Ballatan V. Ca: Facts

BALLATAN v.
CA
-Land Owner in Good faith, Builder in Good faith scenario -The right to choose between
appropriating the improvement or selling the land on which the improvement of the
builder, planter or sower stands, is given to the owner.
-If the option chooses is to sell the lot, the price must be fixed at the prevailing market
value at the time of payment.
FACTS:
Eden Ballatan, together with other petitioners, is living in and registered owners of Lot
No. 24. Respondent Winston Go is living in and registered owners of Lot No. 25 and 26.
And Li Ching Yao is living in and the registered owner of Lot. 27. The Lots are adjacent
to each other.
When Ballatan constructed her house in her lot, she noticed that the concrete fence and
side pathway of the adjoining house of respondent Winston Go encroached on the
entire length of the eastern side of her property. She was informed by her contractor of
this discrepancy, who then told respondent Go of the same. Respondent, however,
claims that his house was built within the parameters of his father’s lot; and that this lot
was surveyed by engineer Jose Quedding, the authorized surveyor of Araneta Institute
of Agriculture (AIA). Petitioner called the attention of AIA on the matter and so the latter
authorized another survey of the land by Engineer Quedding. The latter then did the
survey twice which led to the conclusion that Lots Nos 25, 26 (owned by respondent
Go) and 27 (owned by Li Ching Yao) moved westward to the eastern boundary of Lot
24 (owned by petitioner Ballatan.) –(it was later on discovered by the courts that Go
encroached 42 square meters from the property of Ballatan and Yao encroached 37
square meters on Go’s property, all of which were in GOOD FAITH) Ballatan made
written demands to the respondent to dismantle and move their improvements and
since the latter wasn’t answering the petitioner filed accion publiciana in court. Go’s filed
their “Answer with Third-Party Complaint” impleading as third party defendants
respondents Li Ching Yao, the AIA and Engineer Quedding.
RTC ruled in favor of the petitioner ordering respondent Go to demolish their

improvements and pay damages to Petitioner but dismissing the third-party complaint.
CA affirmed the dismissal of the third party-complaint as to AIA but reinstated the the
complaint against Yao and the Engineer. CA also affirmed the demolition and damages
awarded to petitioner and added that Yao should also pay respondent for his
encroachment of respondent Go’s property. Jose Quedding was also ordered to pay
attorney’s fees for his negligence which caused all this fuzz.
1
ISSUE: What is the proper remedy in this situation (everyone was in
good faith)?
RULING:
Art 448 is the proper remedy (Lower Courts are wrong in awarding the damages). It was
established in the case that the parties had no knowledge of the encroachment until
Ballatan noticed it there all of them were builders in Good faith. In that scenario they
have two options. 1st option is that the land owner will buy the improvements and the
2nd option is to oblige the builders to buy the land given that the value of the land is not
considerably more than the buildings or tree; other wise the owner may remove the
improvements thereon.
The builder, planter or sower, however, is not obliged to purchase the land if its value is
considerably more than the building, planting or sowing. In such case, the builder,
planter or sower must pay rent to the owner of the land. If the parties cannot come to
terms over the conditions of the lease, the court must fix the terms thereof. The right to
choose between appropriating the improvement or selling the land on which the
improvement of the builder, planter or sower stands, is given to the owner. If the option
chooses is to sell the lot, the price must be fixed at the prevailing market value at the
time of payment.
Petitioner was given by SC 30 days to decide on what to do or which right to exercise.

Likewise, Go was also given time to do the regarding Yao’s encroachment. Engineer
Quedding was still asked to pay attorney’s fees.
MANUEL O. FUENTES and LETICIA L. FUENTES, Petitioners,

