granted.[26]

During the continuation of the trial, the trial court ordered the commission to resurvey the area in
order to determine the exact area of the gap or strip of land/canal separating Uy Realty’s land
and that of Mr. Saulog.[27] On January 31, 1989, Engr. Abaya manifested that there is a
conflicting tie line appearing on the survey plans submitted by the engineers of both
parties.[28] The RTC then directed the Director of the Bureau of Lands or his representative to
examine the plans and to certify which one is the correct plan.[29]

Isidro E. Mundo, Jr., Chiet: Surveys Division of the Department of Environment and Natural
Resources-Lands Management Sector (DENR LMS), submitted a reply report[30] dated July 18,
1989 and a supplemental letter[31]clarifying and correcting the tie line.
Subsequently, the Chief of the Technical Services Section of the DENR-LMS, Elpidio T. De Lara
(Engr. De Lara), submitted his Final Report (De Lara Report)[32] of the field survey dated January
11, 1990 which states:

a) [T]he portion of existing houses by the Defendants encroached to the titled property (lot 555 Cad 259,
Pasay Cad) with a sub lot area 549.54 sq. meters[.]

b) [T]he area of canal (portion of this also occupied by the Defendants) in between lot 2, Pcs-2732 and lot
555 Cad 259 Pasay Cad has an area of 232.50 sq. m. which is 4 m. away from corner to corner adjoining
each lot.

c) [T]he two plan[s] submitted [have] a conflicting tie lines. Selecting the correct tie lines to be used [in]
relation to lot 2, Pcs-2732 was on Engr. Ambal’s plan and found that the tie line used by Engr. Pineda is
defective.[33] (Emphasis supplied.)

On May 8, 1990, the trial court issued an Order[34] submitting the case for decision on the basis
of the survey conducted by the commission as previously agreed upon by the parties and their
counsels.

On January 18, 1992, a fire burned the Pasay City Hall Building and the records of the
case.[35] As a result, Uy Realty filed a Petition[36] for reconstitution of records which the court
approved.[37]

On July 25, 2005, the trial court once again issued an Order[38] submitting the case for decision.

On September 30, 2005, the RTC Branch 109, Pasay City rendered a Decision[39] ordering
Balasbas, et al. to vacate the property and to pay attorney’s fees plus costs of suit. The
dispositive portion of the Decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and all defendants are directed to vacate
and surrender to the plaintiff the portion of the latter’s property being occupied by them (defendants)
covered by Transfer Certificate of Title No. 24612 of the Registry of Deeds of Pasay City, Metro Manila
situated at 318-320 Int. EDSA, Barangay Sto. Nino, Pasay City, Metro Manila.

Further, to pay plaintiff the sum of P20,000.00 as and for attorney’s fee plus cost of suit jointly and
severally.
SO ORDERED.[40]

Balasbas, et al. then filed a Motion for New Trial[41] on the following grounds: a) the commission
of fraud in the judicial compromise between the parties; b) the presence of mistake of facts in
the survey reports which renders the Decision uncertain and inconclusive in its resolution of the
actual controversy; and c) the existence of newly discovered evidence referring to a
letter[42] dated October 13, 2003 from the Lands Management Bureau of the DENR which, if
presented, would probably alter the result of the case.[43] On the other hand, Uy Realty filed a
Motion for Execution[44] of the decision.

On August 28, 2006, the RTC issued an Order[45] denying the Motion for New Trial and granting
the Motion for Execution.

Balasbas, et al. appealed.[46] They alleged that the trial court committed serious reversible error
when it rendered a Decision based on the stipulation of facts entered into by the counsels dated
July 6, 1987 and survey reports submitted by the appointed commission.[47] The trial court
likewise erred when it denied a new trial of the case.[48]

CA Ruling

On January 30, 2009, the CA ruled that Uy Realty and Balasbas, et al. are bound by the
partial judgment dated July 9, 1987 which was rendered on the basis of a judicial
compromise agreed upon by the parties.[49] The RTC also acted within its authority in
rendering the judgment based on the survey
reports which were conducted in their presence; hence, Balasbas, et al. are barred from
assailing them.[50] The CA also held that the certification they presented is not a newly
discovered evidence which would warrant a new trial and that Uy Realty’s title cannot be
attacked collaterally.[51]

The CA denied Balasbas, et al. ‘s Motion for Reconsideration[52] via its Resolution dated April 17,
2009.

Petitioners’ Arguments

Balasbas, et al. filed this petition and maintain that the CA erred when it affirmed the
RTC Decision by confirming as binding the stipulation of facts and judicial compromise
entered into by their counsel.[53] They allege that their former counsel, Atty. Garcia, by
herself and without their knowledge and consent, entered into a judicial
compromise.[54]Atty. Garcia likewise allegedly kept them unaware of the developments in
the case which was detailed in the Sinumpaang Salaysay[55] executed by Atilano Bacud.
The CA also erred when it upheld the survey reports which are inaccurate and inconclusive as
to the actual location of the property of Uy Realty and the position of their houses.[56] They
particularly question the Abaya Report on the ground that it was unreliable, incomplete and
conducted contrary to standard survey procedures.[57]

Lastly, the CA erred in ordering all of them to vacate and surrender portions of their propetiy
even if the surveys determined that some of the houses are not found inside Uy Realty’s
property.[58]

Issue

Whether the CA erred in ordering petitioners to vacate and surrender to respondent the
portion of the latter’s property petitioners are occupying.
Ruling

The petition lacks merit.


Our jurisdiction in a Rule 45 petition is limited to the review of pure questions of law. Negatively
put, Rule 45 does not allow the review of questions of fact because the Court is not a trier of
facts.[59] Generally, we are not duty bound to analyze again and weigh the evidence introduced
in and considered by the tribunals below. When supported by substantial evidence, the findings
of fact of the CA are conclusive and binding on the parties and are not reviewable by this
Court.[60]

A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts. The question, to be one of law, must rest solely on what the law provides on the given set
of circumstances and should avoid the scrutiny of the probative value of the parties’ evidence.[61]

We find that the resolution of this case requires the re-evaluation of the factual findings of the
RTC and of the CA. The questions surrounding the execution of the compromise agreement
and its subsequent approval by the RTC, the accuracy of the Abaya and De Lara survey
reports, and the declaration that petitioners’ houses occupy a portion of Uy Realty’s property
require the re-evaluation of the factual findings of the RTC and the CA. On this score alone, the
petition fails.

Just the same, even if we relax the rules, the substantial merits of the petition are insufficient to
reverse the Decisions of the RTC and the CA.

The findings of the RTC and the CA regarding petitioners’ encroachment on Uy Realty’s
property are based on the results of the surveys Engr. Abaya and Engr. De Lara conducted and
which were attended and witnessed by the parties and their representatives, adopted by the
parties through their joint stipulations and admissions and approved by the RTC through its July
9, 1987 Order and September 30, 2005 Decision.

