THIRD DIVISION
that it is claimant Florencio Balatero who has a registerable title over Lot No. 433-
[G.R. No. 73889. September 30, 1987.]
FLORENCIO BALATERO and HEIRS OF JOSEFA BADELLES, petitioners, vs.
INTERMEDIATE APPELLATE COURT and JUAN VELOSO, respondents.
DECISION
GUTIERREZ, JR., J p:
This is a petition to review on certiorari the decision of the then Intermediate
Appellate Court in AC-G.R. No. CV-58576 which reversed the decision of the then
Court of First Instance of Lanao del Norte in Cadastral Case No. IL-N-1 LRC Record
No. N-146 adjudicating Lot Numbers 433-A and 433-B of the Iligan Cadastral 292
to petitioners Florencio Balatero and the heirs of Josefa Badelles. cdphil
The Director of Lands initiated the court proceedings to settle and adjudicate 1419
lots to rightful claimants inside the tract of land in Iligan City designated as the
Iligan Cadastral 292.
The claimants for Lot No. 433 with an area of 216 square meters and Lot No. 817
with an area of 34 square meters were:
1. Petitioner Florencio Balatero, for a portion of both lots by purchase from Josefa
I. de Badelles and Leona, Salvacion, Jose, Catalina and Dominga, all surnamed
Badelles;
2. Josefa Iglupas Badelles, for Lot No. 433 having inherited the same from her
parents. Josefa died during the pendency of the case and was substituted by her
heirs, petitioners herein;
3. Private respondent Juan A. Veloso, for Lot No. 433, having purchased the same
from Josefa Iglupas; and
4. Anacleto Iglupas for Lot No. 433, having inherited the same from his deceased
parents Alejo Iglupas and Tomasa Ronda.
The facts which formed the basis for the trial court's decision are summarized as
follows:
"The court finds that Lot No. 817 which contains an area of 34 square meters was
provided by the cadastral surveyors for the widening of a national street and the
corner thereof with San Miguel St. With the filing of their cadastral answers,
claimants admit that the land in question is still part and parcel of the public
domain. The State as sovereign power and as absolute and final owner of all lands
of the public domain has the right to segregate from an area which it allows to be
claimed for private ownership such portion or portions thereof as it may deem
necessary to retain for common use and for the public good. Lot No. 817 cannot,
therefore, be claimed in private ownership by the claimants herein or any other
person for that matter. The State had reserved the same for public use." (p. 33,
Rollo)
xxx xxx xxx
". . . That the property in question was originally owned by the parents of Josefa
Iglupas (mother-in-law of claimant Florencio Balatero) and her brother Alejo
(father of claimant Anacleto Iglupas); that after the death of their parents, the lot
was given to Alejo Iglupas and his wife Tomasa Ronda; that Alejo Iglupas died in
1916 and on May 10, 1968, his widow Tomasa Ronda, and their son Severo sold
the property to Josefa Iglupas and her husband Juan Badelles for a consideration
of P111.00, which sale is embodied in a public document denominated 'Escritura
de Compra Venta' (Exh. "E"); that in that same year of 1918, Josefa Iglupas
together with her husband and children occupied the lot and the old house
thereon; that in 1925, Josefa Badelles built a new and bigger house on the lot;
that Juan Badelles died in that house and lot in 1927 and his widow Josefa Badelles
and her children continued living thereon until the children became of age and
got married; that Josefa I. Badelles herself died in that property in 1967; that on
June 9, 1930, Josefa Iglupas in order to secure a loan of P68.00 mortgaged the
property to claimant Juan Veloso in a public document denominated as 'Pacto de
Retro Sale' (Exh. "B"); that this loan was paid sometime in 1947, first in an amount
of P100.00 and subsequently an additional amount of P300.00; that on April 30,
1954, Josefa Iglupas and her children Catalina, Leona, Salvacion and Leoncia sold
a portion of the lot to Florencio Balatero as shown in a document denominated
"Deed of Sale Unregistered Land' (Exh. "II"): that the lot was later resurveyed and
subdivided and in a plan (Exh. "I") duly approved by the Director of Lands, Lot 483
was divided into Lot 433-A (Exh "I-A") with an area of 98 square meters as
pertaining to Florencio Balatero and Lot 433-B (Exh. "I-B") with an area of 118
square meters as pertaining to the Heirs of Josefa Badelles; that Josefa Iglupas
Vda. de Badelles had occupied the property from the year 1918 and up to the time
of her death in 1967 when her 'Deed of Sale of Unregistered Land' (Exh "II"); (sic)
that heirs succeeded her in the possession thereof; that the property has always
been declared in the name of Josefa Iglupas Badelles (Exhs. "IV-Badelles") and
taxes thereon paid under her name (Exhs. "VI-Badelles" and "VI-A-Badelles" to
"VI-J-Badelles), that the portion, Lot 433-A, acquired by Florencio Balatero was
also later declared in his own name (Exh. "III") and the taxes thereon also paid by
him (Exhs. "IV" and "IV-A" to "IV-U").
1
"After consideration of the evidence of the claimants, the court finds and holds
A and the Heirs of Josefa Iglupas Vda. de Badelles over that of Lot No. 433-B. There
is no conflict as between the Heirs of Josefa I. Badelles and Florencio Balatero,
hence it is only incumbent upon the court to treat of the claims of Anacleto Iglupas
and Juan Veloso.
"Anacleto Iglupas claims that what was sold to Josefa Iglupas in the document
'Escritura de Compra Venta' in 1918 is only a house and does not include the lot.
The Spanish phrase in the document which is in point reads. 'una casa con su solar
de tabla con techo de nipa dentro de la poblacion del Municipio de lligan'. Iglupas
would like to have the word 'solar' interpreted as meaning 'floor.' The English
word 'floor' is 'suelo' un Spanish. So what was sold is a house including the lot
made of wood and with nipa roofing.' This interpretation is buttressed by the fact
that the boundaries of the property is (sic) even described in the document. While
it is true that Anaclito Iglupas did not sign the document, he testified in Court that
Josefa Iglupas began claiming the land as her own wayback in 1925 and he did
nothing about it. If Iglupas had ever any right to the property in 1918 to 1925, he
lost it by prescription:
"'The owners of proprietors of real property, provided with the most legitimate
and perfect title, may be deprived and dispossessed thereof by usurpers who, by
the lapse of time specified by law, acquire the same by prescription to their
benefit and to the prejudice of the legitimate owners.' (Arts 1106 and 1137, Civil
Code, Cruz v. De Leon, 21 Phil. 199).
"From 1925 to the present is a period of more than 40 years.
"With respect to claimant Juan Veloso, he was never in possession of the
property. He never for once asserted his right to possess the same. This only jibes
with the claim of the Heirs of Josefa Iglupas that the 'Pacto de Retro Sale' on which
Veloso bases his claim of ownership was only a mortgage. The consideration of
the pacto de retro sale in 1930 for the amount of P68.00 is inconsistent with logic
if the fact that Josefa Iglupas bought the property from Tomasa Ronda and Severo
Iglupas for a consideration of P111.00 in 1918 is taken into account. In fine, Veloso
had never any actual possession or control over the property or any portion
thereof which could open into a registerable title.
"On the other hand, the Heirs of Josefa Iglupas and Florencio Balatero, the latter
through the late Josefa Iglupas have always been in possession of the property
under claim of ownership since 1918." (pp. 38-14)
The dispositive portion of the decision of the trial court reads.
"WHEREFORE, judgment is hereby rendered adjudicating Lot No. 433-A
containing an area of 98 square meters to claimant Florencio Balatero married to
Leoncia B. Balatero and Lot No. 433-B containing an area of 118 square meters to
the Heirs of Josefa Iglupas Vda. de Badelles, namely: Leona B. Vda. de Moncote,
Salvacion B. Dacup, Leoncia B. Balatero, Catalina B. de Gracia, Jose I. Badelles, and
Dominga Jarabe.
"Lot No. 817 containing an area of 34 square meters is hereby declared as
property of the State, the same having been provided for the widening of a
national road.
"The Commissioner of Land Registration is hereby directed, after this decision
shall have become final, of which he shall be advised by a specific order of this
court in Judicial Form No. 115, to issue the corresponding decrees and titles as
above provided. (p. 41, Rollo).
Claimant Juan Veloso appealed the decision to the then Intermediate Appellate
Court. As stated earlier the lower court's decision was reversed and set aside. The
dispositive portion of the appellate decision reads:
"WHEREFORE, decision appealed from is hereby REVERSED and SET ASIDE.
Judgment is hereby rendered:
"1. Adjudicating the whole of Cadastral Lot No. 433 (Lot Nos. 433-A and 433-B) to
claimant Juan Veloso, Filipino, of legal age, married to Pilar Dancel Veloso with
residence at Iligan City.
"2. Declaring Lot No. 817 as property of the state, that same having been provided
for the widening of the national road.
"3. Directing the National Land Titles and Deeds of Registration Administration to
issue the corresponding decrees and titles as above provided, after the decision
has become final.
"Costs against the appellees." (p. 61, Rollo).
Petitioners Florencio Balatero and the Heirs of Josefa Badelles filed a motion for
reconsideration on the decision but the motion was denied by the appellate court.
Hence, this petition over the ownership of Lot No. 433.
The petitioners now contend:
"(1) That the Respondent Court erred in holding that the court a quo committed
an error in declaring the Pacto de Retro Sale, Exh. B as a mere mortgage;

"(2) That the Respondent Court erred in holding that the two factors inadequacy
of price and the vendor remains in possession as a lessee, does not give rise to the
presumption that the contract is one of equitable mortgage, inasmuch as Art.
1602 of the New Civil Code of the Philippines, was not found in the Old Civil Code,
hence, since the contract was executed in 1930 — 'no such presumption existed
as yet',
"(3) That Respondent Court erred in disregarding and not giving weight to the fact
that the Petitioners occupied and possessed the subject property openly,
adversely, continuously, peacefully and uninterruptedly from 1934, the alleged
date of the consolidation of title, to Private Respondent Veloso, up to the present,
is covered by Art. 41 of the Code of Civil Procedure and effected the acquisition
of the property by prescription; and that Private Respondent's assertion of better
title is barred;
(4) That Respondent Court erred in holding that Petitioners Heirs of Josefa Iglupas
had no more right or interest in the subject property when they sold Lot 433-A to
Petitioner Florencio Balatero and that the sale to the latter was null and void;
"(5) That Respondent Court erred in disregarding the fact that Petitioner Florencio
Balatero is an innocent purchaser in good faith for value and the Respondent
Court had no authority to order reconveyance of property already in the name of
another;
"(6) That Respondent Court has allowed Private Respondent Veloso to take
inconsistent positions contrary to the elementary principles of right dealing and
good faith, and cannot 'adopt a posture of double-dealing without running afoul
of the doctrine of estoppel;' for it has allowed Private Respondent Veloso who has
slept on his rights to prejudice the rights of third parties who have placed reliance
on his inaction." (pp. 9-10, Rollo)
The following facts are not disputed: that the subject parcel of land (Lot 433 Iligan
Cadastre) was originally owned by the parents of Josefa Iglupas: that after the
death of Josefa's parents, Lot 433 was given to Alejo Iglupas who is married to
Tomasa Ronda; that after the death of Alejo, Tomasa Ronda sold the said lot to
Josefa Iglupas for P111.00 as evidenced by an 'Escritura de Compra Ventra' (Exh.
"E").
In a June 23, 1930 document denominated as "Pacto de Retro Sale" (Exh. "B") this
Lot 433 was sold by Josefa Iglupas to private respondent Juan Veloso for the
amount of P68.00. Whether or not this contract was really what it purports to be
or was an equitable mortgage is the main issue in the instant petition. prLL
Article 1602 of the present Civil Code states:
"The contract shall be presumed to be an equitable mortgage, in any of the
following cases:
"(1) When the price of a sale with right to repurchase is unusually inadequate;
"(2) When the vendor remains in possession as lessee or otherwise;
"(3) When upon or after the expiration of the right to repurchase another
instrument extending the period of redemption or granting a new period is
executed;
"(4) When the purchaser retains for himself a part of the purchase price;
"(5) When the vendor binds himself to pay the taxes on the thing sold;
"(6) In any other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the
performance of any other obligation.
"In any of the foregoing cases, any money, fruits, or other benefit to be received
by the vendee as rent or otherwise shall be considered as interest which shall be
subject to the usury laws."
The appellate court, however, declined to apply Article 1602 on the ground that
it is a new provision of the New Civil Code not found in the Old Civil Code. The
appellate court opined that since the contract was executed in 1930, there was
no presumption or an equitable mortgage existing at this time.
This is not well-taken.
We have ruled that Article 1602 applies even to cases arising prior to the
effectivity of the New Civil Code. Thus, in the case of Santos v. Duata (14 SCRA
1041) we stated:
"Article 1602 is a new provision in the Civil Code designed primarily to curtail the
evils brought about by contracts of sale with right of repurchase, such as the
circumvention of the usury law and pactum commissorium. It particularly
envisions contracts of sale with right of repurchase where the real intention of
the parties is that the pretended purchase price is money loaned, and in order to
2
secure the payment of the loan a contract purporting to be a sale with pacto de
retro is drawn up (See report of the Code Commission, pp. 61-63).
Being remedial in nature Article 1602 may be applied retro-actively to cases
arising prior to the effectivity of the New Civil Code. (Casabar v. Sino Cruz, L-6882,
Dec. 29, 1954). Hence, it may be applied in this case to determine the nature of
Exhibit 3." (at p. 1045; emphasis supplied)
The pertinent portions of the contract donominated as Pacto de Retro Sale stated:
". . . That for and in consideration of the sum of P68.00, the receipt whereof is by
these presents acknowledged, the party of the First Part sells, cedes and transfers
the property above described to the party of the second part (now Veloso), his
heirs and assigns, subject to the conditions hereinbelow specified.
"That the party of the first part (now Iglupas) by these presents reserves for
herself, her heirs and assigns, the right to repurchase said property during the
period of four (4) months from the execution of this instrument by paying back
and returning to said party of the second part the purchase price herein stated
together with all the expenses incident to the execution of this instrument; and
that on failure of said party of the first part to exercise the right to repurchase
said property according to the terms herein stipulated, title thereto shall pass to
and become vested, absolutely and with no reservation, in the party of the second
part, his heirs and assigns. In such case, the party of the first part does by these
presents covenant with the said party on the second part that before the
execution of this instrument she was lawfully seized in fee of said premises; that
they were free from all liens and encumbrances, that she had a perfect right to
convey the same, and that she will warrant and forever defend the same unto the
said party of the second part, his heirs and assigns, against the lawful claims of all
persons whomsoever.
"IN TESTIMONY WHEREOF, — . . ."(Exh."B") (pp. 86-87, Rollo)
The well-settled principle in the interpretation of a contract is that if the terms
thereof are clear and leave no doubt as to the intention of the contracting parties
the literal meaning of the stipulation shall control but when the words appear to
be contrary to the evident intention of the parties, the latter shall prevail over the
former (Article 1281 of the Old Civil Code, now Article 1370, New Civil Code;
Labasan v. Lacuesta, 86 SCRA 16).
On its face, the contract would show that the disputed parcel of land was
transferred to private respondent Juan Veloso by way of sale with pacto de retro.
However, there are circumstances present in the instant case which clearly
indicate that the contract should be treated as an equitable mortgage.
First, the 216 square meters parcel of land remained undisturbed in the
possession of the vendor Josefa Iglupas even after the execution of the contract.
Had Josefa Iglupas really executed a contract of sale in favor of Juan Veloso, this
small parcel of land should have been delivered to the latter and he would have
taken immediate possession after the execution of the contract of sale. The
assertion of the private respondent to the effect that Josefa Iglupas became a
lessee after the execution of the contract and his claim that the P100.00 received
from Josefa Iglupas and the P300.00 from Leoncia Balatero (receipt of which
amounts he had earlier denied) were rentals create a presumption that the
contract was intended to be an equitable mortgage under paragraph 2, Article
1602 of the New Civil Code (see Capulong v. Court of Appeals, 130 SCRA 245).
Moreover, Josefa paid the taxes due on the property, mortgaged the lot to the
Philippine National Bank, and exercised an acts of ownership during the period
when it was supposed to already have been sold. Cdpr
On this score alone, the appellate court's findings that the contract was really a
pacto de retro sale constitutes reversible error. As we ruled in Santos v. Duata,
supra:
"Ciriaca Santos, however, maintains that mere possession of the land and
payment of land taxes due thereon by Duata would not warrant presumption that
Exhibit 3 is an equitable mortgage. Accordingly, she contends that there must be
a 'concurrence of an overwhelming number of circumstances' before the
presumption would arise. To this proposition we do not agree. Article 1602, when
it expressly states 'in any of the following cases,' contemplates the existence of
any of the circumstances enumerated therein." (at p. 1045).
Second, the price or consideration in 1930 of P68.00 is unusually inadequate. This
conclusion is supported by the fact that the same parcel of land was bought by
Josefa Iglupas in 1918 for the price of P111.00. If the contract was indeed one of
sale, why should the vendor, Josefa Iglupas sell the parcel of land for a price
almost half of what she paid for it twelve years earlier. It is common knowledge
that the value of real property appreciates through the years and not otherwise.
This fact also shows that the contract was an equitable mortgage rather than a
contract of sale (See Labasan v. Lacuesta, supra; and Serrano v. Court of Appeals,
139 SCRA 179).
The fact that four (4) years after the execution of the contract, more specifically
on October 6, 1934, private respondent Juan Veloso executed an affidavit (Exh.
"D") to consolidate his right of ownership over the subject parcel of land is of no
consequence. The "constructive possession" over the parcel of land mentioned by
the appellate court did not ripen into ownership. The rule is that only the
possession acquired and enjoyed in the concept of owner can serve as a title for
acquiring dominion. (Article 447, old Civil Code, Article 540, new Civil Code) As can
be gleaned from the facts earlier stated, Juan Veloso never owned the subject
parcel of land because the contract over the same between Josefa Iglupas and
Juan Veloso was actually an equitable mortgage and not a contract of sale.
The appellate court's observations that the lower court's findings of fact
conclusively show that the contract was actually a contract of sale are inaccurate
and based on misreading of the provisions.
An examination of the lower court's decision shows that the supposed findings of
facts cited by the respondent court are actually a summary of the evidence
presented by the private respondent to substantiate his claim that the contract
between him and Josefa Iglupas was indeed a contract of sale. This claim was,
however, controverted by the petitioners who presented their own evidence to
prove that the subject contract was an equitable mortgage. The petitioners'
evidence was likewise summarized in the lower court's decision. The lower court,
after summarizing the conflicting evidence adduced by both parties, came out
with its own findings of facts, the end result of which was its ruling that the subject
contract between the protagonists was actually an equitable mortgage. We find
no reason to set aside these findings. Cdpr
WHEREFORE, the instant petition is GRANTED. The questioned decision of the
then Intermediate Appellate Court is REVERSED and SET ASIDE. The decision of
the then Court of First Instance of Lanao del Norte is REINSTATED.
SO ORDERED.
Fernan (Chairman), Feliciano and Cortes, JJ., concur.
Bidin, J., took no part. I participated in the appealed decision of the I.A.C.
FIRST DIVISION
[G.R. No. 66130. September 8, 1994.]
DIRECTOR OF LANDS, petitioner, vs. HEIRS OF ISABEL TESALONA and the
HONORABLE INTERMEDIATE APPELLATE COURT, respondents.
DECISION
KAPUNAN, J p:
This petition for review seeks to set aside the decision of the Intermediate
Appellate Court rendered on December 29, 1983 which modified the decision
dated December 8, 1976 of the Court of First Instance of Quezon. The controversy
arose from an application for registration of five (5) parcels of land on the basis of
an alleged possessory information title. The application was opposed by the
government on the ground that the parcels of land are part of the inalienable land
of the public domain. LLjur
The subject property is situated in Barrio Butanyog, Mulanay, Quezon, and
consists of about 7.4343 hectares alleged to have been originally acquired by
Maria Rosita Lorenzo under a possessory information title dated May 20, 1896
under the Royal Decree of February 13, 1894. Maria Rosita Lorenzo was married
to Felipe Lizada. Maria Rosita begot two (2) sons, Laureano and Cipriano. Cipriano
died a bachelor and without any issue. Upon the death of the spouses, Laureano
inherited the land. Laureano Lizada married Baldomera Roces and the couple had
two (2) children, Andres and Magdalena. Andres died a bachelor and without any
issue, so upon the death of Laureano, Magdalena inherited the land. Magdalena
married Nerio Tesalona and they had three (3) daughters, Isabel, Consuelo and
Serapia, applicants herein.
On June 23, 1971, Isabel, Consuelo and Serapia Tesalona filed an application for
registration of five (5) parcels of land denominated as Lot Nos. 1, 2, 3, 4 and 5 of
plan Psu 215382 with the Court of First Instance of Quezon, Gumaca Branch. 1 Lot
No. 1 has an area of 7,583 square meters; Lot No. 2 has 36,319 square meters; Lot
No. 3 has 24,347 square meters; Lot No. 4 has 5,388 square meters; and Lot No.
5 has 706 square meters 2 or a total of 74,343 square meters. The possessory
information title covers only an area of 10,481 square meters. 3
The Director of Lands through the Assistant Provincial Fiscal of Quezon filed his
opposition to the application alleging that neither the applicants nor their
predecessors-in-interest had sufficient title of the land applied for nor had they
been in possession thereof for a period of at least thirty (30) years immediately
preceding the filing of the application and that the same is public land. 4
On December 8, 1971, the applicants filed a reply to the government's opposition
claiming that the land in question is private property covered by a possessory
information title dated May 20, 1896. 5
At the initial hearing on the same date, the applicants presented proof of
compliance of jurisdictional requirements. On motion of applicants' counsel, the
court issued an order of general default with the exception of the Director of
Lands and the Director of Forestry. 6
During the hearing on January 18, 1972, the Fiscal moved to withdraw the
opposition of the Director of Forestry and the same was granted. 7 On May 3,
3
1972, Assistant Fiscal Antonio Robles likewise moved for the withdrawal of the
opposition of the Director of Lands and the same was again granted. 8
Reception of evidence was thereafter delegated to a commissioner. 9
Constancio dela Pena Tan likewise filed an opposition even as he supported the
government's contention that the lands applied for are part of the public domain.
Tan averred that he had possessed the land as lessee for a period of more than
thirty five (35) years. Records reveal that Demetria dela Pena, mother of herein
private oppositor occupied Lot Nos. 1, 2, 3, 4, 5 and 6 of plan Psu 217134 which
are identical to Lot Nos. 1 and 2 of Plan Psu 215382, applied for registration, by
virtue of a fishpond lease granted by the Bureau of Fisheries sometime in 1953.
10 Said lands were converted into fishponds and had been subject of a sales
application sometime in 1963. 11 The application to purchase filed by Constancio
is still pending before the Bureau of Lands. prLL
Pending the resolution of whether or not the opposition of Constancio dela Pena
Tan should be admitted, the lower court learned that the special counsel who had
withdrawn the government's opposition was not authorized to do so. Acting
accordingly, the court reinstated the opposition of the Director of Lands and
directed that the opposition of the private oppositor be considered as evidence
in support of the claim of the government that the land applied for is part of the
public domain. 12
After hearing, the trial court rendered judgment adjudicating Lot Nos. 3, 4 and 5
in favor of the applicants and declaring Lot Nos. 1 and 2 as owned by the
government subject to the rights of the lessee, Constancio dela Pena Tan, pending
the approval of his sales application. The dispositive portion of the decision reads:
WHEREFORE, in view of the foregoing, the Court hereby grants the application
insofar as Lots 3, 4 and 5 of plan Psu-215382 are concerned and hereby
adjudicates these properties in favor of the applicants Heirs of Isabel Tesalona
namely: Lilia, Rebecca, Sonia, Emma, Imelda, Antonio, Minda, Luisa, Buenafe and
Carmencita, all surnamed Pobeda; Consuelo L. Tesalona and Serapia L. Tesalona,
together with all the improvements existing thereon and confirms their title
thereto as their exclusive properties. The Court hereby declares Lots 1 and 2 as
owned by the Government subject to the right of the lessee pending the approval
of the sales application of private oppositor Constancio de la Pena.
Upon this decision becoming final, let decree of confirmation and registration be
entered and thereafter, upon payment of the fees required by law, let the
corresponding certificate of title issue in the names of Heirs of Isabel Tesalona
namely: LILIA POBEDA, married to Salvador Magtibay; REBECCA POBEDA, married
to Jose Pineda; SONIA POBEDA, married to Ildefonso Avellano; EMMA POBEDA,
married to Raul Capesano; IMELDA POBEDA, married to Ceferino Jimenez; MINDA
POBEDA, married to Rolando Nagar; LUISA POBEDA, single; BUENAFE POBEDA,
married to Tomasito Javate; and CARMENCITA POBEDA, single; CONSUELO L.
TESALONA, married to Eleuterio Luna; and SERAPIA L. TESALONA, single, all
Filipino citizens and residents of Mulanay, Quezon as their exclusive properties,
free from all liens and encumbrances.
SO ORDERED. 13
Not satisfied with the trial court's ruling, herein applicants interposed an appeal
to the Court of Appeals seeking confirmation of title over Lot Nos. 1 and 2 as well.
On December 29, 1983, the Intermediate Appellate Court through its First Civil
Cases Division 14 rendered a decision, the decretal portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the decision appealed from is hereby
AFFIRMED but modified declaring the confirmation of the title of applicants-
appellants over Lots 1 and 2 covered by Plan PSU-215382, and ordering the
registration of said Lots in their names, along with Lots 3, 4 and 5 of the same PSU
Plan already adjudicated to them in said appealed decision.
SO ORDERED. 15
The instant petition seeks to set aside the aforequoted decision on the basis of
the following grounds, to wit: (a) the respondent court acted contrary to law in
confirming private respondents' alleged title to Lot Nos. 1 and 2 on the basis of a
mere blue print copy of plan Psu 215382; and (b) the respondent court acted
contrary to law in confirming private respondents' alleged title to Lot Nos. 1 and
2 on the basis of a possessory information title dated May 20' 1896 which covers
only an area of 1.0481 hectares. 16
The petition is impressed with merit.
At the outset, we note that private respondents' application for registration of
five (5) parcels of land denominated as Lot Nos. 1, 2, 3, 4 and 5 of Plan Psu 215382
ought to have been struck down at its inception for the reasons which we will
discuss hereinafter. However, since the trial court ruled for confirmation of title
over Lot Nos. 3, 4 and 5 of Plan Psu 215382 in favor of the applicants (herein
private respondents) and no appeal thereon was brought by the government to
the Court of Appeals 17 , we cannot pass upon the validity of the registration of
the other three (3) lots, the same was not put in issue in this petition. Suffice it to
state that we deny the application for registration of Lot Nos. 1 and 2 without
prejudice to the right of the government to pursue whatever means appropriate
with respect to Lot Nos. 3, 4 and 5. LibLex