vs.
CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE MARIE R. CRISTOBAL and PILAR
MALCAMPO,Respondents.
DECISION
ABAD, J.:
This case is about a husband’s sale of conjugal real property, employing a challenged affidavit of
consent from an estranged wife. The buyers claim valid consent, loss of right to declare nullity of
sale, and prescription.
The Facts and the Case
Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga City. On October 11,
1982 she sold it to her son, Tarciano T. Roca (Tarciano) under a deed of absolute sale.1 But
Tarciano did not for the meantime have the registered title transferred to his name.
Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel and Leticia Fuentes (the
Fuentes spouses). They arranged to meet at the office of Atty. Romulo D. Plagata whom they asked
to prepare the documents of sale. They later signed an agreement to sell that Atty. Plagata
prepared2 dated April 29, 1988, which agreement expressly stated that it was to take effect in six
months.
2
The agreement required the Fuentes spouses to pay Tarciano a down payment of ₱60,000.00 for
the transfer of the lot’s title to him. And, within six months, Tarciano was to clear the lot of structures
and occupants and secure the consent of his estranged wife, Rosario Gabriel Roca (Rosario), to the
sale. Upon Tarciano’s compliance with these conditions, the Fuentes spouses were to take
possession of the lot and pay him an additional ₱140,000.00 or ₱160,000.00, depending on whether
or not he succeeded in demolishing the house standing on it. If Tarciano was unable to comply with
these conditions, the Fuentes spouses would become owners of the lot without any further formality
and payment.
The parties left their signed agreement with Atty. Plagata who then worked on the other
requirements of the sale. According to the lawyer, he went to see Rosario in one of his trips to
Manila and had her sign an affidavit of consent.3 As soon as Tarciano met the other conditions, Atty.
Plagata notarized Rosario’s affidavit in Zamboanga City. On January 11, 1989 Tarciano executed a
deed of absolute sale4 in favor of the Fuentes spouses. They then paid him the additional
₱140,000.00 mentioned in their agreement. A new title was issued in the name of the spouses5 who
immediately constructed a building on the lot. On January 28, 1990 Tarciano passed away, followed
by his wife Rosario who died nine months afterwards.
Eight years later in 1997, the children of Tarciano and Rosario, namely, respondents Conrado G.
Roca, Annabelle R. Joson, and Rose Marie R. Cristobal, together with Tarciano’s sister, Pilar R.
Malcampo, represented by her son, John Paul M. Trinidad (collectively, the Rocas), filed an action
for annulment of sale and reconveyance of the land against the Fuentes spouses before the
Regional Trial Court (RTC) of Zamboanga City in Civil Case 4707. The Rocas claimed that the sale
to the spouses was void since Tarciano’s wife, Rosario, did not give her consent to it. Her signature
on the affidavit of consent had been forged. They thus prayed that the property be reconveyed to
them upon reimbursement of the price that the Fuentes spouses paid Tarciano.6
The spouses denied the Rocas’ allegations. They presented Atty. Plagata who testified that he
personally saw Rosario sign the affidavit at her residence in Paco, Manila, on September 15, 1988.
He admitted, however, that he notarized the document in Zamboanga City four months later on
January 11, 1989.7 All the same, the Fuentes spouses pointed out that the claim of forgery was
personal to Rosario and she alone could invoke it. Besides, the four-year prescriptive period for
nullifying the sale on ground of fraud had already lapsed.
Both the Rocas and the Fuentes spouses presented handwriting experts at the trial. Comparing
Rosario’s standard signature on the affidavit with those on various documents she signed, the
Rocas’ expert testified that the signatures were not written by the same person. Making the same
comparison, the spouses’ expert concluded that they were.8
On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled that the action had
already prescribed since the ground cited by the Rocas for annulling the sale, forgery or fraud,
already prescribed under Article 1391 of the Civil Code four years after its discovery. In this case,
the Rocas may be deemed to have notice of the fraud from the date the deed of sale was registered
with the Registry of Deeds and the new title was issued. Here, the Rocas filed their action in 1997,
almost nine years after the title was issued to the Fuentes spouses on January 18, 1989.9
Moreover, the Rocas failed to present clear and convincing evidence of the fraud. Mere variance in
the signatures of Rosario was not conclusive proof of forgery.10 The RTC ruled that, although the
Rocas presented a handwriting expert, the trial court could not be bound by his opinion since the
opposing expert witness contradicted the same. Atty. Plagata’s testimony remained technically
unrebutted.11
Finally, the RTC noted that Atty. Plagata’s defective notarization of the affidavit of consent did not
invalidate the sale. The law does not require spousal consent to be on the deed of sale to be valid.
Neither does the irregularity vitiate Rosario’s consent. She personally signed the affidavit in the
presence of Atty. Plagata.12
On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found sufficient evidence
of forgery and did not give credence to Atty. Plagata’s testimony that he saw Rosario sign the
document in Quezon City. Its jurat said differently. Also, upon comparing the questioned signature
with the specimen signatures, the CA noted significant variance between them. That Tarciano and
Rosario had been living separately for 30 years since 1958 also reinforced the conclusion that her
signature had been forged.
3
Since Tarciano and Rosario were married in 1950, the CA concluded that their property relations
were governed by the Civil Code under which an action for annulment of sale on the ground of lack
of spousal consent may be brought by the wife during the marriage within 10 years from the
transaction. Consequently, the action that the Rocas, her heirs, brought in 1997 fell within 10 years
of the January 11, 1989 sale.
Considering, however, that the sale between the Fuentes spouses and Tarciano was merely
voidable, the CA held that its annulment entitled the spouses to reimbursement of what they paid
him plus legal interest computed from the filing of the complaint until actual payment. Since the
Fuentes spouses were also builders in good faith, they were entitled under Article 448 of the Civil
Code to payment of the value of the improvements they introduced on the lot. The CA did not award
damages in favor of the Rocas and deleted the award of attorney’s fees to the Fuentes spouses.13
Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition for review.14
The Issues Presented
The case presents the following issues:
1. Whether or not Rosario’s signature on the document of consent to her husband Tarciano’s
sale of their conjugal land to the Fuentes spouses was forged;
2. Whether or not the Rocas’ action for the declaration of nullity of that sale to the spouses
already prescribed; and
3. Whether or not only Rosario, the wife whose consent was not had, could bring the action
to annul that sale.
The Court’s Rulings
First. The key issue in this case is whether or not Rosario’s signature on the document of consent
had been forged. For, if the signature were genuine, the fact that she gave her consent to her
husband’s sale of the conjugal land would render the other issues merely academic.
The CA found that Rosario’s signature had been forged. The CA observed a marked difference
between her signature on the affidavit of consent15 and her specimen signatures.16 The CA gave no
weight to Atty. Plagata’s testimony that he saw Rosario sign the document in Manila on September
15, 1988 since this clashed with his declaration in the jurat that Rosario signed the affidavit in
Zamboanga City on January 11, 1989.
The Court agrees with the CA’s observation that Rosario’s signature strokes on the affidavit appears
heavy, deliberate, and forced. Her specimen signatures, on the other hand, are consistently of a
lighter stroke and more fluid. The way the letters "R" and "s" were written is also remarkably
different. The variance is obvious even to the untrained eye.
Significantly, Rosario’s specimen signatures were made at about the time that she signed the
supposed affidavit of consent. They were, therefore, reliable standards for comparison. The Fuentes
spouses presented no evidence that Rosario suffered from any illness or disease that accounted for
the variance in her signature when she signed the affidavit of consent. Notably, Rosario had been
living separately from Tarciano for 30 years since 1958. And she resided so far away in Manila. It
would have been quite tempting for Tarciano to just forge her signature and avoid the risk that she
would not give her consent to the sale or demand a stiff price for it.
What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of consent. That jurat
declared that Rosario swore to the document and signed it in Zamboanga City on January 11, 1989
when, as Atty. Plagata testified, she supposedly signed it about four months earlier at her residence
in Paco, Manila on September 15, 1988. While a defective notarization will merely strip the
document of its public character and reduce it to a private instrument, that falsified jurat, taken
together with the marks of forgery in the signature, dooms such document as proof of Rosario’s
consent to the sale of the land. That the Fuentes spouses honestly relied on the notarized affidavit
as proof of Rosario’s consent does not matter. The sale is still void without an authentic consent.
4
Second. Contrary to the ruling of the Court of Appeals, the law that applies to this case is the Family
Code, not the Civil Code. Although Tarciano and Rosario got married in 1950, Tarciano sold the
conjugal property to the Fuentes spouses on January 11, 1989, a few months after the Family Code
took effect on August 3, 1988.
When Tarciano married Rosario, the Civil Code put in place the system of conjugal partnership of
gains on their property relations. While its Article 165 made Tarciano the sole administrator of the
conjugal partnership, Article 16617 prohibited him from selling commonly owned real property without
his wife’s consent. Still, if he sold the same without his wife’s consent, the sale is not void but merely
voidable. Article 173 gave Rosario the right to have the sale annulled during the marriage within ten
years from the date of the sale. Failing in that, she or her heirs may demand, after dissolution of the
marriage, only the value of the property that Tarciano fraudulently sold. Thus:
Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned,
ask the courts for the annulment of any contract of the husband entered into without her consent,
when such consent is required, or any act or contract of the husband which tends to defraud her or
impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she
or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently
alienated by the husband.
But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on Conjugal
Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on Property Relations
Between Husband and Wife.18Further, the Family Code provisions were also made to apply to
already existing conjugal partnerships without prejudice to vested rights.19 Thus:
Art. 105. x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains
already established between spouses before the effectivity of this Code, without prejudice to vested
rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256.
(n)
Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on January 11, 1989, the
law that governed the disposal of that lot was already the Family Code.
In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide a period
within which the wife who gave no consent may assail her husband’s sale of the real property. It
simply provides that without the other spouse’s written consent or a court order allowing the sale, the
same would be void. Article 124 thus provides:
Art. 124. x x x In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance which must
have the authority of the court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void. x x x
Under the provisions of the Civil Code governing contracts, a void or inexistent contract has no force
and effect from the very beginning. And this rule applies to contracts that are declared void by
positive provision of law,20 as in the case of a sale of conjugal property without the other spouse’s
written consent. A void contract is equivalent to nothing and is absolutely wanting in civil effects. It
cannot be validated either by ratification or prescription.21
But, although a void contract has no legal effects even if no action is taken to set it aside, when any
of its terms have been performed, an action to declare its inexistence is necessary to allow
restitution of what has been given under it.22 This action, according to Article 1410 of the Civil Code
does not prescribe. Thus:
Art. 1410. The action or defense for the declaration of the inexistence of a contract does not
prescribe.
Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment of sale and
reconveyance of the real property that Tarciano sold without their mother’s (his wife’s) written
consent. The passage of time did not erode the right to bring such an action.
5
Besides, even assuming that it is the Civil Code that applies to the transaction as the CA held,
Article 173 provides that the wife may bring an action for annulment of sale on the ground of lack of
spousal consent during the marriage within 10 years from the transaction. Consequently, the action
that the Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale. It did not
yet prescribe.
The Fuentes spouses of course argue that the RTC nullified the sale to them based on fraud and
that, therefore, the applicable prescriptive period should be that which applies to fraudulent
transactions, namely, four years from its discovery. Since notice of the sale may be deemed given to
the Rocas when it was registered with the Registry of Deeds in 1989, their right of action already
prescribed in 1993.
But, if there had been a victim of fraud in this case, it would be the Fuentes spouses in that they
appeared to have agreed to buy the property upon an honest belief that Rosario’s written consent to
the sale was genuine. They had four years then from the time they learned that her signature had
been forged within which to file an action to annul the sale and get back their money plus damages.
They never exercised the right.
If, on the other hand, Rosario had agreed to sign the document of consent upon a false
representation that the property would go to their children, not to strangers, and it turned out that this
was not the case, then she would have four years from the time she discovered the fraud within
which to file an action to declare the sale void. But that is not the case here. Rosario was not a victim
of fraud or misrepresentation. Her consent was simply not obtained at all. She lost nothing since the
sale without her written consent was void. Ultimately, the Rocas ground for annulment is not forgery
but the lack of written consent of their mother to the sale. The forgery is merely evidence of lack of
consent.
Third. The Fuentes spouses point out that it was to Rosario, whose consent was not obtained, that
the law gave the right to bring an action to declare void her husband’s sale of conjugal land. But
here, Rosario died in 1990, the year after the sale. Does this mean that the right to have the sale
declared void is forever lost?
The answer is no. As stated above, that sale was void from the beginning. Consequently, the land
remained the property of Tarciano and Rosario despite that sale. When the two died, they passed on
the ownership of the property to their heirs, namely, the Rocas.23 As lawful owners, the Rocas had
the right, under Article 429 of the Civil Code, to exclude any person from its enjoyment and
disposal.1avv phi 1
In fairness to the Fuentes spouses, however, they should be entitled, among other things, to recover
from Tarciano’s heirs, the Rocas, the ₱200,000.00 that they paid him, with legal interest until fully
paid, chargeable against his estate.
Further, the Fuentes spouses appear to have acted in good faith in entering the land and building
improvements on it. Atty. Plagata, whom the parties mutually entrusted with closing and
documenting the transaction, represented that he got Rosario’s signature on the affidavit of consent.
The Fuentes spouses had no reason to believe that the lawyer had violated his commission and his
oath. They had no way of knowing that Rosario did not come to Zamboanga to give her consent.
There is no evidence that they had a premonition that the requirement of consent presented some
difficulty. Indeed, they willingly made a 30 percent down payment on the selling price months earlier
on the assurance that it was forthcoming.
Further, the notarized document appears to have comforted the Fuentes spouses that everything
was already in order when Tarciano executed a deed of absolute sale in their favor on January 11,
1989. In fact, they paid the balance due him. And, acting on the documents submitted to it, the
Register of Deeds of Zamboanga City issued a new title in the names of the Fuentes spouses. It was
only after all these had passed that the spouses entered the property and built on it. He is deemed a
possessor in good faith, said Article 526 of the Civil Code, who is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it.
As possessor in good faith, the Fuentes spouses were under no obligation to pay for their stay on
the property prior to its legal interruption by a final judgment against them.24 What is more, they are
entitled under Article 448 to indemnity for the improvements they introduced into the property with a
right of retention until the reimbursement is made. Thus:
6
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof. (361a)
The Rocas shall of course have the option, pursuant to Article 546 of the Civil Code,25 of
indemnifying the Fuentes spouses for the costs of the improvements or paying the increase in value
which the property may have acquired by reason of such improvements.
WHEREFORE, the Court DENIES the petition and AFFIRMS WITH MODIFICATION the decision of
the Court of Appeals in CA-G.R. CV 00531 dated February 27, 2007 as follows:
1. The deed of sale dated January 11, 1989 that Tarciano T. Roca executed in favor of
Manuel O. Fuentes, married to Leticia L. Fuentes, as well as the Transfer Certificate of Title
T-90,981 that the Register of Deeds of Zamboanga City issued in the names of the latter
spouses pursuant to that deed of sale are DECLARED void;
2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate Transfer Certificate