Thus, it is too late in the day for petitioners to challenge the surveys undertaken and their joint
stipulations and admissions. As the CA correctly held:

x x x Aside from the fact that the Rules of Court, specifically Rule 32[,] Section 11, clearly provides that
the trial court may adopt, modify, reject or recommit the findings of the commissioners, the parties, in the
case at bench, have agreed to abide by the results of the survey. Besides, the field survey was conducted
in the presence of representatives of both parties. In fact, both parties have submitted documents
which were utilized as references. For actively participating in the conduct of the survey, they are
now barred from questioning the manner by which the procedures were undertaken.[62]
(Emphasis supplied.)

Petitioners’ claim that the judicial compromise based on the parties’ joint stipulations and
admissions was fraudulently entered into by their counsel without their knowledge and consent
also fails to persuade.

We recall that the stipulation of facts was agreed upon by the parties during the course of trial
and was affirmed by the trial court in the Order[63] dated June 11, 1987. The stipulation was re-
affirmed at the hearing on July 6, 1987.[64]Such stipulation served as the basis of the partial
judgment issued on July 9, 1987 where the RTC made the following pronouncement:

The parties in the above-entitled case, assisted by their respective counsel (sic), made the following
admissions and/or stipulations embodied in the Commissioner’s Report dated March 31, 1987, counsel
for plaintiff’s manifestation and motion dated May 18, 1987, counsel for the defendants manifestation and
motion dated June 11, 1987 amplified in the order dated June 11, 1987, counsel for the defendants’
written manifestation dated June 19, 1987, and again affirmed by attending counsels on July 6, 1987 x x
x.[65]

A party may make judicial admissions in (1) the pleadings; (2) during the trial, by verbal or
written manifestations or stipulations; or (3) in other stages of the judicial proceeding. [66] The
veracity of judicial admissions requires no further proof and may be controverted only upon a
clear showing that the admissions were made through palpable mistake or that no admissions
were made.[67]

Here, the stipulation of facts constitutes judicial admissions. Thus, in order to contradict them,
Balasbas, et al. must show that they were made through palpable mistake or that no such
admission was made. No such showing was made in this case.

Equally well-settled is the rule that a client is bound by the acts, even mistakes of his
counsel.[68] The rationale for the rule is that a counsel, once retained, holds the implied authority
to do all acts necessary or, at least, incidental to the prosecution and management of the suit in
behalf of his client, such that any act or omission by counsel within the scope of the authority is
regarded, in the eyes of the law, as the act or omission of the client himself. [69] The exceptions to
this rule are: (1) where reckless or gross negligence of counsel deprives the client of due
process of law; (2) when its application will result in outright deprivation of the client’s liberty or
propetiy; or (3) where the interests of justice so require.[70] In this case, other than petitioners’
self-serving and bare allegation that their previous counsels have purposely kept them ignorant
of the status of their case, petitioners did not present evidence to substantiate their claim.

WHEREFORE, premises considered, the Petition is DENIED for lack of merit. The Court of
Appeals Decision dated January 30, 2009 and Resolution dated April 17, 2009 are AFFIRMED.

Sps. Ernesto Ibias, Sr. and Gonigonda Ibias Vs.


Benita Perez Macabeo; G.R. No. 205004;
August 17, 2016
DECISION

CARPIO, J.:
The Case

G.R. No. 205004 is a petition for review[1] assailing the Decision[2] promulgated on 30 May 2012
as well as the Resolution[3] promulgated on 11 December 2012 by the Court of Appeals (CA) in
CA-G.R. CV No. 88552. The CA affirmed the Decision[4] dated 7 March 2006 of Branch 33 of the
Regional Trial Court of Manila (RTC) in Civil Case No. 01-102236.

The RTC ruled in favor of respondent Benita Perez Macabeo (Benita) and against petitioners
Spouses Ernesto Ibias, Sr. (Ernesto) and Gonigonda Ibias (collectively, Spouses Ibias) and
ordered the Register of Deeds of Manila to cancel Transfer Certificate of Title (TCT) No. 245124
under the name of the Spouses Ibias and reinstate TCT No. 24605.

The Facts

The CA recited the facts as follows:

[Benita] filed a complaint for annulment of title against [Spouses Ibias] on 12 November 2001. She
averred, among others, that she is one of the heirs of Albina Natividad Y. Perez and Marcelo Ibias, both
deceased and registered owners of the parcel of land covered by [TCT] No. 24605 of the Register of
Deeds of Manila. On 13 August 1999, [Ernesto] executed an Affidavit of Loss alleging that the Owner’s
Duplicate of TCT No. 24605 was missing among his files. In support of his petition for reconstitution, he
testified that said owner’s duplicate [of] title was lost while in his parents’ possession. Such petition was
granted and the title was reconstituted, now TCT No. 245124 under the names of [Spouses Ibias]. For this
reason, [Benita] filed a perjury case against defendant-appellant Ernesto docketed as Criminal Case No.
348152 pending before the Metropolitan Trial Court (MeTC) of Manila.

[Benita] averred that defendant-appellant Ernesto made it appear that the title was lost or misplaced while
in the possession of the registered owners when in truth and in fact, he knew fully well that said title was
in the possession of [Benita]. Proof of such knowledge was shown by his letter dated 23 July 1999 where
he asked [Benita] for TCT No. 24605, which was in the latter’s possession. At the time defendant-
appellant Ernesto executed the Affidavit of Loss and filed his petition for reconstitution, he knew that the
title was intact and in the possession of [Benita]. The issuance of the reconstituted title in favor of [the
Spouses Ibias] thus deprived [Benita] and her other siblings of their right over the subject property.
Defendant-appellant Ernesto countered that he is the registered owner of the land described in TCT No.
245124. He claimed that he and his late brother Rodolfo are the only heirs of Marcelo and Albina Ibias.
The subject property was acquired and titled sometime in 1950. He and his late parents have been living
in the same house during the lifetime of the latter. After the death of his parents, he diligently exerted
efforts to locate TCT No. 24605 but [these] attempts proved futile. He inquired from his half-sister,
plaintiff-appellee Benita Macabeo, about the whereabouts of said title. [Benita] claimed that she was in
possession of the title but asked defendant-appellant Ernesto for the amount of PI 1,000.00 in exchange
for the title and as her share in the property. Defendant-appellant Ernesto paid said amount, but when he
asked for the turnover of the title, [Benita] failed to deliver the title nor show the document. Defendant-
appellant Ernesto was thus convinced that [Benita] had neither possession nor knowledge of the
whereabouts of the title.

Believing in good faith that the title was indeed lost, he executed the Affidavit of Loss dated 13 August
1999. Thereafter, he instituted a petition for issuance of new owner’s duplicate certificate of title. [Benita]
did not oppose or object to the petition. Eventually, the new TCT No. 245124 was issued in favor of
[Spouses Ibias] by the Register of Deeds.[5]

The RTC’s Ruling

The RTC ruled in favor of Benita.