To begin with, the original tracing cloth plan of the land applied for was not
submitted in evidence by private respondents. Such omission is fatal to their
application as the submission of the original tracing cloth plan is a statutory
requirement of mandatory character. 18 While a blue print of survey Plan Psu
215382 19 as surveyed for the Heirs of Magdalena Lizada was presented before
the trial court, the same falls short of the mandatory requirement of law.
Private respondents contend that they are in possession of the original tracing
cloth plan but they did not submit it in evidence for fear that it may be lost or
misplaced while in possession of the court. 20 This contention spurs disbelief. The
original tracing cloth plan, together with the duplicate copy of their application
for registration of land title were under the custody of the Land Registration
Commission (LRC) at that time. But such does not relieve the private respondents
of their duty to retrieve the private respondents of their duty to retrieve the said
tracing cloth plan and submit it before the court. In the case of Director of Lands
v. Reyes, 21 this Court clearly declare that if the original tracing plan was
forwarded to the LRC, "the applicants may easily retrieve the same therefrom and
submit the same in evidence." 22 This was not done. Assuming that the same was
in their possession during the trial, private respondents should have made it
available to the trial court for verification.
Private respondents further claim that petitioner failed to object to the
submission of the blue print copy of the survey plan when the same was offered
in evidence, thereby waiving objection to said evidence.
We are not persuaded.
Given the mandatory character of the requirement for the submission of the
original tracing cloth plan of the land applied for, said requirement cannot be
waived either expressly or impliedly. Besides, Rule 143 of the Rules of Court
clearly provides that the rules do not apply to land registration, cadastral and
election cases, naturalization and insolvency proceedings, and other cases not
provided therein, except by analogy or in a suppletory character and whenever
practicable and convenient. In the case at bench, there appears no reason to apply
the exception to the aforesaid rule. cdphil
The basis of the claim of the Heirs of Tesalona, herein private respondents, is a
Spanish title, 23 a possessory information title issued on May 20, 1896 to Maria
Rosita Lorenzo pursuant to the Royal Decree of February 13, 1894 for 1.0481
hectares. But private respondents did not submit the original of the possessory
information title. What was submitted was an unclear, illegible copy of a Spanish
document purporting to be the title evidencing the land grant of 1896. Moreover,
proof of loss or unavailability of the original document as required by Section 5,
Rule 130 of the Rules of Court was not established thus, rendering admissibility of
the said secondary evidence questionable and dubious.
This Court has time and again reiterated that caution and care must be exercised
in the acceptance and admission of secondary evidence of alleged possessory
information titles considering the number of fake titles that have been discovered
following their supposed reconstitution after the last World War. 24 In fact, the
rash of anomalies prompted the promulgation of Presidential Decree No. 892
which outlawed all Spanish titles, including possessory information titles, unless
they were authenticated in appropriate registration proceedings before August
16, 1976. 25
Another point to consider is the fact that there is a glaring and irreconcilable
discrepancy between the area of 1.0481 hectares covered by the alleged
possessory information title and the actual area of 7.4343 hectares applied for.
Law and jurisprudence dictate that applicants have the burden of proving that the
title justifies the considerable increase in land area, failure in which results in the
resolution of the conflict in favor of the government and against them. Well-
settled is the rule that land grants, being gratuitous in nature, are always
construed favorably in favor of the government and strictly against the grantee,
26 and that possessory information titles, assuming them to be valid and legal,
are grants from the State which cannot extend beyond the terms thereof. 27
Finally, Lot Nos. 1 and 2 were classified as swampy area and were as early as 1955,
filled with mangrove trees. 28 Lorenzo del Mundo, husband of Demetria del
Mundo, lessee of the lots in question, in his testimony declared that: LibLex
Q When you first came to know these parcels of lands and possessed the same,
what was the condition or nature of these lands?
A That is (sic) a swampy land with bakawan trees, mangroves and some other
swampy trees.
Q Please name what 'lalao' trees or swampy trees were planted when you
possessed the same?
A Bacawan, sasa, pipisik, tabigui, talisay, tingayos, langaray and bongalon. I forget
(sic) the names of those other big trees planted thereon. 29
This belies the contention of herein private respondents that said lots were
planted to coconuts in 1909 and, thereafter, to palay and other seasonal crops.
Being swampy area covered by mangrove trees and the like, these lots may very
4
well be considered and classified as forest lands. In the case of Heirs of Jose
Amunategui v. Director of Forestry, 30 we declared that: LLphil
A forested area classified as forest land of the public domain does not lose such
classification simply because loggers or settlers may have stripped it of its forest
cover. Parcels of land classified as forest land may actually be covered with grass
or planted to crops by kaingin cultivators or other farmers. "Forest lands" do not
have to be on mountains or in out of the way place. Swampy areas covered by
mangrove trees, nipa palms, and other trees growing in brackish or sea water may
also be classified as forest land. The classification is descriptive of its legal nature
or status and does not have to be descriptive of what the land actually looks like.
Unless and until the land classified as "forest" is released in an official
proclamation to that effect so that it may form part of the disposable agricultural
lands of the public domain, the rules on confirmation of imperfect title do not
apply. 31 (Emphasis ours)
Moreover, well-entrenched is the rule that possession of forest lands, no matter
how long, cannot ripen into private ownership. 32 Its inclusion in a title, whether
the title be issued during the Spanish regime or under the Torrens System, nullifies
the title.
WHEREFORE, premises considered, the decision of the Appellate Court is
REVERSED and SET ASIDE. The application for registration of the Heirs of Isabel
Tesalona of Lot Nos. 1 and 2 is hereby DISMISSED. No costs. prLL
SO ORDERED.
Davide, Jr., Bellosillo and Quiason, JJ., concur.
Cruz, J., is on leave.
THIRD DIVISION
[G.R. No. 76792. March 12, 1990.]
RESURRECCION BARTOLOME, et al., * petitioners, vs. THE INTERMEDIATE
APPELLATE COURT (now Court of Appeals) and HEIRS OF SPOUSES BERNABE
BARTOLOME and URSULA CID, respondents.
Rafael B. Ruiz for petitioners.
E.L. Peralta for private respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; REQUISITES WHEN PRIVATE WRITING NEED NOT
BE PROVEN BY OTHER EVIDENCE OF ITS EXECUTION AND AUTHENTICITY. — Rule
132 of the Rules of Court provides: "SEC. 22. Evidence of execution not necessary.
— Where a private writing is more than thirty years old, is produced from a
custody in which it would naturally be found if genuine, and is unblemished by
any alterations or circumstances of suspicion, no other evidence of its execution
and authenticity need be given." We agree with the appellate court that the first
two requirements ordained by Section 22 are met by Exhibit 4. It appearing that
it was executed in 1917, Exhibit 4 was more than thirty years old when it was
offered in evidence in 1983. It was presented in court by the proper custodian
thereof who is an heir of the person who would naturally keep it.
2. ID.; ID.; PROOFS OF DUE EXECUTION AND AUTHENTICITY OF ANCIENT WRITING.
— Under Section 21 of Rule 132, the due execution and authenticity of a private
writing must be proved either by anyone who saw the writing executed, by
evidence of the genuineness of the handwriting of the maker, or by a subscribing
witness. The testimony of Dominador Bartolome on Exhibit 4 and Ursula Cid's
sworn statement in 1937 do not fall within the purview of Section 21. The
signature of Maria Gonzales on the missing fourth page of Exhibit 4 would have
helped authenticate the document if it is proven to be genuine. But as there can
be no such proof arising from the signature of Maria Gonzales in the deed of sale,
the same must be excluded.
3. CIVIL LAW; CODE OF CIVIL PROCEDURE; WILLS AND SUCCESSION; SURVIVING
SPOUSE ENTITLED ONLY TO THE PROPERTY IN USUFRUCT. — Even if Exhibit 4 were
complete and authentic, still, it would substantially be infirm. Under Article 834
of the old Civil Code, Maria Gonzales, as a surviving spouse, "shall be entitled to a
portion in usufruct equal to that corresponding by way of legitime to each of the
legitimate children or descendants who has not received any betterment." And,
until it had been ascertained by means of the liquidation of the deceased spouse's
estate that a portion of the conjugal property remained after all the partnership
obligations and debts had been paid, the surviving spouse or her heirs could not
assert any claim of right or title in or to the community property which was placed
in the exclusive possession and control of the husband as administrator thereof.
Hence, in the absence of proof that the estate of Epitacio Batara had been duly
settled, Maria Gonzales had no right to sell not even a portion of the property
subject of Exhibit 4.
4. ID.; LAND TITLE AND DEEDS; ACQUISITIVE PRESCRIPTION; PERIOD SUSPENDED
UPON THE INSTITUTION OF CADASTRAL PROCEDURES. — On the issue of whether
acquisitive prescription runs during the pendency of a cadastral case, we hold, as
this Court held in Cano v. De Camacho, that the institution of cadastral
proceedings, or at least the publication of the notice therein issued, has the effect
of suspending the running of the prescriptive period. Hence, the appellate court
erred in ascribing acquisitive prescription in favor of Ursula Cid "up to the
present."
5. REMEDIAL LAW; EVIDENCE; WEIGHT AND SUFFICIENCY; TAX DECLARATIONS;
DOES NOT CONCLUSIVELY PROVE OWNERSHIP. — While it is true that the
property had been declared for tax purposes by Bernabe Bartolome and that,
subsequent to his death, taxes thereon were paid in the name of his son,
Dominador, ownership thereof had not been acquired by Ursula Cid or her heirs.
Aside from the fact that said declarations and payments were made during the
pendency of the cadastral case, a tax declaration in the name of the alleged
property owner or of his predecessor-in-interest, does not prove ownership. It is
merely an indicium of a claim of ownership. In the same manner, neither does the
payment of taxes conclusively prove ownership of the land paid for.
DECISION
FERNAN, C.J p:
This is a petition for review on certiorari of the decision 1 of the then Intermediate
Appellate Court "adjudicating the whole Lot No. 11165 in favor of" Bernabe
Bartolome and Ursula Cid, thereby reversing the decision 2 of the Regional Trial
Court of Ilocos Norte, Branch XII at Laoag City. The dispositive portion of the latter
decision states:
"WHEREFORE, judgment is hereby rendered adjudicating the eastern portion to
the heirs of the late Epitacio Batara measuring 27 meters from south to north by
32 meters from east to west, with an area of 864 square meters, bounded on the
east by the Provincial Road; on the north by the heirs of Rufo Manuel; on the west
by a portion of the same Lot No. 11165; and on the south by Lot No. 11164; the
remaining portion to the heirs of Doroteo Bartolome, bounded on the east by the
portion of Lot No. 11165 adjudicated to the heirs of Epitacio Batara and heirs of
Rufo Manuel; on the north by Eugenio Andrada; on the west by Nieves Caday or
Lot No. 11166; and on the south by Lot No. 11164.
"Likewise, the heirs of Epitacio Bartolome Batara are hereby ordered to reserved
(sic) the road right of way for the necessary expansion of the road adjacent to the
eastern side of said lot, subject, however, to just compensation. cdphil
"Once this Decision becomes final, let the corresponding Decree be issued
accordingly.
"IT IS SO ORDERED."
The record shows that a 725-square meter portion of said Lot No. 11165 located
in Barrio 11, Laoag, Ilocos Norte, was first declared as his property by Epitacio
Batara under tax declaration No. 5708 dated May 23, 1906. 3 The property was
described therein as bounded on the north by the property of Pedro Manuel, on
the east by the road, on the south by the property of Doroteo Bartolome and on
the west by the property of one named Esteban, and as having "una casa de tabla
de dimension 5 x 4 metros" as improvement. Tax declaration No. 5708 was
superseded by tax declaration No. 37576 labelled as a "revision of declaration of
real property (urban)" dated April 23, 1914. 4 The residential lot described in the
latter tax declaration contained an area of 772 square meters with a "casa" and a
"granero" as improvements thereon.
Epitacio Batara and his wife, Maria Gonzales, had two children: Catalina and
Pedro. The latter died a bachelor and without issue. Catalina, who married
someone surnamed Bartolome, bore five children named Isabela, Tarcila, Calixto,
Resurreccion and Ruperta. In 1912, before he left Laoag to settle in Culalabo,
Gamo (Burgos), Isabela, Epitacio entrusted the lot to his cousin, Doroteo
Bartolome, who owned the lot bounding Epitacio's property on the south. 5 Maria
Gonzales remained in the lot for sometime. When she later followed Epitacio to
Isabela, she allowed Doroteo Bartolome to continue taking charge of the
property. 6
In 1916, Epitacio Batara died in Isabela. Five years later or in 1921, Maria Gonzales
and her grandchildren, Calixto and Resurreccion Bartolome, returned to Laoag. As
they found that the house on their lot was destroyed by fire, they boarded in
someone else's house. Calixto constructed a bamboo fence around his
grandfather's lot and he and Resurreccion, who was studying in Laoag, cleaned it.
Resurreccion went back to Isabela after Maria Gonzales' death in 1926. 7 It was
also in that year when Doroteo Bartolome, to whom Epitacio had entrusted his
land, migrated to Davao City. Doroteo died there two years later. 8
Thereafter, the Director of Lands instituted cadastral proceedings over the land
involved herein (Cadastral Case No. 53). On October 23, 1933, Ursula Cid, the
widow of the son of Doroteo Bartolome, Bernabe, who died in 1928, 9 filed an
answer in Cadastral Case No. 53, claiming ownership over Lot No. 11165 with an
area of 1660 square meters, described as bounded on the north by the property
of Rufo Manuel and Eugenia Andrada, on the east by the provincial road, on the
south by the property of Doroteo Bartolome, and on the west by the property of
Nieves Caday and Eugenia Andrada, and with a house as improvement thereon.
The land was allegedly acquired by Ursula Cid through inheritance from Doroteo
Bartolome, the father of Ursula's deceased husband, Bernabe. 10
More than three months later or on January 30, 1934, Resurreccion Bartolome
also filed an answer in the same cadastral case claiming ownership over a portion
of Lot No. 11165 with an area of 864 square meters described as bounded on the
5
north by the property of the heirs of Rufo Manuel, on the east by Blumentritt
Street, on the south by the property of Doroteo Bartolome, and on the west by
the property of Bernabe Bartolome. No improvements on the lot were indicated
in the answer which also stated that said portion of Lot No. 11165 was acquired
by claimant Resurreccion Bartolome "by inheritance from my grandfather and
grandmother . . . Epitacio Batara and Maria Gonzales." 11
From then on, no further proceedings were held in the cadastral case. Meanwhile,
in 1934, Resurreccion Bartolome verbally entrusted the portion she had claimed
to Maria Bartolome, whom she later described as the daughter of Doroteo
Bartolome. 12
In 1939, Ursula Cid and her children also migrated to Davao City leaving their
house on Lot No. 11165 to a lessee, Severino Ramos. Ursula and her son,
Dominador Bartolome, instructed Maria Bartolome, the sister of Bernabe, to
receive the rentals for the house from Severino Ramos. 13 Maria Bartolome also
paid the taxes on the property until 1948, when Dominador took over the task. 14
But on September 22, 1950, Maria Bartolome, as "administrator of the parcel of
land situated at Bo. 11, Laoag, Ilocos Norte," leased Lot No. 11165 to the
Philippine United Trading Co., Inc. 15 The rentals for the property were paid by
the lessee to Dominador Bartolome until the edifice housing the company was
burned down in 1968. 16 Resurreccion Bartolome, who had been residing in
Isabela, was given by Maria Bartolome a small amount, which could have been
about P50, in consideration of the lease contract. 17
In June, 1968, the Court of First Instance of Ilocos Norte sent out notices for the
"continuation of the hearing" on June 13, 1968 in Cadastral Case No. 53. 18 It
should be remembered, however, that from the time Ursula Cid and Resurreccion
Bartolome filed their answers to the petition in the cadastral case, there had been
no progress in the proceedings. LLjur
A year later or in 1969, Maria J. Bartolome filed in Cadastral Case No. 53 a "motion
to admit answer in intervention," alleging that she is one of the children of
Doroteo Bartolome and that she and her co-heirs had been excluded in Ursula
Cid's answer to the petition. She therefore prayed that the answer of Ursula Cid
be amended so as to include the rightful heirs of Doroteo Bartolome. 19 At the
same time, she filed an answer claiming co-ownership over Lot No. 11165 with
Clemente, Julia and Rosario Bartolome and Ursula Cid, the widow of Bernabe. She
likewise alleged therein that she and her siblings inherited the 1660-square meter
lot from Doroteo Bartolome. 20
Three months later, Ursula Cid filed a motion to amend her answer to reflect the
complete "ground or basis of acquisition" of Lot No. 11165. 21 In her amended
answer, Ursula Cid stated that she was the absolute owner of Lot No. 11165; that
she had been the possessor of Lot No. 11165 for over fifty years; that she
"acquired by inheritance from Bernabe Bartolome, who together with her,
purchased the . . . lot which used to be three adjoining lots from their respective
owners;" and that Lot No. 11165 had been declared for tax purposes in the name
of her late husband Bernabe Bartolome. 22
No hearing was conducted in the case until 1974. To buttress her claim that she
and her husband purchased Lot No. 11165, Ursula Cid presented at the trial three
deeds of sale: [a] one dated March 1, 1917 showing that Bernabe Bartolome and
Ursula Cid bought a 374-square meter lot for fifteen pesos from the spouses
Domingo Agustin and Josefa Manrique; 23 [b] another document dated February
18, 1913 executed by Ignacia Manrique in favor of Bernabe Bartolome evidencing
the sale of another lot also for fifteen pesos; 24 and [c] still another deed executed
by Maria Gonzales y Paguyo on February 9, 1917 in favor of Bernabe Bartolome
and Ursula Cid ceding to the latter 772 square meters of land for P103.75. 25 The
last-mentioned piece of land is the one being claimed by Resurreccion Bartolome.
On May 10, 1984, the Regional Trial Court of Ilocos Norte rendered a decision the
dispositive portion of which is quoted above. The court entertained only the
answers of Ursula Cid and Resurreccion Bartolome. It found that the lots
described in Exhibits 2 and 3 presented by Ursula Cid "are not within Lot 11165"
and that said exhibits "are defective as the vendors are not the real owner(s)" of
the lots described therein. As to Exhibit 4, the court ruled that it has "no probative
value as the same is incomplete and unsigned." The court also held that Ursula
Cid's possession of the land "after the claimants had filed their respective
answer(s) or after the declaration of a general default," did not confer ownership
on her because said possession was interrupted and merely tolerated by all the
parties during the pendency of the case. 26
Ursula Cid appealed to the then Intermediate Appellate Court. In its decision
reversing the lower court, the appellate court held that the deeds of sale
presented by Ursula Cid are ancient documents under Section 22, Rule 132 of the
Rules of Court. It also ruled that Ursula Cid's continuous possession of the lot from
its acquisition and her exercise of rights of ownership over it vested her with the
legal presumption that she possessed it under a just title. llcd
Her motion for the reconsideration of said decision having been denied,
Resurreccion Bartolome filed the instant petition for review on certiorari based
on two principal issues: [a] whether the provisions of Rule 132 on ancient
documents are applicable with respect to Exhibit 4, and [b] whether acquisitive
prescription runs during the pendency of a cadastral case.
Exhibit 4 consists of three pieces of paper. The first piece is a blank sheet which
apparently serves as a cover page. The two other pages contain the handwritten
document in Ilocano stating that in consideration of the amount of P103.75, Maria
Gonzales y Paguyo sold to the spouses Bernabe Bartolome and Ursula Cid 772
square meters of land bounded on the north by the property of Pedro Manuel, on
the east by the Bacarra road, on the south by the property of Doroteo Bartolome
and on the west by the property of Bernabe Bartolome. The third sheet or page 2
thereof contains a warranty against eviction and other disturbances with the last
three lines indicating the date of the execution of the instrument.
According to Dominador Bartolome, he first saw Exhibit 4 in the possession of his
mother, Ursula Cid, when he was just eleven years old. He noticed that the
document had a fourth page containing the signature of Maria Gonzales and that
all four pages were sewn together. 27 However, when the document was
entrusted to him by his mother in 1947 as he was then representing the family in
litigation concerning the land, the document's fourth page was already missing.
28 He stated that his mother told him that the fourth page was lost during the
Japanese occupation while they were evacuating from Davao City. 29
Dominador Bartolome also presented in court a sworn statement in Ilocano
executed by Ursula Cid on February 19, 1937. 30 In her statement, Ursula Cid
declared that the sale of the lot to her and her husband by Maria Gonzales was
evidenced by a written instrument; that the land had been transferred in the
name of her husband; that she had been paying taxes therefor, and that they had
been in continuous possession of the land for more than twenty years. 31
Rule 132 of the Rules of Court provides:
"SEC. 22. Evidence of execution not necessary. — Where a private writing is more
than thirty years old, is produced from a custody in which it would naturally be
found if genuine, and is unblemished by any alterations or circumstances of
suspicion, no other evidence of its execution and authenticity need be given."
We agree with the appellate court that the first two requirements ordained by
Section 22 are met by Exhibit 4. It appearing that it was executed in 1917, Exhibit
4 was more than thirty years old when it was offered in evidence in 1983. 32 It
was presented in court by the proper custodian thereof who is an heir of the
person who would naturally keep it. 33 We notice, however, that the Court of
Appeals failed to consider and discuss the third requirement; that no alterations
or circumstances of suspicion are present.
Admittedly, on its face, the deed of sale appears unmarred by alteration. We hold,
however, that the missing page has nonetheless affected its authenticity. Indeed,
its importance cannot be overemphasized. It allegedly bears the signature of the
vendor of the portion of Lot No. 11165 in question and therefore, it contains vital
proof of the voluntary transmission of rights over the subject of the sale. Without
that signature, the document is incomplete. Verily, an incomplete document is
akin to if not worse than a document with altered contents. LibLex
Moreover, there is a circumstance which bothers the Court and makes the
genuineness of the document suspect. If it is really true that the document was
executed in 1917, Ursula Cid would have had it in her possession when she filed
her answer in Cadastral Case No. 53 in 1933. Accordingly, she could have stated
therein that she acquired the portion in question by purchase from Maria
Gonzales. But as it turned out, she only claimed purchase as a mode of acquisition
of Lot No. 11165 after her sister-in-law, Maria J. Bartolome and the other
descendants of Doroteo Bartolome sought intervention in the case and
demanded their rightful shares over the property.
All these negate the appellate court's conclusion that Exhibit 4 is an ancient
document. Necessarily, proofs of its due execution and authenticity are vital.
Under Section 21 of Rule 132, the due execution and authenticity of a private
writing must be proved either by anyone who saw the writing executed, by
evidence of the genuineness of the handwriting of the maker, or by a subscribing
witness. The testimony of Dominador Bartolome on Exhibit 4 and Ursula Cid's
sworn statement in 1937 34 do not fall within the purview of Section 21. The
signature of Maria Gonzales on the missing fourth page of Exhibit 4 would have
helped authenticate the document if it is proven to be genuine. But as there can
be no such proof arising from the signature of Maria Gonzales in the deed of sale,
the same must be excluded. 35
Even if Exhibit 4 were complete and authentic, still, it would substantially be
infirm. Under Article 834 of the old Civil Code, Maria Gonzales, as a surviving
spouse, "shall be entitled to a portion in usufruct equal to that corresponding by
way of legitime to each of the legitimate children or descendants who has not
received any betterment." And, until it had been ascertained by means of the
liquidation of the deceased spouse's estate that a portion of the conjugal property
remained after all the partnership obligations and debts had been paid, the
surviving spouse or her heirs could not assert any claim of right or title in or to the
community property which was placed in the exclusive possession and control of
the husband as administrator thereof. 36 Hence, in the absence of proof that the
estate of Epitacio Batara had been duly settled, Maria Gonzales had no right to
sell not even a portion of the property subject of Exhibit 4. prcd
On the issue of whether acquisitive prescription runs during the pendency of a
cadastral case, we hold, as this Court held in Cano v. De Camacho, 37 that the
institution of cadastral proceedings, or at least the publication of the notice
therein issued, has the effect of suspending the running of the prescriptive period.
6
Hence, the appellate court erred in ascribing acquisitive prescription in favor of
Ursula Cid "up to the present." 38
Neither can Ursula Cid successfully assert that prior to the institution of the
cadastral proceedings, she and her husband had gained acquisitive prescription
over the property. Until Doroteo Bartolome migrated to Davao City in 1926, he
was in possession of the whole lot including the portion entrusted to him by
Epitacio Batara. Granting that the 1520-square meter lot Bernabe Bartolome had
declared as his own in 1925 39 is within Lot No. 11165, still, the period from 1925
until the filing of the cadastral case in 1933 failed to give him an advantage. It is
short of the 10-year actual, adverse and uninterrupted period of possession
mandated by Section 41 of the Code of Civil Procedure in order that a full and
complete title could be vested on the person claiming to be the owner of a piece
of land.
Furthermore, while it is true that the property had been declared for tax purposes
by Bernabe Bartolome and that, subsequent to his death, taxes thereon were paid
in the name of his son, Dominador, 40 ownership thereof had not been acquired
by Ursula Cid or her heirs. Aside from the fact that said declarations and payments
were made during the pendency of the cadastral case, a tax declaration in the
name of the alleged property owner or of his predecessor-in-interest, does not
prove ownership. It is merely an indicium of a claim of ownership. 41 In the same
manner, neither does the payment of taxes conclusively prove ownership of the
land paid for.
The foregoing discussion notwithstanding, the Court is unprepared to decree 824
square meters of Lot No. 11165 in favor of Resurreccion Bartolome and her co-
heirs to the of Epitacio Batara. The revised declaration of real property in the
name of Epitacio, which petitioners presented as Exhibit B, reveals that Epitacio
Batara owned only 772 square meters of the lot involved. Certainly, petitioner and
her co-heirs may not be entitled to an area greater than what their grandfather
claimed as his own. cdphil
Similarly, what remains of Lot No. 11165 after the portion herein adjudicated to
Resurreccion Bartolome and her co-heirs has been determined, may not be
granted to the heirs of Bernabe Bartolome and Ursula Cid exclusively. The two
other deeds of sale presented as Exhibits 2 and 3 having been found worthless by
the trial court as they involve parcels of land not within Lot No. 11165 and the
vendors of which were not the real owners of the property, which findings of facts
are binding on this Court, the law mandates that the property, having been
inherited from Doroteo Bartolome, must be shared in equal portions by his
children or their heirs.
WHEREFORE, the appealed decision of the then Intermediate Appellate Court is
hereby reversed and set aside.
The eastern portion of Lot No. 11165 with an area of 772 square meters is hereby
adjudicated in favor of the heirs of Epitacio Batara who are herein represented by
Resurreccion Bartolome while the remaining area of Lot No. 11165 is hereby
adjudicated in favor of the heirs of Doroteo Bartolome.
Petitioners shall pay the cost of the survey and subdivision of Lot No. 11165. No
costs. SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.
EN BANC
[G.R. No. 130876. January 31, 2002.]
FRANCISCO M. ALONSO, substituted by his heirs, petitioners, vs. CEBU COUNTRY
CLUB, INC., respondent.
Benitez Parlade Africa Herrera Parlade & Panga Law Offices (PABLAW) for
petitioners.
The Solicitor General for respondent.
SYNOPSIS
Petitioner Francisco Alonso, who died pendente lite and substituted by his legal
heirs, was the only son and sole heir of the late Tomas Alonso and Asuncion
Medalle. Sometime in 1992, petitioner discovered documents and records
showing that his father acquired Lot No. 727 of the Banilad Friar Lands Estate from
the Government of the Philippine Islands in or about the year 1911 in accordance
with the Friar Lands Act (Act No. 1120). The documents showed that the original
vendee of the subject lot assigned his sales certificate to petitioner's father, who
completed the required installment payments thereon under Act No. 1120 and
was consequently issued a patent. The Director of Lands executed a final deed of
sale in favor of petitioner's father. However, the deed was not registered with the
Register of Deeds because of lack of technical requirements as required by law.
Upon investigation of the status of the land, petitioner found out that the title of
Lot No. 727 had been administratively reconstituted from the owner's duplicate
under a Transfer Certificate of Title in the name of United Service Country Club,
Inc., predecessor of Cebu Country Club, Inc. Upon order of the court, the name of
the registered owner in the said TCT was changed to Cebu Country Club, Inc.
Petitioner filed with the Regional Trial Court, a complaint for declaration of nullity
and non-existence of deed/title, cancellation of certificates of title and recovery
of property against defendant Cebu Country Club, Inc. which the trial court
decided in favor of the defendant. On appeal, the Court of Appeals affirmed the
decision of the lower court.
The Supreme Court ruled that neither Tomas Alonso nor his son petitioner
Francisco Alonso, or the latter's heirs, are the lawful owners of Lot No. 727 in
dispute. Neither has the respondent Cebu Country Club, Inc. been able to
establish a clear title over the contested estate. 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.
SYLLABUS
1. CIVIL LAW; LAND REGISTRATION ACT (ACT NO. 496); REGISTRATION OF DEED
OF CONVEYANCE SERVES AS OPERATIVE ACT TO CONVEY LAND UNDER TORRENS
SYSTEM. — "Under the law, it is the act of registration of the deed of conveyance
that serves as the operative act to convey the land registered under the Torrens
system. The act of registration creates constructive notice to the whole world of
the fact of such conveyance."
2. REMEDIAL LAW; ACTIONS; RECONVEYANCE BASED ON FRAUD; IMPUTATIONS
OF FRAUD MUST BE PROVED BY CLEAR AND CONVINCING EVIDENCE; CASE AT
BAR. — Imputations of fraud must be proved by clear and convincing evidence.
Petitioner failed to adduce evidence of fraud. In an action for re-conveyance
based on fraud, he who charges fraud must prove such fraud in obtaining a title.
"In this jurisdiction, fraud is never presumed." The strongest suspicion cannot
sway judgment or overcome the presumption of regularity. "The sea of suspicion
has no shore, and the court that embarks upon it is without rudder or compass."
Worse, the imputation of fraud was so tardily brought, some forty-four (44) years
or sixty-one (61) years after its supposed occurrence, that is, from the
administrative reconstitution of title on July 26, 1948, or from the issuance of the
original title on November 19, 1931, that verification is rendered extremely
difficult, if not impossible, especially due to the supervening event of the second
world war during which practically all public records were lost or destroyed, or no
longer available.
3. CIVIL LAW; REPUBLIC ACT NO. 26; RECONSTITUTION OF TITLE; NOT BARRED BY
LACK OF TECHNICAL DESCRIPTION INSCRIBED IN THE RECONSTITUTED TITLE. —
Petitioners next question the lack of technical description inscribed in the
reconstituted title in Cebu Country Club, Inc.'s name. This is not a bar to
reconstitution of the title nor will it affect the validity of the reconstituted title. A
registered owner is given two (2) years to file a plan of such land with the Chief of
the General Land Registration Office. The two-year period is directory, not
jurisdictional. In other words, the failure to submit the technical description
within two (2) years would not invalidate the title. At most, the failure to file such
technical description within the two-year period would bar a transfer of the title
to a third party in a voluntary transaction.
4. ID.; POSSESSION; TAX DECLARATIONS AND REALTY TAX PAYMENTS; GOOD
INDICIA OF POSSESSION IN THE CONCEPT OF OWNER. — This Court has ruled that
although tax declarations or realty tax payments are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of
owner for no one in his right mind will be paying taxes for a property that is not
in his actual or constructive possession.
5. REMEDIAL LAW; ACTIONS; PRESCRIPTION OF ACTIONS; IMPLIED OR
CONSTRUCTED TRUST; ACTION BASED THEREON PRESCRIBES IN TEN YEARS; CASE
AT BAR. — "An action based on implied or constructed trust prescribes in ten (10)
years . . . from the time of its creation or upon the alleged fraudulent registration
of the property." Petitioner Francisco's action in the court below was basically one
of re-conveyance. It was filed on September 25, 1992, sixty-one (61) years after
the title was issued on November 19, 1931, and forty-four (44) years after its
reconstitution on July 26, 1948. Thus, the failure of petitioner Francisco and his
father to assert ownership of the land for over sixty (60) years during which the
Cebu Country Club, Inc. was in possession is simply contrary to their claim of
ownership. Petitioner Francisco's and his father's "long inaction or passivity in
asserting their rights over disputed property will preclude them from recovering
the same." IHaCDE
6. ID.; ID.; ACTION FOR RECONVEYANCE; MUST BE FILED WITHIN TEN YEARS FROM
DISCOVERY OF FRAUD. — [A]ction for re-conveyance based on fraud must be filed
within ten (10) years from discovery of the fraud which as to titled lands referred
to the registration of the title with the register of deeds. "An action for re-
conveyance is a legal remedy granted to a landowner whose property has been
wrongfully or erroneously registered in another's name, but then the action must
be filed within ten years from the issuance of the title since such issuance
operates as a constructive notice." In addition, the action is barred by laches
because of the long delay before the filing of the case.
7. ID.; ID.; JUDGMENT IN REM, IN PERSONAM AND QUASI IN REM, DEFINED. —
[T]he rule is that: (1) a judgment in rem is binding upon the whole world, such as
a judgment in a land registration case or probate of a will; (2) a judgment in
personam is binding upon the parties and their successors in interest but not upon
strangers. A judgment directing a party to deliver possession of a property to
another is in personam; it is binding only against the parties and their successors
in interest by title subsequent to the commencement of the action. "Suits to quiet
7
title are not technically suits in rem, nor are they, strictly speaking, in personam,
but being against the person in respect of the res, these proceedings are
characterized as quasi in rem. The judgment in such proceedings is conclusive only
between the parties." In this case, the action below is basically one for declaration
of nullity of title and recovery of ownership of real property, or re-conveyance.
"An action to recover a parcel of land is a real action but it is an action in
personam, for it binds a particular individual only although it concerns the right
to a tangible thing." "Any judgment therein is binding only upon the parties
properly impleaded."
8. CIVIL LAW; DAMAGES; AWARD OF ATTORNEY'S FEES AND EXPENSES OF
LITIGATION; WHEN PROPER. — An award of attorney's fees and expenses of
litigation is proper under the circumstances provided for in Article 2208 of the