of Title 3533 in the name of Tarciano T. Roca, married to Rosario Gabriel;
3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar
Malcampo are ORDERED to pay petitioner spouses Manuel and Leticia Fuentes the
₱200,000.00 that the latter paid Tarciano T. Roca, with legal interest from January 11, 1989
until fully paid, chargeable against his estate;
4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar
Malcampo are further ORDERED, at their option, to indemnify petitioner spouses Manuel
and Leticia Fuentes with their expenses for introducing useful improvements on the subject
land or pay the increase in value which it may have acquired by reason of those
improvements, with the spouses entitled to the right of retention of the land until the
indemnity is made; and
5. The RTC of Zamboanga City from which this case originated is DIRECTED to receive
evidence and determine the amount of indemnity to which petitioner spouses Manuel and
Leticia Fuentes are entitled.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice
G.R. No. 176791 : November 14, 2012
COMMUNITIES CAGAYAN, INC., Petitioner, v. SPOUSES ARSENIO (Deceased) and ANGELES NANOL
AND ANYBODY CLAIMING RIGHTS UNDER THEM, Respondents.
DECISION
DEL CASTILLO, J.:
LAWS fill the gap in a contract.
This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the December 29. 2006
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Decision2 and the February 12, 2007 Order3 of the Regional Trial Court (RTC), Cagayan De Oro City,
Ï‚ rÎ½ll Ï‚ rÎ½ll
Branch 18, in Civil Case No. 2005-158.
Factual Antecedents
Sometimes in 1994, respondent-spouses Arsenio and Angeles Nanol entered into a Contract to Sell4 with
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petitioner Communities Cagayan, Inc.,5 whereby the latter agreed to sell to respondent-spouses a house
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7
and Lots 17 and 196 located at Block 16, Camella Homes Subdivision, Cagayan de Oro City, 7 for the price
Ï‚rÎ½ ll Ï‚rÎ½ll
of P368,000.00.8 Respondent-spouses, however, did not avail of petitioners inhouse financing due to its high
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interest rates.9 Instead, they obtained a loan from Capitol Development Bank, a sister company of
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petitioner, using the property as collateral.10 To facilitate the loan, a simulated sale over the property was Ï‚rÎ½l l
executed by petitioner in favor of respondent-spouses.11 Accordingly, titles were transferred in the names Ï‚ rÎ½ll
of respondent-spouses under Transfer Certificates of Title (TCT) Nos. 105202 and 105203, and submitted to
Capitol Development Bank for loan processing.12 Unfortunately, the bank collapsed and closed before it Ï‚ rÎ½ll
could release the loan.13 Ï‚ rÎ½ll
Thus, on November 30, 1997, respondent-spouses entered into another Contract to Sell14 with petitioner Ï‚ rÎ½ll
over the same property for the same price of P368,000.00.15 This time, respondent-spouses availed of Ï‚rÎ½ ll
petitioners in-house financing16thus, undertaking to pay the loan over four years, from 1997 to 2001.17 Ï‚rÎ½l l
Sometime in 2000, respondent Arsenio demolished the original house and constructed a three-story house
allegedly valued at P3.5 million, more or less.18 Ï‚rÎ½l l
In July 2001, respondent Arsenio died, leaving his wife, herein respondent Angeles, to pay for the monthly
amortizations.19 Ï‚rÎ½l l
On September 10, 2003, petitioner sent respondent-spouses a notarizedNotice of Delinquency and

Cancellation of Contract to Sell20 due to the latters failure to pay the monthly amortizations. Ï‚ rÎ½ll
In December 2003, petitioner filed before Branch 3 of the Municipal Trial Court in Cities of Cagayan de Oro
City, an action for unlawful detainer, docketed as C3-Dec-2160, against respondent-spouses.21 When the Ï‚rÎ½l l
case was referred for mediation, respondent Angeles offered to pay P220,000.00 to settle the case but
petitioner refused to accept the payment.22 The case was later withdrawn and consequently dismissed Ï‚rÎ½ ll
because the judge found out that the titles were already registered under the names of respondent-
spouses.23 Ï‚rÎ½l l
Unfazed by the unfortunate turn of events, petitioner, on July 27, 2005, filed before Branch 18 of the RTC,
Cagayan de Oro City, a Complaint for Cancellation of Title, Recovery of Possession, Reconveyance and
Damages,24 docketed as Civil Case No. 2005-158, against respondent-spouses and all persons claiming
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rights under them. Petitioner alleged that the transfer of the titles in the names of respondent-spouses was
made only in compliance with the requirements of Capitol Development Bank and that respondent-spouses
failed to pay their monthly amortizations beginning January 2000.25 Thus, petitioner prayed that TCT Nos. Ï‚rÎ½l l
T-105202 and T-105203 be cancelled, and that respondent Angeles be ordered to vacate the subject
property and to pay petitioner reasonable monthly rentals from January 2000 plus damages.26 Ï‚rÎ½ ll
In her Answer,27 respondent Angeles averred that the Deed of Absolute Sale is valid, and that petitioner is
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not the proper party to file the complaint because petitioner is different from Masterplan Properties,
Inc.28 She also prayed for damages by way of compulsory counterclaim.29
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In its Reply,30 petitioner attached a copy of its Certificate of Filing of Amended Articles of
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Incorporation31 showing that Masterplan Properties, Inc. and petitioner are one and the same. As to the
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compulsory counterclaim for damages, petitioner denied the same on the ground of "lack of knowledge
sufficient to form a belief as to the truth or falsity of such allegation."32 Ï‚rÎ½ll
Respondent Angeles then moved for summary judgment and prayed that petitioner be ordered to return the
owners duplicate copies of the TCTs.33 Ï‚rÎ½ll
Pursuant to Administrative Order No. 59-2005, the case was referred for mediation.34 But since the parties Ï‚rÎ½l l
failed to arrive at an amicable settlement, the case was set for preliminary conference on February 23,
2006.35 Ï‚rÎ½ ll
On July 7, 2006, the parties agreed to submit the case for decision based on the pleadings and exhibits
presented during the preliminary conference.36 Ï‚rÎ½ll
Ruling of the Regional Trial Court
On December 29, 2006, the RTC rendered judgment declaring the Deed of Absolute Sale invalid for lack of
consideration.37 Thus, it disposed of the case in this wise: Ï‚ rÎ½ll chan roble svirtual lawlib rary
WHEREFORE, the Court hereby declares the Deed of Absolute Sale VOID. Accordingly, Transfer Certificates
of Title Nos. 105202 and 105203 in the names of the [respondents], Arsenio (deceased) and Angeles Nanol,
are ordered CANCELLED. The [respondents] and any person claiming rights under them are directed to
turn-over the possession of the house and lot to [petitioner], Communities Cagayan, Inc., subject to the
latters payment of their total monthly installments and the value of the new house minus the cost of the
original house.
SO ORDERED.38 Ï‚rÎ½ ll
8
Not satisfied, petitioner moved for reconsideration of the Decision but the Motion39 was denied in an Ï‚rÎ½l l
Order40 dated February 12, 2007.

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Issue
Instead of appealing the Decision to the Court of Appeals (CA), petitioner opted to file the instant petition
directly with this Court on a pure question of law, to wit: ch anroble svirtual lawlib rary
WHETHER X X X THE ACTION OF THE RTC BRANCH 18 X X X IN ORDERING THE RECOVERY OF POSSESSION
BY PETITIONER subject to the latters payment of their total monthly installments and the value of the new
house minus the cost of the original house IS CONTRARY TO LAW AND JURISPRUDENCE X X X.41 Ï‚rÎ½ll
Petitioners Arguments
Petitioner seeks to delete from the dispositive portion the order requiring petitioner to reimburse
respondent-spouses the total monthly installments they had paid and the value of the new house minus the
cost of the original house.42 Petitioner claims that there is no legal basis for the RTC to require petitioner to
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reimburse the cost of the new house because respondent-spouses were in bad faith when they renovated
and improved the house, which was not yet their own.43 Petitioner further contends that instead of ordering
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mutual restitution by the parties, the RTC should have applied Republic Act No. 6552, otherwise known as
the Maceda Law,44 and that instead of awarding respondent-spouses a refund of
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all their monthly amortization payments, the RTC should have ordered them to pay petitioner monthly
rentals.45 Ï‚rÎ½ ll
Respondent Angeles Arguments
Instead of answering the legal issue raised by petitioner, respondent Angeles asks for a review of the
Decision of the RTC by interposing additional issues.46 She maintains that the Deed of Absolute Sale is
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valid.47 Thus, the RTC erred in cancelling TCT Nos. 105202 and 105203.
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Our Ruling
The petition is partly meritorious.
At the outset, we must make it clear that the issues raised by respondent Angeles may not be entertained.
For failing to file an appeal, she is bound by the Decision of the RTC. Well entrenched is the rule that "a
party who does not appeal from a judgment can no longer seek modification or reversal of the same. He
may oppose the appeal of the other party only on grounds consistent with the judgment."48 For this reason, Ï‚rÎ½ll
respondent Angeles may no longer question the propriety and correctness of the annulment of the Deed of
Absolute Sale, the cancellation of TCT Nos. 105202 and 105203, and the order to vacate the property.
Hence, the only issue that must be resolved in this case is whether the RTC erred in ordering petitioner to
reimburse respondent-spouses the "total monthly installments and the value of the new house minus the
cost of the original house."49 Otherwise stated, the issues for our resolution are:
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1) Whether petitioner is obliged to refund to respondent-spouses all the monthly installments paid; and
2) Whether petitioner is obliged to reimburse respondent-spouses the value of the new house minus the cost
of the original house.
Respondent-spouses are entitled to the