The RTC stated that Ernesto’s assertions did not coincide with its findings. When Ernesto filed a
petition for reconstitution on 19 August 1999, Ernesto claimed that the owner’s duplicate of TCT
No. 24605 was lost. However, Ernesto knew that the title was in Benita’s possession. Ernesto
himself wrote a letter dated 23 July 1999 to Benita to ask for the title. Prior to this, Ernesto
borrowed the title from Benita in 1996 for the connection of his water system to NAWASA.

Ernesto also falsely declared in the Deed of Extrajudicial Settlement of Estate with Waiver of
Rights that he and his brother Rodolfo Ibias are the only surviving heirs of Albina Natividad.
Ernesto and Rodolfo actually have four older half-sisters with their mother Albina: Avelina,
Abuendia, Seferiana, and Benita. To the RTC, it is clear that Ernesto was able to procure the
new title in his name through fraudulent means.

The dispositive portion of the RTC’s decision reads:


WHEREFORE, judgment is hereby rendered in favor of [Benita] and against the [Spouses Ibias]. The
Register of Deeds of Manila is ordered to cause the cancellation of Transfer Certificate of Title No.
245124 under [the] name of [Spouses Ibias] and REINSTATE TCT No. 24605. The [Spouses Ibias are]
ordered to pay the costs of the suit. The counter-claim is DISMISSED for lack of merit.

SO ORDERED.[6]

The Spouses Ibias filed a notice of appeal[7] on 19 July 2006. The RTC released an
Order[8] elevating the complete records of the case on 26 July 2006.

The CA’s Ruling

The CA dismissed the Spouses Ibias’ appeal and affirmed the decision of the RTC.

The CA affirmed, the RTC’s findings of fact. Ernesto knew that TCT No. 24605 was with Benita
for safekeeping. Ernesto’s 23 July 1999 letter to Benita categorically stated that he asked for
TCT No. 24605 and acknowledged that the TCT was in her possession. Ernesto wrote:

Sa kadahilanang nabanggit sa itaas ako at ang aking kapatid na si RODOLFO IBIAS ay tuwiran hinihingi
sa iyo ang titulo ng lupa na may No. 24605 na nasa iyong pag-iingat. x x x[9]

In her letter to Ernesto dated 16 August 1999, Benita explained that the money for the purchase
of the land came from the GSIS death benefit of her sister Abuendia Natividad Perez
(Abuendia). It was Abuendia’s wish to put the title of the property in their mother’s name. The
name of Ernesto’s father, Marcelo, was in TCT No. 24605 only because he was married to
Albina. Marcelo had no capacity to buy the property. The PI 1,000 was for the purpose of
including the names of their siblings Rodolfo Ibias and Avelina Perez. The title was in Benita’s
possession only because Albina entrusted it to her. Benita wrote:

Para sa kaalam [sic] mo, totoong matagal nang nasa pag-iingat ko ang kopya ng titulo ng ating lupa. Hindi
ko iyon tinatanggi. Ito’y nasa akin hindi dahil sa gusto ko itong kamkamin (katulad ng gusto mo ngayong
palabasin) kundi dahil sa ito’y inihabilin sa akin ng ating namatay na inang si ALBINA NATIVIDAD y
PEREZ at ito’y alam mo, aminin mo man o hindi.[10]
The Spouses Ibias did not dispute these letters. The correspondence shows that Ernesto knew
that Benita had the owner’s duplicate of TCT No. 24605 in her possession prior to the filing of
the present case. The CA identified the strained relations between the parties as the reason
why Ernesto could not compel Benita to turn over the owner’s duplicate of TCT No. 24605 to
him. The CA concluded that because the Spouses Ibias could not force Benita to give them the
title, Ernesto executed an Affidavit of Loss so as to pull one over on Benita. The tenor of the
correspondence belies the Spouses Ibias’ claim of good faith when the Affidavit of Loss was
executed.

Ernesto falsely stated in the Deed of Extrajudicial Settlement of Estate with Waiver of Rights
that he and his brother Rodolfo are the only surviving heirs of Albina and Marcelo. However, in
his 23 July 1999 letter, as well as in his pleadings, Ernesto asserted that he and Benita have the
same mother.

Ernesto also impliedly recognized Benita’s right over the property when he claimed to have
given her PI 1,000 as her supposed share in the property.

Both Benita’s and Ernesto’s witnesses testified that Marcelo had no resources to purchase the
land. Flordeliza Natividad, Benita’s witness, testified that Abuendia was the breadwinner of the
family and purchased the land on installment. When Abuendia passed away, her family used
her death benefits to make full payment for the land. Pedro Mercado, Ernesto’s witness, testified
that Marcelo had not been working since 1949. Ernesto did not present any evidence to show
that Marcelo had the resources to buy the land.

The CA summarized its findings as follows:

In view of the above documentary and testimonial evidence, the court a quo was correct in canceling TCT
No. 245124 and reinstating TCT No. 24605. There is preponderance of evidence to prove that [the
Spouses Ibias] knew for a fact that TCT No. 24605 was not lost, but in the possession of [Benita]. There
is also clear and convincing evidence that [the Spouses Ibias] committed fraud or fraudulent acts in order
to obtain the reconstituted title. By omitting material facts and perpetrating untruths in the affidavit of
loss, petition for reconstitution, and deed of extrajudicial settlement, [the Spouses Ibias] were issued TCT
No. 245124 to the damage and prejudice of [Benita] and the other legal heirs of Albina Natividad.[11]

The Spouses Ibias filed their Motion for Reconsideration[12] on 19 June


2012, while Benita filed her Comment[13] on 14 August 2012.

The CA denied the Spouses Ibias’ motion in a Resolution[14] dated 11 December 2012. The CA
stated that the Spouses Ibias merely rehashed the same issues which were already passed
upon by the CA in their decision, and there was no cogent reason or novel issue to warrant a
modification or reversal of the decision.

The Spouses Ibias filed the present petition for review on 1 February 2013, Benita filed her
comment on 2 May 2013. On 17 July 2013, this Court required the Spouses Ibias to file a reply
to the comment within 10 days from notice. This period expired on 27 September 2013.[15] On 11
June

2014, this Court issued another Resolution denying the Spouses Ibias’ petition for failure to
comply with our lawful order without any valid cause. On 26 August 2014, the Spouses Ibias
filed a motion for reconsideration of our 11 June 2014 Resolution. We granted the Spouses
Ibias’ motion in a Resolution dated 1 October 2014. The Spouses Ibias filed a manifestation
stating that they reiterate the contents and allegations in their petition and adopt the same as
their reply.

The Issue

The Spouses Ibias presented this sole assignment of error:

With all due respect, the Honorable Court of Appeals committed a reversible error when it affirmed the
order of the court a quo cancelling the Transfer Certificate of Title No. 24512[4] issued in the name of
Spouses Ernesto Ibias Sr. and Gonigonda Ibias as well as the reinstatement of TCT No. 24605, as the
assailed decision contravenes the established facts of the case; the evidence presented by the parties; and
existing law and jurisprudence on the matter.[16]

In her Comment,[17] Benita contends that the CA did not commit any reversible error in cancelling
TCT No. 245124 and reinstating TCT No. 24605.