Civil Code, one of which is when the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered and when the civil
action or proceeding is clearly unfounded and where defendant acted in gross and
evident bad faith.
MELO, J., dissenting opinion:
1. REMEDIAL LAW; EVIDENCE; CREDIBILITY OF WITNESSES; FACTUAL FINDINGS OF
THE COURT OF APPEALS, GENERALLY BINDING UPON THE SUPREME COURT;
EXCEPTION; CASE AT BAR. — The supposed parent title, TCT No. 1021, has not
been shown to be a transfer from the mother titles, OCTs No. 251, 252, and 253.
And while private respondent alleged in its answer to the complaint below that it
had acquired Lot No. 727 in good faith and for value, it failed to prove that it did
so. Neither did it allege from whom it bought the property. To my mind, the
evidence of fraud is clear and convincing. The rule that factual findings of the
Court of Appeals are binding upon this Court finds no application here, there being
material facts and circumstances which, plainly, have been overlooked but which,
when taken into account, will alter the result (Morales vs. Court of Appeals, 197
SCRA 391 [1991]).
2. CIVIL LAW; REPUBLIC ACT NO. 26; RECONSTITUTION OF TITLE; JUDICIAL AND
ADMINISTRATIVE RECONSTITUTION, DISTINGUISHED. — As regards the issue of
nullity due to want of jurisdiction, it is essential to note the difference in law
between judicial and administrative reconstitution under Republic Act No. 26. The
authority granted by said law to the Register of Deeds to make an administrative
reconstitution of a lost or destroyed transfer certificate of title is limited by
Section 5 to only two kinds of source documents: (a) the owner's duplicate of the
certificate of title, and (b) the co-owner's, mortgagee's, or lessee's duplicate of
the certificate of title. These two kinds are mentioned in paragraphs (a) and (b) of
Section 3, Republic Act No. 26. On the other hand, the power of a court to effect
a judicial reconstitution of a lost or destroyed transfer certificate of title
encompasses all the six (6) kinds of source documents enumerated by Section 3.
3. ID.; LAND REGISTRATION ACT (ACT NO. 496); TECHNICAL DESCRIPTION OF LAND
AS DETERMINED BY LAND REGISTRATION COURT SHALL BE INSCRIBED UPON
DECREE OF REGISTRATION; CASE AT BAR. — The owner's duplicate of the
certificate of title, if authentic, cannot be without a technical description of the
covered lot, in view of the provisions of Sections 40, 41, and 42 of Act No. 496.
The clear mandate of these provisions is that the technical description of the land
as determined by the land registration court shall be inscribed upon the decree of
registration, which in turn shall be transcribed upon the original certificate of title
and, in the event of a transfer, upon the transfer certificate of title. To make a
sweeping pronouncement that the lack of a technical description in a
reconstituted title is not a bar to reconstitution of the title is to be imprecise. It
may be correct in the case of a judicial, but wrong in the case of an administrative,
reconstitution of a lost or destroyed transfer certificate of title.
4. ID.; REPUBLIC ACT NO. 26; RECONSTITUTION OF TITLE; RECONSTITUTED TITLE
MERELY REPRODUCES THE CONTENTS OF THE SOURCE DOCUMENT USED. —
[T]he absence of the technical description from the face of the reconstituted title,
TCT No. RT-1310 (T-11351), unmistakably establishes the spuriousness of the
"missing" source document used in its administrative reconstitution. The reason
is simple: the source document itself also did not have it. Reconstitution denotes
the restoration of a lost or destroyed certificate of title in its original form or
condition (Zafra Vda. De Anciano vs. Caballes, 93 Phil. 876). In other words, the
reconstituted title merely reproduces the contents of the source document used;
it mirrors the latter document. Indubitably, the source document used in the
administrative reconstitution of private respondent's title was not a genuine
owner's duplicate for lack of a technical description of the land. Consequently, the
Register of Deeds had no authority at all to effect an administrative reconstitution
of this particular title.
5. ID.; ID.; ID.; IF BASED ON SPURIOUS OWNER'S DUPLICATE, CONSIDERED A VOID
ACT. — Acts executed against the provisions of mandatory or prohibitory laws
shall be void unless the law itself authorizes their validity (Article 5, Civil Code).
The administrative reconstitution of title on the basis of a fake or spurious owner's
duplicate is thus undoubtedly a void act. The infirmity goes into the very authority
of the Register of Deeds to act upon an application for reconstitution anchored
upon a fake or spurious owner's duplicate of a lost or destroyed certificate of title.
6. ID.; PUBLIC LAND ACT; PUBLIC LANDS; GOVERNMENT'S FAILURE TO ISSUE A
DEED OF FINAL CONVEYANCE AFTER FULL PAYMENT OF THE PRICE DOES NOT
PRECLUDE PURCHASER FROM ACQUIRING OWNERSHIP OF THE PROPERTY. — This
Court has been consistent in holding that the only interest left with the
government upon the issuance of the certificate of sale is that of a lien holder or
mortgagee, and only to secure payment of the balance of the price. Thus we held
in De la Torre vs. CA (325 SCRA 11 [2000]), that "the non-payment of the full
purchase price is the only recognized resolutory condition in the case of friar
lands" (See also Pugeda vs. Trias, supra; Jovellanos vs. CA, 210 SCRA 126 [1992]).
Outside of the protection given by this lone resolutory condition, the government
retains no right as an owner (Alvarez vs. Espiritu, supra). It was thus correctly held
in Bacalzo vs. Pacada and in De la Torre vs. CA that the government's failure to
issue a deed of final conveyance after full payment of the price does not preclude
the purchaser from acquiring the ownership of the property. Such full payment
extinguishes totally all interest of the government in the property. cASTED
7. ID.; ID.; ID.; REVERSION OF OWNERSHIP THEREOF, POSSIBLE ONLY UPON
PROOF OF FRAUDULENT ISSUANCE OF PATENT OR CERTIFICATE OF TITLE; CASE AT
BAR. — [T]he Solicitor General, in his Comment, expressly declared that "it can no
longer be disputed that petitioner's father, Tomas Alonso, had validly acquired
the disputed Lot 727 by virtue of a conveyance from the Government way back in
1926." That admission binds the government. If, therefore, Lot No. 727 was validly
acquired from the government way back in 1926, as admitted by the counsel for
the State, or — to be more precise — on March 19, 1919, the date of full
compliance by Tomas Alonso with the legal requirements as held in Bacalzo, then
unquestionably the government's interest in Lot No. 727 had long ago
disappeared or been extinguished. Reversion of ownership over public lands is
legally possible only upon proof of fraudulent issuance of a patent or certificate
of title (Republic vs. CA, 258 SCRA 223 [1996]). The record of this case shows that
fraud in the issuance of the certificate of sale, patent, and deed of final
conveyance to Tomas Alonso has neither been alleged nor made the subject of
evidence. In fine, it is not the sale of Tomas Alonso that has been assailed in this
action on grounds of fraud or any other cause of invalidity, but the fraud and
jurisdictional infirmity afflicting the private respondent's reconstituted title.
8. REMEDIAL LAW; ACTIONS; PRESCRIPTION OF ACTIONS; ACTION AGAINST VOID
TITLE WHERE NULLITY SPRINGS FROM WANT OF JURISDICTION NEVER
PRESCRIBES. — The right to bring an action against a void title where the nullity
springs from want of jurisdiction as in the case of the reconstituted title involved
here never prescribes (Ferrer vs. Bautista, 231 SCRA 257 [1994]; Agne vs. Director
of Lands, 181 SCRA 793 [1990]).
9. ID.; ID.; LACHES; A DOCTRINE OF EQUITY WHICH THE COURT SHOULD NOT
ALLOW TO BE USED AS SHIELD FOR FRAUD; CASE AT BAR. — [L]aches is a doctrine
of equity which the Court should not allow to be used as a shield for fraud or
wrongdoing by one who is shown to have been responsible therefor, like private
respondent (Raneses vs. IAC, 187 SCRA 397 [1990]). Neither should laches be
applied when manifest wrong or injustice will result (Santiago vs. CA, 278 SCRA 98
[1997]). And in Vergara vs. Vergara (5 SCRA 53 [1962]), we held that the second
element of laches — namely, "delay in asserting plaintiff's rights, he having had
knowledge or notice of the defendant's conduct and having been afforded an
opportunity to institute a suit" — is absent where plaintiff had no knowledge of
the doing of the act complained of; hence, the delay in asserting such right,
occasioned by such lack of knowledge, cannot give rise to the defense of laches.
This element is not present in the case at bar. Neither Tomas Alonso nor his son,
petitioner Francisco Alonso, knew about the fraudulent reconstitution of title
effected by Cebu Country Club. Moreover, the requirement that plaintiff must
have been afforded an opportunity to file a suit, has not been met. It is clear from
the record that the opportunity to file suit arose only upon the discovery of the
official documents that unequivocally established the fact that Lot No. 727 had
indeed been fully acquired by Tomas Alonso, and such discovery was, precisely,
what triggered the filing of the present suit.
10. CIVIL LAW; LAND REGISTRATION ACT (ACT NO. 496); INCOMPLETE
REGISTRATION LEGALLY PRODUCES ALL THE EFFECTS OF REGISTRATION DESPITE
NON-ISSUANCE OF TRANSFER CERTIFICATE OF TITLE. — [T]here is authority for
the view that such incomplete registration legally produces all the effects of
registration despite the non-issuance of a TCT in Tomas Alonso's name
(Government vs. Aballe, 60 Phil. 986 [1934]; DBP vs. Actg. Register of Deeds of
Nueva Ecija, 162 SCRA 450 [1988]). Consequently, Tomas Alonso became the
registered owner of Lot No. 727 in contemplation of law (Potenciano vs. Dineros,
97 Phil. 196 [1955]). Despite not having been issued a certificate of title, he
thereafter had ownership rights of which the entire world had notice (Levin vs.
Bass, 91 Phil. 420 [1952]). Against those rights, acquisitive prescription never ran
(Section 46, Act No. 496) both as regards Tomas Alonso and his son, Francisco
Alonso, petitioner in this case; for if prescription is unavailing against the
registered owner, it is equally unavailing against his hereditary successors (Atun
vs. Nunez, 97 Phil. 762 [1955]; Guinoo vs. Court of Appeals, 97 Phil. 235 [1955];
Barcelona vs. Barcelona, 100 Phil. 251 [1956]).
11. ID.; REPUBLIC ACT NO. 26; RECONSTITUTION OF TITLE; RECONSTITUTION
NEITHER CONFIRMS OR ADJUDICATES OWNERSHIP. — [R]eliance on the
reconstituted title is legally improper as the settled rule is that reconstitution
neither confirms nor adjudicates ownership (Serra Serra vs. Court of Appeals, 195
SCRA 482 [1991]), more so because private respondent's reconstituted title
appears to have been issued without any showing, here or elsewhere, that the
Original Certificates of Title No. 251, 252, and 253 from which the reconstituted
title is supposed to have descended have been duly cancelled — another cogent
reason for declaring it void (Alabang Development Corporation vs. Valenzuela,
116 SCRA 261 [1982]) and for declaring the petitioner's heirs as still the lawful
owners of Lot 727.
8
DECISION
PARDO, J p:
The Case
The case is an appeal via certiorari from a decision of the Court of Appeals 1
affirming in toto that of the Regional Trial Court, Branch 8, Cebu City, 2 declaring
that the title to the contested Lot No. 727, Banilad Friar Lands Estate, Cebu City,
was validly re-constituted in the name of the Cebu Country Club, Inc. and ordering
petitioners to pay attorney's fees of P400,000.00, and litigation expenses of
P51,000.00, and costs.
In an appeal via certiorari, petitioners may raise only questions of law, which shall
be distinctly set forth. 3 The jurisdiction of the Supreme Court in cases brought
before it from the Court of Appeals is limited to the review of errors of law and
not to analyze or weigh the evidence all over again, as its findings of facts are
deemed final and conclusive. 4
In this appeal, petitioners raise five (5) issues, all of which involve questions of fact
that have been resolved by the trial court and the Court of Appeals in favor of the
Cebu Country Club, Inc.
The Facts
The facts, as found by the Court of Appeals, are as follows:
(1) Petitioner Francisco M. Alonso, who died pendente lite and substituted by his
legal heirs, a lawyer by profession, the only son and sole heir of the late Tomas N.
Alonso and Asuncion Medalle, who died on June 16, 1962 and August 18, 1963,
respectively (Exhibits "P" and "P-1"). Cebu Country Club, Inc. is a non-stock, non-
profit corporation duly organized and existing under Philippine Laws the purpose
of which is to cater to the recreation and leisure of its members.
(2) Sometime in 1992, petitioner discovered documents and records — Friar Lands
Sale Certificate Register/Installment Record Certificate No. 734, Sales Certificate
No. 734 and Assignment of Sales Certificate (Exhs. "A", "J", and "K") — showing
that his father acquired Lot No. 727 of the Banilad Friar Lands Estate from the
Government of the Philippine Islands in or about the year 1911 in accordance with
the Friar Lands Act (Act No. 1120). The documents show that one Leoncio Alburo,
the original vendee of Lot No. 727, assigned his sales certificate to petitioner's
father on December 18, 1911, who completed the required installment payments
thereon under Act No. 1120 and was consequently issued Patent No. 14353 on
March 24, 1926. On March 27, 1926, the Director of Lands, acting for and in behalf
of the government, executed a final deed of sale in favor of petitioner's father
Tomas N. Alonso (Exh. "C"). It appears, however, that the deed was not registered
with the Register of Deeds because of lack of technical requirements, among them
the approval of the deed of sale by the Secretary of Agriculture and Natural
Resources, as required by law.
(3) Upon investigation of the status of the land, petitioner found out from the
office of the Registrar of Deeds of Cebu City that title to Lot No. 727 of the Banilad
Friar Lands Estate had been "administratively reconstituted from the owner's
duplicate" on July 26, 1948 under Transfer Certificate of Title (TCT) No. RT-1310
(T-11351) in the name of United Service Country Club, Inc., predecessor of Cebu
Country Club, Inc. On March 8, 1960, upon order of the Court of First Instance,
the name of the registered owner in TCT No. RT-1310 (T-11531) was changed to
Cebu Country Club, Inc. Moreover, the TCT provides that the reconstituted title
was a transfer from TCT No. 1021 (Exh. "D" and sub-markings).
(4) At present, TCT No. RT-1310 (T-11351) has been partially cancelled when Lot
No. 727 was subdivided in accordance with the Memorandum of Agreement
entered into by Cebu Country Club, Inc. and Susana Ingles Marquiso and Simeon
Ingles, Jr. by virtue of the ruling of the Court of Appeals in the case of Heirs of
Ramon Cabrera and Graciano Ingles v. Cebu Country Club, Inc. 5 and affirmed by
the Supreme Court in G. R. No. 60392, per resolution dated August 29, 1983. Lot
727-D-2 covered by TCT No. 94905 remains registered in the name of Cebu
Country Club, Inc. (Exh. "D-2").
(5) In the firm belief that petitioner's father is still the rightful owner of Lot No.
727 of the Banilad Friar Lands Estate since there are no records showing that he
ever sold or conveyed the disputed property to anyone, on July 7, 1992, petitioner
made a formal demand upon Cebu Country Club, Inc. to restore to him the
ownership and possession of said lot within fifteen (15) days from receipt thereof.
He indicated that his claim was analogous to that of the heirs of the late Ramon
Cabrera and Graciano Ingles which was upheld by the Court of Appeals (Exh. "H").
Cebu Country Club, Inc., however, denied petitioner's claim and refused to deliver
possession to him.
(6) Left with no other recourse, on September 25, 1992, petitioner filed with the
Regional Trial Court, Cebu City, 6 a complaint for declaration of nullity and non
existence of deed/title, cancellation of certificates of title and recovery of
property against defendant Cebu Country Club, Inc. 7 He alleged that the Cebu
Country Club, Inc. fraudulently and illegally managed to secure in its name the
administrative reconstitution of TCT No. RT-1310 (T-11351) despite the absence
of any transaction of specific land dealing that would show how Lot No. 727 had
come to pass to Cebu Country Club, Inc.; that TCT No. 11351 which is the source
title of TCT No. RT-1310 (T-11351) does not pertain to Lot No. 727; that the
reconstituted title which was issued on July 26, 1948, did not contain the technical
description of the registered land which was inserted only on March 8, 1960,
twenty-eight (28) years after the issuance of TCT No. RT-1310 (T-11351), hence,
Cebu Country Club, Inc.'s title is null and void. Petitioner thus prayed for the
cancellation of TCT No. RT-1310 (T-11351) and the issuance of another title in his
name as the sole heir of Tomas Alonso, for Cebu Country Club, Inc. to deliver
possession of the property to petitioner, and render an accounting of the fruits
and income of the land. Petitioner likewise prayed for the sum of P100,000.00 by
way of attorney's fees plus P500.00 per hearing as appearance fee, and
P10,000.00 as reasonable litigation expenses. cITCAa
(7) On November 5, 1992, Cebu Country Club, Inc. filed with the trial court its
answer with counterclaim. It alleged that petitioner had no cause of action against
Cebu Country Club, Inc. since the same had prescribed and was barred by laches,
Cebu Country Club, Inc. having been in possession of the land since 1935 until the
present in the concept of an owner, openly, publicly, peacefully, exclusively,
adversely, continuously, paying regularly the real estate taxes thereon; that Cebu
Country Club, Inc. acquired the lot in good faith and for value; that it caused the
administrative reconstitution of Lot No. 727 in 1948 from the owner's duplicate,
the original of TCT No. 11351 having been lost or destroyed during the war,
pursuant to Republic Act No. 26, its implementing Circular, GLRO Circular No. 17
8 and Circular No. 6 of the General Land Registration Office; 9 that unlike Cebu
Country Club, Inc., petitioner's father never had any registered title under the
Land Registration Act No. 496 nor did he pay the necessary taxes on Lot No. 727
during his lifetime; that petitioner's father knew that the United Service Country
Club, Inc., predecessor of Cebu Country Club, Inc. was occupying Lot No. 727 as
owner; that petitioner's father never reconstituted his alleged title to Lot No. 727
but did so over Lot No. 810 of the Banilad Friar Lands Estate, a lot adjacent to the
disputed property, in 1946; that petitioner himself lived in Cebu City, a few
kilometers away from the land in litigation; that petitioner's father or petitioner
himself, both of whom are lawyers and the former a congressman as well, for
more than sixty (60) years, never made any demand on Cebu Country Club, Inc.
for the recovery of the property knowing fully well that said land was owned and
utilized by Cebu Country Club, Inc. as its main golf course. By way of counterclaim,
Cebu Country Club, Inc. prayed for the award of attorney's fees in the amount of
P900,000.00 and litigation expenses of P100,000.00, moral damages of
P500,000.00 and exemplary damages of P2,000,000.00. 10
(8) In the course of the trial, Cebu Country Club, Inc. to disprove petitioner's
allegation that its title, TCT No. RT-1310 (T-11351), was obtained illegally and
fraudulently, submitted the deposition of an expert witness, Atty. Benjamin
Bustos, Chief of the Reconstitution Division, Land Registration Authority, Central
Office, Metro Manila (Exh. "8"). He testified that pursuant to GLRO Circular No. 17
dated February 19, 1947 and Circular No. 6 (RD-3) dated August 5, 1946 (Exhs. "2"
and "3"), titles issued before the inauguration of the Republic of the Philippines
were numbered consecutively, and titles issued after the inauguration of the
Republic were likewise numbered consecutively, starting with the number one
(1). Eventually, therefore, the title numbers issued before the inauguration would
be duplicated by the title numbers issued after the inauguration of the Republic.
11
(9) On May 7, 1993, the trial court rendered a decision, the dispositive portion of
which reads:
"THE FOREGOING CONSIDERED, judgment is hereby rendered in favor of the
defendant and against the plaintiff: declaring the contested property or Lot 727
as legally belonging to the defendant; directing the plaintiff to pay attorney'' fee
of P400,000.00; and litigation expenses of P51,000.00; and finally, with costs
against the plaintiff.
"SO ORDERED.
"Cebu City, May 7, 1993.
"(s/t) BERNARDO LL. SALAS
"Judge" 12
(10) In due time, both parties appealed to the Court of Appeals. 13
After proceedings on appeal, on March 31, 1997, the Court of Appeals
promulgated a decision, the dispositive portion of which reads:
"WHEREFORE, IN VIEW OF THE FOREGOING, the appeals interposed by both
parties are hereby DENIED, and the lower court's Decision dated May 7, 1993 is
AFFIRMED in toto. No pronouncement as to costs."
"SO ORDERED." 14
On April 30, 1997, petitioner filed a motion for reconsideration; however, on
October 2, 1997, the Court of Appeals denied the motion. 15
Hence, this appeal. 16
On October 24, 2000, we required the Solicitor General to file comment on the
issue of the validity of the re-constituted title in dispute. 17
9
On November 8, 2000, the Solicitor General submitted a comment stating that on
the basis of information received from the Land Registration Authority (LRA) and
the Land Management Bureau (LMB), the Cebu Country Club, Inc. had been
occupying the disputed property even before the Second World War and
developed it into a golf course and must have acquired the property in a proper
and valid manner. 18 Nonetheless, the Solicitor General emphasized that the
Cebu Country Club's certificate of title is a reconstituted title. A reconstituted title
does not confirm or adjudicate ownership of land covered by lost or destroyed
title. 19 And the Government's right to file reversion proceedings cannot be
barred by prescription that does not run against the State. 20
The Issues
Petitioners raise the following issues:
1. Whether the Court of Appeals erred in affirming the validity of TCT No. RT-1310
(T-11351);
2. Whether the Court of Appeals erred in sustaining respondent's claim of
ownership over Lot No. 727;
3. Whether the Court of Appeals erred in holding that the present action is barred
by prescription and/or by laches;
4. Whether the Court of Appeals erred in not applying the doctrine of stare decisis;
5. Whether the Court of Appeals erred in sustaining the trial court's award for
damages in the form of attorney's fees and litigation expenses. 21
We resolve the issues in seriatim.
First Issue:
Validity of Cebu Country Club, Inc.'s Title
The first issue is whether the Court of Appeals lawfully adjudged the validity of
the administrative reconstitution of the title of Cebu Country Club, Inc. over the
OCT of the Government of the Philippine Islands and Sales Patent No. 14353 on
Lot No. 727 in the name of Tomas N. Alonso.
The issue is factual, which, as aforesaid, cannot be reviewed in this appeal.
Nevertheless, petitioners assail the validity of the administrative reconstitution of
Cebu Country Club, Inc.'s title No. RT-1310 (T-11351) on three (3) grounds: TCDHIc
1. Its source title bears the same number as another title which refers to another
parcel of land;
2. There is no recorded transaction of the land from Tomas Alonso in favor of Cebu
Country Club, Inc.; and
3. The technical description was not transcribed in the title within two (2) years
from the date of its reconstitution.
None of the grounds has any basis or merit.
On the question that TCT No. RT-1310 (T-11351) bears the same number as
another title to another land, we agree with the Court of Appeals that there is
nothing fraudulent with the fact that Cebu Country Club, Inc.'s reconstituted title
bears the same number as the title of another parcel of land. This came about
because under General Land Registration Office (GLRO) Circular No. 17, dated
February 19, 1947, and Republic Act No. 26 and Circular No. 6, RD 3, dated August
5, 1946, which were in force at the time the title was reconstituted on July 26,
1948, the titles issued before the inauguration of the Philippine Republic were
numbered consecutively and the titles issued after the inauguration were
numbered also consecutively starting with No. 1, so that eventually, the titles
issued before the inauguration were duplicated by titles issued after the
inauguration of the Philippine Republic. This was testified to by Atty. Benjamin
Bustos, Chief of the Reconstitution Division, Land Registration Authority, Central
Office, Metro Manila, and by Atty. Dindo Nuñez, Deputy Register of Deeds of Cebu
City, who declared that several titles in the record of the Register of Deeds which
were reconstituted after the inauguration of the Philippine Republic had the same
numbers as the titles issued before the Second World War, due to the operation
of the circulars referred to.
Said the Court of Appeals:
"As a third argument, plaintiff avers that the lower court erred in declaring
defendant as the owner of Lot 727 when it has a void title because it was
fraudulently acquired. Specifically, plaintiff points out that on the face of
defendant's administratively reconstituted title — TCT No. RT-1310 (T-11351), it
would appear that its source title is TCT No. 11351. Going over the said title
further, it can be gleaned that the parent title of TCT No. 11351 is TCT No. 1021.
However, plaintiff claims that defendant failed to present said source titles. It
appears likewise that the Register of Deeds of Cebu City does not have a copy
thereof.
"On the other hand, plaintiff presented TCT No. 11351 issued on June 18, 1954 in
the name of Pacita Raffinan covering Lot 925 of the Cadastral Survey of Cebu with
an area of 310 square meters, more or less, (Exh. "L") and TCT No. 1021 issued on
July 12, 1947 in the name of Rosario Rubio covering Lot No. 51-D of the subdivision
plan being a portion of Lot No. 576 of the Banilad Friar Lands Estate with an area
of 230 sq. m., more or less (Exh. "E"). In his motion for new trial, he likewise
presented as one of his newly discovered evidence a copy of TCT No. RT-1325 (T-
1021) (Annex "B", Motion for New Trial, p. 60, Rollo) whose source title was
presumably TCT No. 1021, which apparently is the parent title of defendant's TCT.
Said TCT No. RT-1325 (T-1021) was administratively reconstituted on July 27, 1948
and covers Lot No. 1314 of the Cadastral Survey of Cebu with an area of 110 sq.
m., more or less, and registered in the name of Spouses Andres Borres and
Emiliana Enriquez. As stated in TCT No. RT-1325 (T-1021), its parent title, TCT No.
1021, was entered in the record book on May 17, 1939.
"Plaintiff concludes then that considering that TCT Nos. 11351 and 1021 as well
as RT-1325 (T-1021), which were purportedly the parent titles of TCT No. RT-1310
(T-11351), do not cover Lot 727, defendant's TCT was void having been obtained
from a spurious or non-existent source (Citing the case of Ramon Cabrera, et al.,
vs. Cebu Country Club, Inc. CA-G.R. No. 65559-R, Exh. "F").
"That there seems to be no record on file of the existence of either TCT No. 11351
or 1021 covering Lot 727 of the Banilad Friar Lands Estate containing an area of
377,622 sq. m., does not invalidate defendant's title. As defendant counters,
which was corroborated by Atty. Dindo Nuñez, Deputy Register of Deeds for Cebu
City, copies of these titles were lost and could not be found despite diligent search
thereof.
"Moreover, the absence of said titles and the existence of TCT Nos. 11351 and
1021, which do not cover Lot 727, do not render TCT No. RT-1310 (T-11351)
invalid in the light of Circular No. 6 (Exh. "3") — re: numbering of certificates of
title, entries in the day book and registration books, and GLRO Circular No. 17
(Exh. "2") — the rules and regulations governing the reconstitution of lost or
destroyed certificates of title." 22
Petitioners next argue that the reconstituted title of Cebu Country Club, Inc. had
no lawful source to speak of; it was reconstituted through extrinsic and intrinsic
fraud in the absence of a deed of conveyance in its favor. In truth, however,
reconstitution was based on the owner's duplicate of the title, hence, there was
no need for the covering deed of sale or other modes of conveyance. Cebu
Country Club, Inc. was admittedly in possession of the land since long before the
Second World War, or since 1931. In fact, the original title (TCT No. 11351) was
issued to the United Service Country Club, Inc. on November 19, 1931 as a transfer
from Transfer Certificate of Title No. 1021 (Exh. "D-6"). More importantly, Cebu
Country Club, Inc. paid the realty taxes on the land even before the war, and tax
declarations covering the property showed the number of the TCT of the land.
Cebu Country Club, Inc. produced receipts showing real estate tax payments since
1949 (Exhs. 27 to 100-B). On the other hand, petitioner failed to produce a single
receipt of real estate tax payment ever made by his father since the sales patent
was issued to his father on March 24, 1926. Worse, admittedly petitioner could
not show any torrens title ever issued to Tomas N. Alonso, because, as said, the
deed of sale executed on March 27, 1926 by the Director of Lands was not
approved by the Secretary of Agriculture and Natural Resources and could not be
registered. "Under the law, it is the act of registration of the deed of conveyance
that serves as the operative act to convey the land registered under the Torrens
system. The act of registration creates constructive notice to the whole world of
the fact of such conveyance." 23 On this point, petitioner alleges that Cebu
Country Club, Inc. obtained its title by fraud in connivance with personnel of the
Register of Deeds in 1941 or in 1948, when the title was administratively
reconstituted. Imputations of fraud must be proved by clear and convincing
evidence. 24 Petitioner failed to adduce evidence of fraud. In an action for re-
conveyance based on fraud, he who charges fraud must prove such fraud in
obtaining a title. "In this jurisdiction, fraud is never presumed." 25 The strongest
suspicion cannot sway judgment or overcome the presumption of regularity. "The
sea of suspicion has no shore, and the court that embarks upon it is without
rudder or compass." 26 Worse, the imputation of fraud was so tardily brought,
some forty-four (44) years or sixty-one (61) years after its supposed occurrence,
that is, from the administrative reconstitution of title on July 26, 1948, or from
the issuance of the original title on November 19, 1931, that verification is
rendered extremely difficult, if not impossible, especially due to the supervening
event of the second world war during which practically all public records were lost
or destroyed, or no longer available. AcSHCD
Petitioners next question the lack of technical description inscribed in the
reconstituted title in Cebu Country Club, Inc.'s name. This is not a bar to
reconstitution of the title nor will it affect the validity of the reconstituted title. A
registered owner is given two (2) years to file a plan of such land with the Chief of
the General Land Registration Office. 27 The two-year period is directory, not
jurisdictional. In other words, the failure to submit the technical description
within two (2) years would not invalidate the title. At most, the failure to file such
technical description within the two-year period would bar a transfer of the title
to a third party in a voluntary transaction.
Second Issue:
Whether Francisco Alonso is owner of the land
The second issue is whether the Court of Appeals erred in ruling that the Cebu
Country Club, Inc. is owner of Lot No. 727.
Admittedly, neither petitioners nor their predecessor had any title to the land in
question. The most that petitioners could claim was that the Director of Lands
issued a sales patent in the name of Tomas N. Alonso. The sales patent, however,
10
and even the corresponding deed of sale were not registered with the Register of
Deeds and no title was ever issued in the name of the latter. This is because there
were basic requirements not complied with, the most important of which was
that the deed of sale executed by the Director of Lands was not approved by the
Secretary of Agriculture and Natural Resources. Hence, the deed of sale was void.
28 "Approval by the Secretary of Agriculture and Commerce is indispensable for
the validity of the sale." 29 Moreover, Cebu Country Club, Inc. was in possession
of the land since 1931, and had been paying the real estate taxes thereon based
on tax declarations in its name with the title number indicated thereon. Tax
receipts and declarations of ownership for taxation purposes are strong evidence
of ownership. 30 This Court has ruled that although tax declarations or realty tax
payments are not conclusive evidence of ownership, nevertheless, they are good
indicia of possession in the concept of owner for no one in his right mind will be
paying taxes for a property that is not in his actual or constructive possession. 31
Notwithstanding this fatal defect, the Court of Appeals ruled that "there was
substantial compliance with the requirement of Act No. 1120 to validly convey
title to said lot to Tomas N. Alonso." 32
On this point, the Court of Appeals erred.
Under Act No. 1120, which governs the administration and disposition of friar
lands, the purchase by an actual and bona fide settler or occupant of any portion
of friar land shall be "agreed upon between the purchaser and the Director of
Lands, subject to the approval of the Secretary of Agriculture and Natural
Resources (mutatis mutandis)." 33
In his Memorandum filed on May 25, 2001, the Solicitor General submitted to this
Court certified copies of Sale Certificate No. 734, in favor of Leoncio Alburo, and
Assignment of Sale Certificate No. 734, in favor of Tomas N. Alonso.
Conspicuously, both instruments do not bear the signature of the Director of
Lands and the Secretary of the Interior. They also do not bear the approval of the
Secretary of Agriculture and Natural Resources.
Only recently, in Jesus P. Liao v. Court of Appeals, 34 the Court has ruled
categorically that approval by the Secretary of Agriculture and Commerce of the
sale of friar lands is indispensable for its validity, hence, the absence of such
approval made the sale null and void ab-initio. 35 Necessarily, there can be no
valid titles issued on the basis of such sale or assignment. 36 Consequently,
petitioner Francisco's father did not have any registerable title to the land in
question. Having none, he could not transmit anything to his sole heir, petitioner
Francisco Alonso or the latter's heirs.
In a vain attempt at showing that he had succeeded to the estate of his father, on
May 4, 1991, petitioner Francisco Alonso executed an affidavit adjudicating the
entire estate to himself (Exh. "Q"), duly published in a newspaper of general
circulation in the province and city of Cebu (Exh. "Q-1"). Such affidavit of self-
adjudication is inoperative, if not void, not only because there was nothing to
adjudicate, but equally important because petitioner Francisco did not show
proof of payment of the estate tax and submit a certificate of clearance from the
Commissioner of Internal Revenue. 37 Obviously, petitioner Francisco has not
paid the estate taxes.
Consequently, we rule that neither Tomas N. Alonso nor his son Francisco M.
Alonso or the latter's heirs are the lawful owners of Lot No. 727 in dispute. Neither
has the respondent Cebu Country Club, Inc. been able to establish a clear title
over the contested estate. 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. 38
Third Issue:
Action has prescribed or is barred by laches
The third issue is whether petitioners' action for re-conveyance has prescribed or
is barred by laches.
"An action based on implied or constructed trust prescribes in ten (10) years . . .
from the time of its creation or upon the alleged fraudulent registration of the
property." 39 Petitioner Francisco's action in the court below was basically one of
re-conveyance. It was filed on September 25, 1992, sixty-one (61) years after the
title was issued on November 19, 1931, and forty-four (44) years after its
reconstitution on July 26, 1948. Thus, the failure of petitioner Francisco and his
father to assert ownership of the land for over sixty (60) years during which the
Cebu Country Club, Inc. was in possession is simply contrary to their claim of
ownership. 40 Petitioner Francisco's and his father's "long inaction or passivity in
asserting their rights over disputed property will preclude them from recovering
the same." 41
Aside from the fact that, as herein-above stated, neither petitioner Francisco nor
his father held a valid title over the land, and that there was no showing that his
father owned the land at the time of his demise so as to bequeath the same to
petitioner Francisco as his sole heir, by now, the rule is firmly settled that an action
for re-conveyance based on fraud must be filed within ten (10) years from
discovery of the fraud which as to titled lands referred to the registration of the
title with the register of deeds. 42 "An action for re-conveyance is a legal remedy
granted to a landowner whose property has been wrongfully or erroneously
registered in another's name, but then the action must be filed within ten years
from the issuance of the title since such issuance operates as a constructive
notice." 43 In addition, the action is barred by laches because of the long delay
before the filing of the case. 44
Fourth Issue:
No stare decisis
The next issue is whether the Court of Appeals erred in not ruling that the decision
in Ramon Cabrera-Graciano Ingles vs. Cebu Country Club, Inc., CA-G.R. No. 65559-
R, October 31, 1981, was binding on respondent Cebu Country Club, Inc. as to the
land in question.
Petitioners assert that as the Court of Appeals annulled Cebu Country Club, Inc.'s
title in the Cabrera-Ingles case, so too must the title in this case be declared void.
In the first place, there is no identity of parties; secondly, neither the titles to nor
the parcels of land involved are the same. Consequently, the doctrine of res
judicata does not apply. 45 Momentarily casting aside the doctrine of res judicata,