cash surrender value of the payments
on the property equivalent to 50% of the
total payments made.
Considering that this case stemmed from a Contract to Sell executed by the petitioner and the respondent-
spouses, we agree with petitioner that the Maceda Law, which governs sales of real estate on installment,
should be applied.
Sections 3, 4, and 5 of the Maceda Law provide for the rights of a defaulting buyer, to wit: chan roble svirtual lawlib rary
Section 3. In all transactions or contracts involving the sale or financing of real estate on installment
payments, including residential condominium apartments but excluding industrial lots, commercial buildings
and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic
Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments,
the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:
9
(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by
him which is hereby fixed at the rate of one month grace period for every one year of installment payments
made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of
the contract and its extensions, if any.
(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the
payments on the property equivalent to fifty percent of the total payments made, and, after five
years of installments, an additional five per cent every year but not to exceed ninety per cent of the total
payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from
receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial
act and upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the computation of the total
number of installment payments made. (Emphasis supplied.)
Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a
grace period of not less than sixty days from the date the installment became due.
If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the
contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission
of the contract by a notarial act.
Section 5. Under Sections 3 and 4, the buyer shall have the right to sell his rights or assign the same to
another person or to reinstate the contract by updating the account during the grace period and before
actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.
In this connection, we deem it necessary to point out that, under the Maceda Law, the actual cancellation of
a contract to sell takes place after 30 days from receipt by the buyer of the notarized notice of
cancellation,50 and upon full payment of the cash surrender value to the buyer.51 In other words, before a
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contract to sell can be validly and effectively cancelled, the seller has (1) to send a notarized notice of
cancellation to the buyer and (2) to refund the cash surrender value.52 Until and unless the seller complies
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with these twin mandatory requirements, the contract to sell between the parties remains valid and
subsisting.53 Thus, the buyer has the right to continue occupying the property subject of the contract to
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sell,54 and may "still reinstate the contract by updating the account during the grace period and before the
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actual cancellation"55 of the contract. Ï‚rÎ½l l
In this case, petitioner complied only with the first condition by sending a notarized notice of cancellation to
the respondent-spouses. It failed, however, to refund the cash surrender value to the respondent-spouses.
Thus, the Contract to Sell remains valid and subsisting and supposedly, respondent-spouses have the right
to continue occupying the subject property. Unfortunately, we cannot reverse the Decision of the RTC
directing respondent-spouses to vacate and turnover possession of the subject property to petitioner
because respondent-spouses never appealed the order. The RTC Decision as to respondent-spouses is
therefore considered final.
In addition, in view of respondent-spouses failure to appeal, they can no longer reinstate the contract by
updating the account. Allowing them to do so would be unfair to the other party and is offensive to the rules
of fair play, justice, and due process. Thus, based on the factual milieu of the instant case, the most that we
can do is to order the return of the cash surrender value. Since respondent-spouses paid at least two years
of installment,56 they are entitled to receive the cash surrender value of the payments they had made
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which, under Section 3(b) of the Maceda Law, is equivalent to 50% of the total payments made.
Respondent-spouses are entitled to

reimbursement of the improvements
made on the property.
Petitioner posits that Article 448 of the Civil Code does not apply and that respondent-spouses are not
entitled to reimbursement of the value of the improvements made on the property because they were
builders in bad faith. At the outset, we emphasize that the issue of whether respondent-spouses are builders
in good faith or bad faith is a factual question, which is beyond the scope of a petition filed under Rule 45 of
the Rules of Court.57 In fact, petitioner is deemed to have waived all factual issues since it appealed the
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case directly to this Court,58 instead of elevating the matter to the CA. It has likewise not escaped our
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attention that after their failed preliminary conference, the parties agreed to submit the case for resolution
based on the pleadings and exhibits presented. No trial was conducted. Thus, it is too late for petitioner to
raise at this stage of the proceedings the factual issue of whether respondent-spouses are ilders in bad faith.
Hence, in view of the special circumstances obtaining in this case, we are constrained to rely on the
presumption of good faith on the part of the respondent-spouses which the petitioner failed to rebut. Thus,
respondent-spouses being presumed builders in good faith, we now rule on the applicability of Article 448 of
the Civil Code.
As a general rule, Article 448 on builders in good faith does not apply where there is a contractual relation
between the parties,59 such as in the instant case. We went over the records of this case and we note that
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10
the parties failed to attach a copy of the Contract to Sell. As such, we are constrained to apply Article 448 of
the Civil Code, which provides viz:
ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have
the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided
for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its
value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if
the owner of the land does not choose to appropriate the building or trees after proper indemnity. The
parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms
thereof.
Article 448 of the Civil Code applies when the builder believes that he is the owner of the land or that by
some title he has the right to build thereon,60 or that, at least, he has a claim of title thereto.61 Concededly,
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this is not present in the instant case. The subject property is covered by a Contract to Sell hence ownership
still remains with petitioner being the seller. Nevertheless, there were already instances where this Court
applied Article 448 even if the builders do not have a claim of title over the property. Thus: chanroblesvi rt uallawl ibra ry
This Court has ruled that this provision covers only cases in which the builders, sowers or planters believe
themselves to be owners of the land or, at least, to have a claim of title thereto. It does not apply when the
interest is merely that of a holder, such as a mere tenant, agent or usufructuary. From these
pronouncements, good faith is identified by the belief that the land is owned; or that by some title one has
the right to build, plant, or sow thereon.
However, in some special cases, this Court has used Article 448 by recognizing good faith beyond this
limited definition. Thus, in Del Campo v. Abesia, this provision was applied to one whose house despite
having been built at the time he was still co-owner overlapped with the land of another. This article was also
applied to cases wherein a builder had constructed improvements with the consent of the owner. The Court
ruled that the law deemed the builder to be in good faith. In Sarmiento v. Agana, the builders were found to
be in good faith despite their reliance on the consent of another, whom they had mistakenly believed to be
the owner of the land.62 Ï‚rÎ½ll
The Court likewise applied Article 448 in Spouses Macasaet v. Spouses Macasaet63 notwithstanding the fact Ï‚rÎ½l l
that the builders therein knew they were not the owners of the land. In said case, the parents who owned
the land allowed their son and his wife to build their residence and business thereon. As found by this Court,
their occupation was not by mere tolerance but "upon the invitation of and with the complete approval of
(their parents), who desired that their children would occupy the premises. It arose from familial love and a
desire for family solidarity x x x."64 Soon after, conflict between the parties arose. The parents demanded
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their son and his wife to vacate the premises. The Court thus ruled that as owners of the property, the
parents have the right to possession over it. However, they must reimburse their son and his wife for the
improvements they had introduced on the property because they were considered builders in good faith
even if they knew for a fact that they did not own the property, thus: chanrob lesvi rtua llawli bra ry
Based on the aforecited special cases, Article 448 applies to the present factual milieu. The established facts
of this case show that respondents fully consented to the improvements introduced by petitioners. In fact,
because the children occupied the lots upon their invitation, the parents certainly knew and approved of the
construction of the improvements introduced thereon. Thus, petitioners may be deemed to have been in
good faith when they built the structures on those lots.
The instant case is factually similar to Javier v. Javier. In that case, this Court deemed the son to be in good
faith for building the improvement (the house) with the knowledge and consent of his father, to whom
belonged the land upon which it was built. Thus, Article 448 was applied.65 Ï‚ rÎ½ll
In fine, the Court applied Article 448 by construing good faith beyond its limited definition. We find no
reason not to apply the Courts ruling in Spouses Macasaet v. Spouses Macasaet in this case. We thus hold
that Article 448 is also applicable to the instant case. First, good faith is presumed on the part of the
respondent-spouses. Second, petitioner failed to rebut this presumption. Third, no evidence was presented
to show that petitioner opposed or objected to the improvements introduced by the respondent-spouses.
Consequently, we can validly presume that petitioner consented to the improvements being constructed.
This presumption is bolstered by the fact that as the subdivision developer, petitioner must have given the
respondent-spouses permits to commence and undertake the construction. Under Article 453 of the Civil
Code, "it is understood that there is bad faith on the part of the landowner whenever the act was done with
his knowledge and without opposition on his part."
In view of the foregoing, we find no error on the part of the RTC in requiring petitioner to pay respondent-
spouses the value of the new house minus the cost of the old house based on Article 448 of the Civil Code,
subject to succeeding discussions.
Petitioner has two options under Article