The Court’s Ruling


The petition has no merit. The RTC and CA were correct in cancelling TCT No. 245124 and
reinstating TCT No. 24605.

Alonso v. Cebu Country Club, Inc.[18] described reconstitution, thus:

The reconstitution of a title is simply the re-issuance of a lost duplicate certificate of title in its original
form and condition. It does not determine or resolve the ownership of the land covered by the lost or
destroyed title. A reconstituted title, like the original certificate of title, by itself does not vest ownership
of the land or estate covered thereby.

Ernesto claimed loss of TCT No. 24605, and instituted reconstitution proceedings. Presidential
Decree No. 1529 (PD 1529) provides for the procedure in case of loss of an owner’s duplicate
certificate of title:

Section 109. Notice and replacement of lost duplicate certificate. -In case of loss or theft of an owner’s
duplicate certificate of title, due notice under oath shall be sent by the owner or by someone in his behalf
to the Register of Deeds of the province or city where the land lies as soon as the loss or theft is
discovered. If a duplicate certificate is lost or destroyed, or cannot be produced by a person applying for
the entry of a new certificate to him or for the registration of any instrument, a sworn statement of the fact
of such loss or destruction may be filed by the registered owner or other person in interest and registered.

Upon the petition of the registered owner or other person in interest, the court may, after-notice and due
hearing, direct the issuance of a new duplicate certificate, which shall contain a memorandum of the fact
that it is issued in place of the lost duplicate certificate, but shall in all respects be entitled to like faith and
credit as the original duplicate, and shall thereafter be regarded as such for all purposes of this decree.

Section 109 applies only if the owner’s duplicate certificate is indeed lost or destroyed. If a
certificate of title has not been lost, but is in fact in the possession of another person, then the
reconstituted title is void and the court that rendered the decision had no
jurisdiction.[19] Consequently, the decision may be attacked any time.[20] Section 7 of Republic Act
(RA) No. 6732, which amended Section 19 of RANo. 26,[21] provides:

SEC. 19. If the certificate of title considered lost or destroyed, and subsequently found or recovered, is
not in the name of the same person in whose favor the reconstituted certificate of title has been issued, the
Register of Deeds or the party concerned should bring the matter to the attention of the proper Regional
Trial Court, which, after due notice and hearing, shall order the cancellation of the reconstituted
certificate of title and render, with respect to the memoranda of new liens and encumbrances, if any, made
in the reconstituted certificate of title, after its reconstitution, such judgment as justice and equity may
require: Provided, however, That if the reconstituted certificate of title has been cancelled by virtue of any
deed or instrument, whether voluntary or involuntary, or by an order of the court, and a new certificate of
title has been issued, the procedure prescribed above, with respect to the memorandum of new liens and
encumbrances made on the reconstituted certificate of title, after its reconstitution, shall be followed with
respect to the new certificate of title, and to such new liens and encumbrances, if any, as may have been
on the latter, after the issuance thereof.

Section 11 of RA No. 6732 further provides that “[a] reconstituted title obtained by means of
fraud, deceit or other machination is void ab initio as against the party obtaining the same and
all persons having knowledge thereof.”

In the present case, the allegedly lost owner’s duplicate copy of TCT No. 24605 was in the
possession of Benita. The lost TCT was offered in evidence during the trial. [22] The Spouses
Ibias did not contest the genuineness and authenticity of said TCT. The Spouses Ibias only
questioned the submission of a photocopy of the TCT, but the trial court, after hearing the
arguments of both parties, admitted the photocopy as part of the evidence presented by Benita.
There is no reason to justify the issuance of a reconstituted title in the name of Spouses Ibias;
hence, there is no error in the cancellation of the same reconstituted title.

Ernesto claimed that he believed that the original owner’s duplicate copy of TCT No. 24605 was
lost after he asked Benita for it then she failed to show it to him. Ernesto chose to omit facts and
to avail of Section 109 as remedy instead of Section 107. Section 107 of PD 1529 reads:

Section 107. Surrender of withhold duplicate certificates. – Where it is necessary to issue a new
certificate of title pursuant to any involuntary instrument which divests the title of the registered owner
against his consent or where a voluntary instrument cannot be registered by reason of the refusal or failure
of the holder to surrender the owner’s duplicate certificate of title, the party in interest may file a petition
in court to compel surrender of the same to the Register of Deeds. The court, after hearing, may order the
registered owner or any person withholding the duplicate certificate to surrender the same, and direct the
entry of a new certificate or memorandum upon such surrender. If the person withholding the duplicate
certificate is not amenable to the process of the court, or if not any reason the outstanding owner’s
duplicate certificate cannot be delivered, the court may order the annulment of the same as well as the
issuance of a new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall
contain a memorandum of the annulment of the outstanding duplicate.

For the reasons stated above, we affirm the rulings of the trial and appellate courts which
cancelled TCT No. 245124 and reinstated TCT No. 24605.

WHEREFORE, we DENY the petition. The Decision promulgated on 30 May 2012 and the
Resolution promulgated on 11 December 2012 by the Court of Appeals in CA-G.R. CV No.
88552 are AFFIRMED.

Jo-And Diaz-Salgado and Dr. Gerard C. Salgado


Vs. Luis G. Anson; G.R. No. 204494; July 27,
2016
DECISION

REYES, J.:

Before the Court is the petition for review on certiorari[1] under Rule 45 of the Rules of Court
assailing the Decision[2]dated August 6, 2012 and the Resolution[3] dated November 26, 2012 of
the Court of Appeals (CA) in CA-G.R. CV No. 92989. The CA affirmed the Decision[4] dated July
23, 2007 of the Regional Trial Court (RTC) of Pasig City, Branch 155, in Civil Case No. 69611.

The Facts

On September 5, 2003, Luis Anson (Luis) filed a Complaint[5] docketed as Civil Case No. 69611
against Jo-Ann Diaz-Salgado (Jo-Ann) and Gerard Salgado (Gerard) (Spouses Salgado) along
with Maria Luisa Anson-Maya (Maria Luisa) and Gaston Maya (Spouses Maya), seeking the
annulment of the three Unilateral Deeds of Sale[6] dated January 23, 2002 and the Deed of
Extra-Judicial Settlement of Estate of the Deceased Severina De Asis dated October 25, 2002.[7]

Luis alleged in his complaint that he is the surviving spouse of the late Severina de Asis-Anson
(Severina). They were married in a civil ceremony on December 28, 1966. Prior to the
celebration of their marriage, Severina gave birth to their daughter, Maria Luisa on December
30, 1965 while Jo-Ann is Severina’s daughter from a previous relationship.[8]
During his marital union with Severina, they acquired several real properties located in San
Juan, Metro Manila, covered by the following Transfer Certificate of Title/s (TCT/s):

1. TCT No. 20618/T-104 (now TCT No. 11105-R),


2. TCT No. 60069/T-301 (now TCT No. 11106-R),
3. TCT No. 5109/T-26 (now TCT No. 11107),
4. TCT No. 8478-R/T-43 (now TCT No. 11076-R),
5. TCT No. 44637/T-224-II (now TCT No. 11078-R), and
6. TCT No. 8003/T-41 (now TCT No. 11077-R).[9]