there is an important moiety in the Cabrera-Ingles case. There, the Director of
Lands, after the administrative reconstitution of the title, issued a directive to the
Register of Deeds to register the lot in question in favor of Graciano Ingles. 46 This
superseded the administrative reconstitution, rendering allegations of fraud
irrelevant. Here, the Director of Lands did not issue a directive to register the land
in favor of Tomas N. Alonso. And worse, the sales patent and corresponding deed
of sale executed in 1926 are now stale. 47
Petitioners further contend that the Supreme Court's minute resolution refusing
to review that decision is equivalent to a judgment on the merits. The minute
resolution may amount to a final action on the case but it is not a precedent. 48
It can not bind non-parties to the action. To restate, the rule is that: (1) a judgment
in rem is binding upon the whole world, such as a judgment in a land registration
case or probate of a will; (2) a judgment in personam is binding upon the parties
and their successors in interest but not upon strangers. 49 A judgment directing a
party to deliver possession of a property to another is in personam; it is binding
only against the parties and their successors in interest by title subsequent to the
commencement of the action. 50 Suits to quiet title are not technically suits in
rem, nor are they, strictly speaking, in personam, but being against the person in
respect of the res, these proceedings are characterized as quasi in rem. The
judgment in such proceedings is conclusive only between the parties." 51 In this
case, the action below is basically one for declaration of nullity of title and
recovery of ownership of real property, or re-conveyance. "An action to recover a
parcel of land is a real action but it is an action in personam, for it binds a particular
individual only although it concerns the right to a tangible thing." 52 "Any
judgment therein is binding only upon the parties properly impleaded." 53
What is more, the doctrine of stare decisis notwithstanding, the Court has
abandoned or overruled precedents whenever it realized that the Court erred in
the prior decisions. "After all, more important than anything else is that this Court
should be right." 54
Fifth Issue:
Award of attorney's fees
The final issue raised is whether or not the Court of Appeals erred in awarding in
favor of the Cebu Country Club, Inc. attorney's fees of P400,000.00 as damages
and P51,000.00 as litigation expenses. 55
An award of attorney's fees and expenses of litigation is proper under the
circumstances provided for in Article 2208 of the Civil Code, one of which is when
the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered 56 and when the civil action or proceeding is clearly
unfounded and where defendant acted in gross and evident bad faith. 57 "The
award of attorney's fees as damages is the exception rather than the rule; it is not
to be given to the defendant every time the latter prevails. The right to litigate is
so precious that a penalty should not be charged on those who may exercise it
erroneously, unless, of course such party acted in bad faith." 58 In this case,
however, we would rather not award attorney's fees and expenses of litigation in
the absence of showing of gross and evident bad faith in filing the action. 59
The Judgment
WHEREFORE, we DENY the petition for review. However, we SET ASIDE the
decision of the Court of Appeals 60 and that of the Regional Trial Court, Cebu City,
Branch 08. 61
IN LIEU THEREOF, we DISMISS the complaint and counterclaim of the parties in
Civil Case No. CEB 12926 of the trial court. We declare that Lot No. 727 D-2 of the
Banilad Friar Lands Estate covered by Original Certificate of Title Nos. 251, 232,
and 253 legally belongs to the Government of the Philippines.
No costs.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Quisumbing, Buena,
De Leon, Jr. and Carpio, JJ., concur.
Melo, J., see dissenting opinion.
Panganiban, J., took no part; former partner of a party's counsel.
11
Ynares-Santiago, J., took no part.
Sandoval-Gutierrez, J., joins Justice Melo in his Dissent.
SECOND DIVISION
[G.R. No. 108926. July 12, 1996.]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS and HEIRS OF
DEMOCRITO O. PLAZA, respondents.
The Solicitor General for petitioner.
Esmeraldo U. Guloy for private respondent.
SYLLABUS
1. CIVIL LAW; PROPERTY; OWNERSHIP; TAX DECLARATION AND PAYMENT OF
REALTY TAX CONSTITUTE AT LEAST PROOF THAT THE HOLDER HAS A CLAIM OF
TITLE OVER THE PROPERTY. — Although tax declarations or realty tax payments
of property are not conclusive evidence of ownership, nevertheless, they are good
indicia of possession in the concept of owner for no one in his right mind would
be paying taxes for a property that is not in his actual or at least constructive
possession. They constitute at least proof that the holder has a claim of title over
the property. The voluntary declaration of a piece of property for taxation
purposes manifests not only one's sincere and honest desire to obtain title to the
property and announces his adverse claim against the State and all other
interested parties, but also the intention to contribute needed revenues to the
Government. Such an act strengthens one's bona fide claim of acquisition of
ownership.
2. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE COURT OF APPEALS;
FINAL AND CONCLUSIVE ON THE SUPREME COURT; EXCEPTIONS. — Well settled
and oft-repeated is the rule that findings of facts of the Court of Appeals are final
and conclusive on the Supreme Court except: 1.) when the conclusion is a finding
grounded entirely on speculation, surmises and conjectures; 2.) when the
inference made is manifestly mistaken, absurd or impossible; 3.) when there is a
grave abuse of discretion; 4.) when the judgment is based on a misapprehension
of facts; 5.) when the findings of facts are conflicting; 6.) when the Court of
Appeals, in making its findings, went beyond the issues of the case and the same
is contrary to the admissions of both appellant and appellee; 7.) when the findings
of the Court of Appeals are contrary to those of the trial court; and 8.) when the
findings of fact are conclusions without citation of specific evidence on which they
are based.
3. CIVIL LAW; NATURE OF THE LAND REGISTRATION LAWS. — Registration does
not vest title. It is merely evidence of such title. Our land registration laws do not
give the holder any better title than what he actually has. When the conditions
set by law are complied with, the possessor of the land, by operation of law,
acquires a right to a grant, a government grant, without the necessity of a
certificate of title being issued. The Torrens system was not established as a
means for the acquisition of title to private land, as it merely confirms, but does
not confer ownership.
DECISION
TORRES, JR., J .:
Petitioner implores this Court to review and set aside the decision 1 of February
8, 1993 of the Court of Appeals in CA-G.R. CV No. 34950 which affirmed the
decision of June 14, 1991 of the Regional Trial Court of Makati in LRC Case No. M-
99 confirming respondent Democrito O. Plaza's title over Rel. Plan 1059, which is
the relocation plan of Psu-97886. llcd
After the filing of private respondent's Comment, this Court, in its resolution of
May 24, 1993, gave due course to the petition and required the parties to submit
their respective Memoranda. The petitioner filed its Memorandum on June 29,
1993 while private respondent filed his Memorandum on July 6, 1993.
The factual background is summarized in the Decision 2 of the Court of Appeals
as follows:
"According to petitioner-appellee, the subject property situated at Liwanag, Talon
(formerly Pamplona), Las Piñas, Rizal, now Metro Manila, having an area of 45,295
sq. m., was first owned by Santos de la Cruz who declared the same in his name
under Tax Declaration Nos. 3932, for the year 1913; 3933 for 1917; and 6905, for
1921 (Exhs. 2-B, 2-C and 2-D, Exh. K for petitioner-appellee, pp. 514-516, Record).
Subsequently, the subject property was successively bought or acquired by Pedro
Cristobal, Regino Gervacio, Diego Calugdan and Gil Alhambra. To evidence their
respective acquisition of the property in question, Tax Declaration Nos. 7937, for
the year 1923; 8463, for 1927, 9467, for 1934; and 2708 (year not available) were
presented. 3 After Gil Alhambra died, his heirs extrajudicially partitioned the
subject property and declared it in their names under Tax Declaration Nos. 5595
and 5596 for the year 1960. 4 On 5 July 1966, they executed a "Deed of Sale With
Mortgage" deeding the subject property to petitioner-appellee for P231,340.00
payable in three (3) installments, the payment of which was secured by a
mortgage on the property. Upon receipt of the full payment, they executed a
"Release of Mortgage" on 1 August 1968. 5 After the sale, petitioner-appellee
took possession of the subject property and paid the taxes due thereon for the
years 1966 up to 1986, and in 1985 declared it in his name under Tax Declaration
Nos. B-013-01392 and B-013-01391. 6 He appointed Mauricio Plaza and Jesus
Magcanlas as the administrator and caretaker thereof, respectively. Due to losses,
the property in question was cultivated only for a while. Five (5) years according
to Mauricio Plaza, and from 1966 up to 1978 according to Jesus Magcanlas. 7
"On 14 November 1986, petitioner-appellee filed a petition, which was amended
on 17 July 1987, for the registration and confirmation of his title over the subject
property alleging, among others, that:
1. by virtue of the deed of sale, he is the owner thereof:
2. he and his predecessors-in-interest have been in open, continuous, exclusive
and notorious possession and occupation of the property prior to, and since 12
June 1945;
3. other than himself, there is no other person occupying, or having any interest
over the property; and,
4. there are no tenants or agricultural lessees thereon. 8
"On 24 February 1988, oppositor-appellant, the Republic of the Philippines
(Republic, for brevity), filed its opposition maintaining, among others, that: (1)
petitioner-appellee and his predecessors-in-interest have not been in open,
continuous, exclusive and notorious possession and occupation of the land in
question since 12 June 1945 or prior thereto; (2) the muniment of title and tax
declarations as well as tax payments relied upon do not constitute sufficient
evidence of a bona fide acquisition of the land by petitioner-appellee and of his
open, continuous possession and occupation thereof in the concept of owner
since 12 June 1945, or prior thereto, and (3) the subject property pertains to the
public domain and is not subject to private appropriation. 9
"On 9 March 1988, after the compliance of the jurisdiction requirements was
proved and, on motion, the lower court issued its order of general default. 10
"Aside from the Republic, there were others who opposed the petition and filed
their opposition thereto prior to, or were allowed to submit their opposition
despite, and after, the issuance of the order of general default. They are:
(a) Arsenio Medina who withdrew his opposition on 29 May 1989; 11
(b) Emilio, Leopoldo and Abraham, all surnamed Borbon; Heirs of Andres Reyes;
Maximo Lopez; and, Marilou Castanares who prayed that the lower court direct
petitioner-appellee to see to it that their respective property, which adjoins the
land in question, are not included in the petition; 12
(c) the Heirs of Santos de la Cruz and the Kadakilaan Estate. Upon their respective
motion, the order of default was set aside as to them and they were allowed to
file their opposition.
"The Heirs of Santos de la Cruz argue that: (1) their predecessor-in-interest,
Santos de la Cruz, is the 'primitive owner' of the subject lot; and, (2) he, his heirs,
and upon their tolerance, some other persons have been in open, peaceful,
notorious and continuous possession of the land in question since time
immemorial until the present.
"The Kadakilaan Estate contends that: (1) by reason of its Titulo de Propiedad de
Terrenos of 1891 Royal Decree 01-4, with approved plans registered under the
Torrens System in compliance with, and as a consequence of, P.D. 872, it is the
owner of the subject property; and, (2) petitioner-appellee or his predecessors-
in-interest have not been in open, continuous, exclusive and notorious possession
and occupation of the land in question since 12 June 1945 or earlier. 13
(d) the Heirs of Hermogenes Rodriguez. They allege, among others, that by reason
of a Titulo de Propiedad de Terrenos of 1891; Royal Decree No. 01-4, Protocol No.
1891; Decree No. 659, approved Plan of the Bureau of Lands No. 12298 dated 10
September 1963, their predecessor-in-interest is the owner of the subject
property. Despite (sic) that their motion to lift order of default as to them and
admit their opposition, which motion was opposed by petitioner-appellee, does
not appear to have been acted upon by the lower court, they were able to present
one (1) witness; 14 and,
(e) Phase II Laong Plaza Settlers Association, Inc. It filed a motion to intervene in
the case but the motion does not appear to have been acted upon by the lower
court. 15
"On 13 March 1990, the Community Environment and Natural Resources Office,
West Sector (CENRO-WEST) of the Department of Environment and Natural
Resources requested the lower court to furnish it photocopies of the records of
the petition as the property in question was the subject of a request for a
Presidential Proclamation reserving the land in question for Slum Improvement
and Resettlement Site (SIR) of the National Housing Authority. 16
"On 22 June 1990, upon order of the lower court, an ocular inspection was
conducted on the subject property by the court-appointed commissioner who
submitted his report on 2 July 1990. 17
12
"On 3 January 1991 Proclamation No. 679 was issued by the President of the
Republic of the Philippines withdrawing the subject property from sale or
settlement and reserve (the same) for slum improvement and sites and services
program under the administration and disposition of the National Housing
Authority in coordination with the National Capital Region, Department of
Environment and Natural Resources subject to actual survey and private rights if
any there be, . . .' The National Housing Authority was authorized to develop,
administer and dispose of the area in accordance with LOI 555, as amended (by
LOI Nos. 686 and 1283), and LOI 557. 18
"On 31 May 1991 petitioner-appellee filed his memorandum. 19 The oppositors
did not. Nevertheless, among them, only the Republic and the Heirs of Santos de
la Cruz formally offered their evidence." 20
On 14 June 1991 the lower court rendered the judgment referred to earlier.
On 8 July 1991, from among the oppositors, only the Republic filed a notice of
appeal which was approved on 10 July 1991. 21 By reason of the approval thereof,
the motion filed on 23 July 1991 by the Heirs of Hermogenes Rodriguez for the
reconsideration of the judgment was denied on 1 August 1991. 22
On February 8, 1993, the Court of Appeals rendered a decision affirming the trial
court's judgment.
Hence, this petition filed by the Republic of the Philippines alleging that:
"THE DECISION OF THE COURT OF APPEALS AFFIRMING THE DECISION OF THE
REGIONAL TRIAL COURT GRANTING PRIVATE RESPONDENT'S APPLICATION FOR
REGISTRATION, IS NOT SUPPORTED BY AND IS CONTRARY TO LAW, THE EVIDENCE
AND EXISTING JURISPRUDENCE."
Petitioner argues that the burden rests on the applicant to show by convincing
evidence that he has a registrable title over the property sought to be titled, which
the latter failed to do.
According to petitioner, aside from mere tax declarations all of which are of recent
vintage, private respondent has not established actual possession of the property
in question in the manner required by law (Section 14, P.D. 1529) and settled
jurisprudence on the matter. Thus, no evidence was adduced that private
respondent cultivated much less, fenced the subject property if only to prove
actual possession. The actual fencing of the property was done only starting 1988
when the actual occupants were forcibly ejected and driven out from their
respective abodes and that its witnesses namely: Elascio Domitita, Manuel Dolom,
Bernadette Aguinaldo and Virginia Franco, who were all actual residents of the
questioned area, categorically testified on this score, summarized as follows:
1. In their long stay in the area, the longest staying occupant being Domitita who
had been in the premises for more than thirty (30) years nobody ever claimed
ownership over the subject property;
2. It was only in 1988 that they learned that private respondent had filed a petition
to have the property titled in his name;
3. Private respondent had not introduced any improvement nor was there a
caretaker assigned by him to look after the property; and,
4. Aside from them, there were about 200 more families residing in the area but
through force, intimidation and illegal demolitions, were driven out by private
respondent from the premises.
We are not persuaded. On this point, the respondent Court correctly found that:
"Proof that petitioner-appellee and his predecessors-in-interest have acquired
and have been in open, continuous, exclusive and notorious possession of the
subject property for a period of 30 years under a bona fide claim of ownership are
the tax declarations of petitioner-appellee's predecessors-in-interest, the deed of
sale, tax payment receipts and petitioner-appellee's tax declarations. The
evidence on record reveals that: (1) the predecessors-in-interest of petitioner-
appellee have been declaring the property in question in their names in the years
1923, 1927, 1934 and 1960; and, (2) in 1966, petitioner-appellee purchased the
same from the Heirs of Gil Alhambra and since then paid the taxes due thereon
and declared the property in his name in 1985.
xxx xxx xxx
. . . Considering the dates of the tax declarations and the realty tax payments, they
can hardly be said to be of recent vintage indicating petitioner-appellee's
pretended possession of the property. On the contrary, they are strong evidence
of possession in the concept of owner by petitioner-appellee and his
predecessors-in-interest. Moreover, the realty tax payment receipts show that
petitioner-appellee has been very religious in paying the taxes due on the
property. This is indicative of his honest belief that he is the owner of the subject
property. We are, therefore, of the opinion that petitioner-appellee has proved
that he and his predecessors-in-interest have been in open, continuous, exclusive
and notorious possession of the subject property in the concept of owner for a
period of 30 years since 12 June 1945 and earlier. By operation of law, the
property in question has become private property. 23
"Contrary to the representations of the Republic, petitioner-appellee had
introduced some improvements on the subject property from the time he
purchased it. His witnesses testified that petitioner-appellee developed the
subject property into a ricefield and planted it with rice, but only for about five
years because the return on investment was not enough to sustain the continued
operation of the riceland. Though not in the category of permanent structures,
the preparation of the land into a ricefield and planting it with rice are considered
'improvements' thereon." 24
Although tax declarations or realty tax payments of property are not conclusive
evidence of ownership, nevertheless, they are good indicia of possession in the
concept of owner for no one in his right mind would be paying taxes for a property
that is not in his actual or at least constructive possession. 25 They constitute at
least proof that the holder has a claim of title over the property. The voluntary
declaration of a piece of property for taxation purposes manifests not only one's
sincere and honest desire to obtain title to the property and announces his
adverse claim against the State and all other interested parties, but also the
intention to contribute needed revenues to the Government. Such an act
strengthens one's bona fide claim of acquisition of ownership. 26
Neither do we find merit in the assertions of petitioner's witnesses Elascio
Domitita, Manuel Dolom, Bernadette Aguinaldo and Virginia Franco. As properly
stated by the public respondent,
". . . Their alleged possession is not based on any right. Neither do they claim to
have any title or interest over the subject property. As a matter of fact, they did
not bother to oppose the petition. The most that can be said of their alleged
possession is that it was only with the tolerance of rightful owners of the property
— plaintiff-appellee and his predecessors-in-interest, hence, is no bar to the
granting of the petition. We do not see why we should accept the bare assertions
of the alleged occupants at their face value as against the claim of ownership of
plaintiff-appellee backed up by legal documents, tax declarations, and tax
receipts." 27
Well-settled and oft-repeated is the rule that findings of facts of the Court of
Appeals are final and conclusive on the Supreme Court except: 1.) when the
conclusion is a finding grounded entirely on speculation, surmises and
conjectures; 2.) when the inference made is manifestly mistaken, absurd or
impossible; 3.) when there is a grave abuse of discretion; 4.) when the judgment
is based on a misapprehension of facts; 5.) when the findings of facts are
conflicting; 6.) when the Court of Appeals, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both appellant
and appellee; 7.) when the findings of the Court of Appeals are contrary to those
of the trial court; and 8.) when the findings of fact are conclusions without citation
of specific evidence on which they are based. 28
Concededly, none of the above exceptions obtains in the case at bar.
Petitioner also alleges that the land in question had been withdrawn from the
alienable portion of the public domain pursuant to Presidential Proclamation No.
679 entitled "Reserving for Slum Improvement and Resettlement (SIR) Sites and
Services of the National Housing Authority, A Certain Parcel of Land of the Public
Domain Situated in the Municipality of Las Piñas, Metro Manila," which was issued
on January 7, 1991 or almost 6 months prior to the issuance of the trial court's
decision. cdtai
The Court of Appeals opined that "the issuance of the proclamation did not have
any effect on the subject property as the proclamation only withdrew it from sale
or settlement and reserved the same for slum improvement and sites and services
program, but subject to actual survey and existing private rights. The
proclamation did not prohibit the registration of title of one who claims, and
proves, to be the owner thereof." We agree. At any rate, registration does not
vest title. It is merely evidence of such title. 29 Our land registration laws do not
give the holder any better title than what he actually has. When the conditions
set by law are complied with, the possessor of the land, by operation of law,
acquires a right to a grant, a government grant, without the necessity of a
certificate of title being issued. The Torrens system was not established as a
means for the acquisition of title to private land, as it merely confirms, but does
not confer ownership. 30
Of particular relevance is the finding of the respondent Court of Appeals to the
effect that —
"We have found that petitioner-appellee has proven his claim of ownership over
the subject property. As provided in the proclamation itself, his ownership of the
subject property must be respected and he cannot be barred from having the land
titled in his name. This does not contravene or negate the intention of the
proclamation. Besides, its implementing Letters of Instruction recognize that
there may be lands declared included in the Slum Improvement Resettlement
(SIR) program that are privately owned. Paragraph 10 of LOI No. 555 provides that
if the land declared to be included in the SIR program is privately owned, the
concerned local government, upon the approval by the National Housing
Authority of its project plan, shall acquire the property through expropriation. In
LOI No. 686 paragraph 3, it is mandated that the NHA, upon request of the local
13
government, expropriate or otherwise acquire land for the SIR program.
Proclamation No. 679 is, therefore, not a valid justification to deny the petition.
. . . At the time the Proclamation was issued, the controversy over the subject
property was sub-judice. The conflicting rights over it had been presented to the
court for resolution. That jurisdiction could not be removed from it by subsequent
legislation. The President must have been aware of this. Hence, the inclusion of
the cautionary clause 'subject to existing private rights.' " 31
Over time, Courts have recognized with almost pedantic adherence that what is
inconvenient or contrary to reason is not allowed in law — Quod est inconveniens,
aut contra rationem non permissum est in lege. Undoubtedly, reason and law find
respondent entitled to rights of ownership over the disputed property.
ACCORDINGLY, the assailed decision dated February 8, 1993 is hereby AFFIRMED
and the instant petition is hereby DISMISSED.
SO ORDERED.
Regalado, Romero, Puno, and Mendoza, JJ ., concur.
THIRD DIVISION
[G.R. No. 137944. April 6, 2000.]
FERNANDA MENDOZA CEQUENA and RUPERTA MENDOZA LIRIO, petitioners, vs.
HONORATA MENDOZA BOLANTE, respondent.
Romeo M. Flores for petitioners.
Public Attorney's Office for respondent.
SYNOPSIS
On October 15, 1975, respondent Honorata Bolante and Miguel Mendoza,
brother of petitioners, had a dispute on the ownership of the land during the
cadastral survey. Because of this dispute, herein petitioners filed a civil case
against respondent claiming ownership and possession of the parcel of land in
question. After trial, the court a quo rendered its judgment in favor of petitioners
awarding the questioned property to petitioners and ordered herein respondent
to vacate the property subject of the case and deliver possession thereof to the
heirs of Margarito Mendoza. Aggrieved by the decision, respondent filed an
appeal to the Court of Appeals. The appellate court reversed the trial court's
decision. Hence, this Petition.
The Supreme Court found the petition not meritorious. The Court ruled that the
appellate court was correct in not giving credence to the affidavit presented by
the petitioner for the reason that it cannot be admitted as an exception to the
hearsay rule under the dead man's statute. Likewise, the affidavit cannot be
considered an ancient document as the petitioner failed to explain how the
purported signature of one of the respondents could have been affixed as she was
an illiterate woman who had never had any formal schooling. Tax declarations and
receipts are not conclusive evidence of ownership. At most, they constitute mere
prima facie proof of ownership or possession of the property for which taxes had
been paid. In the absence of actual public and adverse possession, the declaration
of the land for tax purposes does not prove ownership. In sum, the petitioners'
claim of ownership of the whole parcel has no legal basis. Accordingly, the Court
denied the petition and the assailed decision and resolution of the appellate court
were affirmed. EHSADa
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; HEARSAY RULE; DEAD MAN'S STATUTE;
REQUISITES; A DECLARATION AGAINST INTEREST IS NOT ADMISSIBLE IF THE
DECLARANT IS AVAILABLE TO TESTIFY AS WITNESS. — Before a private document
offered as authentic can be received in evidence, its due execution and
authenticity must be proved first. And before a document is admitted as an
exception to the hearsay rule under the Dead Man's Statute, the offeror must
show (a) that the declarant is dead, insane or unable to testify; (b) that the
declaration concerns a fact cognizable by the declarant; (c) that at the time the
declaration was made, he was aware that the same was contrary to his interest;
and (d) that circumstances render improbable the existence of any motive to
falsify. In this case, one of the affiants happens to be the respondent, who is still
alive and who testified that the signature in the affidavit was not hers. A
declaration against interest is not admissible if the declarant is available to testify
as a witness. Such declarant should be confronted with the statement against
interest as a prior inconsistent statement.
2. ID.; ID.; ANCIENT DOCUMENT; AFFIDAVIT; REQUISITES TO BE CONSIDERED AN
ANCIENT DOCUMENT; AN AFFIDAVIT DOES NOT AUTOMATICALLY BECOME A
PUBLIC DOCUMENT JUST BECAUSE IT CONTAINS A NOTARIAL JURAT. — The
affidavit cannot be considered an ancient document either. An ancient document
is one that is (1) more than 30 years old, (2) found in the proper custody, and (3)
unblemished by any alteration or by any circumstance of suspicion. It must on its
face appear to be genuine. The petitioners herein failed, however, to explain how
the purported signature of Eduarda Apiado could have been affixed to the subject
affidavit if, according to the witness, she was an illiterate woman who never had
any formal schooling. This circumstance casts suspicion on its authenticity. Not all
notarized documents are exempted from the rule on authentication. Thus, an
affidavit does not automatically become a public document just because it
contains a notarial jurat. Furthermore, the affidavit in question does not state
how the ownership of the subject land was transferred from Sinforoso Mendoza
to Margarito Mendoza. By itself, an affidavit is not a mode of acquiring ownership.
3. CIVIL LAW; PROPERTY; OWNERSHIP; BASIS OF A CLAIM FOR OWNERSHIP
THROUGH PRESCRIPTION. — Ownership of immovable property is acquired by
ordinary prescription through possession for ten years. Being the sole heir of her
father, respondent showed through his tax receipt that she had been in
possession of the land for more than ten years since 1932. When her father died
in 1930, she continued to reside there with her mother. When she got married,
she and her husband engaged in kaingin inside the disputed lot for their
livelihood. Respondent's possession was not disturbed until 1953 when the
petitioners' father claimed the land. But by then, her possession, which was in the
concept of owner — public, peaceful, and uninterrupted — had already ripened
into ownership. Furthermore she herself, after her father's demise, declared and
paid realty taxes for the disputed land. Tax receipts and declarations of ownership
for taxation, when coupled with proof of actual possession of the property, can
be the basis of a claim for ownership through prescription.
4. ID.; ID.; ID.; CANNOT BE ACQUIRED BY MERE OCCUPATION. — In contrast, the
petitioners, despite thirty-two years of farming the subject land, did not acquire
ownership. It is settled that ownership cannot be acquired by mere occupation.
Unless coupled with the element of hostility toward the true owner, occupation
and use, however long, will not confer title by prescription or adverse possession.
Moreover, the petitioners cannot claim that their possession was public, peaceful
and uninterrupted. Although their father and brother arguably acquired
ownership through extraordinary prescription because of their adverse
possession for thirty-two years (1953-1985), this supposed ownership cannot
extend to the entire disputed lot, but must be limited to the portion that they
actually farmed. We cannot sustain the petitioners' contention that their
ownership of the disputed land was established before the trial court through the
series of tax declarations and receipts issued in the name of Margarito Mendoza.
Such documents prove that the holder has a claim of title over the property. Aside
from manifesting a sincere desire to obtain title thereto, they announce the
holder's adverse claim against the state and other interested parties.
5. ID.; ID.; ID.; TAX DECLARATIONS AND RECEIPTS ARE NOT CONCLUSIVE
EVIDENCE OF OWNERSHIP. — However, tax declarations and receipts are not
conclusive evidence of ownership. At most, they constitute mere prima facie
proof of ownership or possession of the property for which taxes have been paid.
In the absence of actual public and adverse possession, the declaration of the land
for tax purposes does not prove ownership. In sum, the petitioners' claim of
ownership of the whole parcel has no legal basis.
DECISION
PANGANIBAN, J p:
Tax receipts and declarations are prima facie proofs of ownership or possession
of the property for which such taxes have been paid. Coupled with proof of actual
possession of the property, they may become the basis of a claim for ownership.
By acquisitive prescription, possession in the concept of owner — public, adverse,
peaceful and uninterrupted — may be converted to ownership. On the other
hand, mere possession and occupation of land cannot ripen into ownership.
The Case
Before us is a Petition for Review on Certiorari of the March 19, 1999 Decision 1
of the Court of Appeals 2 (CA) in CA-GR CV No. 43423. The assailed Decision
disposed as follows: 3
"WHEREFORE, for all the foregoing, the decision of the trial court appealed from
is REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered
declaring . . . Honorata Mendoza Bolante the rightful owner and possessor of the
parcel of land which is the subject of this appeal."
The Facts
The Petition herein refers to a parcel of land situated in Barangay Bangad,
Binangonan, Province of Rizal, having an area of 1,728 square meters and covered
by Tax Declaration No. 26-0027. LLjur
The undisputed antecedents of this case are narrated by the Court of Appeals as
follows: 4
"The facts not disputed revealed that prior to 1954, the land was originally
declared for taxation purposes in the name of Sinforoso Mendoza, father of
[respondent] and married to Eduarda Apiado. Sinforoso died in 1930. [Petitioners]
were the daughters of Margarito Mendoza. On the basis of an affidavit, the tax
declaration in the name of Sinforoso Mendoza of the contested lot was cancelled
and subsequently declared in the name of Margarito Mendoza. Margarito and
Sinforoso are brothers. [Respondent] is the present occupant of the land. Earlier,
on October 15, 1975, [respondent] and Miguel Mendoza, another brother of
[petitioners], during the cadastral survey had a dispute on [the] ownership of the
land.
14
"During the pre-trial conference, parties stipulated the following facts:
‘1) The land subject of the case was formerly declared for taxation purposes in the
name of Sinforoso Mendoza prior to 1954 but is now declared in the name of
Margarito Mendoza.
‘2) The parties agree[d] as to the identity of the land subject of instant case.
‘3) [Petitioners] are the daughters of Margarito Mendoza while the [respondent]
is the only daughter of Sinforoso Mendoza.
'4) Margarito Mendoza and Sinforoso Mendoza [were] brothers, now deceased.
‘5) During the cadastral survey of the property on October 15, 1979 there was
already a dispute between Honorata M. Bolante and Miguel Mendoza, brother of
[petitioners].
‘6) [Respondent was] occupying the property in question.
‘The only issue involved [was] who [was] the lawful owner and possessor of the
land subject of the case.’
"After trial, the court a quo rendered its judgment in favor of [petitioners], the
dispositive portion of which reads as follows:
‘Wherefore, in view of the foregoing considerations, judgment is hereby rendered
for the [petitioners] and against the [respondent]:
‘1. Declaring that the parcel of land situated in Bangad, Binangonan, Rizal covered
by tax declaration no. 26-0027 in the name of Margarito Mendoza belong to his
heirs, the [petitioners] herein;
‘2. Ordering [respondent] to vacate the property subject of the case and deliver
possession thereof to the heirs of Margarito Mendoza.
‘3. Ordering the [respondent] to indemnify the [petitioners] in the sum of
P10,000.00, as actual damages.
‘4. Ordering the [respondent] to pay the costs.’"
Ruling of the Court of Appeals
The Court of Appeals reversed the trial court because the genuineness and the
due execution of the affidavit allegedly signed by the respondent and her mother
had not been sufficiently established. The notary public or anyone else who had
witnessed the execution of the affidavit was not presented. No expert testimony
or competent witness ever attested to the genuineness of the questioned
signatures.
The CA further ruled that the affidavit was insufficient to overcome the denial of
respondent and her mother. The former testified that the latter, never having
attended school, could neither read nor write. Respondent also said that she had
never been called "Leonor," which was how she was referred to in the affidavit.
Moreover, the appellate court held that the probative value of petitioners' tax
receipts and declarations paled in comparison with respondent's proof of
ownership of the disputed parcel. Actual, physical, exclusive and continuous
possession by respondent since 1985 indeed gave her a better title under Article
538 of the Civil Code.
Hence, this Petition. 5
Issues
Insisting that they are the rightful owners of the disputed land, the petitioners
allege that the CA committed these reversible errors: 6
"1. . . . [I]n not considering the affidavit as an exception to the general rule that
an affidavit is classified as hearsay evidence, unless the affiant is placed on the
witness stand; and
"2. . . . [I]n holding that respondent has been in actual and physical possession,
coupled with . . . exclusive and continuous possession of the land since 1985,
which are evidence of the best kind of circumstance proving the claim of the title
of ownership and enjoys the presumption of preferred possessor."
The Court's Ruling
The Petition has no merit.
First Issue: Admissibility of the Affidavit
Petitioners dispute the CA's ruling that the affidavit was not the best evidence of
their father's ownership of the disputed land, because the "affiant was not placed
on the witness stand." They contend that it was unnecessary to present a witness
to establish the authenticity of the affidavit because it was a declaration against
respondent's interest and was an ancient document. As a declaration against
interest, it was an exception to the hearsay rule. As a necessary and trustworthy
document, it was admissible in evidence. And because it was executed on March
24, 1953, it was a self-authenticating ancient document. LexLib