448 and pursuant to the ruling in
Tuatis v. Escol.66 Ï‚rÎ½ ll
11
In Tuatis, we ruled that the seller (the owner of the land) has two options under Article 448: (1) he may
appropriate the improvements for himself after reimbursing the buyer (the builder in good faith) the
necessary and useful expenses under Articles 54667 and 54868 of the Civil Code; or (2) he may sell the land
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to the buyer, unless its value is considerably more than that of the improvements, in which case, the buyer
shall pay reasonable rent.69 Quoted below are the pertinent portions of our ruling in that case:
Ï‚rÎ½ll chanrob lesvi rtual lawlib rary
Taking into consideration the provisions of the Deed of Sale by Installment and Article 448 of the Civil Code,
Visminda has the following options: chan roble svirtual lawlib rary
Under the first option, Visminda may appropriate for herself the building on the subject property
after indemnifying Tuatis for the necessary and useful expenses the latter incurred for said
building, as provided in Article 546 of the Civil Code.
It is worthy to mention that in Pecson v. Court of Appeals, the Court pronounced that the amount to be
refunded to the builder under Article 546 of the Civil Code should be the current market value of
the improvement, thus:
xxx
Until Visminda appropriately indemnifies Tuatis for the building constructed by the latter, Tuatis may retain
possession of the building and the subject property.
Under the second option, Visminda may choose not to appropriate the building and, instead, oblige
Tuatis to pay the present or current fair value of the land. The P10,000.00 price of the subject
property, as stated in the Deed of Sale on Installment executed in November 1989, shall no longer apply,
since Visminda will be obliging Tuatis to pay for the price of the land in the exercise of Vismindas rights
under Article 448 of the Civil Code, and not under the said Deed. Tuatis obligation will then be statutory,
and not contractual, arising only when Visminda has chosen her option under Article 448 of the Civil Code.
Still under the second option, if the present or current value of the land, the subject property herein,
turns out to be considerably more than that of the building built thereon, Tuatis cannot be
obliged to pay for the subject property, but she must pay Visminda reasonable rent for the same.
Visminda and Tuatis must agree on the terms of the lease; otherwise, the court will fix the terms.
Necessarily, the RTC should conduct additional proceedings before ordering the execution of the judgment in
Civil Case No. S-618. Initially, the RTC should determine which of the aforementioned options Visminda will
choose. Subsequently, the RTC should ascertain: (a) under the first option, the amount of indemnification
Visminda must pay Tuatis; or (b) under the second option, the value of the subject property vis-vis that of
the building, and depending thereon, the price of, or the reasonable rent for, the subject property, which
Tuatis must pay Visminda.
The Court highlights that the options under Article 448 are available to Visminda, as the owner of the
subject property. There is no basis for Tuatis demand that, since the value of the building she constructed is
considerably higher than the subject property, she may choose between buying the subject property from
Visminda and selling the building to Visminda for P502,073.00. Again, the choice of options is for Visminda,
not Tuatis, to make. And, depending on Vismindas choice, Tuatis rights as a builder under Article 448 are
limited to the following: (a) under the first option, a right to retain the building and subject property until
Visminda pays proper indemnity; and (b) under the second option, a right not to be obliged to pay for the
price of the subject property, if it is considerably higher than the value of the building, in which case, she
can only be obliged to pay reasonable rent for the same.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with
the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even
as the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner cannot
refuse to exercise either option and compel instead the owner of the building to remove it from the land.
The raison detre for this provision has been enunciated thus: Where the builder, planter or sower has acted
in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner
of the improvements without causing injustice to the owner of the land. In view of the impracticability of
creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land
the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It is
the owner of the land who is authorized to exercise the option, because his right is older, and because, by
the principle of accession, he is entitled to the ownership of the accessory thing.
Vismindas Motion for Issuance of Writ of Execution cannot be deemed as an expression of her choice to
recover possession of the subject property under the first option, since the options under Article 448 of the
Civil Code and their respective consequences were also not clearly presented to her by the 19 April 1999
Decision of the RTC. She must then be given the opportunity to make a choice between the options available
to her after being duly informed herein of her rights and obligations under both.70 (Emphasis supplied.)
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12
In conformity with the foregoing pronouncement, we hold that petitioner, as landowner, has two options. It
may appropriate the new house by reimbursing respondent Angeles the current market value thereof minus
the cost of the old house. Under this option, respondent Angeles would have "a right of retention which
negates the obligation to pay rent."71 In the alternative, petitioner may sell the lots to respondent Angeles
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at a price equivalent to the current fair value thereof. However, if the value of the lots is considerably more
than the value of the improvement, respondent Angeles cannot be compelled to purchase the lots. She can
only be obliged to pay petitioner reasonable rent.
In view of the foregoing disquisition and in accordance with Depra v. Dumlao72 and Technogas Philippines
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Manufacturing Corporation v. Court of Appeals,73 we find it necessary to remand this case to the court of
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origin for the purpose of determining matters necessary for the proper application of Article 448, in relation
to Articles 546 and 548 of the Civil Code.
WHEREFORE, the petition is hereby PARTIALLY GRANTED. The assailed Decision dated December 29,
2006 and the Order dated February 12, 2007 of the Regional Trial Court, Cagayan de Oro City, Branch 18, in
Civil Case No. 2005-158 are hereby AFFIRMED with MODIFICATION that petitioner Communities
Cagayan, Inc. is hereby ordered to RETURN the cash surrender value of the payments made by
respondent-spouses on the properties, which is equivalent to 50% of the total payments made, in ccordance
with Section 3(b) of Republic Act No. 6552, otherwise known as the Maceda Law.
The case is hereby REMANDED to the Regional Trial Court, Cagayan de Oro City, Branch 18, for further
proceedings consistent with the proper application of Articles 448, 546 and 548 of the Civil Code, as
follows:cha nro blesvi rtua llawli bra ry
1. The trial court shall determine:
a) the present or current fair value of the lots;
b) the current market value of the new house;
c) the cost of the old house; and
d) whether the value of the lots is considerably more than the current market value of the new house minus
the cost of the old house.
2. After said amounts shall have been determined by competent evidence, the trial court shall render
judgment as follows:
a) Petitioner shall be granted a period of 15 days within which to exercise its option under the law (Article
448, Civil Code), whether to appropriate the new house by paying to respondent Angeles the current market
value of the new house minus the cost of the old house, or to oblige respondent Angeles to pay the price of
the lots. The amounts to be respectively paid by the parties, in accordance with the option thus exercised by
written notice to the other party and to the court, shall be paid by the obligor within 15 days from such
notice of the option by tendering the amount to the trial court in favor of the party entitled to receive it.
b) If petitioner exercises the option to oblige respondent Angeles to pay the price of the lots but the latter
rejects such purchase because, as found by the trial court, the value of the lots is considerably more than
the value of the new house minus the cost of the old house, respondent Angeles shall give written notice of
such rejection to petitioner and to the trial court within 15 days from notice of petitioners option to sell the
land. In that event, the parties shall be given a period of 15 days from such notice of rejection within which
to agree upon the terms of the lease, and give the trial court formal written notice of the agreement and its
provisos. If no agreement is reached by the parties, the trial court, within 15 days from and after the
termination of the said period fixed for negotiation, shall then fix the period and terms of the lease, including
the monthly rental, which shall be payable within the first five days of each calendar month. Respondent
Angeles shall not make any further constructions or improvements on the building. Upon expiration of the
period, or upon default by respondent Angeles in the payment of rentals for two consecutive months,
petitioner shall be entitled to terminate the forced lease, to recover its land, and to have the new house
removed by respondent Angeles or at the latters expense.
c) In any event, respondent Angeles shall pay petitioner reasonable compensation for the occupancy of the
property for the period counted from the time the Decision dated December 29, 2006 became final as to
respondent Angeles or 15 days after she received a copy of the said Decision up to the date petitioner
serves notice of its option to appropriate the encroaching structures, otherwise up to the actual transfer of
ownership to respondent Angeles or, in case a forced lease has to be imposed, up to the commencement
date of the forced lease referred to in the preceding paragraph.
d) The periods to be fixed by the trial court in its decision shall be nonextendible, and upon failure of the
party obliged to tender to the trial court the amount due to the obligee, the party entitled to such payment
shall be entitled to an order of execution for the enforcement of payment of the amount due and for
compliance with such other acts as may be required by the prestation due the obligee.
13
SO ORDERED.
G.R. No. 165907 July 27, 2009
SPS. DOMINADOR R. NARVAEZ and LILIA W. NARVAEZ, Petitioners,

vs.
SPS. ROSE OGAS ALCISO and ANTONIO ALCISO, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition challenges
the 29 October 2004 Decision2 of the Court of Appeals in CA-G.R. CV No. 63757. The Court of
Appeals affirmed with modification the 6 April 1998 Decision3 of the Regional Trial Court (RTC),
Judicial Region 1, Branch 8, La Trinidad, Benguet, in Civil Case No. 84-CV-0094.
The Facts
Larry A. Ogas (Ogas) owned a 1,329-square meter parcel of land situated in Pico, La Trinidad,
Benguet. The property was covered by Transfer Certificate of Title (TCT) No. T-1068, and a portion
was subject to a 30-year lease agreement4 with Esso Standard Eastern, Inc. Ogas sold the property
to his daughter Rose O. Alciso (Alciso). TCT No. T-1068 was cancelled and TCT No. T-124225 was
issued in the name of Alciso.
On 25 August 1979, Alciso entered into a Deed of Sale with Right to Repurchase,6 selling the
property to Jaime Sansano (Sansano) for ₱10,000. Alciso later repurchased the property from
Sansano and, on 28 March 1980, she entered into another Deed of Absolute Sale,7 this time selling
the property to Celso S. Bate (Bate) for ₱50,000. The Deed stated that:
The SELLER warrants that her title to and ownership of the property herein conveyed are free from
all liens and encumbrances except those as appear on the face of the title, specifically, that lease
over the said property in favor of ESSO STANDARD EASTERN, INC., the rights over which as a
lessor the SELLER likewise hereby transfers in full to the buyer.8
TCT No. T-12422 was cancelled and TCT No. T-160669 was issued in the name of Bate. On 14
August 1981, Bate entered into a Deed of Sale of Realty,10 selling the property to the spouses
Dominador R. Narvaez and Lilia W. Narvaez (Spouses Narvaez) for ₱80,000. TCT No. T-16066 was
cancelled and TCT No. T-1652811 was issued in the name of the Spouses Narvaez. In 1982, the
Spouses Narvaez built a commercial building on the property amounting to ₱300,000.
Alciso demanded that a stipulation be included in the 14 August 1981 Deed of Sale of Realty
allowing her to repurchase the property from the Spouses Narvaez. In compliance with Alciso’s
demand, the Deed stated that, "The SELLER (Bate) carries over the manifested intent of the original
SELLER of the property (Alciso) to buy back the same at a price under such conditions as the
present BUYERS (Spouses Narvaez) may impose." The Spouses Narvaez furnished Alciso with a
copy of the Deed.
Alciso alleged that she informed the Spouses Narvaez that she wanted to repurchase the property.
The Spouses Narvaez demanded ₱300,000, but Alciso was willing to pay only ₱150,000. Alciso and
the Spouses Narvaez failed to reach an agreement on the repurchase price.
In a Complaint12 dated 15 June 1984 and filed with the RTC, Alciso prayed that (1) the 25 August
1979 Deed of Sale with Right to Repurchase, the 28 March 1980 Deed of Absolute Sale, and the 14
August 1981 Deed of Sale of Realty be annulled; (2) the Register of Deeds be ordered to cancel
TCT Nos. T-16066 and T-16528; (3) the Spouses Narvaez be ordered to reconvey the property; and
(4) Sansano, Bate, and the Spouses Narvaez be ordered to pay damages, attorney’s fees and
expenses of litigation. Alciso claimed that the intention of the parties was to enter into a contract of
real estate mortgage and not a contract of sale with right of repurchase. She stated that:
14
[C]ontrary to the clear intention and agreement of the parties, particularly the plaintiffs herein,
defendant JAIME SANSANO, taking advantage of the good faith and financial predicament and
difficulties of plaintiffs at the time, caused to be prepared and induced with insidous [sic] words and
machinations, prevailed upon plaintiff to sign a contract denominated as "Sale With Right to
Repurchase", instead of Deed of Real Estate Mortgage as was the clear intention and agreement of
the parties.
xxxx
Defendant JAIME SANSANO caused to be prepared a contract denominated as DEED OF