According to Luis, because there was no marriage settlement between him and Severina, the
above-listed properties pertain to their conjugal partnership. But without his knowledge and
consent, Severina executed three separate Unilateral Deeds of Sale on January 23, 2002
transferring the properties covered by TCT Nos. 20618, 60069 and 5109 in favor of Jo-Ann, who
secured new certificates of title over the said properties.[10] When Severina died on September
21, 2002,[11] Maria Luisa executed a Deed of Extra-Judicial Settlement of Estate of Deceased
Severina de Asis on October 25, 2002, adjudicating herself as Severina’s sole heir. She
secured new TCTs over the properties covered by TCT Nos. 8478-R, 44637 and 8003.[12]

Luis claimed that because of the preceding acts, he was divested of his lawful share in the
conjugal properties and of his inheritance as a compulsory heir of Severina.[13]

In Jo-Ann’s Answer with Compulsory Counterclaim,[14] which the trial court considered as the
Answer of her husband, Gerard,[15] Jo-Ann countered that she was unaware of any marriage
contracted by her mother with Luis. She knew however that Luis and Severina had a common-
law relationship which they both acknowledged and formally terminated through a Partition
Agreement[16] executed in November 1980. This was implemented through another Partition
Agreement[17] executed in April 1981. Thus, Luis had already received the properties apportioned
to him by virtue of the said agreement while the properties subject of the Unilateral Deeds of
Sale were acquired exclusively by Severina. The TCTs covering Severina’s properties were
under Severina’s name only and she was described therein as single without reference to any
husband.[18]

Meanwhile, the Spouses Maya corroborated the Spouses Salgado’s stance in their
Answer,[19] stating that Maria Luisa is also not aware that Luis and Severina were married. She is
cognizant of the fact that Luis and Severina lived together as common-law husband and wife – a
relationship which was terminated upon execution of a Partition Agreement. In the Partition
Agreement, Luis and Severina were described as single and they acknowledged that they were
living together as common-law spouses. They also mutually agreed to the partition of the
properties they owned in common. Hence, Luis already received his share in the
properties[20] and is estopped from denying the same.[21] After the termination of their cohabitation
in 1980, Luis went to United States of America (USA), married one Teresita Anson and had a
son with her; while Maria Luisa was left under the guardianship and custody of Severina.[22] It
was after the death of Severina that Maria Luisa executed a Deed of Extra-Judicial Settlement
of the Estate of the Deceased Severina de Asis on October 25, 2002. The Spouses Maya were
also able to obtain a Certificate of No Record of Marriage[23] (between Luis and Severina) from
the Office the Civil Registrar General of the National Statistics Office.[24]

Trial ensued thereafter. After Luis gave his testimony and presented documentary evidence
which included a certified true copy of his marriage contract with Severina, [25] the Spouses
Salgado and Spouses Maya filed their respective Demurrers to Evidence. [26] The Spouses
Salgado disputed the validity of Luis and Severina’s marriage on the ground of lack of marriage
license as borne out by the marriage contract. They further claimed that Luis himself disclosed
on cross-examination that he did not procure a marriage license prior to the alleged
marriage.[27] Luis had also admitted the existence, due execution and authenticity of the Partition
Agreement.[28] The logical conclusion therefore is that the properties disposed in favor of Jo-Ann
were owned by Severina as her own, separate and exclusive properties, which she had all the
right to dispose of, without the conformity of Luis.[29]

On February 16, 2006, the trial court denied both demurrers, explaining that the sufficiency of
evidence presented by Luis is evidentiary in nature and may only be controverted by evidence
to the contrary.[30] The Spouses Salgado and Spouses Maya filed their separate motions for
reconsideration,[31] which the trial court denied.[32] Consequently, both the Spouses Salgado and
Spouses Maya filed their respective petitions for certiorari with the CA.[33]Meanwhile, the
Spouses Salgado were deemed to have waived their presentation of evidence when they failed
to attend the scheduled hearings before the trial court.[34]

Resolving the petition for certiorari on the demurrer to evidence filed by the Spouses Salgado,
the CA Second Division directed the trial court “to properly resolve with deliberate dispatch the
demurrer to evidence in accordance with Section 3, Rule 16 of the 1997 Rules of Civil
Procedure by stating clearly and distinctly the reason therefor on the basis of [the Spouses
Salgado’s] proffered evidence[,]”[35] whereas the CA Ninth Division dismissed the petition of the
Spouses Maya and ordered the trial court to decide the case with deliberate dispatch.[36]

In an Order[37] dated July 16, 2007, the RTC, in compliance with the order of the CA to resolve
the demurrer to evidence in more specific terms, denied the twin demurrers to evidence for lack
of merit and held that the totality of evidence presented by Luis has sufficiently established his
right to obtain the reliefs prayed for in his complaint.

Ruling of the RTC

On July 23, 2007, the RTC rendered its Decision[38] in favor of Luis, holding that the marriage
between Luis and Severina was valid. It noted that the marriage contract, being a public
document, enjoys the presumption of regularity in its execution and is conclusive as to the fact
of marriage.[39] The trial court also based its ruling in Geronimo v. CA[40] where the validity of
marriage was upheld despite the absence of the marriage license number on the marriage
contract.[41] The trial court thus declared that the properties covered by the Unilateral Deeds of
Sale were considered conjugal which cannot be disposed of by Severina without the consent of
her husband, Luis.[42]

The dispositive portion of the decision reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of [Luis] and against [the
Spouses Salgado] ordering as follows:

1. ANNULMENT, VOIDING, SETTING ASIDE and DECLARING OF NO FORCE AND EFFECT of


the three (3) Unilateral Deeds of Sale, all dated January 23, 2002 executed by [Severina] in favor of [Jo-
Ann];

2. ANNULMENT, VOIDING, SETTING ASIDE and DECLARING OF NO FORCE AND EFFECT of


the three (3) [TCT] Nos. 11107-R, 11105-R and 11106-R covering the subject properties, all issued in the
name of [Jo-Ann] by the Registry of Deeds for San Juan, Metro Manila;

3. RESTITUTION of all properties covered by TCT Nos. 11107-R, 11105-R and 11106-R (formerly TCT
Nos. 5109, 20618 and 60069, respectively) to the conjugal community of properties between [Luis] and
[Severina].
No pronouncement as to costs.

SO ORDERED.[43]

On November 17, 2008, the RTC rendered another Decision[44] which ordered the
“ANNULMENT, VOIDING, SETTING ASIDE and DECLARING OF NO FORCE AND EFFECT
the Deed of Extra-Judicial Settlement of Estate of the Deceased Severina De Asis executed by
[Maria Luisa] dated October 25, 2002 x x x.”[45] The RTC also ordered the cancellation of new
TCTs issued by virtue of the said Deeds.[46]

The Spouses Salgado and the Spouses Maya filed their respective motions for reconsideration
on September 11, 2007[47] and August 28, 2007,[48] respectively, which the RTC denied in the
Omnibus Order[49] dated October 30, 2007 for lack of merit. This prompted the Spouses Salgado
and Spouses Maya to file their separate notices of appeal before the CAon December 13,
2007[50] and April 24, 2009,[51] respectively.