We quote below the pertinent portion of the appellate court's ruling: 7
"While it is true that the affidavit was signed and subscribed before a notary
public, the general rule is that affidavits are classified as hearsay evidence, unless
affiants are placed on the witness stand (People's Bank and Trust Company vs.
Leonidas, 207 SCRA 164). Affidavits are not considered the best evidence, if
affiants are available as witnesses (Vallarta vs. Court of Appeals, 163 SCRA 587).
The due execution of the affidavit was not sufficiently established. The notary
public or others who saw that the document was signed or at least [could] confirm
its recitals [were] not presented. There was no expert testimony or competent
witness who attested to the genuineness of the questioned signatures. Worse,
[respondent] denied the genuineness of her signature and that of her mother . . .
[Respondent] testified that her mother was an illiterate and as far as she knew
her mother could not write because she had not attended school (p. 7, ibid). Her
testimony was corroborated by Ma. Sales Bolante Basa, who said the
[respondent's] mother was illiterate."
The petitioners' allegations are untenable. Before a private document offered as
authentic can be received in evidence, its due execution and authenticity must be
proved first. 8 And before a document is admitted as an exception to the hearsay
rule under the Dead Man's Statute, the offeror must show (a) that the declarant
is dead, insane or unable to testify; (b) that the declaration concerns a fact
cognizable by the declarant; (c) that at the time the declaration was made, he was
aware that the same was contrary to his interest; and (d) that circumstances
render improbable the existence of any motive to falsify. 9
In this case, one of the affiants happens to be the respondent, who is still alive
and who testified that the signature in the affidavit was not hers. A declaration
against interest is not admissible if the declarant is available to testify as a witness.
10 Such declarant should be confronted with the statement against interest as a
prior inconsistent statement.
The affidavit cannot be considered an ancient document either. An ancient
document is one that is (1) more than 30 years old, (2) found in the proper
custody, and (3) unblemished by any alteration or by any circumstance of
suspicion. 11 It must on its face appear to be genuine. The petitioners herein
failed, however, to explain how the purported signature of Eduarda Apiado could
have been affixed to the subject affidavit if, according to the witness, she was an
illiterate woman who never had any formal schooling. This circumstance casts
suspicion on its authenticity.
Not all notarized documents are exempted from the rule on authentication. Thus,
an affidavit does not automatically become a public document just because it
contains a notarial jurat. Furthermore, the affidavit in question does not state
how the ownership of the subject land was transferred from Sinforoso Mendoza
to Margarito Mendoza. By itself, an affidavit is not a mode of acquiring ownership.
Second Issue: Preference of Possession
The CA ruled that the respondent was the preferred possessor under Article 538
of the Civil Code because she was in notorious, actual, exclusive and continuous
possession of the land since 1985. Petitioners dispute this ruling. They contend
that she came into possession through force and violence, contrary to Article 536
of the Civil Code.
We concede that despite their dispossession in 1985, the petitioners did not lose
legal possession because possession cannot be acquired through force or
violence. 12 To all intents and purposes, a possessor, even if physically ousted, is
still deemed the legal possessor. 13 Indeed, anyone who can prove prior
possession, regardless of its character, may recover such possession. 14
However, possession by the petitioners does not prevail over that of the
respondent. Possession by the former before 1985 was not exclusive, as the latter
also acquired it before 1985. The records show that the petitioners’ father and
brother, as well as the respondent and her mother were simultaneously in
adverse possession of the land.
Before 1985, the subject land was occupied and cultivated by the respondent's
father (Sinforoso), who was the brother of petitioners' father (Margarito), as
evidenced by Tax Declaration No. 26425. 15 When Sinforoso died in 1930,
Margarito took possession of the land and cultivated it with his son Miguel. At the
same time, respondent and her mother continued residing on the lot.
When respondent came of age in 1948, she paid realty taxes for the years 1932-
1948. 16 Margarito declared the lot for taxation in his name in 1953 17 and paid
its realty taxes beginning 1952. 18 When he died, Miguel continued cultivating the
land. As found by the CA, the respondent and her mother were living on the land,
which was being tilled by Miguel until 1985 when he was physically ousted by the
respondent. 19
Based on Article 538 of the Civil Code, the respondent is the preferred possessor
because, benefiting from her father's tax declaration of the subject lot since 1926,
she has been in possession thereof for a longer period. On the other hand,
petitioners' father acquired joint possession only in 1952.
Third Issue: Possession of Better Right
Finally, the petitioners challenge the CA ruling that "actual and physical coupled
with the exclusive and continuous possession [by respondent] of the land since
15
1985" proved her ownership of the disputed land. The respondent argues that she
was legally presumed to possess the subject land with a just title since she
possessed it in the concept of owner. Under Article 541 of the Code, she could not
be obliged to show or prove such title.
The respondent's contention is untenable. The presumption in Article 541 of the
Civil Code is merely disputable; it prevails until the contrary is proven. 20 That is,
one who is disturbed in one's possession shall, under this provision, be restored
thereto by the means established by law. 21 Article 538 settles only the question
of possession, and possession is different from ownership. Ownership in this case
should be established in one of the ways provided by law.
To settle the issue of ownership, we need to determine who between the
claimants has proven acquisitive prescription. 22
Ownership of immovable property is acquired by ordinary prescription through
possession for ten years. 23 Being the sole heir of her father, respondent showed
through his tax receipt that she had been in possession of the land for more than
ten years since 1932. When her father died in 1930, she continued to reside there
with her mother. When she got married, she and her husband engaged in kaingin
inside the disputed lot for their livelihood. 24
Respondent's possession was not disturbed until 1953 when the petitioners'
father claimed the land. But by then, her possession, which was in the concept of
owner — public, peaceful, and uninterrupted 25 — had already ripened into
ownership. Furthermore she herself, after her father's demise, declared and paid
realty taxes for the disputed land. Tax receipts and declarations of ownership for
taxation, when coupled with proof of actual possession of the property, can be
the basis of a claim for ownership through prescription. 26
In contrast, the petitioners, despite thirty-two years of farming the subject land,
did not acquire ownership. It is settled that ownership cannot be acquired by
mere occupation. 27 Unless coupled with the element of hostility toward the true
owner, 28 occupation and use, however long, will not confer title by prescription
or adverse possession. Moreover, the petitioners cannot claim that their
possession was public, peaceful and uninterrupted. Although their father and
brother arguably acquired ownership through extraordinary prescription because
of their adverse possession for thirty-two years (1953-1985), 29 this supposed
ownership cannot extend to the entire disputed lot, but must be limited to the
portion that they actually farmed.
We cannot sustain the petitioners' contention that their ownership of the
disputed land was established before the trial court through the series of tax
declarations and receipts issued in the name of Margarito Mendoza. Such
documents prove that the holder has a claim of title over the property. Aside from
manifesting a sincere desire to obtain title thereto, they announce the holder's
adverse claim against the state and other interested parties. 30
However, tax declarations and receipts are not conclusive evidence of ownership.
31 At most, they constitute mere prima facie proof of ownership or possession of
the property for which taxes have been paid. 32 In the absence of actual public
and adverse possession, the declaration of the land for tax purposes does not
prove ownership. 33 In sum, the petitioners' claim of ownership of the whole
parcel has no legal basis.
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution
AFFIRMED. Costs against petitioners. LibLex
SO ORDERED.
Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.
SECOND DIVISION
[G.R. No. 127382. August 17, 2004.]
DR. JESUS SERIÑA and ENRIQUETA SERIÑA (deceased), represented by DR. JESUS
SERIÑA, JR., ANTONIO SERIÑA, VIOLETA SERIÑA TAN, REYNALDO SERIÑA and
EMMANUEL SERIÑA, petitioners, vs. VICTOR CABALLERO, TEODORO DONELA,
OLIVER DONELA, COURT OF APPEALS, and THE HONORABLE REGIONAL TRIAL
COURT, BRANCH 20, MISAMIS ORIENTAL, respondents.
DECISION
CALLEJO, SR., J p:
Before us is a petition for review on certiorari of the Decision 1 of the Court of
Appeals (CA) dated August 23, 1996, affirming the dismissal of the complaint for
quieting of title, recovery of possession, and damages by the Regional Trial Court
(RTC) of Misamis Oriental, Cagayan de Oro City, in Civil Case No. 8716.
The Antecedents
On August 11, 1982, Dr. Jesus Seriña and his wife, Enriqueta Seriña filed a
Complaint for quieting of title, recovery of possession, and damages with a prayer
for a writ of preliminary mandatory injunction against respondents Victor
Caballero and his tenants, Teodoro Donela and Oliver Donela. When Dr. Seriña
died on August 6, 1983, he was substituted by his children, petitioners Jesus, Jr.,
Antonio, Violeta, Reynaldo and Emmanuel. 2
The petitioners alleged in their complaint that they are the absolute owners and
have been in actual and constructive possession for thirty-five (35) years of a
parcel of land described as follows:
Lot No. 3533-A, Cad-237, Cagayan Cadastre
Tax Declaration No. 02161
Location - Mantadiao, Opol,
Misamis Oriental
Area - 2.5000 has.
Boundaries:
North - Alejo Seriña
South - T. Sabornido
East - A. Seriña & T. Sabornido
West - F. Caballero 3
The petitioners averred that sometime in March 1982, they discovered that
respondent Caballero was claiming ownership over the said land and offering it
for sale or mortgage to third parties. They also discovered that the respondents
Donelas were occupying the land as tenants and caretakers of the land. 4
The petitioners claimed that their father, Dr. Seriña, bought the land from Lucia
Vda. de Marbella who inherited it from her father, Ramon Neri. 5 They presented
a Deed of Sale 6 dated August 23, 1947 showing that Dr. Seriña bought 5 hectares
of ricefield, bounded on the North by Raymundo Seriña, on the East by Teofilo
Saburnido, on the South by Obdelio Caballero, on the West by Obdullo Caballero,
from Lucia Vda. de Marbella. Dr. Seriña was issued Tax Declaration No. 4029
allegedly for the said property. As indicated in the tax declaration and subsequent
tax declarations issued in the name of Dr. Seriña, they were issued for Cadastral
Lot No. 3533 and covered a 2.5-hectare ricefield with the same boundary owners
as those in the complaint. 7 The petitioners also averred that they regularly paid
taxes thereon since 1947 up to the present. 8
In his answer, respondent Caballero alleged that he was the lawful owner, and
had been in actual physical possession of the disputed land since time
immemorial. He averred that the disputed land is part of Cadastral Lot No. 3533,
C-7 of the Cagayan Cadastre and originally owned by his grandfather, Eustaquio
Caballero. 9
The respondents averred that Eustaquio Caballero declared the entire parcel of
land for tax purposes even before the war. Tax Declaration No. 2442 was issued
in lieu of the records that were destroyed during the war.
This tax declaration indicated that the 119,490 square-meter parcel of land was
located at Pontacon, Iponan, Cagayan de Oro City, bounded on North by Rustico
Dablio, on the East by J. Seriña and T. Saburnido, on the South by Victor Obsioma,
and on the West by Victorino Caballero. 10
Emiliana Ibarat, respondent Caballero's sister, testified that when Eustaquio
Caballero died in 1944, the land was divided among his three children, Vicenta,
Benita and Victorino, the father of respondent Caballero. Lot A, with an area of
39,625 square meters, was given to Victorino, which was later inherited by the
respondent. Lot B, with an area of 71,450 square meters, was given to Benita; and
Lot C, with only 7,938 square meters was given to Vicenta. Lots B and C were,
thereafter, sold to one Gaga Yasay. Because of the trouble between the
petitioners and the respondents, Yasay agreed to buy only a portion of Lot A. 11
The land was surveyed during the trial and it was determined that it now consisted
of only 23,373 square meters, 12 and not 25,000 square meters as claimed by the
petitioners. Gliceria Legaspi, respondent Caballero's other sister, also testified
that the disputed land was now bounded on the North by Seriña and Nangcas, on
the East by Teofilo Saburnido, on the South by Gaga Yasay, and on the West by
Nangcas. 13
The RTC rendered judgment 14 on January 21, 1992, dismissing the complaint,
and upholding the right of the respondents over the land. The dispositive portion
reads:
WHEREFORE, judgment is hereby rendered in favor of the defendant Victor
Caballero and against the plaintiffs herein, to wit:
1. Ordering the dismissal of the complaint with costs.
2. Ordering the defendant Victor Caballero as the absolute and lawful owner and
possessor of the land in question.
16
3. Ordering the plaintiffs, their heirs, lawyers, servants or privies not to disturb or
molest the possession and ownership of Victor Caballero over the land in
question.
4. Ordering the plaintiffs to pay to defendant Victor Caballero, jointly and
severally the sum of FIVE THOUSAND (P5,000.00) pesos for expenses of litigation,
and THREE THOUSAND (P3,000.00) pesos for and as attorney's fees having been
compelled to retain the services of counsel to protect his interest herein. TaSEHD
SO ORDERED. 15
The trial court ruled that it was not clearly shown that the land bought by Dr.
Seriña from Lucia Vda. de Marbella was the same land owned by Victor Caballero,
and that the petitioners failed to show that Lucia Vda. de Marbella bought the
land from Eustaquio Caballero, the original owner and cadastral claimant of the
land. It also noted that the deed of sale between Lucia Vda. de Marbella and Dr.
Seriña showed that the land had an area of 5 hectares, whereas, the petitioners
only claimed 2.5 hectares. Furthermore, the boundaries of the land stated in the
complaint did not coincide with what was stated in the Deed of Sale, or in Tax
Declaration No. 2442 in the name of Eustaquio Caballero. The trial court ruled that
the petitioners failed to explain these discrepancies, and that there was no
showing that Tax Declaration No. 2442 was cancelled by Tax Declaration No. 4029
in the name of Dr. Seriña. The trial court interpreted this to mean that Eustaquio
Caballero's right as owner of the land remained.
Dissatisfied, the petitioners appealed the case to the CA, which rendered a
Decision 16 affirming in toto the decision of the RTC. The petitioners filed a
Motion for Reconsideration on September 30, 1996. 17 The CA denied the
motion. 18
Hence, the instant petition.
The petitioners assign the following errors:
1. THAT IT IS ERROR FOR THE HONORABLE COURT OF APPEALS TO UPHOLD THE
HONORABLE RTC ON THE ISSUE THAT THE ALLEGED IDENTITY OF THE LAND IN
LITIGATION IS UNESTABLISHED BETWEEN THE PARTIES-LITIGANTS.
2. THAT IT IS ERROR FOR THE HONORABLE COURT OF APPEALS TO FAIL TO
APPRECIATE THE 35-YEAR ACQUISITIVE PRESCRIPTION IN FAVOR OF THE
PLAINTIFFS-APPELLANTS. 19
The issues in this petition are, therefore, the following: (1) whether the petitioners
were able to establish the identity of the land being claimed by them; and (2)
whether acquisitive prescription should be appreciated in favor of the petitioners.
IDSaTE
The Ruling of the Court
The first issue deals clearly with a question of fact which is beyond the province
of this Court in a petition for review on certiorari. Well-entrenched is the rule that
the Court's jurisdiction in a petition for review is limited to reviewing or revising
errors of law allegedly committed by the appellate court. Factual findings of the
Court of Appeals are conclusive on the parties and not reviewable by this Court
— and they carry even more weight when the Court of Appeals affirms the factual
findings of the trial court. 20 The exceptions to this rule are the following:
(1) when the conclusion is a finding grounded entirely on speculations, surmises
or conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on misapprehension of facts; (5) when the findings of facts are conflicting;
(6) when the Court of Appeals, in making its findings, went beyond the issues of
the case and the same is contrary to the admissions of both appellant and
appellee; (7) when the findings of the Court of Appeals are contrary to those of
the trial court; (8) when the findings of fact are conclusions without citation of
specific evidence on which they are based; (9) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion; and (10) when the
findings of fact of the Court of Appeals are premised on the absence of evidence
and are contradicted by the evidence on record. 21
We find no cogent reason to reverse the findings of the CA. None of the
aforementioned exceptions is present in this case. The CA was correct in
concluding that the petitioners failed to establish that the parcel of land in the
possession of the respondents is the same as that subject of their complaint.
The CA noted that the land subject of the complaint has boundaries different from
the land in possession of the respondents. In fact, the land described in the
complaint appears to be different from the land described in the Deed of Sale
which the petitioners invoke as the basis of their ownership.
First. The petitioners alleged in their complaint that the boundaries of their
property are as follows:
North - Alejo Seriña
South - T. Sabornido