ABSOLUTE SALE, covering the lot in question, contrary to the clear intention and understanding of
plaintiff who was inveigled into signing said contract under the impression that what she was
executing was a real estate mortgage.13
The RTC’s Ruling
In its 6 April 1998 Decision, the RTC held that (1) the 25 August 1979 Deed of Sale with Right to
Repurchase became functus officio when Alciso repurchased the property; (2) the action to annul
the 28 March 1980 Deed of Absolute Sale had prescribed; (3) Alciso had no legal personality to
annul the 14 August 1981 Deed of Sale of Realty; (4) the 14 August 1981 Deed of Sale of Realty
contained a stipulation pour autrui in favor of Alciso — Alciso could repurchase the property; (5)
Alciso communicated to the Spouses Narvaez her acceptance of the favor contained in the
stipulation pour autrui; (6) the repurchase price was ₱80,000; (7) Alciso could either appropriate the
commercial building after payment of the indemnity equivalent to one-half of its market value when
constructed or sell the land to the Spouses Narvaez; and (8) Alciso was entitled to ₱100,000
attorney’s fees and ₱20,000 nominal damages.
The Spouses Narvaez appealed to the Court of Appeals. In their Appellants Brief14 dated 21
November 2000, the Spouses Narvaez claimed that (1) the 14 August 1981 Deed of Sale of Realty
did not contain a stipulation pour autrui — not all requisites were present; (2) the RTC erred in
setting the repurchase price at ₱80,000; (3) they were purchasers for value and in good faith; and
(4) they were builders in good faith.
The Court of Appeals’ Ruling
In its 29 October 2004 Decision, the Court of Appeals held that (1) the 14 August 1981 Deed of Sale
of Realty contained a stipulation pour autrui; (2) Alciso accepted the favor contained in the
stipulation pour autrui; (3) the RTC erred in setting the repurchase price at ₱80,000; (4) the 14
August 1981 Deed of Sale of Realty involved a contract of sale with right of repurchase and not real
estate mortgage; (5) the Spouses Narvaez were builders in good faith; and (6) Alciso could either
appropriate the commercial building after payment of the indemnity or oblige the Spouses Narvaez
to pay the price of the land, unless the price was considerably more than that of the building. The
Court of Appeals remanded the case to the RTC for determination of the property’s reasonable
repurchase price.
The Issue
The Spouses Narvaez elevated the case to the Court. In their Petition dated 15 December 2004, the
Spouses Narvaez claimed that Alciso did not communicate her acceptance of the favor contained in
the stipulation pour autrui; thus, she could not repurchase the property.
The Court’s Ruling
The petition is unmeritorious.
Article 1311, paragraph 2, of the Civil Code states the rule on stipulations pour autrui:
If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment
provided he communicated his acceptance to the obligor before its revocation. A mere incidental
benefit or interest of a person is not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person.
15
In Limitless Potentials, Inc. v. Quilala,15 the Court laid down the requisites of a stipulation pour autrui:
(1) there is a stipulation in favor of a third person; (2) the stipulation is a part, not the whole, of the
contract; (3) the contracting parties clearly and deliberately conferred a favor to the third person —
the favor is not an incidental benefit; (4) the favor is unconditional and uncompensated; (5) the third
person communicated his or her acceptance of the favor before its revocation; and (6) the
contracting parties do not represent, or are not authorized by, the third party.
All the requisites are present in the instant case: (1) there is a stipulation in favor of Alciso; (2) the
stipulation is a part, not the whole, of the contract; (3) Bate and the Spouses Narvaez clearly and
deliberately conferred a favor to Alciso; (4) the favor is unconditional and uncompensated; (5) Alciso
communicated her acceptance of the favor before its revocation — she demanded that a stipulation
be included in the 14 August 1981 Deed of Sale of Realty allowing her to repurchase the property
from the Spouses Narvaez, and she informed the Spouses Narvaez that she wanted to repurchase
the property; and (6) Bate and the Spouses Narvaez did not represent, and were not authorized by,
Alciso.
The Spouses Narvaez claim that Alciso did not communicate her acceptance of the favor. They state
that:
A perusal of the provision of the Deed of Sale of Realty between Celso Bate and the spouses
Dominador R. Narvaez and Lilia W. Narvaez (Annex "B") which clearly provides that "the third
person" (Rose O. Alciso) must have communicated her acceptance to the obligors (spouses
Dominador R. Narvaez and Lilia W. Narvaez) before its revocation was not complied with. The
acceptance is at best by mere inference.
xxxx
Petitioner Narvaez clearly stated that while the contract (Deed of Sale of Realty, Annex "D")
contained an [sic] stipulation in favor of a third person (Rose O. Alciso), she did not demand its
fulfillment and communicate her acceptance to the obligors before its revocation.
xxxx
We maintain that the stipulation aforequoted is not a stipulation pour autrui. Let the following be
emphasized:
1.While the contract contained a stipulation in favor of a third person (Rose Alciso) she did not
demand its fulfillment and she never communicated her acceptance to the obligors (Spouses
Narvaez) before its revocation (Uy Tam vs. Leonard, 30 Phil. 471; Coquia vs. Fieldmen’s Insurance
Co., Inc., 26 SCRA 178)
2.Granting arguendo that the stipulation is a pour autrui yet in the three meetings Rose Alciso had
with Mrs. Narvaez she never demanded fulfillment of the alleged stipulation pour autrui and, what is
worse, she did not communicate her acceptance to the obligors before it is revoked.16
A petition for review on certiorari under Rule 45 of the Rules of Court should include only questions
of law — questions of fact are not reviewable. A question of law exists when the doubt centers on
what the law is on a certain set of facts, while a question of fact exists when the doubt centers on the
truth or falsity of the alleged facts. There is a question of law if the issue raised is capable of being
resolved without need of reviewing the probative value of the evidence. Once the issue invites a
review of the evidence, the question is one of fact.17
Whether Alciso communicated to the Spouses Narvaez her acceptance of the favor contained in the
stipulation pour autrui is a question of fact. It is not reviewable.
The factual findings of the trial court, especially when affirmed by the Court of Appeals, are binding
on the Court.18In its 6 April 1998 Decision, the RTC found that Alciso communicated to the Spouses
Narvaez her acceptance of the favor contained in the stipulation pour autrui. The RTC stated that:
Rose Alciso communicated her acceptance of such favorable stipulation when she went to
see defendant Lillia [sic] Narvaez in their house. Under the foregoing circumstances, there is no
question that plaintiff Rose Alciso can maintain her instant action for the enforcement and/or
16
fulfillment of the aforestated stipulation in her favor to by [sic] back the property in
question.19 (Emphasis supplied)
In Florentino v. Encarnacion, Sr.,20 the Court held that the acceptance may be made at any time
before the favorable stipulation is revoked and that the acceptance may be in any form — it does
not have to be formal or express but may be implied. During the trial, Alciso testified that she
informed the Spouses Narvaez that she wanted to repurchase the property:
q – What was your proposal to Mrs. Narvaez by way of settlement?
a – I tried to go to her and asked her if I could redeem the property and Mrs. Narvaez told me
why not, you could redeem the property but not our price.
xxxx
q – Now, when you went back to her, what if any did you propose to her or tell her, Madam
witness?
a – I just asked for the redemption for the property, sir and she just told me wa [sic] the price
that I could only redeem the property.
q – Three Hundred thousand pesos?
a – Yes, sir.
q – Did you make any counter proposal?
a – Yes, for the third time I want [sic] back again your Honor...21
The exceptions to the rule that the factual findings of the trial court are binding on the Court are (1)
when there is grave abuse of discretion; (2) when the findings are grounded on speculations; (3)
when the inference made is manifestly mistaken; (4) when the judgment of the Court of Appeals is
based on a misapprehension of facts; (5) when the factual findings are conflicting; (6) when the
Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions
of the parties; (7) when the Court of Appeals overlooked undisputed facts which, if properly
considered, would justify a different conclusion; (8) when the findings of the Court of Appeals are
contrary to those of the trial court; (9) when the facts set forth by the petitioners are not disputed by
the respondents; and (10) when the findings of the Court of Appeals are premised on the absence of
evidence and are contradicted by the evidence on record.22 The Spouses Narvaez did not show that
the instant case falls under any of the exceptions.
In its 29 October 2004 Decision, the Court of Appeals held that Bate and the Spouses Narvaez
entered into a sale with right of repurchase and that, applying Article 448 of the Civil Code, Alciso
could either appropriate the commercial building after payment of the indemnity or oblige the
Spouses Narvaez to pay the price of the land, unless the price was considerably more than that of
the building. Article 448 states:
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the
obliged to buy the land if its value is considerably more than that of the building or the trees. In such
case of disagreement, the court shall fix the terms thereof.
The Court of Appeals stated that:
[T]he contract between defendants-appellants Bate and Narvaez spouses is a contract of sale with a
stipulation granting plaintiffs-appellees the right to repurchase the property at a reasonable price.
Being the absolute owners of the property in question, defendants-appellants Narvaez spouses have
the undisputed right to use, enjoy and build thereon.
17
Having built the improvement on the land they own and registered in their names, they are likened to
builders in good faith and their rights over the improvement shall be governed by Article 448 of the
Civil Code which provides:
ART. 448. The owner of the land on which anything has been built, sown or planted in good faith,
shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the
obliged to buy the land if its value is considerably more than that of the building or tress. In such
case of disagreement, the court shall fix the terms thereof.
Applying said Article, plaintiffs-appellees, after repurchasing the land, will have the following options:
(1) to appropriate for themselves the building upon payment of its value to defendants-
appellants Narvaez spouses; OR
(2) to compel the defendants-appellants Narvaez spouses to buy the land, unless the value
of thereof [sic] be considerably more than that of the building, in which case, said spouses
may lease the land instead. The parties shall agree upon the terms of the lease and in case
of disagreement, the courts shall fix the terms thereof.23
The Court disagrees.
The rule is that only errors specifically assigned and properly argued in the appellant’s brief will be
considered, except jurisdictional and clerical errors.24 However, the Court is clothed with ample
authority to review matters not assigned as errors if their consideration is necessary in arriving at a
just decision.25
Article 448 is inapplicable in cases involving contracts of sale with right of repurchase — it is
inapplicable when the owner of the land is the builder, sower, or planter. In Pecson v. Court of
Appeals,26 the Court held that:
Article 448 does not apply to a case where the owner of the land is the builder, sower, or
planter who then later loses ownership of the land by sale or donation. This Court said so
in Coleongco v. Regalado:
Article 361 of the old Civil Code is not applicable in this case, for Regalado constructed the
house on his own land before he sold said land to Coleongco. Article 361 applies only in cases
where a person constructs a building on the land of another in good or in bad faith, as the
case may be. It does not apply to a case where a person constructs a building on his own
land, for then there can be no question as to good or bad faith on the part of the builder.
Elsewise stated, where the true owner himself is the builder of the works on his own land, the
issue of good faith or bad faith is entirely irrelevant. (Emphasis supplied)
Article 448 is inapplicable in the present case because the Spouses Narvaez built the commercial
building on the land that they own. Besides, to compel them to buy the land, which they own, would
be absurd.
As the Court of Appeals correctly observed, the terms of the 14 August 1981 Deed of Sale of Realty
show that Bate and the Spouses Narvaez entered into a sale with right of repurchase, where Bate
transferred his right of repurchase to Alciso. The Deed states that, "The SELLER (Bate) carries over
the manifested intent of the original SELLER of the property (Alciso) to buy back the same at a price
under such conditions as the present BUYERS (Spouses Narvaez) may impose." Article 1601 of the
Civil Code states that, "Conventional redemption shall take place when the vendor reserves the right
to repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and
other stipulations which may have been agreed upon." In Gallar v. Husain,27 the Court held that "the
right of repurchase may be exercised only by the vendor in whom the right is recognized by contract
or by any person to whom the right may have been transferred."
18
In a sale with right of repurchase, the applicable provisions are Articles 1606 and 1616 of the Civil
Code, not Article 448. Articles 1606 and 1616 state:
Art. 1606. The right referred to in Article 1601, in the absence of an express agreement, shall last
four years from the date of the contract. lawph!l
Should there be an agreement, the period cannot exceed ten years.
However, the vendor may still exercise the right to repurchase within thirty days from the time final
judgment was rendered in a civil action on the basis that the contract was a true sale with right to
repurchase.
Art. 1616. The vendor cannot avail himself of the right of repurchase without returning to the vendee
the price of the sale, and in addition:
(1) The expenses of the contract, and any other legitimate payments made by reason of the
sale;
(2) The necessary and useful expenses made on the thing sold.
Under Article 1616, Alciso may exercise her right of redemption by paying the Spouses Narvaez (1)
the price of the sale, (2) the expenses of the contract, (3) legitimate payments made by reason of the
sale, and (4) the necessary and useful expenses made on the thing sold. In the present case, the
cost of the building constitutes a useful expense. Useful expenses include improvements which
augment the value of the land.28
Under the first paragraph of Article 1606, Alciso had four years from 14 August 1981 to repurchase
the property since there was no express agreement as to the period when the right can be
exercised. Tender of payment of the repurchase price is necessary in the exercise of the right of
redemption. Tender of payment is the seller’s manifestation of his or her desire to repurchase the
property with the offer of immediate performance.29
Alciso’s intimation to the Spouses Narvaez that she wanted to repurchase the property was
insufficient. To have effectively exercised her right of repurchase, Alciso should have tendered
payment. In Lee v. Court of Appeals,30the Court held that:
The rule that tender of payment of the repurchase price is necessary to exercise the right of
redemption finds support in civil law. Article 1616 of the Civil Code of the Philippines x x x furnishes
the guide, to wit: "The vendor cannot avail himself of the right of repurchase without returning to the
vendee the price of the sale..."
1avvphi1
Thus, in the case of Angao vs. Clavano, 17 Phil. 152, it was held that "it is not sufficient for the
vendor to intimate or to state to the vendee that the former desires to redeem the thing sold, but he
must immediately thereupon offer to repay the price..." Likewise, in several other cases decided by
the Supreme Court (Fructo vs. Fuentes, 15 Phil. 362; Retes vs. Suelto, 20 Phil. 394; Rosales vs.
Reyes, et al., 25 Phil. 495; Canuto vs. Mariano, 37 Phil. 840; De la Cruz, et al. vs. Resurreccion, et
al., 98 Phil. 975; and other cases) where the right to repurchase was held to have been properly
exercised, there was a definite finding of tender of payment having been made by the vendor.
(Emphasis supplied)
Nevertheless, under the third paragraph of Article 1606, Alciso has 30 days from the finality of this
Decision to exercise her right of repurchase. In Laserna v. Javier,31 the Court held that:
The new Civil Code in Article 1606, thereof gives the vendors a retro "the right to repurchase within
thirty days from the time final judgment was rendered in a civil action, on the basis that the contract
was a true sale with the right to repurchase." This provision has been construed to mean that "after
the courts have decided by a final or executory judgment that the contract was a pacto de retro and
not a mortgage, the vendor (whose claim as mortgagor had definitely been rejected) may still have
the privilege of repurchasing within 30 days." (Perez, et al. vs. Zulueta, 106 Phil., 264.)
The third paragraph of Article 1606 allows sellers, who considered the transaction they entered into
as mortgage, to repurchase the property within 30 days from the time they are bound by the
judgment finding the transaction to be one of sale with right of repurchase.
19
WHEREFORE, the Court DENIES the petition. The Court AFFIRMS the 29 October 2004 Decision
of the Court of Appeals in CA-G.R. CV No. 63757 with MODIFICATION. Respondent Rose O. Alciso
may exercise her right of redemption by paying the petitioners Spouses Dominador R. Narvaez and
Lilia W. Narvaez (1) the price of the sale, (2) the expenses of the contract, (3) legitimate payments
made by reason of the sale, and (4) the necessary and useful expenses made on the subject
property. The Court DIRECTS the Regional Trial Court, Judicial Region 1, Branch 8, La Trinidad,
Benguet, to determine the amounts of the expenses of the contract, the legitimate expenses made
by reason of the sale, and the necessary and useful expenses made on the subject property.
After such determination, respondent Rose O. Alciso shall have 30 days to pay the amounts to
petitioners Spouses Dominador R. Narvaez and Lilia W. Narvaez.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
G.R. No. 205664 June 9, 2014
DEPARTMENT OF EDUCATION, represented by its REGIONAL DIRECTOR TERESITA