Ruling of the CA

The Spouses Maya and Luis thereafter entered into a Compromise Agreement[52] which was
approved by the CA in its Decision[53] dated October 26, 2011. This resulted in the termination of
the Spouses Maya’s appeal.[54]

On August 6, 2012, the CA rendered a Decision,[55] dismissing the appeal of the Spouses
Salgado. The fallo reads as follows:

WHEREFORE, the appeal interposed by [the Spouses Salgado] is DISMISSED. The Decision dated
July 23, 2007 of the [RTC] of Pasig is AFFIRMED IN TOTO.

SO ORDERED.[56]

The CA sustained the ruling of the RTC for the simple reason that the Spouses Salgado did not
present and formally offer any testimonial and documentary evidence to controvert the evidence
presented by Luis.[57] The CA further explained that “the best evidence to establish the absence
of a marriage license is a certification from the Local Civil Registrar that the parties to the
Marriage Contract did not secure a marriage license or at the very least a certification from the
said office that despite diligent search, no record of application for or a marriage license was
issued on or before December 28, 1966 in favor of Luis and Severina. Again, Spouses Salgado
failed to prove the same by their failure to secure the said certification and present evidence
during the trial.”[58]

The Spouses Salgado and Spouses Maya filed a motion for reconsideration[59] which the CA
denied through its Resolution[60] dated November 26, 2012.

The Spouses Salgado elevated the matter before the Court raising the core issue of whether the
CA committed reversible error in affirming the RTC decision which declared the marriage
between Luis and Severina valid and the subject lands as conjugal properties.

Ruling of the Court

The Spouses Salgado argue that the marriage between Luis and Severina is null and void for
want of marriage license based on the Marriage Contract[61] presented by Luis which has
adequately established its absence.[62]

Luis, in his Comment,[63] opposes the filing of the present petition on the ground that it raises a
question of fact, which cannot be raised in a petition for review on certiorari. He also countered
that the Spouses Salgado did not present any evidence to support their theory.[64] If the
existence of the marriage license is in issue, it is incumbent upon the Spouses Salgado to show
the lack of marriage license by clear and convincing evidence.[65]

Before proceeding to the substantive issues brought in this petition, the Court shall first tackle
the procedural issue raised by Luis which pertains to the propriety of the filing of this petition for
review on certiorari.

Contrary to Luis’ contention, the present petition raises a question of law, mainly, whether the
absence of a marriage license may be proven on the basis of a marriage contract which states
that no marriage license was exhibited to the solemnizing officer on account of the marriage
being of an exceptional character.

In any event, while the jurisdiction of the Court in cases brought before it from the appellate
court is, as a general rule, limited to reviewing errors of law, there are exceptions [66] recognized
by the Court, such as when the CA manifestly overlooked certain relevant facts not disputed by
the parties, which, if properly considered, would justify a different conclusion.[67]

Since the marriage between Luis and Severina was solemnized prior to the effectivity of the
Family Code, the applicable law to determine its validity is the Civil Code, the law in effect at the
time of its celebration[68] on December 28, 1966.

A valid marriage license is a requisite of marriage under Article 53[69] of the Civil Code, and the
absence thereof, save for marriages of exceptional character,[70] renders the marriage void ab
initio pursuant to Article 80(3). It sets forth:

Art. 80. The following marriages shall be void from the beginning: x x x x

(3) Those solemnized without a marriage license, save marriages of exceptional character;

x x x x. (Emphasis ours)

“Under the Civil Code, marriages of exceptional character are covered by Chapter 2, Title III,
comprising Articles 72 to 79. To wit, these marriages are: (1) marriages in articulo mortis or at
the point of death during peace or war, (2) marriages in remote places, (3) consular marriages,
(4) ratification of marital cohabitation, (5) religious ratification of a civil marriage, (6)
Mohammedan or pagan marriages, and (7) mixed marriages.”[71] To reiterate, in any of the
aforementioned marriages of exceptional character, the requirement of a valid marriage license
is dispensed with.

The marriage is not of an exceptional character

A cursory examination of the marriage contract of Luis and Severina reveals that no marriage
license number was indicated therein. It also appears therein that no marriage license was
exhibited to the solemnizing officer with Article 77 of Republic Act No. 386 (Civil Code) being
cited as the reason therefor. The pertinent portion of the marriage contract is quoted as follows:

[A]nd I further certify that Marriage License No. x x x issued at x x x on x x x, 19 x x x in favor of, said
parties, was exhibited to me or no marriage license was exhibited to me, this marriage being of an
exceptional character performed under Art. 77 of Rep. Act 386; x x x.[72]
The reference to Article 77 of the Civil Code in the marriage contract is not dismissible. Being a
public document, the marriage contract is not only a prima facie proof of marriage, but is also
a prima facie evidence of the facts stated therein. This is pursuant to Section 44, Rule 130 of
the 1997 Rules of Court, which reads:

Sec. 44. Entries in official records. – Entries in official records made in the performance of his duty by a
public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law,
are prima facie evidence of the facts therein stated.

Consequently, the entries made in Luis and Severina’s marriage contract me prima facie proof
that at the time of their marriage, no marriage license was exhibited to the solemnizing officer
for the reason that their marriage is of an exceptional character under Article 77 of the Civil
Code.

Article 77 of the Civil Code provides:

Art. 77. In case two persons married in accordance with law desire to ratify their union in conformity with
the regulations, rites, or practices of any church, sect, or religion, it shall no longer be necessary to
comply with the requirements of Chapter 1 of this Title and any ratification made shall merely be
considered as a purely religious ceremony.

The foregoing provision pertains to a religious ceremony performed with the purpose of ratifying
a marriage which was solemnized civilly. In the eyes of the law, the marriage already exists; the
subsequent ceremony is undertaken merely to conform to religious practices. Thus, the parties
are exempted from complying with the required issuance of marriage license insofar as the
subsequent religious ceremony is concerned. For this exemption to be applicable, it is sine qua
non that: (1) the parties to the religious ceremony must already be married to each other in
accordance with law (civil marriage); and (2) the ratifying ceremony is purely religious in
nature.

Applied to the present case however, it is clear that Luis and Severina were not married to each
other prior to the civil ceremony officiated on December 28, 1966 – the only date of marriage
appearing on the records. This was also consistently affirmed by Luis in open court:
Atty. Francisco:

Q- You testified that you have a Marriage Contract marked as Exhibit A certifying that you were
married to the late [Severina].

A- Yes, sir.

Q- Do you recall when this marriage took place?

A- As far as I can recall it was sometime two (2) days before my daughter get (sic) one (1) year old.
That was 1966 December something like 28, because she was born December 30, the death of
Jose Rizal. I can remember 1965. So, before she turned one (1) year old two (2) days before we
got married here in San Juan.