East - A. Seriña & T. Sabornido
West - F. Caballero 22
On the other hand, the Deed of Sale provides that the property sold to them has
the following boundaries:
North - Raymundo Seriña
South - Obdullo Caballero
East - Teofilo Saburnido
West - Obdullo Caballero 23
Second. The complaint 24 of the petitioners states that the property they are
claiming has an area of 2.5 hectares. On the other hand, the Deed of Sale 25
provides that the subject property has an area of 5 hectares.
Third. The complaint alleged that the property is located in "Mantadiao, Opol,
Misamis Oriental," 26 while the Deed of Sale shows that the property purchased
is located in "Puntakon, Igpit, Cagayan Or. Misamis." 27
We agree with the CA that there was no showing that Tax Declaration No. 2442 in
the name of Eustaquio Caballero was cancelled. Absent any specific statement
therein to that effect, it cannot be presumed that Tax Declaration No. 4029 in the
name of Dr. Seriña cancelled Tax Declaration No. 2442. IEAHca
Moreover, the land covered by Tax Declaration No. 2442 is different from that
covered by Tax Declaration No. 4029 for the following reasons:
The boundary owners of the land as indicated in Tax Declaration No. 2442 differ
from those stated in Tax Declaration No. 4029. The boundary owners as indicated
in Tax Declaration No. 2442 are as follows:
North - Rustico Dablio
South -Victor Obsioma
East - J. Seriña & T. Saburnido
West - Victorino Caballero 28
Under Tax Declaration No. 4029, on the other hand, the boundary owners are as
follows:
North - Alejo Seriña
South - Teofilo Saburnido
East - A. Seriña [and] T. Saburnido
West - Eustaquio Caballero 29
Moreover, Tax Declaration No. 2442 covers an area of 119,490 square meters 30
while Tax Declaration No. 4029 covers only 25,000 square meters or 2.5 hectares.
31
The petitioners argue that the Deed of Sale and Tax Declaration No. 4029 should
not be compared to Tax Declaration No. 2442 and the Technical Description of
Cadastral Lot No. 3533 because the former refers only to a portion of the area
referred to by the latter. 32 While the petitioners are correct on this point, such
mistake would still not justify a different conclusion. The fact remains that the
documentary and testimonial evidence presented by the petitioners did not prove
the identity of the land being claimed. The petitioners did not present evidence
to prove that the land registered in the name of Eustaquio Caballero was sold to
Lucia Vda. de Marbella or her predecessor-in-interest from whom they purchased
the land subject of their complaint.
The failure to establish the identity of the land is obviously fatal to the petitioners'
case. In Beo vs. Court of Appeals, 33 a case which also involves an action for
possession and quieting of title, the Court had the occasion to state:
. . . [B]ecause petitioners failed to explain the discrepancy or present other
evidence to prove with certainty the location and area of the land they seek to
recover, respondent court correctly applied the invariable rule that a person who
claims ownership of real property is duty-bound to clearly identify the land being
claimed, in accordance with the title on which he anchors his right of ownership.
When the record does not show that the land subject matter of the action for
recovery of possession has been exactly determined, such action cannot prosper,
as in the case of petitioners. In sum, proof of ownership coupled with identity of
the land is the basic rule.
Corollarily, the rule is likewise well-settled that in order that an action for recovery
of possession may prosper, it is indispensable that he who brings the action fully
proves not only his ownership but also the identity of the property claimed, by
describing the location, area and boundaries thereof. As the appellate court
17
succinctly stated, he who claims to have a better right to the property must clearly
show that the land possessed by the other party is the very land that belongs to
him. 34
On the second issue, the CA ruled that inasmuch as the petitioners failed to
establish that the parcel of land in possession of the respondents is the same as
the subject of their complaint, their claim of acquisitive prescription is clearly
untenable.
The petitioners argue that they would not have regularly paid taxes on the land
since 1947 had they not believed that they owned the same. 35 The respondents,
for their part, aver that the petitioners were only able to prove seven (7) years of
actual possession of the land through cultivation by their tenants. They argue that
such seven-year period of cultivation cannot be considered in the petitioners'
favor, since the witness who testified on this fact did not personally know the
boundaries of the land cultivated, or whether it was the same land bought by Dr.
Seriña. The respondents contend that acquisitive prescription applies only when
there is no dispute as to the identity of the property. 36
We agree with the respondents. Since the property has not been clearly identified
by the petitioners, their claim of acquisitive prescription cannot be considered.
Insufficient identification of the portion of land claimed in absolute ownership
cannot ripen into ownership. Possession as a means of acquiring ownership, while
it may be constructive, is not a mere fiction. 37
Assuming, however, that the disputed land has been clearly identified, acquisitive
prescription will still not lie in favor of the petitioners because they were not able
to prove that they have been in possession of the property for the requisite
number of years. Prescription requires public, peaceful, uninterrupted and
adverse possession of the property in the concept of an owner for ten years, in
case the possession is in good faith and with just title. 38
Aside from the testimony of Leonardo Vacalares that certain tenants of the
petitioners cultivated the land for a total of seven years, the petitioners did not
present any other evidence to show that they have been in actual possession of
the property for at least ten years.
The petitioners' argument that the payment of taxes on the property since May
31, 1948 constitutes proof of their possession of the subject land for thirty-five
years is untenable. Tax declarations and receipts are not conclusive evidence of
ownership. At most, they constitute mere prima facie proof of ownership of the
property for which taxes have been paid. In the absence of actual, public and
adverse possession, the declaration of the land for tax purposes does not prove
ownership. 39
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the
Court of Appeals is AFFIRMED. No costs.
SO ORDERED. ESCacI
Puno, Austria-Martinez, Tinga and Chico-Nazario, JJ ., concur.
SECOND DIVISION
[G.R. No. 133208. July 31, 2006.]
LAURENCIO C. RAMEL, SOCORRO B. RAMEL and RENE LEMAR B. RAMEL,
petitioners, vs. DANIEL AQUINO and GUADALUPE ABALAHIN, respondents.
BENJAMIN AQUINO and VIRGINIA AQUINO, respondents-intervenors.
DECISION
PUNO, J p:
At bar is a Petition for Review on Certiorari of the Decision and Resolution of the
Court of Appeals in CA-G.R. CV No. 28654 dated April 16, 1997 and March 25,
1998, respectively, affirming the decision of the Regional Trial Court of Santiago,
Isabela, Branch 21, in Civil Case No. 0302.
The instant case originated from a suit filed by petitioners Laurencio C. Ramel,
Socorro B. Ramel and Rene Lemar B. Ramel against respondent Daniel Aquino,
married to respondent Guadalupe Abalahin, for Specific Performance with
Preliminary Injunction and Damages.
Daniel Aquino is the registered owner of Lot No. 2080, a 14.1825-hectare land
situated in Tanggal, Cordon, Isabela under Transfer Certificate of Title (TCT) No. T-
36937. On October 21, 1975, Aquino mortgaged the property to the Development
Bank of the Philippines (DBP), Ilagan Branch, Ilagan, Isabela for P50,000.00. In
1983, the property was in danger of being foreclosed as respondents had no
means to pay for the loan. Thus, on August 7, 1983, they offered to sell to
petitioners 8.2030 hectares of the mortgaged property.
Petitioners agreed to purchase the property but the agreement was not reduced
into writing. Petitioners were to buy the 8.2030 hectares at P13,500.00 per
hectare or at a total sum of around P110,700.00. Petitioners would assume the
remaining mortgage obligation of respondents with DBP as of July 31, 1983 in the
amount of P85,543.00 and the balance of about P25,000.00 shall be paid to
respondents on installment. 1
On the same day that the offer was made and accepted, petitioners gave
respondents an earnest money of P5,000.00. 2 Further additional partial
payments were made on September 7, 1983 in the sum of P15,000.00 3 and
P4,800.00 4 on February 12, 1984. All three payments were duly receipted by
respondents.
Petitioners also made the following payments to DBP: 5 P10,000.00 on September
7, 1983; P3,097.00 on November 18, 1983; and, P10,000.00 on April 2, 1984, for
a total of P23,097.00.
Respondents also sold to petitioners 2,484 square meters of the southern portion
of the mortgaged property for P2,700.00. Petitioners paid the full amount on
September 7, 1983. 6 On even date, petitioners were allowed by respondents to
take possession of the parcels of land sold. Since then, they allegedly introduced
improvements 7 to the property, such as rice paddies, drainage canal, fence and
a house. aSITDC
On November 18, 1983, petitioners applied for a re-structuring of the mortgage
loan with the DBP for a period of ten years, allegedly with the conformity of
respondents. The bank approved the loan re-structuring. 8 Under the new
scheme, the loan was to be paid with a semi-annual amortization of P8,634.15
beginning May 21, 1984 for five years. Thereafter, the loan shall be paid with a
semi-annual amortization of P4,904.60 starting on the 6th to the 10th year. 9
On October 1, 1984, petitioners went to DBP to pay for the amortization but they
found out that respondents had paid the bank P72,703.06. Petitioners offered to
return to respondents the said sum but the latter refused to accept the offer.
Instead, respondents told petitioners that they would return whatever they have
paid for the land, and threatened to withdraw the certificate of title of the land
from the bank. The manager of the bank accepted the money tendered by
respondents as "deposit" and gave the parties time to settle the matter on their
own, but to no avail. On October 9, 1984, petitioners filed with the trial court for
Specific Performance with Preliminary Injunction and Damages. On October 12,
1984, the trial court restrained the respondents from withdrawing the certificate
of title and the Release of Mortgage. The bank was also enjoined from releasing
the title to respondents. On even date, respondents withdrew the amount of
P72,703.06 which they had paid to the bank.
Meanwhile, during the pendency of the case, petitioners made the following
payments to DBP in full settlement of the loan: P30,000.00 on November 29,
1984; P50,000.00 on April 30, 1986; and P5,118.42 on May 2, 1986, or a total of
around P108,216.00. The DBP then deposited the Release of Mortgage to the
Clerk of Court.
Respondent spouses alleged that petitioners agreed to pay them P35,000.00, not
P25,000.00. They further alleged that petitioners agreed to assume in full the then
remaining mortgage loan with DBP and to withdraw the certificate of title of the
land not later than December 31, 1983. Respondents allegedly set this period
because they needed the title to claim the area taken by the NIA for an irrigation
canal. However, petitioners defaulted to pay the bank within the period agreed
upon and re-structured the loan without their consent. Upon learning of
petitioners re-structuring the loan, respondents decided to revoke the sale, sold
a portion of Lot No. 2080 and tendered P72,703.06 from its proceeds to DBP on
October 1, 1984 in full settlement of the loan.
Respondents-Intervenors Benjamin Aquino and Virginia Aquino are the siblings of
respondent Aquino and intervened as co-owners of Lot No. 2080. An amicable
settlement 10 was entered into between respondent Aquino and the intervenors
on March 2, 1985.
The trial court issued an Order dated March 11, 1986 stating the following
material parts of the stipulations of the parties during the pre-trial conference:
STIPULATIONS OF FACTS
xxx xxx xxx
2. That the 8.2030 hectares of riceland located at Cordon, Isabela is covered by
Transfer Certificate of Title No. 36937, Isabela Registry, in the name of Daniel
Aquino;
xxx xxx xxx
5. That the payments made by Rene Lemar R. Ramel and duly receipted are:
(1) On Feb. 12, 1983, 11 the amount of P4,800.00 . . . ;
(2) On August 7, 1983, the amount of P5,000.00 . . . ;
(3) On Sept. 7, 1983, the amount of P15,000.00 . . . ;
(4) On Sept. 7, 1983, the amount of P2,700.00 . . . ;
and admitted by all the parties. 12
On June 28, 1990, the trial court decided as follows, viz.:
18
WHEREFORE, in light of the foregoing considerations[,] judgment is hereby
rendered: cITaCS
1. ORDERING the spouses Daniel Aquino and Guadalupe Aquino to execute a deed
of sale over a portion of lot 2080 located and bounded by Ilut Creek on the south,
Juan Mariano's lot on the east, portion of lot 2080 on the north and Castillo's lot
on the west, containing an area of [2,484] square meters more or less, in favor of
Rene Lemar Ramel.
2. DECLARING that the oral contract of sale between the plaintiff Rene Lemar
Ramel and the defendants spouses Daniel and Guadalupe Aquino as rescinded.
3. ORDERING the defendants spouses Daniel and Guadalupe Aquino to pay to the
plaintiff Rene Lemar Ramel the sums of P29,800.00 representing the amount
received by said defendants for the land, plus P108,216.00 representing the
amount paid by the plaintiffs to the bank.
4. ORDERING the plaintiffs to return the peaceful possession of the land, lot
2080[,] after they shall have been paid the aforesaid amount by the defendants.
5. ORDERING the intervenors Benjamin Aquino and Virginia Aquino to reimburse
to the defendant Daniel Aquino their one-third share each of the amount of
P138,016[.00] which the latter paid to the plaintiff.
6. DECLARING that the intervenors Benjamin Aquino and Virginia Aquino are the
co-owners of the 8.2030 southern portion of lot 2080 in equal shares. 13
Petitioners appealed to the Court of Appeals which affirmed the decision of the
trial court and denied their Motion for Reconsideration. Hence, this petition
assailing the decision of the appellate court, viz.:
I.A. BASED NOT ONLY ON MISAPPREHENSION AND APPRECIATION OF FACTS, BUT
ALSO ON THE FINDINGS WHICH MANIFESTLY OVERLOOKED CERTAIN RELEVANT
FACTS NOT DISPUTED BY THE PARTIES AND WHICH, IF PROPERLY CONSIDERED,
WOULD JUSTIFY A DIFFERENT CONCLUSION, AS WELL AS ON AN INFERENCE
WHICH IS MANIFESTLY MISTAKEN.
I.B. BASED ON A FALSE, FABRICATED AND SELF-SERVING TESTIMONY OF THE
RESPONDENTS.
I.C. BASED ON THE FINDINGS OF FACTS WHICH ARE CONTRARY TO THOSE OF THE
TRIAL COURT AND CONTRARY TO THE ADMISSION OF THE RESPONDENTS HEREIN.
II. THE JUDGMENT OF THE TRIAL COURT WHICH WAS AFFIRMED BY THE COURT
OF APPEALS IS NOT IN ACCORD WITH THE EXISTING LAWS AND THE APPLICABLE
DECISIONS OF THIS HONORABLE COURT, BEING AN ERRONEOUS APPLICATION OF
ARTICLES 1191 AND 1545 OF THE CIVIL CODE AND THE APPLICABLE
JURISPRUDENCE. 14
The hinge issues are the following: (1) whether petitioners substantially breached
their obligation warranting the rescission of the contract and (2) whether there is
legal ground to order the offsetting of the claim of improvements by petitioners
to the claim of fruits derived from the land by respondents.
First to be determined is the total amount paid by petitioners to respondents to
show the former's compliance or non-compliance with their obligation.
There is no question that petitioners were obligated to pay the remaining
mortgage obligation of respondents with the DBP as of July 31, 1983. The official
receipt 15 dated September 7, 1983 issued by DBP shows that the remaining
mortgage obligation of respondents as of September 7, 1983 was P75,544.92, that
is after petitioners had paid the bank P10,000.00 on the same date. Hence, the
total remaining mortgage obligation as of July 31, 1983 which was supposed to be
assumed by petitioners was P85,544.92. Deducting this from the total value of the
land which is about P110,700.00, the balance of about P25,000.00, and not
P35,000.00, was to be paid by petitioners to respondents. ICHDca
The courts a quo erred in concluding that petitioners were able to pay
respondents a total sum of P29,800.00. Per stipulation by the parties themselves,
petitioners paid to respondents the total sum of P27,500.00. 16 This even includes
the amount of P2,700.00 which petitioners paid for the additional 2,484-square
meter strip of land which they purchased from respondents. Deducting this
P2,700.00 from the total payments made for the 8.2030 hectares, petitioners
were able to pay a sum of P24,800.00 of the P25,000.00 balance for the subject
parcel. This small discrepancy is not a ground for respondents to rescind their
contract with petitioners.
We look, however, to the other ground — the failure of petitioners to pay the
remaining balance of the mortgage obligation of respondents to the DBP. The
record shows that at the time petitioners filed the case with the trial court on
October 9, 1984, they were able to pay only P23,097.00 of the then P85,544.92
outstanding mortgage obligation of respondents. Instead of petitioners paying
the remaining balance on or before December 31, 1983, they asked the DBP to
re-structure the payment of the loan for ten years in November 1983. They did so
without the consent of respondents. Their claim to the contrary is not
substantiated by evidence.
First, after respondents learned that petitioners had re-structured the loan,
respondents paid the amount of P72,703.06 to DBP. The fact that respondents
later on withdrew the amount cannot operate against them because the trial
court had enjoined them from withdrawing the certificate of title and the bank
from releasing the same.
Second, the subject property was facing foreclosure that December of 1983. It
was precisely due to the impending foreclosure that respondents offered to sell
the subject property to petitioners. It was never the intention of respondents to
be left at the mercy of petitioners as to when the latter would complete payment
of the remaining mortgage obligation. It goes against the common sense of man
and the ordinary course of business that an owner of land sells his property
without any definite agreement as to when the obligation shall be paid, especially
if his property is facing foreclosure. Though petitioners were able to subsequently
fully settle the mortgage loan in May 1986 — two years and five months from
December 1983, and one and a half years after they filed this case — the fact
remains that they reneged on their obligation to pay within the agreed period.
They could have asked respondents to give them a grace period to settle the
remaining loan obligation but they did not.
It is true that petitioners sent a Notice of Loan Approval 17 dated November 24,
1983 addressed to respondent Aquino informing that the application for loan re-
structuring had been approved by the DBP. But this does not prove their claim
that respondents authorized the loan re-structuring for the following reasons:
one, it was petitioners themselves who applied for the loan re-structuring; two,
the document is a mere notice; three, the notice does not even show that it was
received by respondents; and four, after the manager of the DBP informed
respondents about the loan re-structuring, respondents rushed to sell another
portion of their land so they could pay the remaining obligation. They later
withdrew the amount because of the restraining order issued by the trial court
and not because they waived their right to rescind the contract.
With the breach committed by petitioners, the trial court ruled and the appellate
court rightly affirmed that petitioners substantially violated their obligation.
Hence, respondents are entitled to a rescission of the contract under Article 1191
of the Civil Code, viz.:
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case
one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter should become
impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
xxx xxx xxx
Petitioners can not argue that their breach is merely casual and slight, especially
that they were able to subsequently pay the loan and the purpose of the contract
has been fulfilled by petitioners, i.e., that the mortgage obligation shall be paid
and respondents shall be able to retain at least the rest of the land free from any
liens or encumbrances. 18 The ruling of the trial court on this issue is correct, viz.:
. . . It is admitted that the underlying purpose of the Aquinos to sell a portion of
the land was in order that their mortgage obligation shall be paid and they shall
be able to retain at least the rest of the land free from any liens and
encumbrances. It was imperative then for Rene Ramel to pay the mortgage
obligation. He did not do so. . . . . More important[,] he did not even intend to pay
the bank because he had the loan re-structured so as to be payable in ten years.
Of course, he finally paid the mortgage loan but only after one and one-half years
after the filing of this case. To the mind of the [c]ourt, the non-payment of the
mortgage obligation until after one and one-half years after the filing of this case
constitutes a substantial breach that entitles the Aquinos to rescind the contract.
19
Rightly, the appellate court affirmed the ruling, viz.:
Since Ramel failed to settle Aquino's mortgage obligation on or before December
31, 1983 as in fact he restructured it for a period of ten years, he committed a
substantial breach of his agreement with Aquino. That the breach is substantial is
all the more appreciated when note is taken of the fact that the entire 14.1825-
hectare property, not just the 8.2030 hectares portion thereof sold to Ramel,
remained encumbered beyond the agreed deadline of December 31, 1983, thus
restricting the owners' rights thereto. 20
Petitioners further invoke Article 1592 of the Civil Code and argue that
respondents are not entitled to rescission because no demand has been made
upon them either judicially or by notarial act. They contend that respondents
"merely raised rescission as a defense in this case of Specific Performance and
they have never informed the Ramels about their alleged decision to exercise the
said right before this case was filed . . . ." 21 They aver that the act of the Aquinos
in tendering payment to DBP does not constitute demand as the term is defined
under Article 1592, 22 viz.:
19
Art. 1592. In the sale of immovable property, even though it may have been
stipulated that upon failure to pay the price at the time agreed upon the rescission
of the contract shall of right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for rescission of the contract has
been made upon him either judicially or by a notarial act. After the demand, the
court may not grant him a new term. EScIAa
Again, we reject the argument. We held in the case of Luzon Brokerage Co., Inc.
v. Maritime Building Co., Inc. 23 that even a cross-claim found in the Answer filed
in the trial court constitutes judicial demand for rescission that satisfies the
requirements of Article 1592. Further, in Iringan v. Court of Appeals, 24 we held
that an action for Judicial Confirmation of Rescission and Damages before the
Regional Trial Court complied with the requirement of the law for judicial demand
of rescission even if the intention of the moving party was to compel the other
party to formalize in a public document their extrajudicial mutual agreement to
rescind. In this case, the mutual agreement to rescind was forged when the
injured party sent to the defaulting party a letter stating that he had considered
the contract rescinded and that he would not accept any further payment. The
defaulting party replied that he was not opposing the revocation of the sale, save
for some reimbursements. We held that though the letter declaring the intention
to rescind did not satisfy the "demand" required by the law, the subsequent case
filed for a judicial confirmation of the rescission did meet the requirement for a
valid demand.
We rule that respondents satisfied Article 1592 when they raised rescission as a
defense in their Answer. To be sure, petitioners learned of respondents' intention
to rescind even before they filed their Answer. Petitioners knew the intent to
rescind when respondents deposited the amount of P72,703.06 with DBP to fully
settle their remaining obligation. Petitioners were told by respondents that they
were rescinding the contract after the mortgage was re-structured without their
consent. Indeed, it was this declaration by respondents that prompted petitioners
to file the case of Specific Performance with the trial court.
Finally, petitioners question the ruling of the courts a quo offsetting the claim of
improvements by petitioners and the claim of the fruits derived from the land by
respondents. Petitioners claim that the offsetting of claims is erroneous citing
Articles 546 and 547 of the Civil Code, viz.:
Art. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed
therefor.
Useful expenses shall be refunded only to the possessor in good faith with the
same right of retention, the person who has defeated him in the possession
having the option of refunding the amount of the expenses or of paying the
increase in value which the thing may have acquired by reason thereof.
Art. 547. If the useful improvements can be removed without damage to the
principal thing, the possessor in good faith may remove them, unless the person
who recovers the possession exercises the option under paragraph 2 of the
preceding article.
Under these provisions, petitioners argue that as possessors in good faith and in
the concept of an owner, they are entitled to the fruits received before possession
was legally interrupted and they must be reimbursed for their expenses or for the
increase in the value the subject property may have acquired by reason thereof.
25
The records show that both parties failed to prove their claims through any receipt
or document. Despite the lack of proof, the trial court ordered that whatever
improvements spent on the land shall be offset from the fruits derived therefrom,
viz.: 26
The plaintiffs claimed that they were able to improve the land after possession
was given to them. No receipts were shown to guide the [c]ourt as to how much
[were] the costs of the improvements. Likewise the defendants claimed that the
plaintiffs were able to cultivate the land and harvest palay although their
testimonies to this effect [are] based on their presumptions and calculations not
on actual harvest such that the [c]ourt also cannot make determination of the real
fruits derived from the land. This being so, the [c]ourt shall just offset the claim of
improvements to the claim of fruits derived from the land and then place the
parties in their previous positions before the agreement. Whatever
improvements spent on the land shall be compensated from the fruits derived
therefrom. 27
The appellate court found the setting off by the trial court to be in order, viz.:
[W]e find in order the Solomonic setting off by the court a quo the appellants'
claim of improvements on, with the appellees' claims for value of the fruits of, the
subject land, given the paucity of evidence on the matter. Along the same vein,
We find it just and fair to set off the compensation arising from the possession
and enjoyment of the fruits of subject lot by appellants during the pendency of
the case with the interests due on the amounts paid by them to the Aquinos and
to the DBP. 28
We can not order an offsetting of the claims as did the trial court and the appellate
court. The evidence show that both parties failed to prove their respective claims.
In the absence of evidence from both parties on their claims, offsetting is
improper. The right to offset may exist but the question of how much is to be
offset is factual in nature and needs to be proved by proper evidence. ACcEHI
IN VIEW WHEREOF, the Decision and the Resolution of the Court of Appeals in CA-
G.R. CV No. 28654 dated April 16, 1997 and March 25, 1998, respectively, are
AFFIRMED with the MODIFICATION that respondents are ordered to pay
petitioners the sum of P24,800.00, not P29,800.00 as ordered by the trial court,
representing the amounts they received from petitioners, plus the sum of
P108,216.00 representing the amounts petitioners paid to DBP. The order on the
offsetting of claims is DELETED for lack of evidence. Respondents-intervenors, as
co-owners, are likewise ordered to reimburse respondent Aquino their one-third
share each of the total amount to be paid by Aquino to petitioners.
SO ORDERED.
Sandoval-Gutierrez, Corona, Azcuna and Garcia, JJ., concur.
SECOND DIVISION
[G.R. No. L-54526. August 25, 1986.]
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner, vs. THE
COURT OF APPEALS and THE CITY OF DAGUPAN, respondents.
Miguel T. Caguioa, Ireneo B. Orlino and Manuel D. Victorio for respondent City of
Dagupan.
SYLLABUS
1. REMEDIAL LAW; APPEALS; JOINDER OF PARTIES; COURT WHICH RENDERED THE
APPEALED JUDGMENT SHOULD NOT BE MADE PARTY TO AN APPEAL BY
CERTIORARI. — It may be necessary to invite attention to the common error of
joining the court (be it a Regional Trial Court, the Intermediate Appellate Court,
or the Sandiganbayan) as a party respondent in an appeal by certiorari to this
court under Rule 45 of the Rules of Court. The only parties in an appeal by
certiorari are the appellant as petitioner and the appellee as respondent. (Cf. Elks
Club vs. Rovira, 80 Phil. 272) The court which rendered the judgment appealed
from is not a party in said appeal.
2. ID.; ID.; ID.; EXCEPTION. — The joinder of the Intermediate Appellate Court or
the Sandiganbayan as party respondent in an appeal by certiorari is necessary in
cases where the petitioner-appellant claims that said court acted without or in
excess of its jurisdiction or with grave abuse of discretion. An example of this is a
case where the petitioner-appellant claims that the Intermediate Appellate Court
or the Sandiganbayan acted with grave abuse of discretion in making its findings
of fact, thus justifying the review by this court of said findings of fact. In such a
case, the petition for review on certiorari under Rule 45 of the Rules of Court is at
the same time a petition for certiorari under Rule 65, and the joinder of the
Intermediate Appellate Court or the Sandiganbayan becomes necessary. (Cf.
Lianga Lumber Company vs. Lianga Timber Co., Inc., March 31, 1977, 76 SCRA 197)
3. ID.; SPECIAL CIVIL ACTION; CERTIORARI; JOINDER OF PARTIES; JOINDER OF
JUDGE OR COURTS AS PARTY DEFENDANT OR RESPONDENT, NECESSARY. — It is
in the special civil action of certiorari under Section 5 of Rule 65 of the Rules of
Court where the court or judge is required to be joined as party defendant or
respondent.
4. CIVIL LAW; PROPERTY; BUILDER IN BAD FAITH LOSES WHAT IS BUILT AND
WITHOUT RIGHT TO INDEMNITY. — Does a possessor in bad faith have the right
to remove useful improvements? The answer is clearly in the negative.
Recognized authorities on the subject are agreed on this point. Article 449 of the
Civil Code of the Philippines provides that "he who builds, plants or sows in bad
faith on the land of another, loses what is built, planted or sown without right to
indemnity." As a builder in bad faith, NAWASA lost whatever useful improvements
it had made without right to indemnity (Santos vs. Mojica, Jan. 31, 1969, 26 SCRA
703).
5. ID.; ID.; RIGHTS OF POSSESSOR IN GOOD FAITH; LIMITATIONS. — Under Article
546 of said code, only possessor in good faith shall be refunded for useful
expenses with the right of retention until reimbursed; and under Article 547
thereof, only a possessor in good faith may remover useful improvements if this
can be done without damage to the principal thing and if the person who recovers
the possession does not exercise the option of reimbursing the useful expenses.
6. ID.; ID.; POSSESSOR IN BAD FAITH ENTITLED TO REMOVE IMPROVEMENTS
MADE PURELY FOR LUXURY AND MERE PLEASURE; EXCEPTION. — The right given
a possessor in bad faith to remove improvements applies only to improvements
for pure luxury or mere pleasure, provided the thing suffers no injury thereby and
the lawful possessor does not prefer to retain them by paying the value they may
have at the time he enters into possession (Article 549, Civil Code).
7. ID.; ID.; RULING ON THE CASE OF CARBONELL vs. COURT OF APPEALS (66 SCRA
99) DOES NOT ESTABLISH PRECEDENT; CASE AT BAR. — In the case of Carbonell
vs. Court of Appeals (66 SCRA 99), both the trial court and the Court of Appeals
found that respondents Infantes were possessors in good faith. On appeal, the
20
First Division of this Court reversed the decision of the Court of Appeals and
declared petitioner Carbonell to have the superior right to the land in question.
On the question of whether or not respondents Infantes were possessors in good
faith, four Members ruled that they were not, but as a matter of equity allowed
them to remove the useful improvements they had introduced on the land.
Inasmuch as only four Members concurred in ruling that respondents Infantes
were possessors in bad faith and two Members ruled that they were possessors
in good faith, said decision does not establish a precedent. Moreover, the
equitable considerations present in said case are not present in the case at bar.
DECISION
FERIA, J p:
This is a petition for review on certiorari of the decision of the Court of Appeals
which affirmed the decision of the then Court of First Instance of Pangasinan. The
lower court had declared respondent City of Dagupan the lawful owner of the
Dagupan Waterworks System and held that the National Waterworks and
Sewerage Authority, now petitioner Metropolitan Waterworks and Sewerage
System, was a possessor in bad faith and hence not entitled to indemnity for the
useful improvements it had introduced.
Before proceeding further, it may be necessary to invite attention to the common
error of joining the court (be it a Regional Trial Court, the Intermediate Appellate
Court, or the Sandiganbayan) as a party respondent in an appeal by certiorari to
this Court under Rule 45 of the Rules of Court. The only parties in an appeal by
certiorari are the appellant as petitioner and the appellee as respondent. (Cf. Elks
Club vs. Rovira, 80 Phil. 272) The court which rendered the judgment appealed
from is not a party in said appeal. It is in the special civil action of certiorari under
Section 5 of Rule 65 of the Rules of Court where the court or judge is required to
be joined as party defendant or respondent. The joinder of the Intermediate
Appellate Court or the Sandiganbayan as party respondent in an appeal by
certiorari is necessary in cases where the petitioner-appellant claims that said
court acted without or in excess of its jurisdiction or with grave abuse of
discretion. An example of this is a case where the petitioner-appellant claims that
the Intermediate Appellate Court or the Sandiganbayan acted with grave abuse
of discretion in making its findings of fact, thus justifying the review by this court
of said findings of fact. (See the exceptions to the rule of conclusiveness of the
findings of fact of the Intermediate Appellate Court or the Sandiganbayan in the
case of Sacay vs. Sandiganbayan, G.R. Nos. 66497-98, July 10, 1986.) In such a
case, the petition for review on certiorari under Rule 45 of the Rules of Court is at
the same time a petition for certiorari under Rule 65, and the joinder of the
Intermediate Appellate Court or the Sandiganbayan becomes necessary. (Cf.
Lianga Lumber Company vs. Lianga Timber Co., Inc., March 31, 1977, 76 SCRA
197).
The City of Dagupan (hereinafter referred to as the CITY) filed a complaint against
the former National Waterworks and Sewerage Authority (hereinafter referred to
as the NAWASA), now the Metropolitan Waterworks and Sewerage System
(hereinafter referred to as MWSS), for recovery of the ownership and possession
of the Dagupan Waterworks System. NAWASA interposed as one of its special
defenses R.A. 1383 which vested upon it the ownership, possession and control
of all waterworks systems throughout the Philippines and as one of its
counterclaims the reimbursement of the expenses it had incurred for necessary
and useful improvements amounting to P255,000.00. Judgment was rendered by
the trial court in favor of the CITY on the basis of a stipulation of facts. The trial
court found NAWASA to be a possessor in bad faith and hence not entitled to the
reimbursement claimed by it. NAWASA appealed to the then Court of Appeals and
argued in its lone assignment of error that the CITY should have been held liable
for the amortization of the balance of the loan secured by NAWASA for the
improvement of the Dagupan Waterworks System. The appellate court affirmed
the judgment of the trial court and ruled as follows:
"However, as already found above, these useful expenses were made in utter bad
faith for they were instituted after the complaint was filed and after numerous
Supreme Court decisions were promulgated declaring unconstitutional the taking
by NAWASA of the patrimonial waterworks systems of cities, municipalities and
provinces without just compensation.
"Under Article 546 of the New Civil Code cited by the appellant, it is clear that a
builder or a possessor in bad faith is not entitled to indemnity for any useful
improvement on the premises. (Santos vs. Mojica, L-25450, Jan. 31, 1969). In fact,
he is not entitled to any right regarding the useful expenses (II Paras (1971) 387).
He shall not have any right whatsoever. Consequently, the owner shall be entitled
to all of the useful improvements without any obligation on his part (Jurado, Civil
Law Reviewer (1974) 223)."
Petitioner-Appellant MWSS, successor-in-interest of the NAWASA, appealed to
this Court raising the sole issue of whether or not it has the right to remove all the
useful improvements introduced by NAWASA to the Dagupan Waterworks
System, notwithstanding the fact that NAWASA was found to be a possessor in
bad faith. In support of its claim for removal of said useful improvements, MWSS
argues that the pertinent laws on the subject, particularly Articles 546, 547 and
549 of the Civil Code of the Philippines, do not definitely settle the question of
whether a possessor in bad faith has the right to remove useful improvements.
To bolster its claim MWSS further cites the decisions in the cases of Mindanao
Academy, Inc. vs. Yap (13 SCRA 190) and Carbonell vs. Court of Appeals (69 SCRA
99).