DOMALANTA,Petitioner,
vs.
MARIANO TULIAO, Respondent.
DECISION
MENDOZA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court filed by the Department of
Education (DepEd) assails the January 31, 2013 Decision1 of the Court of Appeals (CA) in G.R. SP
No. 123450 which dismissed DepEd's petition for review.
The Factual Antecedents:
On October 8, 2002, Mariano Tuliao (Tuliao) filed an action for recovery of possession and removal
of structure with damages against the Department of Education (DepEd) with the Municipal Trial
Court in Cities of Tuguegarao City (MTCCJ. He alleged that he was the registered owner of the
subject parcel of land and that a portion of the said property was allowed by his predecessors-in-
interest to be used by the Atulayan Elementary School (AES) as an access road for the
schoolchildren in going to and from the school. In March 2000, upon discovering that a structure was
being constructed on the land, he demanded that the DepED cease and desist and vacate the
property. The respondent, however, refused. Tuliao likewise demanded payment for reasonable
rent, but his demand was also ignored.
In its defense, the DepEd denied the material allegations of the complaint and averred that it did not
state a cause of action. Even if there was, the same was already barred by prescription and/or
laches. Its occupation of the subject land was adverse, peaceful, continuous, and in the concept of
an owner for more than fifty (50) years. It also alleged that it did not receive a notice to cease and
desist or notice to vacate. As owner of the school site, it could not be compelled to pay rent or its
reasonable value.
On January 26, 2010, the MTCC rendered its decision, ruling that Tuliao was the registered owner of
the subject property and, thus, had a right of action against the holder and possessor of the said
property. Further, it found that respondent’s possession of the subject property was merely tolerated
by Tuliao. For said reason, his right to recover it was never barred by laches.
As to the structures, the MTCC stated that it could not allow the immediate removal thereof in view
of the provisions of Article 4482 of the New Civil Code and directed Tuliao to exercise his options
under said article. Pertinent portions of the MTCC decision, including the fallo reads:
Plaintiff’s prayer that the structures built on his lot be removed immediately cannot be allowed in
view of the provision of Article 448.
20
WHEREFORE, premises considered, judgment is hereby rendered by:
1. Declaring the plaintiff to be the lawful possessor of the lot in suit;
2. Directing the plaintiff to exercise his option under the law (Article 448, Civil Code) whether
to appropriate the structures built on the lot in suit as his own by paying to the defendant the
amount of the expenses spent for the structures or to oblige the defendant to pay the price of
the land, and said option must be exercised and relayed to this court formally within 30 days
from receipt of this decision and a copy of such notice must be furnished to the defendant.
a. If in case the plaintiff exercises the option to appropriate the structures built on the
lot in suit, the defendant is hereby directed to submit to this court the amount of the
expenses spent for the structures within 15 days from receipt of the notice of the
plaintiff of his desired option.
b. If the plaintiff decides to oblige the defendant to pay the price of the land, the
current market value of the land including its improvements as determined by the
City Assessor’s Office shall be the basis for the price thereof.
c. In case the plaintiff exercises the option to oblige the defendant to pay the price of
the land but the latter rejects such purchase because the value of the land is
considerably more than that of the structures, the parties shall agree upon the terms
of a forced lease, and give the court a formal written notice of such agreement and
its provisos.
d. If no formal agreement shall be entered into within a reasonable period, the court
shall fix the terms of the forced lease.
3. Directing the defendant to pay the plaintiff the amount of five hundred pesos (₱500.00) as
reasonable compensation for the occupancy of the encroached property from the time the
complaint was filed until such time the possession of the property is delivered to the plaintiff
subject to the reimbursement of the aforesaid expenses in favor of the defendant or until
such time the payment of the purchase price of the lot be made by the defendant in favor of
the plaintiff in case the latter opts for the compulsory sale of the same;
4. Directing the defendant to pay the plaintiff the amount of ₱20,000.00 as attorney’s fees
and to pay the costs of the suit.
So Ordered.3
On appeal to the RTC, aside from the issue of inaction, the DepEd argued that Tuliao failed to
sufficiently and competently prove the identity of the property – the exact location, area and
boundaries. The DepEd further claimed that the material allegations of the complaint established
one of accion reivindicatoria, and not accion publiciana, because Tuliao raised the issue of
ownership and made it the anchor of his claim for juridical possession.
Acting thereon, the RTC dismissed the appeal and affirmed the MTCC decision. It stated that "[i]f a
party in accion publiciana alleges that he owns the property in question, it is not ex sequitur that the
action is a reinvindicatory one," and that a claimant could assert ownership as basis of his claim of
possession.4 The RTC also wrote that Tuliao was able to present evidence establishing a definite
and unmistakable identification of the land and its ownership over the subject property. Moreover,
the DepEd’s possession was with the acquiescence of Tuliao’s predecessors-in-interest, thus, the
defense of laches was found weak.5
Interestingly, despite having affirmed the MTCC decision, the RTC opined that the case was
impressed with public interest6 and it was the paramount interest of the pupils who would be
prejudiced by the finality and execution of the appealed decision.7 The RTC strongly suggested that
the DepEd, or if unable, the City Government of Tuguegarao City, be requested to pay Tuliao the
just compensation of the land in question the amount of which to be determined by a panel of three
commissioners appointed by the court and whose determination was to be approved by the said
court.8
21
Aggrieved, the DepEd elevated the case to the CA via a petition for review under Rule 42. Finding
no merit, the CA affirmed the RTC decision. It stated that the DepEd’s reliance on the case of Bote
vs. San Pedro Cineplex Properties Corporation9 in arguing that Tuliao’s certificate of title alone was
inadequate to hand over possession of an unidentified parcel of land was misplaced. In Bote, both
parties asserted ownership and possession of the land and presented their respective titles as
evidence thereof. Hence, it was ruled therein that geodetic survey was necessary to determine
whose title actually covered the disputed property.10
In this case, however, only Tuliao presented a certificate of title as well as tax declaration and real
property tax receipts for the years 2003-2005.11 The pieces of evidence Tuliao presented resolved
the issue of who had the better right of possession and dispensed with the need for the testimony of
an expert witness.12
Hence, the present petition.
ISSUES:
I.
WHETHER THE COURT OF APPEALS ERRED IN AFFIRMING THE REGIONAL TRIAL COURT
AND HOLDING THAT THERE IS A SUFFICIENT DESCRIPTION OF THE LAND IN DISPUTE.
II.
WHETHER THE COURT OF APPEALS ERRED IN AFFIRMING THE REGIONAL TRIAL COURT
AND HOLDING THAT PETITIONER’S POSSESSION WAS ONLY DUE TO THE ACQUIESCENCE
OR TOLERANCE OF HEREIN RESPONDENT.
III.
WHETHER THE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT

RESPONDENT’S CLAIM IS BARRED BY LACHES DUE TO THE UNINTERRUPTED
POSSESSION OF ATULAYAN ELEMENTARY SCHOOL FOR AT LEAST THIRTYTWO (32)
YEARS.13
Firstly, the DepEd has argued that Tuliao failed to discharge the burden of proving ownership over
the disputed property. It asserts that presentation of a certificate of title does not automatically entitle
the claimant to possession; that he has to first prove, by competent and reliable evidence, that the
land he is claiming falls within his title; that the allegations and declarations of a party with a
certificate of title are inadequate; and that where a claimant asserts ownership over a disputed
property, it is essential that the boundaries of his title be correlated with the area claimed as this
might be a case of an owner mistaking another’s property as one’s own.
Secondly, the DepEd avers that its witness, Caridad Soriano, who was a retired teacher of AES and
who had taught at the said school for more than 30 years, testified that its possession of the subject
land was open, continuous, exclusive, notorious, and in the concept of an owner since 1970. AES
has delineated its possession by fencing its campus. Thus, whatever is within this fence is part of
AES.14
Thirdly, the DepEd declares that Tuliao has lost his right to recover by his inaction for thirty two (32)
years.15 After a scrutiny of the records, the Court is not swayed by DepEd’s arguments.
It has been consistently held that the Court is not a trier of facts.
Moreover, the factual findings of the trial court, when affirmed by the CA, are generally binding on
this Court.16Subject to certain exceptions, the Court will not review, analyze and weigh all over again
evidence already considered in the proceedings below.
From the records, it appears that there is no necessity to disturb the factual findings and conclusions
of law by the CA. Time and again, it has been ruled that he who alleges the affirmative of the issue
has the burden of proof.17Upon the plaintiff in a civil case, the burden of proof never parts. Once the
plaintiff makes out a prima facie case in his favor in the course of the trial, however, the duty or the
22
burden of evidence shifts to defendant to controvert plaintiff’s prima facie case, otherwise, a verdict
must be returned in favor of plaintiff.18
Here, Tuliao, as the registered owner, filed a complaint for recovery of possession and removal of
structure. To support his claim, he presented not only tax declarations and tax receipts, but also a
1âw phi 1
certificate of title. The Court agrees with the CA that the said pieces of evidence were sufficient to
resolve the issue of who had the better right of possession. That being the case, the burden was
shifted to the DepEd to prove otherwise. Unfortunately, the DepEd only presented testimonial
evidence and nothing more to prove its defense and refute Tuliao’s claim. Its lone witness was all
that the DepEd had to prove its right of possession. As between a certificate of title, which is an
incontrovertible proof of ownership,19 accompanied with a tax declaration and a tax receipt on one
hand, and a testimony of a lone witness who is a retired teacher on the other, the former prevails in
establishing who has a better right of possession over the property, following the rule that testimonial
evidence cannot prevail over documentary evidence.20
As regards the DepEd 's defense of ]aches, it has no merit either. It avers that its possession of the
subject land was open, continuous, exclusive, adverse, notorious and in the concept of an owner for
at least thirty-two (32) years already at the time Tuliao filed the complaint. It must be noted, however,
that Tuliao's claim that the DepEd's possession of a portion of his land to be used as a passageway
for the students was mere tolerance was not refuted. Thus, the same is deemed admitted. This
means that the DepEd 's possession was not truly adverse.
The Court once ruled that mere material possession of the land was not adverse as against the
owner and W8S insufficient to vest title, unless such possession was accompanied by the intent to
possess as an owner.21Accordingly, the DepEd 's possession can only be considered as adverse
from the time the gymnasium was being constructed in 1999 on the subject portion of Tuliao's
property. In March 2000, Tuliao discovered the construction and demanded that the DepEd cease
and desist from continuing the same. When DepEd refused, Tuliao filed a complaint for recovery of
possession of the subject lot in 2002. Thus, only two (2) years had elapsed from the time the DepEd
resisted Tuliao's claims. Clearly, he did not sleep on his rights. There was no prolonged inaction that
barred him from prosecuting his claims.
At any rate, the MTCC was fair when it stated that it could not order the immediately removal of the
structures and directed Tuliao to exercise his option under Article 448.
If that would not be feasible or practical for DepEd, its remedy is to file an action for expropriation.
WHEREFORE, the petition is DENIED.
SO ORDERED.
JOSE CATRAL MENDOZA

Associate Justice
23

Ballatan V. Ca: Facts

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BALLATAN v.

RTC ruled in favor of the petitioner ordering respondent Go to demolish their

Petitioner was given by SC 30 days to decide on what to do or which right to exercise.

MANUEL O. FUENTES and LETICIA L. FUENTES, Petitioners,

The Facts and the Case

The Issues Presented

The case presents the following issues:

The Court’s Rulings

2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate Transfer Certificate

G.R. No. 176791 : November 14, 2012

DEL CASTILLO, J.:

LAWS fill the gap in a contract.

Branch 18, in Civil Case No. 2005-158.

could release the loan.13 Ï‚ rÎ½ll

On September 10, 2003, petitioner sent respondent-spouses a notarizedNotice of Delinquency and

Ruling of the Regional Trial Court

Order40 dated February 12, 2007.

Respondent Angeles Arguments

The petition is partly meritorious.

Respondent-spouses are entitled to the

actual cancellation"55 of the contract. Ï‚rÎ½l l

Respondent-spouses are entitled to

Petitioner has two options under Article

1. The trial court shall determine:

a) the present or current fair value of the lots;

b) the current market value of the new house;

c) the cost of the old house; and

G.R. No. 165907 July 27, 2009

SPS. DOMINADOR R. NARVAEZ and LILIA W. NARVAEZ, Petitioners,

Defendant JAIME SANSANO caused to be prepared a contract denominated as DEED OF

The RTC’s Ruling

The Court of Appeals’ Ruling

The Court’s Ruling

The petition is unmeritorious.

q – What was your proposal to Mrs. Narvaez by way of settlement?

q – Three Hundred thousand pesos?

q – Did you make any counter proposal?

The Court of Appeals stated that:

The Court disagrees.

Should there be an agreement, the period cannot exceed ten years.

G.R. No. 205664 June 9, 2014

DEPARTMENT OF EDUCATION, represented by its REGIONAL DIRECTOR TERESITA

The Factual Antecedents:

1. Declaring the plaintiff to be the lawful possessor of the lot in suit;

Hence, the present petition.

WHETHER THE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT

WHEREFORE, the petition is DENIED.

JOSE CATRAL MENDOZA

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