Q- So, when was she born if you can recall?

A- Maria Luisa was born on December 30, 1965.

Q- If it is two (2) days before, it should be 1966?

A- Yes, sir.

Q- If you can recall who solemnized the marriage?

A- It was the late Mayor Ebona of San Juan.[73]

xx
xx

[Atty. Valenton:] x x x You alleged during your direct examination that you were married to [Severina]?

A: Yes sir.

Q: When do you say you marrfied] her?

A: Two (2) days before our daughter turned one year old, so that is December 28,
1966.[74] (Emphasis ours)

Being that the ceremony held on December 28, 1966 was the only marriage ceremony between
the parties and this was not solemnized pursuant to any ratifying religious rite, practice or
regulation but a civil one officiated by the mayor, this marriage does not fall under the purview of
Article 77 of the Civil Code. It is evident that the twin requirements of the provision, which
are: prior civil marriage between the parties and a ratifying religious ceremony, were not
complied with. There is no prior ceremony to ratify. Thus, this marriage is not of an exceptional
character and a marriage license is required for Luis and Severina’s marriage to be valid.

Absence of marriage license

The next issue to be resolved is: who has the burden of proving the existence or non-existence
of the marriage license?

Since there was an unequivocal declaration on the marriage contract itself that no marriage
license was exhibited to the solemnizing officer at the time of marriage owing to Article 77 of the
Civil Code, when in truth, the said exception does not obtain in their case, it is the burden of
Luis to prove that they secured the required marriage license.

However, instead of proving that a marriage license was indeed issued to them at the time of
their marriage, Luis relied mainly on the presumption of validity of marriage. This presumption
does not hold water vis-a-vis a prima facieevidence (marriage contract), which on its face has
established that no marriage license was presented to the solemnizing officer. If there was a
marriage license issued to Luis and Severina, its absence on the marriage contract was not
explained at all. Neither the original nor a copy of the marriage license was presented. No other
witness also testified to prove its existence, whereas Luis is not the best witness to testify
regarding its issuance. He admitted that he did not apply for one, and is uncertain about the
documents they purportedly submitted in the Municipal Hall. As he revealed in his testimony:

ATTY. VALENTON:

Q- How did you prepare for the alleged wedding that took place between you and [Severina]?

ATTY. FRANCISCO: May I know the materiality, Your Honor?

ATTY. VALENTON: We are exploring as to whether there was really a wedding that took place, Your
Honor.

COURT: Answer.

What preparations were done?

A- There was no preparation because we were just visitors of the Mayor during that time and
the Mayor is a close friend of ours. So, when he knew that we are traveling, we are going to
Thailand with the invitation of a friend to work with him in Thailand, he told us you better
get married first before you travel because your daughter will be illegitimate. [75]

xxxx

ATTY. VALENTON:
Q- Do you remember having applied for a marriage license?

A- We did not.

Q- So, you are telling us that there is no marriage license?

A- No.

CLARIFICATORY QUESTIONS BY THE COURT TO THE WITNESS

[Q-] There was no marriage license?

A- Well, when you get married you have to get a marriage license.

COURT:

Not necessarily.

A- But, I don’t know whether there was an application for the license because it was at the
house of the Mayor.

COURT:

But in this particular case before you went to the house of the Mayor for the solemnization
of your marriage, did you apply for a marriage license?
A- No.[76]

xxxx

RE-DIRECT EXAMINATION OF [LUIS]:

Q- Mr. Anson, a while ago during your cross-examination you were asked by counsel as well as
a question was raised by the Honorable Court whether or not you applied for a marriage
license when you got married on December 28, 1966 allegedly with [Severina]. Can you tell
the Court what you meant by that?

COURT:

By what?

ATTY. FRANCISCO:

When he was asked, Your Honor, by the Honorable Court.

COURT:

Whether he applied?

ATTY. FRANCISCO:
Whether he applied for a marriage license prior to the solemnization of the marriage, you
answered no.

WITNESS:

I did not apply for such, all what I know is to sign something affidavit or application before
we went to the house of the Mayor to get marry (sic) but that was about – – I cannot recall if
that past (sic) a week or 2 days or 3 days ago.

ATTY. FRANCISCO:

Q- You mentioned, we signed an affidavit or application, when you used we, whom are you
referring to?

A- [Severina].

Q- And, yourself?

A- Yes.

Q- In your recollection, where did you file those affidavits with [Severina] before the
solemnization of the marriage?

A- It was in the Municipal Hall. I do not know whether that was the Registrar, Office of the
[M]ayor or Office of the Chief of Police. I cannot recall. It is inside the Munisipyo of San
Juan.
Q- Who made you sign that Affidavit?

A- The Chief of Police whom we get (sic) to be (sic) witness for our marriage. They let us signed
(sic) an application or affidavit. I cannot recall what it is.[77] (Emphasis ours)

In upholding the supposed validity of the marriage, the RTC and the CA failed to consider the
glaring statements in the marriage contract that no marriage license was exhibited to the
solemnizing officer and that the marriage is of an exceptional character under Article 77 of the
Civil Code, the latter statement being fallacious. Both the RTC and CA upheld the fact of
marriage based on the marriage contract but simply glossed over the part stating that the
marriage is of an exceptional character. It is inevitable to deduce that this is not a case of mere
non-recording of the marriage license number on the marriage contract, as was in Geronimo.[78]

The factual antecedents in Geronimo are not on all fours with the case under review, hence,
inapplicable. In Geronimo, despite the absence of the marriage license number on the marriage
contract presented by therein petitioner (brother of the deceased), there was no statement
therein that the marriage is of an exceptional character. Various witnesses also testified that the
deceased and her husband were indeed married. More importantly, the husband of the
deceased was able to produce a copy of the marriage contract on file with the National Archives
and Records Section where the marriage license number appears.

“[T]o be considered void on the ground of absence of a marriage license, the law requires that
the absence of such marriage license must be apparent on the marriage contract, or at
the very least, supported by a certification from the local civil registrar that no such marriage
license was issued to the parties.”[79] Considering that the absence of the marriage license is
apparent on the marriage contract itself, with a false statement therein that the marriage is of an
exceptional character, and no proof to the contrary was presented, there is no other plausible
conclusion other than that the marriage between Luis and Severina was celebrated without a
valid marriage license and is thus, void ab initio.