The CITY in its brief questions the raising of the issue of the removal of useful
improvements for the first time in this Court, inasmuch as it was not raised in the
trial court, much less assigned as an error before the then Court of Appeals. The
CITY further argues that petitioner, as a possessor in bad faith, has absolutely no
right to the useful improvements; that the rulings in the cases cited by petitioner
are not applicable to the case at bar; that even assuming that petitioner has the
right to remove the useful improvements, such improvements were not actually
identified, and hence a rehearing would be required which is improper at this
stage of the proceedings; and finally, that such improvements, even if they could
be identified, could not be separated without causing substantial injury or
damage to the Dagupan Waterworks System.
The procedural objection of the CITY is technically correct. NAWASA should have
alleged its additional counterclaim in the alternative - for the reimbursement of
the expenses it had incurred for necessary and useful improvements or for the
removal of all the useful improvements it had introduced.
Petitioner, however, argues that although such issue of removal was never
pleaded as a counterclaim, nevertheless it was joined with the implied consent of
the CITY, because the latter never filed a counter-manifestation or objection to
petitioner's manifestation wherein it stated that the improvements were
separable from the system, and quotes the first part of Sec. 5 of Rule 10 of the
Rules of Court to support its contention. Said provision reads as follows:
"SEC. 5. Amendment to conform to or authorize presentation of evidence. —
When issues not raised by the pleadings are tried by express or implied consent
of the parties, they shall be treated in all respects, as if they bad 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 so to amend
does not affect the result of the trial of these issues . . . "
This argument is untenable because the above-quoted provision is premised on
the fact that evidence had been introduced on an issue not raised by the pleadings
without any objection thereto being raised by the adverse party. In the case at
bar, no evidence whatsoever had been introduced by petitioner on the issue of
removability of the improvements and the case was decided on a stipulation of
facts. Consequently, the pleadings could not be deemed amended to conform to
the evidence.
However, We shall overlook this procedural defect and rule on the main issue
raised in this appeal, to wit: Does a possessor in bad faith have the right to remove
useful improvements? The answer is clearly in the negative. Recognized
authorities on the subject are agreed on this point.**
Article 449 of the Civil Code of the Philippines provides that "he who builds, plants
or sows in bad faith on the land of another, loses what is built, planted or sown
without right to indemnity." As a builder in bad faith, NAWASA lost whatever
useful improvements it had made without right to indemnity (Santos vs. Mojica,
Jan. 31, 1969, 26 SCRA 703).
Moreover, under Article 546 of said code, only a possessor in good faith shall be
refunded for useful expenses with the right of retention until reimbursed; and
under Article 547 thereof, only a possessor in good faith may remove useful
improvements if the can be done without damage to the principal thing and if the
person who recovers the possession does not exercise the option of reimbursing
the useful expenses. The right given a possessor in bad faith is to remove
improvements applies only to improvements for pure luxury or mere pleasure,
provided the thing suffers no injury thereby and the lawful possessor does not
prefer to retain them by paying the value they have at the time he enters into
possession (Article 549, Id.).
The decision in the case of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) cited
by petitioner does not support its stand. On the contrary, this Court ruled in said
case that "if the defendant constructed a new building, as he alleges, he cannot
recover its value because the construction was done after the filing of the action
for annulment, thus rendering him a builder in bad faith who is denied by law any
right of reimbursement." What this Court allowed appellant Yap to remove were
the equipment, books, furniture and fixtures brought in by him, because they
were outside of the scope of the judgment and may be retained by him.
Neither may the decision in the case of Carbonell vs. Court of Appeals (69 SCRA
99), also cited by petitioner, be invoked to modify the clear provisions of the Civil
Code of the Philippines that a possessor in bad faith is not entitled to
reimbursement of useful expenses or to removal of useful improvements.
In said case, both the trial court and the Court of Appeals found that respondents
Infantes were possessors in good faith. On appeal, the First Division of this Court
reversed the decision of the Court of Appeals and declared petitioner Carbonell
to have the superior right to the land in question. On the question of whether or
not respondents Infantes were possessors in good faith, four Members ruled that
they were not, but as a matter of equity allowed them to remove the useful
improvements they had introduced on the land. Justice Teehankee (now Chief
Justice) concurred on the same premise as the dissenting opinion of Justice
Muñoz Palma that both the conflicting buyers of the real property in question,
21
namely petitioner Carbonell as the first buyer and respondents Infantes as the
second buyer, may be deemed purchasers in good faith at the respective dates of
their purchase. Justice Muñoz Palma dissented on the ground that since both
purchasers were undoubtedly in good faith, respondents Infantes' prior
registration of the sale in good faith entitled them to the ownership of the land.
Inasmuch as only four Members concurred in ruling that respondents Infantes
were possessors in bad faith and two Members ruled that they were possessors
in good faith, said decision does not establish a precedent. Moreover, the
equitable consideration present in said case are not present in the case at bar.
WHEREFORE, the decision of the appellate court is affirmed with costs against
petitioner.
SO ORDERED.
Fernan Gutierrez, Jr., Paras and Cruz, JJ., concur.
Alampay,***, J., took no part.
THIRD DIVISION
[G.R. No. 73418. September 20, 1988.]
PELICULA SABIDO and MAXIMO RANCES, petitioners, vs. THE HONORABLE
INTERMEDIATE APPELLATE COURT and DOMINADOR STA. ANA, respondents.
SYLLABUS
1. REMEDIAL LAW; JUDGMENT; EXECUTION AGAINST A PARTY PRIVY TO A
DECIDED CASE. — An order wherein a party privy to a decided case is ordered to
vacate the premises and to remove all his constructions over the lot in dispute
grants him only such option and cannot avail himself of the rights pertaining to a
builder in good faith.
2. ID.; ID.; BILL OF COSTS IF NOT DULY PROVED BEFORE THE TRIAL, MAY NOT BE
AWARDED. — The necessity of proof cannot be dispensed with. In the absence of
proof before the trial regarding any of the claims in the bill of costs, they cannot
be awarded.
DECISION
GUTIERREZ, JR., J p:
This petition for review on certiorari seeks to set aside the decision of the then
Intermediate Appellate Court which nullified the orders of the trial court for the
issuance of the writs of execution and demolition in favor of the petitioners and
which ordered the trial court to assess the value of the demolished properties of
the private respondent for the purposes of set-off against respondent's liability to
the petitioners. LibLex
This case originated from an action for quieting of title which was filed by the
spouses Victor Dasal and Maria Pecunio against herein petitioners, Maximo
Rances and Pelicula Sabido on the question of ownership over two parcels of land
otherwise known as Lots "B" and "D".
On October 7, 1969, the trial court presided by Judge Delfin Sunga declared the
petitioners as owners of Lots "B" and "D". The decision became final. However,
when the decision was being carried out to put the petitioners in possession of
Lot "B", the Provincial Sheriff found three (3) persons occupying portions of Lot
"B". One of them was private respondent Dominador Sta. Ana.
The petitioners filed a motion to require the private respondent to show cause
why he should not be ejected from the portion of Lot "B". In his answer, Sta. Ana
claimed ownership by purchase from one, Prudencio Lagarto, of a bigger area of
which Lot "B" is a part. He stated that the two other persons occupying the
disputed portion are his tenants. LexLib
Subsequently, an order of demolition was issued by the trial court against the
private respondent. This order was challenged by the private respondent and
upon his filing of certiorari proceedings, this Court on November 26, 1973, set
aside the order of the trial court and remanded the case to the latter for further
reception of evidence to determine: 1) Whether or not the private respondent is
privy to the spouses Victor Dasal and Maria Pecunio as the losing parties in the
action below; and 2) Whether or not the petitioners and the private respondent
are litigating over the same parcel of land or whether there is overlapping of
boundaries of their respective lands.
On December 12, 1974, after conducting an ocular inspection and hearing, Judge
Sunga issued an order for the private respondent to vacate Lot "B" upon finding
that there is no proof that what the respondent allegedly purchased from Lagarto
covers a portion of Lot "B" but on the contrary, the deed of sale and tax
declaration show that what was sold to the respondent was bounded on the south
by Tigman river and therefore, the respondent's ownership could not have
extended to Lot "B" which was separated by Tigman river and mangrove swamps
from the portion he purchased.
Before the order of December 12, 1975, could be executed, however, Judge Sunga
inhibited himself from the case so the same was transferred to the then Court of
First Instance (now Branch XXI, Regional Trial Court) of Naga City presided by
Judge Mericia B. Palma.
The execution of the order met with some further delay when the records were
reconstituted. Judge Palma, feeling the need for a clearer understanding of the
facts and issues involved in the case, proceeded to hear and received evidence.
On May 16, 1983, Judge Palma issued a resolution finding that there was privity
between the private respondent and the spouses Victor Dasal and Maria Pecunio
as to the ownership of Lot "C" and as to the possession over the western portion
of the private road and the disputed Lot "B"; and that Lot "B" and the private road
are not included in the land purchased by the respondent from Lagarto.
According to the trial court, the private respondent was in the company of Dasal
(from whom he was renting Lot "C" and who was also the brother-in-law of
Lagarto) and was present when Commissioner Tubianosa inspected the land in
question in 1953 supporting the claim that the respondent knew that the land was
already in dispute between Dasal and the petitioners; and if the respondent really
believed that he owns the entire Lot "B" and the private road, he should have
raised his claim of ownership when Tubianosa inspected the land. The respondent
also failed to include the land in dispute in the survey of his purchased lot with
the flimsy excuse that the surveyor failed to return to finish the survey and include
the disputed land.
Before arriving at the above findings, however, the trial court clarified the issues
involved in the case. It said:
"WE NOW come to the RESOLUTION OF THE TWO ISSUES: (1) Was there privity
between Petitioner Sta. Ana and Plaintiffs Dasal? and (2) Is the disputed area
identified in paragraph '1' of the foregoing enumeration, part of the land
purchased by Petitioner from Prudencio Lagarto?
"If there is a privity between the Petitioner and Dasal, then the Petitioner is bound
by the final decision in this CC No. R-396 (2040) against Dasal and therefore
Petitioner is subject to the order of execution and is bound to vacate the land in
question or subject a portion of his house and the surrounding walls to
demolition. If there is no privity then he is not bound by said final decision." (Rollo,
pp. 48-49).
In the dispositive portion, however, the trial court held:
"WHEREFORE, premises considered, the Court finds:
"1) That there is privity between the petitioner and the plaintiffs spouses Victor
Dasal and Maria Pecunio as to ownership of Lot C and as to the possession over
the western portion of the private road and the disputed Lot B as so identified in
Exhibit 5;
"2) That the private road identified as within points 1, 2, 3, 4,5, 6 and 1 in Exh. 5
is owned by the respondents as already decided in CC No. 1103, and the same
private road and the Lot B in Exhibit 5 are both owned by the respondents as
already decided in this CC No. R-396 (2040);
"3) That the balcony of the present house of the petitioner is located in the
disputed Lot B and its southern (or southeastern) part of the western portion of
the 'private road';
xxx xxx xxx
"6) That therefore, this Court recommends to the Honorable Supreme Court, that
the petitioner be ordered to remove the entire balcony and the northern portion
of the main house to the extent of about one meter found to be standing on the
private road, as well as the northern extension of the hollow block walls on the
eastern boundary of Lot C that stand on the private road and to the northern end
of Lot B which wall measures to a total length of about 15 meters from the
northern boundary of Lot B to the southern edge of the private road; or in the
alternative to require the petitioner to pay the respondents the value of the
western portion of the disputed area which is now enclosed in the wall
constructed by the petitioner;
"7) And to hold the petitioner liable to the respondents for reasonable attorney's
fees and damages." (Rollo, p. 52).
On June 7, 1983, the private respondent filed with this Court a pleading captioned
"Notice of Appeal for Review." Said petition was denied in this Court's resolution
on October 26, 1983, to wit:
L-32642 (Dominador Sta. Ana v. Hon. Delfin Vir, Sunga, etc., et al.). Considering
the petition of petitioner for review of trial court resolution dated May 16, 1983,
the Court Resolved to DENY the petition, said resolution of May 16, 1983, being
in accord with the decision of November 26, 1973 (Rec., p. 438) and the resolution
of May 16, 1975 (idem, p. 595) as well as the order of December 12, 1974 (idem,
p. 500) which ordered the petitioner to vacate the premises (which is presumably
final). As stated in the aforesaid resolution of May 16, 1975, any review has to be
sought by timely appeal to the appellate court and cannot be sought in this case."
(Rollo, p. 65).
22
A series of resolutions were subsequently issued by this Court denying the private
respondent's motion to reconsider the above-quoted resolution. Finally, on
February 27, 1984, this Court issued a resolution ordering "the Chief of the
Judgment Division of this Court to RETURN the records thereof to the respondent
court for execution of judgment."
On August 9, 1984, the petitioners filed a motion for execution of judgment,
accompanied by a bill of costs, as follows: 1) Attorney's fees — P25,000.00; 2) Cost
of litigation - P7,000.00; 3) Expenses for transcript of record — P600.00; 4)
Expenses for xeroxing of important papers and documents — P500.00; 5) Accrued
rentals for the lot in question — P11,800,00 and 6) Legal interest of accrued
rentals at 12% a year — P1,436.00, for a total of P46,336.00.
On October 5, 1984, the trial court issued an order granting the petitioners'
motion for execution and application for a writ of attachment and approving the
bill of costs. In said order, the trial court ordered the demolition of any part of the
private respondent's building and all other construction within Lot "B" and the
private road. The demolition was effected.
The private respondent appealed to the then Intermediate Appellate Court,
contending that the order of the trial court departed from the intention of the
Supreme Court's resolution ordering execution of the judgment, for it thereby
deprived him of the alternative choice of paying the value of the disputed area
which was allowed in the trial court's resolution of May 16, 1983, which the
Supreme Court found to be in accord with, among others, its decision in G.R. No.
L-32642 (Sta. Ana v. Sunga, 54 SCRA 36).
On September 20, 1985, the appellate court rendered the assailed decision, the
dispositive portion of which provided;
"WHEREFORE, the writs of certiorari and prohibition applied for are granted. The
Order of October 5, 1984 approving the bill of costs and granting execution of
'previous orders', as well as the order/writ of demolition are hereby set aside,
Respondent Court is ordered to forthwith determine the value of the demolished
portion of petitioner's residential building and other structures affected by the
demolition and also, to assess the value of the disputed area for purposes of set
off and whatever is the excess in value should be paid to the party entitled
thereto." (Rollo, pp. 40-41)
In its decision, the appellate court explained the rationale behind the dispositive
portion. It said:
xxx xxx xxx
"The unqualified affirmance of said resolution of May 16, 1983, to Our Mind,
carried with it the approval of the above recommendation. The fact that the
Supreme Court was silent on the recommended alternative choice of demolition
and payment of the disputed area and merely returned the records for execution
of judgment, did not indicate that the recommended demolition was preferred.
The sufficiency and efficacy of the resolution of May 16, 1983, as the judgment to
be enforced or executed, cannot be doubted considering its substance rather than
its form. The aforequoted recommendation, itself the dispositive portion, can be
ascertained as to its meaning and operation. Thereby, the petitioner is given the
option to pay the value of the western portion of the disputed area which is
enclosed in the wall constructed by said petitioner. It is petitioner who is given
the alternative choice since if he does not pay, then he can be ordered to remove
whatever structure he had introduced in the questioned premises. Notably,
petitioner indicated his willingness to pay the price of the disputed area or
otherwise exercised that option.
"Respondent Court therefore acted with grave abuse of discretion tantamount to
lack or excess of jurisdiction in abandoning the alternative choice of payment of
the value of the area in dispute, which it authorized in its final resolution of May
16, 1983, when it ordered execution of its 'previous orders' for the petitioner to
vacate the land in question and for demolition, which was set aside when the case
was remanded for hearing pursuant to the Supreme Court decision of November
26, 1973. The previous orders referred to have not been specified by the
respondent Court in its Order of October 5, 1984. If it is the Order of December
12, 1974 which is being referred to by respondent Court, it should have so
specified; however, it did not presumably because it was reconsidered as can be
deduced from the fact that thereafter, respondent Court further heard the parties
and received their respective evidence in compliance with the decision of
November 26, 1973, after which proceedings, the respondent Court issued its
resolution of May 16, 1983." (Rollo, p. 38)
In the petition before us, the petitioners maintain that the appellate court
committed grave abuse of discretion when it granted the private respondent the
option of exercising the alternative choice of staying in the disputed land when it
has been established that the private respondent was in privy with the spouses
Victor Dasal and Maria Pecunio and, therefore, he could not be considered a
builder in good faith as to entitle him to the alternative choice of retention; and
that the demolition of the private respondent's construction on Lot "B" and on
the private road is a logical consequence of the finding that he was privy to the
losing parties who were also the adversaries of the petitioners in the original case.
LibLex
We agree.
When this Court ordered the remand of the case between the petitioners and the
private respondent in our decision of November 26, 1973 (see Sta. Ana v. Sunga,
supra), it was precisely to determine whether herein respondent was privy to the
spouses Dasals as to make the decision against the latter and in favor of the
petitioners over Lot "B" binding upon him. And this fact was clearly pointed out
by Judge Palma in her resolution of May 16, 1983 stating that if there is privity
between the private respondent and the spouses Dasals, then the former is bound
by the final decision in CC No. R-396 (2040) which is the case between the Dasals
and the petitioners. However, an apparent confusion was brought about by the
dispositive portion of the aforementioned resolution when it recommended to
this Court either to order the respondent to remove all his constructions over Lot
"B" or to require said respondent to pay the petitioners the value of the disputed
area which was already enclosed by a wall constructed by the respondent. This,
nevertheless, was rectified when we issued the series of resolutions denying the
respondent's petition and motions for reconsideration before this Court wherein
we stated that the resolution of May 16, 1983 was in accord, among others, with
the order of December 12, 1974 "which ordered the petitioner (private
respondent) to vacate the premises (which is presumably final)."
Hence, it is clear that the private respondent has to remove all his constructions
over Lot "B" and vacate the premises. This is his only option. Being adjudged in
privy with the spouses Dasals, he cannot avail himself of the rights granted to a
builder in good faith. He, therefore, must remove all his useful improvements over
Lot "B" at his own expense and if the same have already been removed, he cannot
be entitled to the right of retention or to any reimbursement. Thus, in the case of
Metropolitan Waterworks and Sewerage System v. Court of Appeals, (143 SCRA
623, 629), we ruled:
"Article 449 of the Civil Code of the Philippines provides that 'he who builds, plants
or sows in bad faith on the land of another, loses what is built, planted or sown
without right to indemnity.' As a builder in bad faith, NAWASA lost whatever
useful improvements it had made without right to indemnity (Santos v. Mojica,
Jan. 31, 1969, 26 SCRA 703).
"Moreover, under Article 546 of said code, only a possessor in good faith shall be
refunded for useful expenses with the right of retention until reimbursed; and
under Article 547 thereof, only a possessor in good faith may remove useful
improvements if this can be done without damage to the principal thing and if the
person who recovers the possession does not exercise the option of reimbursing
the useful expenses. The right given a possessor in bad faith to remove
improvements applies only to improvement for pure luxury or mere pleasure,
provided the thing suffers no injury thereby and the lawful possessor does not
prefer to retain them by paying the value they have at the time he enters into
possession (Article 549, Id.)."
We, therefore, find that the appellate court committed reversible error in holding
that the private respondent is entitled to exercise the option to pay the value of
the disputed area of Lot "B" and to reimbursement for the value of the
demolished portion of his building. We, however, affirm its ruling that the
petitioner's bill of costs must be set aside and that while the resolution of May 16,
1983 included attorney's fees and damages, the necessity of proof cannot be
dispensed with. Since no proof was presented before the trial regarding any of
these claims, they cannot be awarded.
WHEREFORE, the petition is GRANTED and the decision of the court of Appeals
dated September 20, 1985 is ANNULLED and SET ASIDE. The writ of attachment
issued by the trial court for the purpose of satisfying the award for damages and
the bill of costs is, however, permanently SET ASIDE. LLpr
SO ORDERED.
Fernan C.J., Feliciano, Bidin and Cortes, JJ., concur.
FIRST DIVISION
[G.R. No. L-33397. June 22, 1984.]
ROMEO F. EDU, in his capacity as Commissioner of Land Transportation,
EDUARDO DOMINGO, CARLOS RODRIGUEZ and PATRICIO YAMBAO in their
capacity as ANCAR Agents, petitioners, vs. HONORABLE AMADOR E. GOMEZ, in
his capacity as Judge of the Court of First Instance of Manila, Branch I, THE SHERIFF
of Quezon City, and LUCILA ABELLO, respondents.
Coronel Law Office for petitioners.
The Solicitor General for respondents.
SYLLABUS
1. CIVIL LAW; PROPERTY; POSSESSION; RIGHT OF PURCHASER IN GOOD FAITH OF
CHATTEL OR MOVABLE PROPERTY. — The acquirer or purchaser in good faith of a
chattel or movable property is entitled to be respected and protected in his
possession as if he were the true owner thereof until a competent court rules
otherwise. In the meantime, as the true owner, the possessor in good faith can
not be compelled to surrender possession nor to be required to institute an action
for the recovery of the chattel, whether or not an indemnity bond is issued in his
23
favor. The filing of an information charging that the chattel was illegally obtained
through estafa from its true owner by the transferor of the bona fide possessor
does not warrant disturbing the possession of the chattel against the will of the
possessor.
2. ADMINISTRATIVE LAW; LAND TRANSPORTATION COMMISSION; POWER OF THE
COMMISSIONER TO SEIZE AND IMPOUND MOTOR VEHICLES; BASIS FOR EXERCISE
THEREOF. — The provision of Section 60 of Republic Act 4136 of the right of the
Commissioner of Land Transportation to seize and impound subject property is
only good for the proper enforcement of lien upon motor vehicles. The Land
Transportation Commission may issue a warrant of constructive or actual distraint
against motor vehicle for collection of unpaid fees for registration re-registration
or delinquent registration of vehicles.
DECISION
RELOVA, J p:
Subject matter of this case is a 1968 model Volkwagen, bantam car, Engine No. H-
5254416, Chassis No. 118673654, allegedly owned by Lt. Walter A. Bala of Clark
Airbase, Angeles City, under whose name the car was allegedly registered on May
19, 1970 at the Angeles City Land Transportation Commission Agency, under File
No. 2B-7281. prcd
The Office of the Commission on Land Transportation received a report on August
25, 1970 from the Manila Adjustment Company that the abovementioned car was
stolen on June 29, 1970 from the residence of Lt. Bala, at 63 Makiling Street,
Plaridel Subdivision, Angeles City. Petitioners Eduardo Domingo, Carlos
Rodriguez, and Patricio Yambao, agents of Anti-Carnapping Unit (ANCAR) of the
Philippine Constabulary, on detail with the Land Transportation Commission, on
February 2, 1971, recognized subject car in the possession of herein private
respondent Lucila Abello and immediately seized and impounded the car as stolen
property. Likewise, herein petitioner Romeo F. Edu, then Commissioner of Land
Transportation, seized the car pursuant to Section 60 of Republic Act 4136 which
empowers him to seize the motor vehicle for delinquent registration aside from
his implicit power deducible from Sec. 4(5), Sec. 5 and 31 of said Code, "to seize
motor vehicles fraudulently or otherwise not properly registered."
On February 15, 1971, herein private respondent Lucila Abello filed a complaint
for replevin with damages in respondent court, docketed as Civil Case No. 82215,
impleading herein petitioners, praying for judgment, among others, to order the
sheriff or other proper officer of the court to take the said property (motor
vehicle) into his custody and to dispose of it in accordance with law.
On February 18, 1971, respondent judge of the then Court of First Instance of
Manila issued the order for the seizure of the personal property. Solicitor Vicente
Torres, appearing for the herein petitioners, submits that the car in question
legally belongs to Lt. Walter A. Bala under whose name it is originally registered
at Angeles City Land Transportation Commission Agency; that it was stolen from
him and, upon receipt by the Land Transportation Commissioner of the report on
the theft case and that the car upon being recognized by the agents of the ANCAR
in the possession of private respondent Lucila Abello, said agents seized the car
and impounded it as stolen vehicle. With respect to the replevin filed by private
respondent Lucila Abello, respondent Court of First Instance Judge found that the
car in question was acquired by Lucila Abello by purchase from its registered
owner, Marcelino Guansing, for the valuable consideration of P9,000.00, under
the notarial deed of absolute sale, dated August 11, 1970; that she has been in
possession thereof since then until February 3, 1971 when the car was seized from
her by the petitioners who acted in the belief that it is the car which was originally
registered in the name of Lt. Walter A. Bala and from whom it was allegedly stolen
sometime in June 1970. llcd
Finding for the private respondent, respondent judge held that —
"The complaint at bar is for replevin, or for the delivery of personal property,
based on the provisions of Rule 60, Sections 1 and 2 of the Rules of Court. All the
requirements of the law are present in the verified averments in the complaint,
viz:
"1. That plaintiff is the owner of the automobile in question.
"2. That the aforesaid property was seized from her against her will not for a tax
assessment or fine pursuant to law, not under a writ of execution or attachment
against her properties;
"3. That the property is wrongfully detained by the defendants, who allegedly
seized it from her on February 3, 1971, 'allegedly for the purpose of verifying the
same' (see par. 3, Complaint), but have refused since then until now to return the
same to the plaintiff.
"4. That plaintiff was ready to put up a bond in double the value of the car, and
has in fact already put up an P18,000.00 bond to the defendants for the return
thereof to the latter, if that shall be the ultimate judgment of the court, and to
pay defendants damages that they may incur.
"The issuance therefore, by this Court of the order of seizure of the said chattel
by the sheriff and for the latter to take it into his custody, is precisely pursuant to
the existing law, governing the subject.
"If defendants object to the seizure, the remedy provided for by law is set out in
Section 5 of Rule 60 and that is for them to put up a counter-bond for the same
amount of P18,000.00, which is double the value of the car in question.
Defendants may not ignore the law under the claim that, on complaint of a certain
party, the Manila Adjustment Company, they have a right to seize the same as it
appears to be the property that was stolen from Lt. Walter A. Bala several months
ago." (p. 19, Rollo)
There is no merit in the petition considering that the acquirer or the purchaser in
good faith of a chattel of movable property is entitled to be respected and
protected in his possession as if he were the true owner thereof until a competent
court rules otherwise. In the meantime, as the true owner, the possessor in good
faith cannot be compelled to surrender possession nor to be required to institute
an action for the recovery of the chattel, whether or not an indemnity bond is
issued in his favor. The filing of an information charging that the chattel was
illegally obtained through estafa from its true owner by the transferor of the bona
fide possessor does not warrant disturbing the possession of the chattel against
the will of the possessor. LLpr
Finally, the claim of petitioners that the Commission has the right to seize and
impound the car under Section 60 of Republic Act 4136 which reads:
"Sec. 60. The lien upon motor vehicles. — Any balance of fees for registration, re-
registration or delinquent registration of a motor vehicle, remaining unpaid and
all fines imposed upon any vehicle owner, shall constitute a first lien upon the
motor vehicle concerned."
is untenable. It is clear from the provision of said Section 60 of Republic Act 4136
that the Commissioner's right to seize and impound subject property is only good
for the proper enforcement of lien upon motor vehicles. The Land Transportation
Commission may issue a warrant of constructive or actual distraint against motor
vehicle for collection of unpaid fees for registration, re-registration or delinquent
registration of vehicles.
ACCORDINGLY, the petition is hereby DENIED.
SO ORDERED.
Teehankee, Melencio-Herrera, Plana and De la Fuente, JJ ., concur.
FIRST DIVISION
[G.R. No. 80298. April 26, 1990.]
EDCA PUBLISHING & DISTRIBUTING CORP., petitioner, vs. THE SPOUSES LEONOR
and GERARDO SANTOS, doing business under the name and style of "SANTOS
BOOKSTORE," and THE COURT OF APPEALS, respondents.
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson for petitioner.
Cendaña, Santos, Delmundo & Cendaña for private respondents.
DECISION
CRUZ, J p:
The case before us calls for the interpretation of Article 559 of the Civil Code and
raises the particular question of when a person may be deemed to have been
"unlawfully deprived" of movable property in the hands of another. The article
runs in full as follows:
ART. 559. The possession of movable property acquired in good faith is equivalent
to a title. Nevertheless, one who has lost any movable or has been unlawfully
deprived thereof, may recover it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully
deprived has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor.
The movable property in this case consists of books, which were bought from the
petitioner by an impostor who sold it to the private respondents. Ownership of
the books was recognized in the private respondents by the Municipal Trial Court,
1 which was sustained by the Regional Trial Court, 2 which was in turn sustained
by the Court of Appeals. 3 The petitioner asks us to declare that all these courts
have erred and should be reversed.
This case arose when on October 5, 1981, a person identifying himself as Professor
Jose Cruz placed an order by telephone with the petitioner company for 406
books, payable on delivery. 4 EDCA prepared the corresponding invoice and
delivered the books as ordered, for which Cruz issued a personal check covering
the purchase price of P8,995.65. 5 On October 7, 1981, Cruz sold 120 of the books
to private respondent Leonor Santos who, after verifying the seller's ownership
from the invoice he showed her, paid him P1,700.00. 6
Meanwhile, EDCA having become suspicious over a second order placed by Cruz
even before clearing of his first check, made inquiries with the De la Salle College
where he had claimed to be a dean and was informed that there was no such
person in its employ. Further verification revealed that Cruz had no more account
or deposit with the Philippine Amanah Bank, against which he had drawn the
payment check. 7 EDCA then went to the police, which set a trap and arrested
Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de la
24
Peña and his sale of 120 of the books he had ordered from EDCA to the private
respondents. 8
On the night of the same date, EDCA sought the assistance of the police in Precinct
5 at the UN Avenue, which forced their way into the store of the private
respondents and threatened Leonor Santos with prosecution for buying stolen
property. They seized the 120 books without warrant, loading them in a van
belonging to EDCA, and thereafter turned them over to the petitioner. 9
Protesting this high-handed action, the private respondents sued for recovery of
the books after demand for their return was rejected by EDCA. A writ of
preliminary attachment was issued and the petitioner, after initial refusal, finally
surrendered the books to the private respondents. 10 As previously stated, the
petitioner was successively rebuffed in the three courts below and now hopes to
secure relief from us.
To begin with, the Court expresses its disapproval of the arbitrary action of the
petitioner in taking the law into its own hands and forcibly recovering the disputed
books from the private respondents. The circumstance that it did so with the
assistance of the police, which should have been the first to uphold legal and
peaceful processes, has compounded the wrong even more deplorably. Questions
like the one at bar are decided not by policemen but by judges and with the use
not of brute force but of lawful writs.
Now to the merits.
It is the contention of the petitioner that the private respondents have not
established their ownership of the disputed books because they have not even
produced a receipt to prove they had bought the stock. This is unacceptable.
Precisely, the first sentence of Article 559 provides that "the possession of
movable property acquired in good faith is equivalent to a title," thus dispensing
with further proof.
The argument that the private respondents did not acquire the books in good faith
has been dismissed by the lower courts, and we agree. Leonor Santos first
ascertained the ownership of the books from the EDCA invoice showing that they
had been sold to Cruz, who said he was selling them for a discount because he
was in financial need. Private respondents are in the business of buying and selling
books and often deal with hard-up sellers who urgently have to part with their
books at reduced prices. To Leonor Santos, Cruz must have been only one of the
many such sellers she was accustomed to dealing with. It is hardly bad faith for
any one in the business of buying and selling books to buy them at a discount and
resell them for a profit.
But the real issue here is whether the petitioner has been unlawfully deprived of
the books because the check issued by the impostor in payment therefor was
dishonored.
In its extended memorandum, EDCA cites numerous cases holding that the owner
who has been unlawfully deprived of personal property is entitled to its recovery
except only where the property was purchased at a public sale, in which event its
return is subject to reimbursement of the purchase price. The petitioner is
begging the question. It is putting the cart before the horse. Unlike in the cases
invoked, it has yet to be established in the case at bar that EDCA has been
unlawfully deprived of the books.
The petitioner argues that it was, because the impostor acquired no title to the
books that he could have validly transferred to the private respondents. Its reason
is that as the payment check bounced for lack of funds, there was a failure of
consideration that nullified the contract of sale between it and Cruz.
The contract of sale is consensual and is perfected once agreement is reached
between the parties on the subject matter and the consideration. According to
the Civil Code: cdll
ART. 1475. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to
the provisions of the law governing the form of contracts.
xxx xxx xxx
ART. 1477. The owner ship of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof.
ART. 1478. The parties may stipulate that ownership in the thing shall not pass to
the purchaser until he has fully paid the price.
It is clear from the above provisions, particularly the last one quoted, that
ownership in the thing sold shall not pass to the buyer until full payment of the
purchase price only if there is a stipulation to that effect. Otherwise, the rule is
that such ownership shall pass from the vendor to the vendee upon the actual or
constructive delivery of the thing sold even if the purchase price has not yet been
paid.
Non-payment only creates a right to demand payment or to rescind the contract,
or to criminal prosecution in the case of bouncing checks. But absent the
stipulation above noted, delivery of the thing sold will effectively transfer
ownership to the buyer who can in turn transfer it to another.
In Asiatic Commercial Corporation v. Ang, 11 the plaintiff sold some cosmetics to
Francisco Ang, who in turn sold them to Tan Sit Bin. Asiatic not having been paid
by Ang, it sued for the recovery of the articles from Tan, who claimed he had
validly bought them from Ang, paying for the same in cash. Finding that there was
no conspiracy between Tan and Ang to deceive Asiatic, the Court of Appeals
declared:
Yet the defendant invoked Article 464 12 of the Civil Code providing, among other
things that "one who has been unlawfully deprived of personal property may
recover it from any person possessing it." We do not believe that the plaintiff has
been unlawfully deprived of the cartons of Gloco Tonic within the scope of this
legal provision. It has voluntarily parted with them pursuant to a contract of
purchase and sale. The circumstance that the price was not subsequently paid did
not render illegal a transaction which was valid and legal at the beginning. LLjur
In Tagatac v. Jimenez, 13 the plaintiff sold her car to Feist, who sold it to Sanchez,
who sold it to Jimenez. When the payment check issued to Tagatac by Feist was
dishonored, the plaintiff sued to recover the vehicle from Jimenez on the ground
that she had been unlawfully deprived of it by reason of Feist's deception. In ruling
for Jimenez, the Court of Appeals held:
Although the title of Cruz was presumed under Article 559 by his mere possession
of the books, these being movable property, Leonor Santos nevertheless
demanded more proof before deciding to buy them.
It would certainly be unfair now to make the private respondents bear the
prejudice sustained by EDCA as a result of its own negligence. We cannot see the
justice in transferring EDCA's loss to the Santoses who had acted in good faith,
and with proper care, when they bought the books from Cruz.
While we sympathize with the petitioner for its plight, it is clear that its remedy is
not against the private respondents but against Tomas de la Peña, who has
apparently caused all this trouble. The private respondents have themselves been
unduly inconvenienced, and for merely transacting a customary deal not really
unusual in their kind of business. It is they and not EDCA who have a right to
complain.
WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED,
with costs against the petitioner.
Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been