In Republic of the Philippines v. Dayot,[80] the Court similarly declared that a marriage
solemnized without a marriage license based on a fabricated claim of exceptional character, is
void. In lieu of a marriage license, therein parties to the marriage executed a false affidavit of
marital cohabitation. In declaring the marriage void, the Court rejected the notion that all the
formal and essential requisites of marriage were complied with. The Court held that to permit a
false affidavit to take the place of a marriage license is to allow an abject circumvention of the
law. It was further explained:

We cannot accept the insistence of the Republic that the falsity of the statements in the parties’ affidavit
will not affect the validity of marriage, since all the essential and formal requisites were complied with.
The argument deserves scant merit. Patently, it cannot be denied that the marriage between Jose and
Felisa was celebrated without the formal requisite of a marriage license. Neither did Jose and Felisa meet
the explicit legal requirement in Article 76, that they should have lived together as husband and wife for
at least five years, so as to be excepted from the requirement of a marriage license.

xxxx

Similarly, we are not impressed by the ratiocination of the Republic that as a marriage under a license is
not invalidated by the fact that the license was wrongfully obtained, so must a marriage not be invalidated
by a fabricated statement that the parties have cohabited for at least five years as required by law. The
contrast is flagrant. The former is with reference to an irregularity of the marriage license, and not to the
absence of one. Here, there is no marriage license at all. Furthermore, the falsity of the allegation in the
sworn affidavit relating to the period of Jose and Felisa’s cohabitation, which would have qualified their
marriage as an exception to the requirement for a marriage license, cannot be a mere irregularity, for it
refers to a quintessential fact that the law precisely required to be deposed and attested to by the parties
under oath. If the essential matter in the sworn affidavit is a lie, then it is but a mere scrap of paper,
without force and effect. Hence, it is as if there was no affidavit at all.[81]

The Court cannot turn a blind eye to the statements made in the marriage contract because
these refer to the absence of a formal requisite of marriage. “The parties should not be afforded
any excuse to not comply with every single requirement and later use the same missing element
as a pre-conceived escape ground to nullify their marriage. There should be no exemption from
securing a marriage license unless the circumstances clearly fall within the ambit of the
exception.”[82] “The requirement and issuance of marriage license is the State’s demonstration of
its involvement and participation in every marriage, in the maintenance of which the general
public is interested. This interest proceeds from the constitutional mandate that the State
recognizes the sanctity of family life and of affording protection to the family as a basic
‘autonomous social institution.”[83]

Partition Agreement is Valid


Relative to the properties they amassed during the period of their cohabitation, Luis and
Severina executed a notarized Partition Agreement[84] in November 1980, which divided their
properties between them without court intervention. Luis sought to annul such agreement on the
ground that “the separation of property is not effected by the mere execution of the contract or
agreement of the parties, but by the decree of the court approving the same. It, therefore,
becomes effective only upon judicial approval, without which it is void.”[85]

The Court does not subscribe to Luis’ posture.

In Valdes v. RTC, Branch 102, Quezon City,[86] the Court held that “[i]n a void marriage,
regardless of the cause thereof, the property relations of the parties during the period of
cohabitation is governed by the provisions of Article 147 or Article 148, such as the case may
be, of the Family Code. Article 147 is a remake of Article 144 of the Civil Code x x x.” [87] It
provides:

Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively with
each other as husband and wife without the benefit of marriage or under a void marriage, their
wages and salaries shall be owned by them in equal shares and the property acquired by both of
them through their work or industry shall be governed by the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to
have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares.
For purposes of this Article, a party who did not participate in the acquisition by the other party of any
property shall be deemed to have contributed jointly in the acquisition thereof if the former’s efforts
consisted in the care and maintenance of the family and of the household.

Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired
during cohabitation and owned in common, without the consent of the other, until after the termination of
their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the
co-ownership shall be forfeited in favor of their common children. In case of default of or waiver by any
or all of the common children or their descendants, each vacant share shall belong to the respective
surviving descendants. In the absence of descendants, such share shall belong to the innocent party. In all
cases, the forfeiture shall take place upon termination of the cohabitation.[88] (Emphasis ours)
As there is no showing that Luis and Severina were incapacitated to marry each other at the
time of their cohabitation and considering that their marriage is void from the beginning for lack
of a valid marriage license, Article 144 of the Civil Code,[89] in relation to Article 147 of the Family
Code, are the pertinent provisions of law governing their property relations. Article 147 of the
Family Code “applies to union of parties who are legally capacitated and not barred by any
impediment to contract marriage, but whose marriage is nonetheless void for other reasons, like
absence of a marriage license.”[90] “Under this property regime, property acquired by both
spouses through their work and industry shall be governed by the rules on equal co-
ownership. Any property acquired during the union is prima facie presumed to have been
obtained through their joint efforts. A party who did not participate in the acquisition of the
property shall still be considered as having contributed thereto jointly if said party’s ‘efforts
consisted in the care and maintenance of the family household.'”[91]

Accordingly, the provisions on co-ownership under the Civil Code shall apply in the partition of
the properties co-owned by Luis and Severina. It is stated under Article 1079 of the Civil Code
that “partition, in general, is the separation, division and assignment of a thing held in common
among those to whom it may belong. The thing itself may be divided, or its value.” As to how
partition may be validly done, Article 496 of the Civil Code is precise that “partition may be
made by agreement between the parties or by judicial proceedings x x x.” The law does not
impose a judicial approval for the agreement to be valid. Hence, even without the same, the
partition was validly done by Luis and Severina through the execution of the Partition
Agreement.

Moreover, Luis admitted the existence, due execution and authenticity of the Partition
Agreement.[92] It also remains uncontroverted that he already received his share as stipulated in
the Partition Agreement. As such, the Court finds no reason to have the said agreement
declared null and void or annulled, in the absence of any circumstance which renders such
contract invalid or at least, voidable.

All things considered, the Court holds that although a certification of no record of marriage
license or certification of “due search and inability to find” a record or entry issued by the local
civil registrar is adequate to prove the non-issuance of the license,[93] such certification is not
the only proof that could validate the absence of a marriage license.

In this case, the categorical statement on Luis and Severina’s marriage contract that no
marriage license was exhibited to the solemnizing officer, coupled with a contrived averment
therein that the marriage is of an exceptional character under Article 77 of the Civil Code, are
circumstances which cannot be disregarded. Incidentally, it may be well to note that Luis’ failure
to assert his marriage to Severina during the latter’s lifetime is suspect. Luis left for the USA in
1981, and until Severina’s death in 2002, he never saw, much less reconciled with her.[94] All
those years, he never presented himself to be the husband of Severina. Not even their
daughter, Maria Luisa, knew of the marriage. During trial, he never presented any other witness
to the marriage. He contends that his marriage to Severina was valid and subsisting, yet he
knowingly contracted a subsequent marriage abroad. Verily, Luis failed to prove the validity of
their marriage based on the evidence he himself had presented.

“The solemnization of a marriage without prior license is a clear violation of the law and would
lead or could be used, at least, for the perpetration of fraud against innocent and unwary
parties, which was one of the evils that the law sought to prevent by making a prior license a
prerequisite for a valid marriage. The protection of marriage as a sacred institution requires not
just the defense of a true and genuine union but the exposure of an invalid one as well.”[95]

WHEREFORE, the petition is GRANTED. The Decision dated August 6, 2012 and the
Resolution dated November 26, 2012 of the Court of Appeals in CA-G.R. CV No. 92989 are
hereby REVERSED and SET ASIDE. The Complaint filed in Civil Case No. 69611
is DISMISSED.

SO ORDERED.