unlawfully deprived of her car. At first blush, it would seem that she was
unlawfully deprived thereof, considering that she was induced to part with it by
reason of the chicanery practiced on her by Warner L. Feist. Certainly, swindling,
like robbery, is an illegal method of deprivation of property. In a manner of
speaking, plaintiff-appellant was "illegally deprived" of her car, for the way by
which Warner L. Feist induced her to part with it is illegal and is punished by law.
But does this "unlawful deprivation" come within the scope of Article 559 of the
New Civil Code?

xxx xxx xxx

. . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a
voidable contract (Article 1390 N.C.C.). Being a voidable contract, it is susceptible
of either ratification or annulment. If the contract is ratified, the action to annul
it is extinguished (Article 1392, N.C.C.) and the contract is cleansed from all its
defects (Article 1396, N.C.C.); if the contract is annulled, the contracting parties
are restored to their respective situations before the contract and mutual
restitution follows as a consequence (Article 1398, N.C.C.).

However, as long as no action is taken by the party entitled, either that of

annulment or of ratification, the contract of sale remains valid and binding. When
plaintiff-appellant Trinidad C. Tagatac delivered the car to Feist by virtue of said
voidable contract of sale, the title to the car passed to Feist. Of course, the title
that Feist acquired was defective and voidable. Nevertheless, at the time he sold
the car to Felix Sanchez, his title thereto had not been avoided and he therefore
conferred a good title on the latter, provided he bought the car in good faith, for
value and without notice of the defect in Feist's title (Article 1506, N.C.C.). There
being no proof on record that Felix Sanchez acted in bad faith, it is safe to assume
that he acted in good faith.

The above rulings are sound doctrine and reflect our own interpretation of Article
559 as applied to the case before us.

Actual delivery of the books having been made, Cruz acquired ownership over the
books which he could then validly transfer to the private respondents. The fact
that he had not yet paid for them to EDCA was a matter between him and EDCA
and did not impair the title acquired by the private respondents to the books.

One may well imagine the adverse consequences if the phrase "unlawfully
deprived" were to be interpreted in the manner suggested by the petitioner. A
person relying on the seller's title who buys a movable property from him would
have to surrender it to another person claiming to be the original owner who had
not yet been paid the purchase price therefor. The buyer in the second sale would
be left holding the bag, so to speak, and would be compelled to return the thing
bought by him in good faith without even the right to reimbursement of the
amount he had paid for it.

It bears repeating that in the case before us, Leonor Santos took care to ascertain
first that the books belonged to Cruz before she agreed to purchase them. The
EDCA invoice Cruz showed her assured her that the books had been paid for on
delivery. By contrast, EDCA was less than cautious — in fact, too trusting — in
dealing with the impostor. Although it had never transacted with him before, it
readily delivered the books he had ordered (by telephone) and as readily accepted
his personal check in payment. It did not verify his identity although it was easy
enough to do this. It did not wait to clear the check of this unknown drawer.
Worse, it indicated in the sales invoice issued to him, by the printed terms
thereon, that the books had been paid for on delivery, thereby vesting ownership
in the buyer. Cdpr

Surely, the private respondent did not have to go beyond that invoice to satisfy
herself that the books being offered for sale by Cruz belonged to him; yet she did.
25